Desperation Is a Tender Trap

It gets you every time. And desperation is what we are seeing in the paper precious metal "markets".

Today was just another example. No doubt you noticed the shockwave that was sent into the gold pit, beginning at 9:47 EDT today. In stages, a bullion bank (which one doesn't matter) dumped over 7,000 contracts in 10 minutes. The resultant decline was about $18. This brought a further wave of selling about 10 minutes later which clipped an additional $6 from price.

Now, don't go deluding yourself into thinking this was somehow legitimate selling. The only headline that occurred near the same time was extremely gold-positive. ( http://www.zerohedge.com/news/chicago-pmi-plunges-527-lowest-print-september-2009) No, this plan was coordinated and executed for one simple reason...to lessen a bank's short position. How does that work, you ask?

Let's say that the bank in question began the day with a net short position of 10,000 contracts. The bank takes a look at the order book and concludes that there are a multitude of sellstops in a certain area. If the bank can exert enough pressure (in this case, dump 7000 contracts), they can buy back their 7000 new shorts plus a couple thousand more by the end of the day. Price recovers as this happens and, presto magico, the net result on Comex price is negligible.

So, in the end, The Bank In Question deliberately manipulated the price lower. They then utilized the triggered stops to cover and they used the attendant weakness to cover even more. About an hour later, The Bank has a net short position of just 8,000 contracts and all is well, as if nothing even happened. Of course, if you were one of the unfortunate longs who got your stop "gunned"...well, sorry. That's what you get for playing in The Crooked Casino. For the rest of us, The Bank In Question is now a couple thousand contracts closer to a net neutral position. This (net neutral or even net long) is their ultimate goal. It has been their goal since 8/5/11 and everything that has happened since (The Labor Day Beatdown, The December Liquidation, The Leap Day Disaster) has been a part of this process.

One more thing, DO NOT FORGET that tomorrow is BLSBS day. Again, because of the archaic manner in which the "unemployment rate" is calculated, expect a headline number that looks good for the O'Bottom Regime. The devil will, once again, be in the details. After an initial decline (stop-harvesting again?), I expect a decent rally.

Here are your latest charts. Note that both gold and silver are still rangebound but are forming pennants within the range. Let's see if they can both break higher and toward the tops of the ranges tomorrow.

In other news, here's something interesting. Jim Comiskey has a client who, in reading over some BIS documents, found the following. Not sure yet how significant this is but I'm going to send it off to Bill and Chris at GATA to get their thoughts. First, there's this line:

3.    Foreign exchange risk
718(xxx). This section sets out a minimum capital standard to cover the risk of holding or taking positions in foreign currencies, including gold.136
718(xxxi). Two processes are needed to calculate the capital requirement for foreign exchange risk. The first is to measure the exposure in a single currency position. The second is to measure the risks inherent in a bank’s mix of long and short positions in different currencies.

And then, here is footnote #136, as mentioned above:

(136) Gold is to be dealt with as a foreign exchange position rather than a commodity because its volatility is more in line with foreign currencies and banks manage it in a similar manner to foreign currencies.

Hmmm. Again, this is from an official BIS document. Is this an admission of bank gold manipulation (management of price)? I'm looking forward to hearing what Bill and Chris have to say on the matter.

Finally, below is hands-down the single most important item of the day. Some of you may recall that I alluded to "big things behind the scenes" a few days ago. This is one of those things. Please watch this interview of Hugo Salinas-Price. As you know, the Greek people are about to suffer incredible adversity and hyperinflation as they attempt to regain sovereignty over their currency. This idea of a new national currency that has a direct silver backing would be exactly the type of measure needed to save that country. If anyone reading this has the ability to contact Mr. Tsipras and bring this to his attention, please let me know. I can very quickly put him in touch with Mr. Salinas-Price and, perhaps, we can save the Greek people from this impending disaster brought about by central bankers and unlimited fiat currency.

 

Hang in there and have a great day. Tomorrow should be quite interesting! TF

269 Comments

Big Buffalo's picture

Got it

I may not have won a yellow hat yesterday, but at least a first as a consolation prize will heal my achy breaky heart.

Got me some dry powder for tomorrow's flash decline a la Turd.

Turd: Why is there defense at $1570?

