Stocks Up, Bonds Up, USD Up, Precious Metals Monkey-Hammered

Tyler Durden's picture

From the moment China opened last night, precious metals were under pressure; this accelerated during the middle of the European day, recovered modestly into the US open (on crappy data and implicitly no taper) and then slid lower for the rest of the day ending at its lows (gold -4.3%, silver -5.6%). Stocks were loving it - but again we saw the opening spike in homebuilders sold all day and Staples and Utilities outperforming (not really risk-on?). Treasuries never looked back and rallied all day (belly -7bps) to leave rates practically unchanged on the week (while S&P is up 20 points). The USD is up 0.7% on the week having rallied all day today - led by EUR weakness (and notably AUDJPY once again recoupled with stocks this afternoon). Credit modestly underperformed but rallied technically (more below) as the cash S&P 500 regained the all-important 1,600 level but Trannies rolled over into the close (and stocks remain down around 3% from FOMC levels). Oh, and AAPL <$400

Gold and Silver were monkey-hammered...


and on an intrday basis the pain began as China opened...


Stock indices continue to rise...


but the sector shift is notable for its seeming lack of real risk-on exuberance...


Treasuries were bid all day - especially as the crappy GDP print hit...


For some sense of how 'cheap' Treasuries have become relative to stocks, we dust off an old model... simply put (despite the appearance of convergence in levels) this shift in bonds leaves them around 8-sigma cheap to stocks if the taper is off...


VIX tracked stocks tick for tick all day and filled the gap back to 6/19 levels.


Intraday, the S&P futures followed a similar pattern into the close with low volume ramps and heavier volume dips to VWAP after the cash close...


Charts: Bloomberg and Capital Context

Bonus Chart: Just WTF is going on here?

Bonus Bonus Chart: Oil is its most expensive in 5 years on a 'real' gold-adjusted basis...


Bonus Credit Discussion (for 10,000 extra credits):

As we noted yesterday, credit indexes rallied again today but it seems very clear that the reason is the same as yesterday. The knee-jerk move in HY CDX especially reflects more index-arbitrage. We also hear increasing chatter of funds removing the macro overlay hedges that they grabbed en masse (driving the skew - 2nd and 4th pane below - between the index and its underlying value to extremes) and are both selling down individual holdings (as we saw here in the cash markets) or being more selective on hedges in individual names.


In english (we are explaining this as it is important and little discussed in mainstream media) - credit bond managers were worried but didn't want to sell as they knew the avalanche is cash bonds would happen; so they grabbed the most liquid protection they could (ETFs and credit derivative indices); this left credit indices massively cheap to their underlying value (NAV discount/premium in ETF and skews in CDS land); as the pain continues, they are unwinding the hedges now and reducing underlying exposure... which means the modest rally in credit indices is misleading in its positivity since it merely gets the index back to its fair value.

With skews now more normalized, the next leg one way or the other is important.

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Debtonation's picture

I don't have anymore patience, collapse already.

Supernova Born's picture

Only increasing perversity can hold my interest.

I have yet to be disappointed.

Clueless Economist's picture

Wish I could buy silver at anywhere near the $18.50 spot price.

rolls of silver quarters are still going for a 25% premium on eBay

BLOTTO's picture

Patience is bitter...


But its fruit is sweet.

AllThatGlitters's picture

The bigger moves in gold and silver happen at night when markets are more thin.

Watch live spot for the next pummeling:

Live Gold:
Live Silver:

Then again...  Perhaps it suddently ramps higher overnight, as the Bullion Banks yell "Psych!"

unwashedmass's picture

you have to be impressed with JPM and Bernanke....and how far they are willing to take this in terms of the staggering visibility of the manipulation in order to save JPM's butt. 

JPM musta dug one deep deep hole. 

Jack Napier's picture

I'm impressed with the fact that they are willing to undermine their entire method of price control for one last cheap discount just so they can snatch up all the physical. Make no mistake, they are going long as we speak. Last chance to get on this train.

U4 eee aaa's picture

oh thank you. That was very profound. I'll be carrying that one around for a long time

One World Mafia's picture

Few years ago when i bought silver in the $17 range, I paid in the $18 range at apmex.  Now I'd pay 3.99 premium.

Go Tribe's picture but wait until it crashes. We have a wave of deflation coming.

Clueless Economist's picture

I feel sorry for all those first time gold buyer saps, who got in at $1700/$1800 levels.

