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Market Snapshot: Gold & Silver Continue Slide As ES Drops 20pts From Highs
While Friday's dramatic skid lower in the precious metals was later blamed somewhat on a leaked margin hike (as well as the simultaneous and anti-empirical sell-off in 30Y), it seems the liquidations that were rumored (whether hedgie or central banker) are in play once again as both gold and silver (the latter very significantly!) are finding little support. After some early weakness (EUR strength), the China news we noted earlier and general lack of any actionable rescue plan or large-scale money-printing has markets in a decidedly risk-off mode for the last few hours as ES shifts into the red and very early credit runs show 2-3bps widening in the front-end of the European indices.
Its not only the precious metals but copper and oil are also dropping and the latest headline from Bloomberg is not helping:
*RUBBER IN TOKYO PLUMMETS 9.8% TO 308.8 YEN PER KILOGRAM
*CHINA'S SHANGHAI COMPOSITE INDEX FALLS 1.5%, EXTENDS DECLINE
UPDATE: Silver is now -16%!
Gold/Silver Ratio has smashed higher as Silver plummets (to Sep2010 highs) - is it too simple to see similar jarring patterns leading up to crises?
As Gold drops below $1600 for the first time since July and Silver is down a further 12% from Friday's close, it seems the relative under-performance of Gold and Silver suggest this is still liquidation (and margin-exaggerated). The dollar dipped out of the gate but has recovered and is back at last week's highs now with the EUR testing 1.34. Notably, JPY is rallying once again and while GBP is unch from Friday, JPY is stronger (vs USD) by around 0.5% as JPY crosses (carry pairs) all send a very risk-off signal.
TSYs are rallying modestly off the late Friday peaks in yields with 30Y -3bps as the whole curve flattens very slightly for now. Stocks are much more active than TSYs or FX for now having managed to get up to 1144.5 in early Sunday trading only to drop back into the red retracing 50% of the upswing from early Friday - hovering around Friday's closing VWAP level for now.
Charts: Bloomberg
Early credit index runs show modest 2-3bps decompression in CDS and in cash, we see flattening/inversion and higher yields across the board with IRE and ESP worst performers so far (though not all are open). PTE is 22bps wider vs Bunds in 2Y and 11bps wider in 10Y. UPDATE: XOver +16bps and Main +4bps - Senior FINLs +6bps
And finally, for some perspective, now all risk drivers are open we see ES pulling down towards its CONTEXT expected value:
Chart: Capital Context
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Same for me. Been waiting for a purchase confirmation for the last two hours. Nothing. Are the paper and physical markets finally diverging?
I say two things happen as quick as silver has dropped. Massive short covering and massive physical buying. If prices drop like this then there should lines out the door of every dealer with people desparite to sell their silver bars. That makes sense with a price collapse. We have the complete opposite.
I think for silver investers a further decline in price is better now than a rise at this point. Just as a fast sharp selloff is better than a slow bleed. Keep your eye on comex available supply. If they are not lying and demand your physical metal.
I need another Diet Coke... BTFD!
Coke - http://www.youtube.com/watch?v=IzxHDqUz8Sk&feature=related
Three reasons:
1. Operation Twist 2, like 1961's Operation Twist, is dollar supportive.
2. Friday's margin increase on gold
3. Some big hedge fund or country is liquidating gold for cash. Slovenia? Poland? France -- to bail out banks?
This should set up one big bounce once the smoke clears and the bloated body rises to the surface...
Right! An epic bounce I would wager!
I'm pretty much a "long-term" anti-PM bug...but I'm still not impressed.
IF gold goes under $1200 or so...and/or silver gets below $20...then I MIGHT start padding myself on the back...but still, even those prices are pretty damn high...
That said, silver is still considered, at least in large part, to be an "industrial" commodity, so I'm not surprised at all - given the global shit storm on the horizon...
Gold - I still don't "get it."
I can't understand why some people have such faith in gold ALWAYS being a good store of wealth when it has little or no inherent usefulness (besides looking pretty to SOME people) - other than as medium of exchange...
...which is to say that, for the most part, most people who buy/keep gold only do so because they, AT SOME POINT, plan to trade it/buy stuff with it...
So, in a sense, those people really don't want gold itself at all. Rather, they want something else with an actual usefulness...which they hope to "trade" the gold for in the future. It almost has a pseudo-fiat kind of nature to it...