Dr G's picture

Blatant repost from the last

Blatant repost from the last thread. And good catch by Comiskey on gold manipulation. Of course it's manipulated. Just like a currency :)

Such great comments today! I really appreciate the educational discussion instead of everybody slinging terms like "troll" around!

Here is a summation of my thoughts:

  • QE will come before the election.
  • The best dates for it to be announced and take hold prior to election run-up would be the FOMC meeting in June (3 weeks from now) or late July/August (roughly 8 weeks from now).
  • All this action (or just talk?) about Greece and Spain has given flight from the Euro and it seems investors have piled into the USD.
  • The USD is up over 83 on this latest round of "news" out of Europe.
  • If this "news" continues then it seems investors would continue to enter the USD. That will send it higher. As Turd said, possibly over 84 or even up to 88 range.
  • Metals have responded with a down move as the USD has risen. On days they haven't moved down they have largely moved sideways. Some days have nice gains but place the spot price still lower than it was earlier in the week.
  • Silver has gone from $49 to $26 in the past year. It is currently sub-28. 27 has held rather well recently, but we all thought 45 would hold, then 40, then 35, then 30, and look at us now.
  • That seems like there isn't much strength in silver (probably due to lack of investor interest in the Crimex). I feel minimal strength in gold until it clears a hurdle (1600?) that gets investors interested again.
  • I wouldn't be surprised to see silver and gold continue to fall as the USD continues to rise. That is usually how it works. Decoupling is always possible and has happened before but it never seems to really take hold.
  • Maybe Europe doesn't implode and the Euro is fine. I don't know. All I know is that this latest round of PM downdraft is based on "news" from Europe. So the "news" does affect the spot price.
  • I'm bearish until something changes with the USD. In my mind that is the inevitable QE that is coming very soon. Medium term and long term I'm as bullish as can be. Therefore, I'm thankful that the price is down now. Makes me very happy.
alphamorph's picture

why the miners????

I'm surprised by the spread between silver price and that of most mines.  Anyone with suggestions?

Big L's picture

Thurd

Alllmoosttt.....

Edit: I was 'this' close..... and Thanks Turd!

I'm still reeling from that Jim Willie podcast.

Haven't quite got my pins underneath me yet.

boil_in_the_bag_rice's picture

Hemmingway

“How did you go bankrupt?"
Two ways. Gradually, then suddenly.”

Ernest Hemingway
 

Fired's picture

You are getting as good as

You are getting as good as Santa in keeping my spirits up Turd. Thank you so much for your efforts!

The Green Manalishi's picture

Alexis Tsipras Contact Details

Alexis TSIPRAS

[Photo]

.

e-mail: tsipras ΠΑΠΑΚΙ syn ΤΕΛΕΙΑ gr 
Office: Pl.Eleftherias 1, 10553 Athens 
tel 2103378633-634 
fax. 2103219614

.

Patrancus's picture

Never underestimate the desperation

pickaxe's picture

What To Do When Your Dry Powder Is Gone

Is Your Dry Powder Gone?

Just join me sitting on my hands watching the fireworks!

Don't play into the manipulators hands: the urge to do something... anything when chaos erupts must be fought.

Now, if I can only follow my own advice...

~pickaxe

lostinspace's picture

Tenth!!!!!!!!

Tenth!!!!!!!!

ClinkinKY's picture

Vet's Coin Collection Stolen (Happy ending though)

MADEIRA — Madeira police officers daily go after the bad guys, but admit their collective resolve ratcheted up a few notches when they learned a coin collection had been stolen from the home of an 89-year-old World War II veteran shortly before Memorial Day.

“Let’s just say we kind of took it personal,” Det. Tim Vogel said.

Vogel said two brothers from Southgate burglarized Joe Schirmer’s house in Madeira shortly after 11 a.m. May 21. No one was home at the time.

As Timothy Fetters kept a lookout, Vogel said, Craig Fetters broke into a lockbox and emptied a shoebox in Schirmer’s home, leaving with Schirmer’s gold wedding band and 15 Morgan silver dollars and Peace silver dollars.

“(Schirmer) kept records of all the dates on the coins, which assisted in the investigation,” Vogel said.

“We just called around to the coin places and we finally got a hit down in Cincinnati.”

