Is Gold Suffering Under ECB Margin Calls?

Tyler Durden's picture


Last night we noted the very concerning rise in margin calls for European banks thanks to collateral degradation at the ECB. This story has become very popular as traders try to figure out which assets were deteriorating rapidly and which banks face immediate cash calls. One thing that came to mind for us was - what about Gold? Coincidentally or not, the last time we saw a big surge in collateral margin calls by the ECB (in September of last year), not only did Gold lease rates explode (implode) but Gold prices fell off a cliff as the squeeze came on from gold liquidity providers pushing prices down to exacerbate the negative lease rates on the gold collateral. The point here is that as margin calls come in from the ECB, we wonder whether banks will be forced to liquidate their gold (last quality collateral standing) to meet the ECB's risk standards. The key will be to watch gold lease rates (as we explained here and here) and ECB Margin calls to see if Gold is merely suffering a short-term dip from USD strength derisking or if this is  a more broad based meeting of collateral desperation need that might have legs - only to be bought back later. MtM losses combined with collateral calls (as we noted earlier) was never a recipe for success and we will be watching closely.



Charts: Bloomberg

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 03/07/2012 - 18:10 | 2233781 mayhem_korner
mayhem_korner's picture



The ECB has risk standards?

Wed, 03/07/2012 - 18:42 | 2233864 MillionDollarBonus_
MillionDollarBonus_'s picture

It puzzles me that struggling countries like Italy and France sit on tons of useless gold in vaults while their economies suffer. Why don't they pledge it as collateral to the ECB in order to attain credit for further fiscal stimulus? If doomer chumps want to bid over a thousand dollars for this junk, then why not take advantage of their ignorance by pledging useless bars of shiny metal for millions in spendable credit?  

Wed, 03/07/2012 - 18:42 | 2233883 Sudden Debt
Sudden Debt's picture

Would you?
Imagine italy would need to go back to the Lire. They need gold to do so.
Gold is plan Z. You know, when everything fails like it's doing now.

Wed, 03/07/2012 - 21:07 | 2234363 CIABS
CIABS's picture

Don't feed the trolls.

Wed, 03/07/2012 - 23:50 | 2234668 trav7777
trav7777's picture

c'mon, without some trolling how much fun would teh interwebz be?

Thu, 03/08/2012 - 07:05 | 2235277 GetZeeGold
GetZeeGold's picture




Screw the trolls.......screw the margin calls.


Just keep the damn gold.




Thu, 03/08/2012 - 00:11 | 2234710 Abitdodgie
Abitdodgie's picture

MDB you say that gold is usless but then you want them to use it at a security for the ECB, you cannot fix stupid, as long as you don't have any thats all that matters.

Wed, 03/07/2012 - 21:37 | 2234430 zaphod
zaphod's picture

One of the best replies to this type of nonsense I've seen...

Wed, 03/07/2012 - 18:51 | 2233918 AC_Doctor
AC_Doctor's picture

MillionDufusBoner, you ignorance is outstanding.

Thu, 03/08/2012 - 00:53 | 2234835 economics1996
economics1996's picture

Feeding the troll.

Wed, 03/07/2012 - 18:53 | 2233929 Al Huxley
Al Huxley's picture

Why don't they just split from the union altogether, and take back control of the ability to print their own currency.  Then under Modern Monetary Theory (MMT) they'd just print their way to wealth.  Given that possibility you have to wonder why they ever joined the union in the first place.  The more I read about MMT, the more magical it seems /sarc

Wed, 03/07/2012 - 18:57 | 2233943 seek
seek's picture

Probably your most enlightening sarcasm yet, MDB.

I'm struggling with how to reward this, upvote because I like it ot downvote because you're probably looking to that number as your success indicator

Wed, 03/07/2012 - 18:59 | 2233951 eddiebe
eddiebe's picture

Two reasons come to mind. If they pledge the gold, they will lose it to the banksters printing, and two, they know full well that if they acknowledge gold publicly, they loose the power to print, which is a pretty lucrative endeavour.

Wed, 03/07/2012 - 20:02 | 2234175 DCon
DCon's picture

Is that you Warren?


Wed, 03/07/2012 - 21:29 | 2234403 chump666
chump666's picture

If the IMF/EU lead cartel, backstopped by an insane Italian via the ECB, purge/steal the PIIGS and other EZ gold reserves.  100% lock in an armed conflict/acts of terror within the EZ/EU.  No doubt there at all.

Greece gets pillaged again by 'other' European entities and it's assets (gold) is ripped off by the IMF.  Don't holiday in Greece unless you want to be kidnapped and used as collateral/ransom by various groups.  Europe is taking a turn back into it's dirty sh*tty past.

