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   Strategies & Market TrendsThe Ego Forum

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To: hubris33 who wrote (11592)12/20/2012 4:49:25 PM
From: ames
2 Recommendations   of 12175
Speaking of "games' and "the system," here's jesse's late add w/ his hypothesis re the smackdown-as-
end-of-year phenomenon:

<< Gold and Silver Smackdown: Same Time Last Year

The takedown in gold and silver is fairly obvious, so much so that all but a career bureaucrat might have trouble not noticing it.

So how does one explain it away.

Who is selling this time? Soros? Paulson? And for what reason? Liquidation, redemptions, profit taking, tax selling?

Tax selling is fruitless unless you see a big change in the position coming anyway and are going to sell in the short term, because you sell and then have to buy back in.

Its possible to do it for pure capital gains considerations, but you have to be able to time/set the market price to suit yourself to allow a buy back in without losing on the price. Or you could shift assets from one market to another more adeptly without incurring the wash rule, that is, derivatives and stocks, playing the same fundamental direction if the regulators are asleep at the switch and don't have a look across your positions.

I have been hit several times in the past three weeks by people who claim to have talked to a insider friend who heard from 'high level money managers' in NYC, London, or Tel Aviv, that say that Paulson is facing redemptions and is selling off his GLD position. Everyhone wants to be 'in the know.'

Well, I should like to think that these fellows are not cretins, just dumping positions carefully timed in ways to maximize the downside price movements. Unless of course it is purposeful, which there is almost no doubt in my mind that this is. There could be a squeeze on, and front running of forced sales, but the timing makes this a little problematic in my mind.

More likely this is the same thing which we saw last year. The bottom two charts are for gold and silver from last year.

There are any number of ways to explain this.

The one which I favor is that if a certain party is carrying a enormous, and losing, short position, one of the ways to manage the end of year mark to market would be to smack the price down as much as possible, and cover at least part of the short position going into year end, ending around Dec 26 or 27 given the "Buy to Close" rules.

This also provides a method of gaming that long term short position. Not only do you get to mark it at a lower price, but you can 'trade around it,' picking up metal on the cheap as weaker longers capitulate and toss it at the bottom. And the momentum wise guys get in on the action, the trading desks start spreading their rumours and deploy their useful idiots, and we have a major price bottom in the making.

For this and some other reasons, I think we see the usual rally in January, as the market starts to correct back to something roughly reflecting physical reality.

The complicating factor is that this time we have the 'fiscal cliff' to consider, and the potential for a liquidation event. That is a littler harder to play.

But Jesse, wouldn't other players in the market see this obvious manipulation and buy against the artificial price declines?

Yes in a theoretical model of independent players in an efficient market with transparent information and the rule of law this would happen. And how many moons orbit your planet, if you think this is reality given all that we have seen in the past five years? How many scandals do you have to forget before you 'get it.' The financial system is broken and corrupted.

As for now, there may be more downside, but most of it is over. Currency manipulation tends to overshoot to the downside. And this looks like a manipulation given the way in which all the usual correlations were pitched and the downward movements were played. Look at the price movements from December last year for another example.

And I suspect we will be seeing the same thing next December, if the 'big shorts' in the metals are still on and being held by two or three of the big banks. As I recall HSBC is one of the big shorts. They could not possibly be involved in anything dodgy, with the officials turning a bling eye, could they?

So as always, the message is one of reform. Until there is justice and transparency and the rule of law, you may as well get used to this sort of thing, affecting an increasing portion of your daily lives. Not just precious metals, but the price of gasoline, electricity, natural gas, food, water, other staples, and your children's education.

And they will use their media to turn your anger against... regulation and the rule of law.

This is not the abuse of 'big government' but the partnership of the monied interests and a corrupted government that is also known as corporatism, or deep capture. And where their interests align, the people should beware. They are becoming ever more open in their actions. And if you wake up and object they say, 'So what? How are you going to stop us?' It is an audacious oligarchy.