Vogel said the Fetters brother sold the loot at Coins Plus in downtown Cincinnati for a total of $460.

Madeira police tracked down a video that caught the Fetters brothers cashing the check from Coins Plus at First Financial Bank in Dent, Vogel said.

He said Madeira police recovered all the stolen goods and took them to Schirmer.

“He didn’t even realize that his wedding ring was missing,” Vogel said.

“It was priceless to him, the wedding ring was.

“He just started tearing up and was so happy to get his stuff back,” Vogel said.

Schirmer said his wedding ring represents 56 years of marriage to his wife Marjorie, who died in 2003.

“I had a wonderful marriage,” Schirmer said.

Of course, Schirmer thinks a few other people are wonderful, too.

“The Madeira police did a wonderful job,” said Schirmer, who served in the Army Service Forces in Maryland and the Sixth Air Force in the Galapagos Islands.

“They came to my house immediately. I was surprised the police found (my possessions) so quickly.”

Meanwhile, Madeira officers arrested the Fetters brothers May 23 – two days after they got the burglary report.

Craig Fetters, 24, is charged with burglary, possessing criminal tools and safecracking.

Timothy Fetters, 27, is charged with complicity to burglary.

Really-'s picture

Here's what I don't understand...

Turd talked about a bank dropping several thousand contracts of gold, which in turn brought about a drop in price.  This allowed them to jump back in and buy back even more at a cheaper rate.  Wouldn't you or I do this if we had the means?  Are the bank's actions illegal?  I know I've seen this talked about before but when I read it, a lot of if seems to be accompanied by a fog of uncertainty.  Thanks.

murphy's picture

@ JGalt from last thread

JGalt wrote

For all I know the numbers we get each day as our daily "price fix" comes from some anonymous computer geek with sausage fingers who types in a predetermined series of numbers on a computer screen at market close each day.

Ding,ding ding ding!! We have a winner! Long read from ZH, here's cliff notes.

http://www.zerohedge.com/news/second-act-jpm-cio-fiasco-has-arrived-mismarking-hundreds-billions-default-swaps