Wed, 03/21/2012 - 14:15 | 2277265 MeelionDollerBogus
MeelionDollerBogus's picture

I struggle with the idea of pledging useful things like gold or land as collateral. As long as useless bonds that won't ever be paid are accepted as collateral just make more of those & send 'em out the door.

Wed, 03/07/2012 - 18:40 | 2233871 Sudden Debt
Sudden Debt's picture

Gold has become the derivative from the paper gold where it used to be the other way around.
In that point of view, the paper woth 1/100 of the fiat it's traded in and can't be used as collateral in any way.
Next phase is that the bullion will set the price of the paper and will witness some form of delution which will cause the bullion price to skyrocket and the paper to implode.
The price of paper is also so manipulated that they keep printing more contracts Pushing the price of the contracts zimbabwe style.

Same for silver where the paper now trades at 269 to 1. Thats about a year production per day that's sold and printed into existence. So the price for silver should mathematical be between 8600$ and 32$, give or take 4000$ at this moment and not including the future QE's that will delute the dollar much more.

Wed, 03/07/2012 - 19:28 | 2234045 Reptil
Reptil's picture

very lucid observation, thank you.

Wed, 03/07/2012 - 21:54 | 2234456 Manthong
Manthong's picture

There is a peak silver argument that holds water and considering the consumption and irreplaceability of silver in certain industrial applications, an argument can be made that silver could ultimately be priced at a higher value than gold in whatever trade units eventually supplant the FRN.

Wed, 03/07/2012 - 23:52 | 2234673 trav7777
trav7777's picture

eh...demand will get crushed at prices like that.  Soon as silver peaks, it will do the same thing as gold.  Hell, it may already have happened and the 5x price rise since the bygone days of $6/oz may be in part due to that.

There simply haven't been enough dollars printed to justify this level of inflation.

Thu, 03/08/2012 - 00:35 | 2234765 battlestargalactica
battlestargalactica's picture

But... But... this assclown says otherwise:

"...Based on history, a big move in silver prices is likely afoot. And given silver's 27.8% rise in price already this year, the lack of additional stimulus and steadily improving economic conditions in the United States, the most likely direction of that move is down."

To flog yourself with gold brick wrapped in a lemon, see more here:

SARC ON>: Volume! Don't we PM bugs get it?!? It's just about volume on COMEX and SLV. It's just about paper VOLUME. There are no other factors at play here... cuz... cuz... the ecomony is improving!

Wonder how many anti-PM assclowns you can fit in a Volkswagon these days... and still be able to push it off a cliff.

Wed, 03/07/2012 - 18:10 | 2233782 Mongo
Mongo's picture

The collapse will be like an orgasm because this has to stop...

Wed, 03/07/2012 - 18:22 | 2233819 SILVERGEDDON

The collapse will be like a nymphomaniac riding a vibrator plugged into 110 household volts - it ain't gonna stop until the house wiring shorts out and burns the whole fucking house down. Multiple orgasms of volatility ad infinitum bitchez ! Buy the fucking dips with flammable paper dog shit fiat, bonds, CDS's,  and stock certificates. Buy copper, lead, diesel, food, seed, land, and a future.

Or, burn in a paper hell of your own investing. Remember 2008 ? Market tanks over the antics of one insurance company. WTF do you think is gonna happen when more countries default, pushing all the fucking greedy banksters and their paper house over a cliff, on fire ?


Wed, 03/07/2012 - 18:35 | 2233854 chump666
chump666's picture

hahahahahaha.  " a nymphomaniac riding a vibrator plugged into 110 household volts - it ain't gonna stop until the house wiring shorts out and burns the whole fucking house down. Multiple orgasms of volatility ad infinitum bitchez !"

I love it. 

Wed, 03/07/2012 - 18:44 | 2233889 Manthong
Manthong's picture

Um.. maybe something a bit more industrial is warranted,,

and leave it up to an esteemed higher education institution to provide it.

Wed, 03/07/2012 - 18:51 | 2233920 Sudden Debt
Sudden Debt's picture

I wonder if it's ISO certified....

Wed, 03/07/2012 - 19:00 | 2233957 BidnessMan
BidnessMan's picture

Or MIL-STD 810F certified.  Learn so many interesting things on ZH.

Wed, 03/07/2012 - 19:10 | 2233991 Silver Pullet
Silver Pullet's picture

Or MILF approved at least...

Wed, 03/07/2012 - 19:15 | 2234009 jimijon
jimijon's picture

Ah yes my Almamater! They always had one or two great classes a year.