There will be no sustainable recovery until the financial system is reformed and the grip of big money on the politicians and bureaucrats is removed.
"It is the neo-liberal idea that has given us deregulation and de-supervision; that has given us the notion that markets can function on their own without breaking down or blowing up..

This is the great illusion of the last generation, and it fostered a form of economic growth that was intrinsically unstable and unsustainable. Why?...

To put it in simple terms, it was based upon financial fraud, on the most massive wave of financial fraud that the world has ever seen."

Jamie Galbraith, Berlin, 6 Dec 2012

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To: hubris33 who wrote (11586)12/20/2012 7:50:34 PM
From: hubris33
   of 12175
COT volume up 25,000 per today's preliminary numbers, that on a drop of POG of 21.80. Front month had bulk of action rising 32K - suggesting traders were driving the action. April volume down 76% (-9K). June volume essentially flat.

So we'll see what happens with Open Interest when numbers come out tomorrow

I see TOCOM added 2K of OI to 152K today....

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From: ames12/20/2012 10:37:09 PM
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FWIW Dept: gold bouncing around in the overnights, incuding swoon back into the 30s. But Businessweek pumping gold in re to CU, and miners in re to gold. Sentiment is trying to sit up in its coffin:

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To: ames who wrote (11596)12/21/2012 2:09:47 AM
From: hubris33
   of 12175
Hmmm, second attempt at that 1630 level and it didn't hold. Will be interesting to see where Asia finally draw a line in the sand and holds form with its buying.

If I were a betting man here, I'd be look for a spot to sell some OOT Money puts of a few of the PMs.....AEM, SLW, RGLD, ANV. Maybe not just now, but soon.

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To: hubris33 who wrote (11595)12/21/2012 10:19:21 AM
From: hubris33
   of 12175
COT Data is out....................... ..................... ...................

Well COT didn't go 3 for 3. On a drop in POG of 21.80, OA OI dropped -7242 to 430,442. While POG hit a new low, OI remained above its recent low of 427K (7-Dec).

Only significant place where COT dropped was in the front month contract, Feb, dropping - 9226 of OI as Traders headed for the exits in droves. That obviously was offset by adding 1984 of OI in other contracts. In fact, the Apr contract was able to maintain its streak of session with day-to-day adds in OI - now at 24 trading sessions. Yesterday's big winner was the Aug13 contract adding 1177 of OI.

So is this divergence? If it is, what does divergence mean for us?

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To: hubris33 who wrote (11593)12/21/2012 11:37:32 PM
From: Amark$p
2 Recommendations   of 12175
Those are great charts...

Especially the bottom one.

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To: hubris33 who wrote (11593)12/22/2012 7:25:33 PM
From: JimisJim
   of 12175
Thx... great charts... maybe I'll finally have time to finish my miners' homework over the holidays... thx again for all the info you've posted and sent my way.

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From: hubris3312/24/2012 11:02:23 AM
   of 12175
Here's to a Merry Christmas to all who might wander into TEF! Hope the season finds you happy and healthy!

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From: hubris3312/26/2012 11:27:40 PM
1 Recommendation   of 12175
COT an interesting study.... ......................... .................

Well last week we were all excited about the positive divergence shown by COT's Open Interest (OI) versus a declining POG. We posted a chart here:

Message 28619131

Unfortunately Friday before the holidays wasn't friendly to our theory. OI dropped 5,192 as POG recovered a bit (+14.20) from its Thursday smack down of -21.80. So Friday we hit a new short-term low of 425K OI.

Christmas Eve we added a bit to the OI, but not enough to "cancel out" our two-day OI drop. Looks like that positive divergence is trashed or in serious trouble here.

So we watch & wait. Obviously if we are going to get a run up in the paper POG, we need OI to expand to support such a rise. Now I'd like to see 430K to start things, but a break above 440K looks like it is what is needed for a strong up move.

So what happens the rest of this week? Is every one on vacation or are Funds still squaring books for the EoY? Is the fiscal cliff enough of a deal to send investors into Gold's hands?

Here's the chart, fwiw......

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From: hubris3312/27/2012 12:03:33 AM
   of 12175
What does this mean? ............... .......................

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