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Gold, Silver Speculative Longs Plunge To March 2009 Levels

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Sat, 10/01/2011 - 14:23 | 1729202 tickhound
tickhound's picture

When a zh'er prompts you to nbc sitcom comedy, assume its worth the trip...

Hilarity about the irs, gold, the printing press, excess... according to your own inclination.


Sat, 10/01/2011 - 20:13 | 1729875 Strike Back
Strike Back's picture

Oh come on it was funny.  Green.

Sat, 10/01/2011 - 21:27 | 1729958 diesheepledie
diesheepledie's picture

Minutes of my life I will never get back. Fuck Off!

Sun, 10/02/2011 - 00:30 | 1730207 Real Estate Geek
Real Estate Geek's picture

OMFG.  Thanks for the reminder why I don't have TV.

Sat, 10/01/2011 - 14:21 | 1729204 Stonecold
Stonecold's picture

Comercial longs increased and comercial shorts have decreased.  That is what I would follow.

Sat, 10/01/2011 - 14:21 | 1729205 reader2010
reader2010's picture

NO Brainer. Just BTFD.

Sat, 10/01/2011 - 15:37 | 1729351 snowball777
snowball777's picture

As if any other kind of decision making were available to you.

Sat, 10/01/2011 - 16:35 | 1729455 nope-1004
nope-1004's picture


Investing in this ponzi of a market is sheer stupidity.

Putting your faith in Geithner, total suicide.

Trusting quiver lip Benocide, complete self-depracation.

No one has any other choice.  The economy is being held up by an illusion, a dream, some kind of farce, "a change you can believe in".  What a joke of a president.

We are FORCED to invest in PM's because this ship is going down.  Anyone who wants preservation of their hard earned wealth has no other choice.  Therein lies the gov't rationale to bash metals down.


Sat, 10/01/2011 - 17:20 | 1729548 AldousHuxley
AldousHuxley's picture

government, police, congress, Fed all in the game to favor the banksters.



See: "Fuck the Fed" protest in Boston Fed by OccupyBoston



Never could have imagined, but it is happening.

Sat, 10/01/2011 - 23:16 | 1730110 Hephasteus
Hephasteus's picture

It's funny because a controlled bullshit rebellion is bringing out the real deals.

Sat, 10/01/2011 - 23:16 | 1730109 reader2010
reader2010's picture

Marc Faber once famously said that owning gold is about to be your own central banker. 

Sun, 10/02/2011 - 12:30 | 1730866 Thomas
Thomas's picture

When asked why this is not 1981, one hedge fund manager noted that gold in 1981 was competing against an 8% real (inflation-adjusted) return on 30 year treasuries. That really seems to capture the spirit of my own bullishness. When there is something better than metals to own, I will swap them out.

Sun, 10/02/2011 - 13:24 | 1730928 reader2010
reader2010's picture

If you're after cash flow, own some brothels instead because it's inflation/deflation-proof entertainment biz. But when it comes down to preservation of wealth,  you'd better off in king's money.

Sat, 10/01/2011 - 14:22 | 1729207 Fips_OnTheSpot
Fips_OnTheSpot's picture

I'll order the next kilo Wednesday - screw them. It's all paper manipulation.


Where's the 90tons Mexico bought *physically* - they got a BOND delivery. LOL! Squeeze physical?

1:55, bitchez!

Sat, 10/01/2011 - 16:29 | 1729446 agent default
agent default's picture

Do you have a link to that story?

Sat, 10/01/2011 - 23:39 | 1730140 Ahmeexnal
Ahmeexnal's picture

Well, that certainly gives Mexico the right to nationalize gold/silver/copper mines....and get paid with gold to do so instead of having to pay.

Sat, 10/01/2011 - 14:39 | 1729213 DavidPierre
DavidPierre's picture

Try to sort through the noise of market commentary to decide for yourself where this market is going. Read as much as you can from both the bear and bull camps, and dismiss much of what you read as misguided nonsense, but there are still many unknown unknowns that will determine the outcome for the intermediate trend in both gold and silver.

The bearish 'knowns' include:

* the existence of a hostile Cartel that is well-funded and taking deliberate action to suppress both metals

* a breakdown in the charts for both silver and the entire junior mining sector, plus the pending threat of tax loss selling set to commence shortly

* only a small segment of the overall market participation is interested in the PM sector, and these investors are demoralized and sentiment has been decimated

The bullish 'knowns' include:

* seasonal strength for the metals
* long term chart for both gold and silver indicating the bull market
remains intact * inflationary pressures remain in effect and money printing continues unabated
* current low price regime for the metals will encourage further bullion buying worldwide
* CB buying has been increasing

Now there are questions that make a great deal of difference in terms of how the above factors will impact the performance for the sector. For example, read reports from many smaller bullion sellers that business is brisk and they are experiencing record sales for gold and silver, with few retail sellers in their shops. This is also confirmed by larger vendors like Sprott Precious Metals. Asian bullion demand has also been very strong. So assume that as this bullion is sold from the shops, these vendors are buying back inventory in bulk.