  • Markit Group’s founders also include four hedge funds. However, Markit Group refuses to disclose the names of those hedge funds. In response to an inquiry, a Markit Group spokesman said it was “corporate policy” to keep the names of the hedge funds secret, but he would not say why Markit Group had such a policy. It seems worth knowing whether those hedge funds have any influence over Markit Group’s published information or indexes, and whether those hedge funds are trading on that information. It would also be worth knowing whether those hedge funds or affiliated hedge funds have engaged in short selling of public companies whose debt and stock prices were profoundly affected by the information that Markit Group published.
  • Goldman Sachs (NYSE:GS), JP Morgan Chase (NYSE:JPM) and several other investment banks also have ownership stakes in Markit Group. The investment banks received their stakes in exchange for providing trading data to Markit Group. It would be worth knowing whether these investment banks engaged in short selling ahead of Markit Group’s published indexes and price quotations.
  • Markit Group is secretive about how it creates its indexes. In early 2008, The Wall Street Journal noted that the CMBX simply “doesn’t make sense” and that Markit Group’s indexes “might be exaggerating the amount of distress” in the home and commercial mortgage markets. In 2008, the average prediction for defaults on commercial mortgages was 2%. The CMBX implied that the default rate could be four times that level.
  • Markit Group is equally secretive about how it derives its “prices” for credit default swaps. A spokesman for the company spent close to one hour talking to Deep Capture. He did his job well and sounded like he was trying to be helpful. But he told us as little as possible.
  • However, in the course of this conversation, we did learn that Markit Group’s “prices” are not actual, traded prices. They are mere quotations. The Markit Group has what it calls “contributors” – hedge funds and broker-dealers that provide it with information. Markit Group has a grand total of 22 “contributors.” Deep Capture asked Markit Group’s spokesman for the names of these “contributors.” The spokesman said he would try to find out the names and call back later. He never called back.
  • The 22 “contributors” provide Markit Group with quotations, and these quotations become the Markit Group’s “price.” In other words, the “contributors” can quote any price for a CDS that they choose, regardless of whether anyone is actually willing to buy the CDS at that price. Markit Group looks at these quotations. Then it somehow decides which quotations make the most sense. Then it publishes information that purports to represent the actual market price of that CDS. This process is certainly unscientific. And it is ripe for abuse.
  • Consider, for example, the Markit Group “price” for CDSs insuring the debt of company X.  The Markit Group price strongly suggests that company X is going to default on its debt in the immediate future. Short sellers eagerly point to the Markit Group CDS “price” as evidence that company X is doomed. Panic ensues, and suddenly, company X really is doomed. But the fact is, nobody ever bought a company X CDS at the price quoted by Markit Group. Rather, that panic-inducing “price” was, in effect, pulled out of a hat. Who pulled it out of a hat? That is matter of immense importance. There are two possible scenarios:
  • The first possible scenario is that the 22 “contributors” report their quotations in good faith. They should be sending the actual traded price, not just a quotation, but assume they are just doing what was asked of them. From these quotations, Markit Group somehow decides what the “price” should be. It is possible that this decision is based on some secret formula (which would be worrisome); or it is possible that Markit Group executives sit around a table debating what the price should be and take a shot in the dark (which would be even more worrisome); or it is possible that Markit Group deliberately chooses the most horrifying price possible in order to assist the short sellers who are affiliated with its owners (which would be a matter for the authorities).
  • The second possible scenario is that Markit Group acts in good faith (if not scientifically), but one or more of the 22 “contributors” or their affiliates has an interest in seeing company X fail. If just one of those “contributors” sends in an astronomically high quotation, that could be enough. Markit Group factors the absurd quotation into its posted “price” and it suddenly becomes possible to convince the world that company X is about to default on its debt.  Panic ensues, the firm’s layer of debt dries up, the stock price plunges, and perhaps the “contributor” or its affiliate make a lot of money.
  • As Deep Capture understands it, CDS quotations suggested by the 22 “contributors” also help determine the movement of the CMBX and ABX indexes. The movement of these indexes did serious damage to the American economy in multiple ways. The  indexes prompted write downs at most of the major banks and mortgage companies. They were ammunition for short sellers, like David Einhorn, who claimed that companies had cooked their books by not writing down to the rock bottom prices suggested by the Markit Group indexes. They helped precipitate the decline in prices of mortgage securities, and contributed mightily to the panic that spread across the markets.  A lot of people made a lot of money as result of those indexes moving downward. So, it is rather important to know more about how those indexes are formulated, and if they can be driven by the same people who are making directional bets on their movements.

Conclusion: Ten years ago, there was no such thing as a credit default swap. Six years ago, a very small number of investors traded credit default swaps as hedges against the long-shot possibility of corporate defaults. Nobody looked to credit default swaps as reliable indicators of corporate well-being.

LifeIsPain's picture

Sorry Turd, your explanation is lacking...

Sorry, Turd, your explanation of the precipitous fall in gold today doesn't make sense:

<<Let's say that the bank in question began the day with a net short position of 10,000 contracts. The bank takes a look at the order book and concludes that there are a multitude of sellstops in a certain area. If the bank can exert enough pressure (in this case, dump 7000 contracts), they can buy back their 7000 new shorts plus a couple thousand more by the end of the day. Price recovers as this happens and, presto magico, the net result on Comex price is negligible.>>

If the bank is short 10,000 contracts, they can't dump 7000 contracts to lessen their shorts.  They have to buy those shorts back, i.e. go long 7000 contracts, which would have the effect of increasing the price of gold.  The only way this theoretical bank could lower the price of gold would be to go further short, i.e. sell 7000 more contracts and end up with a net of 17,000 contracts short.

Eman Laer's picture

Got Gold Report for May 28 2012

I'm not familiar with Gene Arensberg but in this video he goes into a lot of detail about the implictions of the COT reports:

Be Prepared's picture

Situation Normal All F*cked Up (SNAFU)

We have and will continue to be in a SNAFU wave for quite some time.  There are no quick and easy fixes to this situation.  Some economists have conjectured that the U.S. is beyond the tipping point heading towards a currency collapse, but trying to nail the timing is a near impossibility.  The U.S. government, as with most other governments, is spending more than is sustainable both now and in the future.  $1.2 Trillion to feed an uncontrollable beast and the march of the national public debt gains new ground.