Yeah, I know - it's the "you can't eat gold" argument...but I can't get past it...at least as a LONG-TERM thing...
Short-term - ANYTHING is possible.
hold onto your fiat then. The only thing better than gold is productive farm land--that is not going into anyone's safe deposit box though.
SPX Options
http://www.marketwatch.com/investing/index/spx/options
Nicely coordinated beatdown on the PM's. Well done, Ben. He was on the verge of losing control, so this is his answer. The ultimate bubble is now UST's. That will be the endgame. Enjoy this while it lasts Ben, your time for being relevant is closing fast.
That´s a very safe bubble. A stunning 70% of U.S. govt. debt is held by off-market and not for profit institutions.
This current cyclical run the dollar index may rocket to over 100.
Which is it, do you get your paychecks from the U.S. government or from a TBTF bank?
I have a feeling Prechter may hjave been right what are thsupports in the rising trned channels for the metals?
break those and ikts game over
Goddammit.
wild moves, $2 both way in last hour
I smell a stock market plunge in a few hours.
that's a given
Maybe not?
http://finance.yahoo.com/q?s=%5EGDAXI
going to bed now, lets see what happanes in next 7 hours, my prediction it stays @ $26-27!
At 29 at the moment, my guess they will make it stay below 30 for at least 2 days to scare the n00bs, and do it's job. Or maybe some ZH'ers will wake up in the morning to find out they purchased 500oz. in the middle of the night at 26.99 and they already made a few grand. Looks to be more of the latter.
I do not care and cannot comment on this thread. I have tried repeatedly to comment on the thread just above this about Here Comes FIATtackWatch: Ben "Big Brother" Bernanke Goes Watergate, Prepares To Eavesdrop On Everything Mentioning The Fed
Every single time I try to open this thread I get a blue screen and an "operation aborted."
But just from the headline I want to comment on a matter going on in my life now, I had a house, the bank got me not once but twice. I was screwed, and that happens, I was upset but not destructive about it, I see they sow destruction by screwing ordinary pople like me, I am content to let karma take it's course.
But, just when the bill came due on the first time homebuyer tax credit this year I filed an IRS form 5405 which by law showed I had no liability to repay because my house was taken in foreclosre, so the IRS instead went back to my 2008 tax filing when I got the credit and disallowed it to start with. Now I owe not only the original tax credit but interest and fees. No explanation for the finding. Just a bill to pay 8,259.95 to the IRS. Hey GOP, kick a little guy while he is down, sexy yes? Bad news for you is you will never collect.
In 2003 I saw all this coming. I actually saw it in the 90's but by 2003 I knew there was going to be a depression, we are in it, and it would be a class war unlike anything in human history, just when I was getting to old to fight it. I got my Irish/EU passport because my dad was from Ireland, and I saw the benefit of holding a passport from what has always been a neutral island nation. I understand that a lot of you think that Ireland is a basket case in your fiat world, but the reality is that the nation is better off than most of the world, and they will hoist a stout to you when the USA is dead and gone. And I will have a few cows on good green land near the lough Derg, while you live in caves guarding your little hoards of silver and gold, hunted because you refused to give them up.
Sometimes gold and smart charts are not enough. Sometimes you just need to be Irish.
Irelands debt to GDP is 1,382%
It holds the #1 place.
But I would still go there because the U.S. will have to bail out the entire European Continent (plus the islands). So Americans will get stuck with that bill too.
Is it just me or is it an interesting coincidence that the bottom of that fall was about $26.05...
i.e. surprisingly close to where the silver was once upon a time when the chief teleprompter has proudly announced qe2 ?
..or maybe it simply wasn't bottom yet..
Greetings from Poland for all ZHers!
[things here are pretty fu#*@$ up as well... as you know]
is anyone here sellimng or are you going to hold?
maybe prechter right and santa is way wrong?Deflation, not gold bitches?
Don't fear peeps. My highly successfult model says silver support at 25.50, next at 23.62, a rock solid foundation at $5, and bedrock at $1.50.
Below 0, rumor has it that JPM will pick up and dispose of your excess silver holdings for a modest fee.
Get a cow and a few ducks, metal will make you an enemy of the state, they will need it by presidential order and you will sell it at a huge loss or be a criminal for non compliance. Some chickens would be good too. Learn to fish.