Silver stands out in particular because there are no CB reserves of silver that can be tapped to deliver against this demand. Where is this bullion coming from to supply the strong demand at these price levels? An estimate is that we are talking about tens of millions of ounces of silver bullion that has been accumulated during this dip worldwide, so that should make a dent even in the ridiculous paper trading scam at the LBMA and Comex.

They raiding the inventory of the ETFs and allocated bullion pools to supply this metal to a relentless market even as the prices have been crushed!

{On a personal note, I just received confirmation that my bullion order from the first day of the big selloff will not be shipped until the week of October 17th. This from a reputable dealer I have purchased from for several years. I paid in full for the metal and was told it was in stock when I bought and now I am back on a waiting list it seems. This appears very similar to 2008 when I had to wait several weeks to get any order filled and could not find a dealer anywhere that had gold or silver in stock for immediate shipment.}

 Indeed vendors are back ordered and the supplies have been coming from ETF inventories, at best this will only delay the demand curve. That metal still must be purchased and that buying pressure cannot be offset from a flood of paper promises that are unbacked by real metal.

The big question to resolve is what happened to the CB buyers? Why are China, Russia standing back to allow for this smackdown?

Assume they were covertly contacted and advised that a major intervention was coming and that they wisely will stand down and wait for lower price levels to begin buying again.  But is there any extra supply coming to market from this intervention?

 It is almost entirely paper contracts dumped at opportune windows of low market volume to trigger price collapse. Add in the collective buying pressure from smaller bullion retailers and and bigger buys from CBs. The spot market should be recovering sharply on physical demand but so far it has not happened. How much extra metal will be around for large scale buying when the CBs get back into the market? Where is it going to come from? And what advantage is there to allow the price to be smashed if the resumption of buying just runs the price right back up again in short order?

Do not think China, Russia, and others have any love for western nations that are in duress. Do not think they wish to support corrupt bullion banks and help them unwind manipulative derivative positions in the metals. What promises could have been made to get these nations on board for this planned meltdown? When will they return to the markets and start buying?

There is one other unknown in all of this. It was reported that Carlos Slim sold silver hedges for tens of millions of ounces at around the $25 level last year. I have not seen much commentary on this lately, but if the counterparty for that hedging was JPM? And as the bullion is delivered against those hedges, would this not amount to a war chest of strategic bullion that could be dumped as a massive order of physical silver to collapse the market and then allow for the paper contracts to be closed out as spec longs sell into this down wave? This could account for some of the unknowns  listed above. It would also neatly answer why the floor for this correction came in just above the $25 price range.

At this point remain focused on the long term, and remain committed to buying the dips as they are presented.

Discount the bubble nonsense, be not overly concerned that the long term top is already in.

Perhaps we have many years of decline ahead. It is a possibility but all of the evidence suggests otherwise. Bullion inventory is approaching a critical low and mine supply has not been able to keep up. Even as hedging contracts are delivered to private counter parties, that bullion is removed from the market and buyers must compete that much harder for the remaining mine supply. At some point that aggressive buying must translate into higher prices, and if prices are contained through the issuance of fraudulent paper contracts, then eventually a delivery failure must occur. There is no way out of this shortage as long as the demand for bullion runs higher than mine supply. And all of the evidence supports this conclusion. 

 Wait patiently and continue buying.


Sat, 10/01/2011 - 14:54 | 1729263 Confused
Confused's picture

Thanks for taking the time. 

Sat, 10/01/2011 - 15:10 | 1729293 Pegasus Muse
Pegasus Muse's picture

Excellent comments from le propriétaire. 

Some more color on the state of the retail physical markets, PM technical analysis, and review of the latest COT Report check out the Weekly Metals Wrap at KingWorldNews:  http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/10/1_KWN_Weekly_Metals_Wrap.html

And for some good insights from a guy with four decades experience in the Precious Metals & Miners listen to John Hathaway:  http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/10/1_John_Hathaway.html

He talks about a group of companies will likely be the high dividend paying “utilities” of the future.


Sat, 10/01/2011 - 15:22 | 1729321 mjk0259
mjk0259's picture

Maybe the vendors are betting it will go down and delaying shipment to increase their profits

Sat, 10/01/2011 - 15:23 | 1729324 austin0388
austin0388's picture

Some good comments, DavidPierre, but your statement "* only a small segment of the overall market participation is interested in the PM sector, and these investors are demoralized and sentiment has been decimated" should DEFINITLY be in the Bullish knowns list.