The constant Gold commercials sickened me, and I knew the "newbies" would be slaughtered.  I think thousands are now really angry at PM's and gold bugs.

I like most ZH have been dollar cost averaging from the $500 level and see this as a sale on PM's




thelibcentury's picture

I'd get in at $1800 now! Hell, I'd get in at $5000.

Anything to dump these (long-term) worthless pieces of murder backed paper.

greatbeard's picture

>> I'd get in at $1800 now!

Call me, we can do business.

thelibcentury's picture

you're selling??! boy, a fool born every minute.

greatbeard's picture

>> you're selling??!

At $1,800?  Hell yeah, I'd sell a boat load. 

angel_of_joy's picture

Better remain clueless... and quiet !

Bay of Pigs's picture

Horseshit. Those who know the score are not "angry" at the PM's and goldbugs you dumbfuck. 

Angry at the banksters, pols and assclowns like Krugtard? Now you're getting warmer.

Being Free's picture

Well to the extent that the "popular" commercials may indicate turning points, I was encouraged at the pop-up add I just got on ZH...

"Don't get crushed by falling gold.  Click here to see why gold will fall to $750." (or something like that)

Jack Napier's picture


I should thank you for living up to your name. Honesty is the best policy.

Nobody's slaughtered until/unless they sell. When gold returns to money anybody who bought at any price will be very happy.

max2205's picture

Remember all those Chinese sheep lined up to buy gold a couple of weeks ago.....baaaah!

thelibcentury's picture

If you have to be a sheep, might as well be a sheep following a herd moving towards a warm barn with food, than off a cliff.


NotApplicable's picture

Not to mention a cultural memory of the limitations of a fiat currency.

Al Huxley's picture

Yeah, must have been all those 'cash 4 gold' adds that turned them on to gold. No wait, then they'd have been selling...  Maybe they finally got the Glen Beck commercials or G Gordon Liddy.  ORRR  maybe they just buy gold when it's cheap because they find its the best way to save in an economy where the banks are all starting to freeze up.  Maybe they're thinking (unlike the trusting souls in the West) that they don't want to get Cyprus'd by their banks.  Baaaahhh.

buzzsaw99's picture

yeah, all the poor peasants of the world are buying gold by the ton. chinese, indians, who can't afford a pot to piss in are buying it like crazy. [/sarc.]

only trolls said gold might go down so we went into lurk mode because nobody likes us. keep buying young skywalker.

Al Huxley's picture

This isn't 1975 - You know which tourists traveling around Europe are spending all the money (and paying cash)?  Chinese.  You know where all the software jobs from the US went?  India.  You think they don't have money?  Sure, lots of them don't but hundreds of millions do.  You can laugh at them for buying gold, but they're still going to do it, they don't give a fuck what the FED does, they buy when the price is good, because they keep it in the family.  It's not a big fucking secret, it just gets derided in the west by people who live and die by the idea that India and China are backwater 3rd world countries full of starving illiterate peasants, and western money managers buying and selling GLD shares constitute the gold market.

slaughterer's picture

The Chinese paper traders have not ben very bullish on PMs at all this year.  I would not expect any help from them in pushing the price up.  Thus I am not holding PMs overnight ever.

The discussion about credit and hedging above is really quite good and arrives at the same conclusion that I think the "bond gods" (Gundlach and Gross/El-Erian) have arrived at concerning the "next turn" being tbe crucial one.  I think these gods have resolved this question by simply establishing stops if yields start popping beyond their risk models.  The bond market is clearly still in a Fed-induced bubble, so caution is required.  The "resolution" will probably come only in Sept FOMC as Jackson Hole will be a dud.

The whole narrative of Bernanke caving in to the hawks earlier this year and discussing the taper scenarios last presser to please them is really very convincing: now that these same hawks are coming out with dovish statements, makes you see how unprepared these hawks were for the concrete consequences of their ideal policies.  It really is a Fed market at least until the end of the year, when I expect macro themes to return with a vengeance and cause a complete collapse.  

Jdog's picture

didn't the biggest chinese gold market shut down couple months ago because they had no gold to deliver?

Ness.'s picture

I thought the CME was located in Chicago, no?  Nevermind, they're still open.. for now.

Jack Napier's picture

HKMEX did shut down their metal exchanges recently due to lack of volume. Who cares what their paper traders are doing anyway? Physical demand is breaking records constantly. Paper is about to become defunkt. After that the underwater beachball goes sailing.

Hughing's picture

The collapse will kill the hawks. Then, a paper backed socialism with no options but to  print print print.....

johngaltfla's picture

90 days. You'll have your collapse. Or worse.