Bad news is that with what is coming 300 million people are going to try to eat and live on land that can accommodate a third that number. And that is AT MOST! Truth is that 313,000,000 Americans will all want to just get through the next day and there will not be a government to help them. Break up ala Soviet Union. There is a Russia today, the world did not end, but, the nation is also a basket case mafia major cesspool of corruption that makes America look honest. It will never be a proud nation of intellectual pioneers again. And poverty, abuse, need, historic levels of disease and oligarchic punishment are the reward for throwing off communism. Better to be a communist than to be the slave of an oligarch that provided you no rights or even privileges.
I'll be damned, it's actually doing what I thought it will.
$30 silver and falling on the screen.
Gods.... If this thing accelerates into the morning I say to do nothing until hit bottom.
When it does, Kitco is going to go vertical. At that point start buying as fast as you can because a bounce in Silver can be viciously fast at ... 6 dollars in 10 minutes or more off a 23.00 or 26.00 low.
My call, your thoughts.
If it falls past 20 into the 15+ dollar range, I am going to fucking refi my home and take delivery via 18 wheeler.
No intention to sell the real stuff. Period.
US still has a $1.3 Trillion budget deficit. Strong dollar is going to smoke exports which aint going to help US revenues none. European GDP contraction is also going stuff US trade figures up.
US is bankrupt insolvent.
How are they going to continue to fund a compounding deficit?
They either crash the whole show into a million pieces now sending thousands of business to the wall, add another 15% to unemployment backward, trash all asset values, social break down and spend decades climbing out of the pit, OR the super duper Trillions print job at warp 9 hoping for another global war to come along at some time....OR gold standard.
The extreme pressure to do 'something' means they will have to print at some stage. And frankly if they do print it will be big, and commodities and PMs will leap up just as fast as they fell.
Agree. And when, not if, interest rates go way up all of the banks are SOL & so are all of the business's dependent on their lending.
plunge enforcement team bitches.
When the stock market crashed in '08, gold and silver declined for quite a while.
I think we are dealing with a group of people that nobody can really read. Its a dynasic order.
I'm not sure we are going to see that inflation like was expected. I think everything might tank by Tuesday.
The people who bought guns and food were probably the smart ones.
Sorry, I'm just depressed (no pun intended)
calling a bottom on silver here, good level. getitng in the AM
Same here, but it is bouncing back fiercely already. I wish USA markets were open now.
starting up the truck now... :-)
The dollar gaining this much strength this fast is giving Bennie Bernanke fits. He HATES deflation as do all big debtors and exporters coupled with ZIRP is a cascade disaster in the works. Besides all that, too many on the same side of the trade destabilizes the boat too much. Prepare for Ben's USD pure adrenalin injection into the aorta of his digital money printing machine to compensate the lilt of the ship. I suspect it will come under cover of the Euro crisis currently unfolding. His keypad is gonna shoot out virtual USD's with the ink still wet like a fire hose.
He has no choice. The U.S. cannot afford a too strong dollar but for very short periods. The Euro crisis comes at a most convenient time. This is all much too destabilizing.
I am, The Big Ching-aso
L0L!!!
LOL. Hell I don't know the future Slewie but I do know how the Bernanke Banky thinks. This deflation shit ain't one of his strong suits!
I am, The Big Ching-aso
Not a lil' Ching or a Cha Ching?
In case we forget where we are at...this is a good aid.
http://www.usdebtclock.org/
gold and silver started going parabolic in april / mai. No surprise they crash down just as fast. When the taxi driver tells you he just bought gold, you know it's time to sell.
Almost nobody I know bought gold or silver. In fact the only thing you ever here for a long time is that gold and silver are in a bubble. The sure sign it aint in a bubble but reflecting money printing and unknown risk.
HAHAHA
Gold and silver are recovering now, and WALL STREET FUTURES are GREEN!
What happened?
Fuck me.
Silver dropped 10% in 2 hours, and went RIGHT BACK UP in ANOTHER 2 hours.
And I didn't buy any (happened too fast).
BASTARDS !!
That is why you need to be on the firing line locked and loaded ready to buy/sell.
Metals are boring as hell with few minutes of frantic activity as a secretary does with the boss once in a while.
FUBM in full effect, window is closing rapidly.
You should wait to buy it until after the markets crash. It will probably go lower.
Run into the $$$$. Dump everything. 2008 again. No gold safe haven.
You mean 2008 with no ammunition in the musket. Check.
It´s the end of the quarter so adjustments are being made in portfolios.
Stocks have generally been losers this quarter, PM´s winners at least through August. So, they´ve been selling winners and keeping losers in the hope that the latter will recover. Is that typical or what?