Sat, 10/01/2011 - 15:28 | 1729335 Motley Fool
Motley Fool's picture

" the existence of a hostile Cartel that is well-funded and taking deliberate action to suppress both metals"

I would argue that this is long term bullish as well.

Sat, 10/01/2011 - 16:40 | 1729463 nope-1004
nope-1004's picture

" the existence of a hostile Cartel that is well-funded and taking deliberate action to suppress both metals"

This statement, while true, is a direct cause of your other two points, being demoralization and less investment in PM's.  Whether it is bearish or bullish, I think it is the only statement that is true, because the other two are a RESULT of the first.  They aren't independent 'bearish' statements without #1 being the cause.


Sat, 10/01/2011 - 17:46 | 1729613 Bendromeda Strain
Bendromeda Strain's picture

Eric King's weekly wrap w/ CMI shows that physical buyers are far from demoralized and are actually active to beat the anticipated premium increases. Paper specs demoralized? So sorry.

Sat, 10/01/2011 - 19:03 | 1729788 Smiddywesson
Smiddywesson's picture

DavidPierre touched on a point I would like to, once again, emphasize.  

I have to laugh at all the people who continue to say Russia will do this, or China will do that, or Germany will do xyz.  The only reason they have been able to ride this leperous three legged dehydrated donkey so far across the blasted financial wasteland that has existed since BearSterns and Leahman is because ALL the central banks are on the same sheet of music.  China obviously doesn't like getting hosed.  They are angry and they are opening their own exchanges and playing the propaganda game, but they HAVE to be playing along with the kick the can game or gold would have spiked.  Any major player could bring this charade to an end by panicked buying or just issuing alarming statements.  And yet, they haven't.

We are going to continue to kick the can and suppress gold and silver prices as long as we can.  No matter how much we have to reluctantly print, no matter how much financial destruction we create, kicking the can is the Prime Directive.  That much is clear.  It is also clear that when the end nears, all of the major gold vendors will seize up and delay delivering product.  During this delay, they will assess how much richer they are becoming.  If that is an exponential climb, they will shutter their windows and will not deliver.  Anyone who hasn't acquired a good portion of the PMs they require to protect their wealth is playing with fire.  You can't time this collapse.  It can come tonight or two years from now.   

Sun, 10/02/2011 - 07:39 | 1730480 prole
prole's picture

or a hundred and two years from now...

Sun, 10/02/2011 - 11:21 | 1730750 Smiddywesson
Smiddywesson's picture

The system is too unstable to last more than a handful of years.  There is a point at which the central banks deem they have enough gold vs. the destruction of their wealth via outstanding loans being paid back in debased currencies.  They are losing money on kicking the can and debasing the currency being paid to them.  They are  making money on the gold they are acquiring (assuming they will ramp the price of gold in the future) plus paying off their own debts in debased currency.  At some point, they will pass over the line into solvency and halt what they are doing and announce a gold referrenced system.  Until then, they will keep buying gold while trying to convince you it is very risky and and a bad investment. 

Sat, 10/01/2011 - 14:30 | 1729221 macholatte
macholatte's picture

If you delete the speculative interest in a commodity and look only at its value in terms of USD that have inflated (maybe this is not possible) then you get the real current value of that commodity net of supply/demand. In Other words, is the base value of gold relative to the currently inflated USD really around $1600 or $600? Or is the Big Mac really the best indicator of current value?

the Big Mac index


Sat, 10/01/2011 - 16:04 | 1729404 Central Bankster
Central Bankster's picture


The measurement of GDP is hard to quantify in "real" terms.   This leads to problems in using it as a baseline for value of money.  In addition to this problem, we are not factoring for the future drag on real GDP from the curent unsustainable debts.  IE, is the economy as we measure it, sustainable?



Sat, 10/01/2011 - 14:33 | 1729226 GeneMarchbanks
GeneMarchbanks's picture

You cannot stop this gold bull.

Sat, 10/01/2011 - 18:06 | 1729660 midtowng
midtowng's picture

When you hike margins (2 or 3 times) you chase out the weak speculators. Unless they drop margins (unlikely) future margin hikes won't have much effect.

I'm feeling a little bit smart for a change. I took profits on my gold holdings 2-3 weeks ago, and just started buying more gold and gold stocks on Friday. Hope I guessed something near the bottom.

Sat, 10/01/2011 - 18:29 | 1729720 Melin
Melin's picture

good job.  I did just about the opposite.  Went dbl lng gold and silver about 3 weeks ago.  I dont' sell the physical and I haven't sold the etfs.  just blade runnin' downward and crossing my fingers.  Pretty dopey prolly.  