SemperFord's picture

And this is why I said Monday I will not short stocks, You hear me Ben?

Still rather lose that money on women and drinks!

Rainman's picture

Seeing a lot fewer gold selling commercials on the teevee these days.  Pimp blood in the streets means strong buy.

I Am Not a Copper Top's picture

Just got off the phone with my coin dealer, after finally getting through after a 15 minute wait.  Could hear the phones ringing off the hook in the background.  Pretty sure no one was selling.  California Numismatic Investments, in case you were wondering...


EDIT:  Shit just realized that piece of information may allow the NSA to zero me.  But I made the call from work, so maybe...Nah I'm fucked

SemperFord's picture

APMEX is stocked and have great customer service.

StacksOnStacks's picture

They sent me a tube once full of Silver but labeled it as Gold... Think I can get away with it?   

Frank N. Beans's picture

a tube full of gold and sold as silver would have been better :)

just bought some PMs meself at the LCS, they had plenty of oro and silver for purchase, though they said they had more buyers than sellers.  reasonable premiums.

A. Magnus's picture

If they don't get you for that. they'll just make up something and blackmail a few of your acquaintances into stabbing you in the back...because they LOVE to serve the public...

The Shootist's picture

Silver be crazy. That is all.

disabledvet's picture

this is the crazy round trip. the Hunt Brothers rode that thing up to fifty bucks...still the all time 34 years ago! "how low can gold go" does strike me as a good question. since the bulk of all this gold is trapped inside well massive amounts of cash they don't want to lend i really am truly fascinated that this "quantitative easing thingy" is working the way it is. the old saying that "if something is too good to be true that's because it is" sure seems applicable. and yet as the uber bull i've missed out on this run. i've got a veritable Tolstoy length novel of equities worth buying right now but strangely i still feel like lightening the load to zero right now. GDP is slowing, mines are closing, employment has never moved in a statistically significant way...i think real the real estate bubble just burst...i think China itself has just burst. "that's a lot of product capacity" that last one. i gotta say it's very tempting to revisit this wild man from the 80's actually: "the other Hunt brother" as they say. "the King of the Zero Coupon Bond."

EclecticParrot's picture

Had a song from the mid- Eighties going through my head nonstop today.  It may bit a bit of a stretch, but could one assume this was because of our wonderful global finance leaders?  :


You’re trying to fool somebody

but you end up fooling yourself

You’re reading from the Book of the Dead

but you don’t know what it’s about

I’ve listened to you, now maybe you’ll listen to me

You’re trying much too hard 

to make your world seem like a dream


(*Felt, ‘Sunlight Bathed the Golden Glow’, 12” version)

Cathartes Aura's picture

whoa, flashback.

well done, though he mostly wrote about himself,  Lawrence certainly fits the sign o' the times. . .

EclecticParrot's picture

Bravo, you're a gentleman and a scholar.  Had a feeling I'd find at least a few cool Felt fans on ZH.   Then, you think "well, nobody but me has any Television Personalities, Edson, Lucksmiths, #poundsign#, Field Mice, Legendary Jim Ruiz Group, East River Pipe or Scud Mountain Boys", but in fact they're probably out there as much as those cranking Satie's Gnossiennes tonight.  Big, big world we live in.

Oh regional Indian's picture

Actually, as it turns out, She's a laydehhhh... ;-)

Cathartes Aura's picture

thanks, female here, but I lived in London those days, and knew him via an extended circle that included Cocteau Twins / Liz Frazer / Creation Records & co., and many various others. . .pretty notorius for being "moody" and stubborn, but hell, that's what makes good art. . . that he professed obvious respect for Tom Verlaine's Television (plenty of "personalities" there, heh) was enough for me to like him.

if you know Television, you'll hear the, shall we say, homage.

so many great guitar bands from then, here's one that pops into mind:  Ride Dreams Burn Down


edit: obviously spent too much time listening to music prior to posting, I've been outed already, heh.


bonzo112358's picture

End of the month/first half of the year window dressing.  No money manager wants to send out a letter saying that they lost money after the first half of the year was so good to the bulls.  Let them ramp it up for a few more days. 

angel_of_joy's picture

Yahoo news headline

Gold Is Unsafe at Any Price: Dicker

That's the spirit... and by the way, what a perfect name for such a job.

IridiumRebel's picture

Alternate headline:
Attn. Plebes, Gold wants to kill you.