About 30 more minutes then window is GONE DIDDLY ON.
Just bought some Maples. Wish I would've been paying attention earlier. I guess there is a good thing to working night shift.
Then the corruption is renewed once again.
Ok maybe only 10 minutes left.
And the EE comes back for round 2, ready with some fresh shorts. The crowd goes WILD!
bounced off support hard
Gold fell below the 200-day MA at 1550 and snapped back.
This is a fairly important technical event.
Gold has traded way above the 200-day MA since March, was almost $400 above it early this month.
John T. Sheeple was overheard saying 'Shit I haven't seen this much action since... since... 2008!' 'Well worth the price of admission to see 10% drop in 30 minutes combined with a 10% rise the next 30 minutes!'
I´m sure it´s not lost on short-sellers how fast these so called safe haven PM´s can drop.
Epic battle, looks like a draw at 30 for the night. This kind of volatility is ominous.
It certainly is.
I think the big elephant in the room that nobody wants to talk about is the huge number of Oct. put contracts against the SPX. Usually I think open interest is at 10-15,000 contracts or less, now it´s 900,000. Spooky.
I read that as well. I really hope this desperation doesn't lead to war.
Silver went to 26 on Monday, amazing! Exactly where it was predicted to land in this time in this March prediction chart(25-32USD corridor in H2 2011).:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&start=40#p31020
and gold went to 1550! fantastic: Again, exactly where it was expected to be in this April prediction ( which predicted also the bubble-well I expected it to be there in November) - down to 1500-1600 in November 2011.And I expected bubble and crash in October- it happened in September..
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&start=220#p32176
But future looks bright in the charts. Silver to 100 USD in Q2 2012.
Screen Cap of orders getting filled at that price or it didn't happen!
Congratulations!
You're my hero Ivars, you know that. Peace.
helluva call, Ivars.
This is too much to fast. I wonder what is going on in the physical market. Especially in Silver. That is what everyone should have their eyes on.
The big banks JPM know where the bottom is in the paper market. If they cover and go long they can clean out everyone. They will clean out the physical market as well. They will have enough money to litigate and screw over anyone bringing a case against them.
Remember. OJ got off on murder. I'm sure JPM has even better lawyers. Or maybe they just have the government .
It is too much too fast. I would buy with open arms if you have the cash.
smoke=fire - copper, rubber oil silver gold ... it is obvious that the free money spigot got turned off last week. The financial world is in chaos as the economies of the world are contracting (pie shrinking). Money is in flight trying to find safe haven. I will call it "The Slosh", because it is going to get very messy as this surge of money goes into US government bonds, then out again into other venues, as zero percent interest rates show. At some point the US Congress will insist that BennyB turn the spigots back on in order to "save the country". Until then we will free fall. Not sure at what point even tiurning the spigots back on will reverse the momo. AS of yet there is no real flight to safety to Gold and silver, it has been more of a play than a lifeboat...the US Bonds, if the interest rates start to rise then you will know that money if leaving to go elsewhere. Possibly back to Europe, where ever. Once interest rates (US bonds) start to rise then IMO there will be a whole sale dumping of US Bonds and a subsequent destruction of the US economy. Benny has his hands tied for now. His helo was taken away from him. That will not last long when interest rates start flying.
I am long silver. With gold:silver @ 55ish, today I flipped my last gold bars into kgs of silver. Smiling all day.
Bennie is keeping his powder dry for the European melt down, he will need to act like they did in 2008 when the Fed doled out $16+ T to keep the system afloat.
Bam has little to no chance of getting elected if oil is above $80, OPEC prices oil in ozs of gold, so the politicians are putting huge pressure on the Fed to deflate, and do it fast.
Long term trends have not changed, the Federal government is borrowing 40% of what it spends and it is unlikely this changes. These funds can only come from the Fed given the 30 year is under 3%. Bennie will rev the helicopter in spring, 2012 so the economy will be "improving" by fall 2012 in time for the election. 2013 will be the hangover, hope we make it that far.
There is no way Bennie let's deflation take hold, he is a student of the great depression of course. :-)
This is best case, who really knows.
sschu
Perspective:
Silver crushed down to Mar 2011 levels (as of 10am); Gold to 4th of July. How have the balance sheets of the western sovereigns fared since then?
Baseline fundamentals are unchanged. Maneuvering is all that's going on here. Stay the course.