Sun, 10/02/2011 - 06:40 | 1730455 7bit
7bit's picture

You should have looked at a chart before you bought. In order to make profits you are supposed to buy low and sell high, not the other way around.

Sun, 10/02/2011 - 07:10 | 1730468 mayhem_korner
mayhem_korner's picture


I'm feeling a little bit smart for a change.

Based on what you're doing, I'd say that's "transitory."  You're still viewing PMs as a trading asset, not a wealth store.  If you view gold as a store of wealth, you would not be worrying about a "bottom" and would not be buying and selling paper. 

Not sure you are in the same stadium with most PM holders here.

Sat, 10/01/2011 - 14:34 | 1729229 MFL8240
MFL8240's picture

Exactly as the criminals planned it.  Great job Ben.  At least you suceeded at something.

Sat, 10/01/2011 - 14:40 | 1729238 Motley Fool
Motley Fool's picture

That is perplexing, but it is only paper.

Sat, 10/01/2011 - 14:42 | 1729241 DosZap
DosZap's picture

For those here in Denial.......................on paying taxes on PM sales.

Rules for Brokers and Other Taxpayers
  • In Publication 544, "Sales and Other Dispositions of Assets," the IRS states that gold is a capital asset when held by a taxpayer. Any gain or loss that the individual sustains when he sells the gold is regarded as a capital gain or loss. Taxpayers are required to report these transactions on Form 1099, where gains are reported as ordinary income. Taxes are paid to the federal government based on how long the gold was held, the initial price when the gold coins were bought and the sale price when the gold was sold. At the same time, brokers who sell gold coins are not required to report the sales to the federal government when fewer than 25 gold coins are sold in a single transaction. But, of course, coin dealers have been expected to report the amount they made from the sale as ordinary business income. The exact wording of the broker regulations is contained in the sales of precious metals section of the IRS Form 1099-B instructions.

Read more: What Are IRS Reporting Rules About Sale of Gold Coins? | eHow.com http://www.ehow.com/list_6980367_irs-rules-sale-gold-coins_.html#ixzz1ZYY5rDCj

Sat, 10/01/2011 - 14:46 | 1729247 Fips_OnTheSpot
Fips_OnTheSpot's picture

Sweet - in Germany it's tax-free for gold. For silver it's 7% VAT (coins, 19% on bullion) *at buying*.

And that's it.

Sat, 10/01/2011 - 18:58 | 1729776 Ahmeexnal
Ahmeexnal's picture

When TSHTF, people who were smart enough to keep their wealth in gold/silver instead of fiat euro-kaiser-konfetti in Germany will be asked to please board a train and only pack a couple suitcases with them.
That's how the german power elite confiscated gold last time around.

Sat, 10/01/2011 - 15:00 | 1729271 Motley Fool
Motley Fool's picture

Simple workaround. Buy and don't sell. At least untill the US government breaks down. Shouldn't be too long now. :P

Sat, 10/01/2011 - 15:07 | 1729289 Long-John-Silver
Long-John-Silver's picture

or have an unfortunate boating accident and lose all your Gold and Silver when it sank.

Sat, 10/01/2011 - 15:10 | 1729291 Fips_OnTheSpot
Fips_OnTheSpot's picture

How so? I buy physical OTC (read: anonymous) I fail to see any sinking there.

Sat, 10/01/2011 - 15:58 | 1729395 DosZap
DosZap's picture


I buy OTC occasionally  also, and unless your buying only one or two ounces, your going to fill out paperwork for $10k's worth.

Name,addy,and SS#.

Sat, 10/01/2011 - 16:10 | 1729418 Motley Fool
Motley Fool's picture

yeah well. buy 9k worth. walk out the door, walk back in, reintroduce yourself. wash,rinse, repeat. :P

Sat, 10/01/2011 - 17:31 | 1729570 DosZap
DosZap's picture


Sorry No Workee that way.....................

They have a little rule called STACKING.

Doing as you suggest would likely/could likely cost you alll you own, and a stretch in the big house.

Sat, 10/01/2011 - 17:57 | 1729632 Motley Fool
Motley Fool's picture

Well. Fuck em. How would that work anyway?

I suppose if one has to one could buy from multiple dealers?

Sat, 10/01/2011 - 18:48 | 1729758 WmMcK
WmMcK's picture

Physical PM's only. Buy with FRN's (<10 K/). No name/SSN.
Make a list of every coin dealer in ~50 mile radius.
OK so far -- let's minimize the FUD.

Sun, 10/02/2011 - 08:56 | 1730550 darteaus
darteaus's picture

I've never had to produce ID.

-- John Smith

Sun, 10/02/2011 - 08:54 | 1730548 darteaus
darteaus's picture

Don't you have family? Stack them at the counter with your money.

Do NOT follow this link or you will be banned from the site!