Wed, 03/07/2012 - 19:45 | 2234114 Tompooz
Tompooz's picture

Blythe riding. :-)

Wed, 03/07/2012 - 20:08 | 2234196 chump666
chump666's picture

Jung would look at as a nymphomaniac female being the destroyer of worlds or a throw back to Judea/Christian teaching that women are evil.

I love evil women.

Wed, 03/07/2012 - 20:24 | 2234262 Goldilocks
Goldilocks's picture

Electric Light Orchestra- Evil Woman (4:22)

Wed, 03/07/2012 - 20:35 | 2234292 chump666
chump666's picture

oh F*ck ELO!!! You legend!

Wed, 03/07/2012 - 23:50 | 2234670 TheFourthStooge-ing
TheFourthStooge-ing's picture

Spooky Tooth - Evil Woman


Wed, 03/07/2012 - 19:29 | 2234048 Schmuck Raker
Schmuck Raker's picture

+1 Butchness bitchez

+10 With chaps

Wed, 03/07/2012 - 18:10 | 2233783 Attitude_Check
Attitude_Check's picture

From weak hands to strong hands.

Wed, 03/07/2012 - 18:14 | 2233797 ReallySparky
ReallySparky's picture

Love that attitude.

Wed, 03/07/2012 - 18:13 | 2233791 jcaz
jcaz's picture

Just selling their winners to cover the calls.....  Prolly phoning Beth in the back office, trying to squeeze an extra day out of her......

Wed, 03/07/2012 - 18:14 | 2233796 redpill
redpill's picture

It's darkest before the dawn, and the sun hasn't even set yet.  Just wait until the screws really get turned to get the peasants to turn over the yellow stuff.


Wed, 03/07/2012 - 18:49 | 2233911 Zero Govt
Zero Govt's picture

there is a short circuit to the Monopolist Matrix:

Stop Paying Your Taxes (peasants, don't feed the suckers)

Thu, 03/08/2012 - 08:41 | 2235408 Mesquite
Mesquite's picture

Don't know best place to insert this...Guess here will do..

I note on the list of top ten gold holdings--Russia up, Germany down

    (over last year, or so..)


Wed, 03/07/2012 - 18:14 | 2233799 navy62802
navy62802's picture

Does it even matter for the longs? Short-term, this kind of analysis may be valuable, but for the long-term holders, this is just noise. We all know what's going to happen over the next 5-10 years ... central banks are going to print. Which means that the value of gold and silver will only increase. Any other questions???

Wed, 03/07/2012 - 18:16 | 2233803 Pladizow
Pladizow's picture


Wed, 03/07/2012 - 18:33 | 2233849 LowProfile
LowProfile's picture

Unless you have cash to buy more!

Wed, 03/07/2012 - 18:15 | 2233802 SeverinSlade
SeverinSlade's picture

I am sure turd and his technical analysis will completely ignore this and tell everyone that gold is on its way to 2000 and silver to 40 by tomorrow

Wed, 03/07/2012 - 18:18 | 2233809 tekhneek
tekhneek's picture

So stop reading it?

I know I never paid much attention to his chart drawings... nothing against the guy, I just thought it was a fool's errand drawing lines on a chart then screaming about manipulation in the same breath. Waste of time and energy in my opinion.

Stack stack stack, bitchez. There's your chart.

Thu, 03/08/2012 - 00:27 | 2234739 WonderDawg
WonderDawg's picture

Or, take your chances and wait a little while, see if the price does indeed drop (I think it will, but I've been adding a little to the stacks anyway, as I've been wrong before). Either way, PMs need to be a part of your plan, IMO.

Tekhneek, I know you're a dude but for the longest time thought you were a chick because of your avatar, and still read your posts as if they're coming from a female before catching myself. I know others have made the same mistake. Not telling you what to do with your avatar, just letting you know. Food for thought. Dude.

Wed, 03/07/2012 - 18:16 | 2233804 mayhem_korner
mayhem_korner's picture

MtM losses combined with collateral calls (as we noted earlier) was never a recipe for success


Had folks "jumping for joy" in 1929, no?

Wed, 03/07/2012 - 18:19 | 2233812 Sweet Chicken
Sweet Chicken's picture

This post only matters is you are dealing with GLD NOT if you own GOLD.


Physical bitchezzz

Wed, 03/07/2012 - 18:26 | 2233836 zorba THE GREEK
zorba THE GREEK's picture

Once gold has been moved from weak hands to strong hands, the price

will be allowed to rise. So I say " Bring it on. "  Do your thing manipulators, 

you are too big to stop, especially since you are backed by central banks.

Once you are done and most of the gold is in strong hands, gold will go to

levels that will surprise almost everyone because it will be the only real money

left standing.

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