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

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mayhem_korner's picture



The ECB has risk standards?

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?  

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.

CIABS's picture

Don't feed the trolls.

trav7777's picture

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

GetZeeGold's picture




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


Just keep the damn gold.




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.

zaphod's picture

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

AC_Doctor's picture

MillionDufusBoner, you ignorance is outstanding.

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

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

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.

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.

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.

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.

Reptil's picture

very lucid observation, thank you.

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.

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.

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.

Mongo's picture

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


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 ?


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. 

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.

Sudden Debt's picture

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

BidnessMan's picture

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

Silver Pullet's picture

Or MILF approved at least...

jimijon's picture

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

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.

Schmuck Raker's picture

+1 Butchness bitchez

+10 With chaps

Attitude_Check's picture

From weak hands to strong hands.

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......

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.


Zero Govt's picture

there is a short circuit to the Monopolist Matrix:

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

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..)


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???

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

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.

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.

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?

Sweet Chicken's picture

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


Physical bitchezzz

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.