I am not hoping for hyper-inflation, but even "hot" inflation will leave a destructive wake across much of the world.  The current situation in not about the "mad-max" scenario, but more about realizing that you are responsible to defend yourself against this financial assault.  Silver and Gold will offer a significant barrier to most of the probable implosions coming in the future....

.... but Dr. G is right to state that in every chaotic financial event.... there is always going to be dramatic movement upwards and downwards as more people try to resolve how they view the world around them.  It is fair to say that we are in a downtrend... how long or far this downtrend may go... I leave to the Great Turd and other prognosticators, but you need to realize that anything can happen so your time horizon for any silver or gold physical purchase needs to wisely account for these variations.  The days ahead will grow more uncertain... so your own certainty and clarity about why and what you are doing is the true iron in your resolve... nothing more.... nothing less.  :-)

OrangeAlert's picture

Turd

Huge hat tip to you sir!  You really are a great humanitarian.  I hope someone knows Mr. Tsipras and you can help make something positive happen.  Even if he is communist.  The Greek people don't deserve destitution even if they voted for people who made them that way.

murphy's picture

Could be a new sign for the Federal Reserve

going up on 33 Liberty NYC, NY

http://www.theburningplatform.com/?p=35317

I think the saying below from Dante could be a new mantra and symbol for TBP. I bet I could sell tens of t-shirts with this saying below the TBP symbol.

edit: after a second look it kind of looks like Zoltan

agNau's picture

Anyone eyeballed the ten year lately?

Nice confirmation @Willie
What a surprise.

alphamorph's picture

I mean today's silver mine price

I don't recall anything in recent memory where the mines so badly lagged the spot price.  Anyone?

Turd Ferguson's picture

No, you don't understand

MODERATOR

AFTER adding the 7,000 new shorts, The Bank almost-instantaneously buys back 9,000. Their new net short position is now 8,000 where it had been 10,000.

The Bank is the buyer as the sellstops are triggered. The Bank is also the buyer as price rebounds.

Averaging it all together, they make a small killing while simultaneously reducing their net short position.

ivars's picture

GOLD prediction reality comparison chart and extension to Sep1

Version of today. Red- May 5 2011 prediction, Green - October 2011 improvement (?) , blue- actual prices.

Press right button-View-zoom to see dates and prices.

More charts:

http://www.tfmetalsreport.com/forum/2814/ivars-charts

SilverFocker's picture

@Dr G

While I agree with most of your thoughts, I just don't see QE coming soon.

There is another debt debate about to unfold, this thing will get very nasty due to the erection's being waved around like trumpeting elephant trunks.

We will again need to write another IOU to the Fed of a Trillion or two, which I think most of the Fed members see as a sticking point on announcing any QE before this debt BS is close to a resolve. I just think this is not the time..........If I am wrong and QE and the debt ceiling happen in tandem then PM holders could see a rocket ride past 50 and 2000 by turkey day and I will be buying bourbon and weed.

opticsguy's picture

10YR reached its peak

maybe the short covering has exhausted itself.  When getting 1.6% for ten years is the safest place to put money, every pension plan in the country is doomed.

Bugzy's picture

Words they are looking for

Just read an update from Simon Black about (threat) words that are scanned for (e mail) by the powers that be. There was also a post (on here) about this a few days ago.

This is really really disturbing. As only a modicum of thought leads to one of three conclusions.

The presenting intent is to crack down on terrorism (oops - that was a word). Yet this is ridiculous! When under cover operators in the war wanted to communicate to each other, they would have pre arranged words that had absolutely nothing to do with what they were planning. They knew fully and well that their comms could be intercepted.

And just like today - we all know (or at least suspect) that our comms can and will be screened. 

So instead of: "The crow fly's at midnight over the sleepy hen house".

A modern day example might be: "Avatar is playing on Sunday at four, are you up for it"?

So...this "monitoring" is not intended to catch these people at all. Complete and utter folly.

So then, what is the intent of publishing such a comprehensive list of "do not use or else" words such as: Exercise. Cloud. Leak. Sick. Organization. Pork. Bridge. Smart. Tucson. Target. China. Social media.

 

1) To get you always thinking about big brother. That he is there watching you 24 - 7 and you better watch what you type to your friends.

2) To collect data on any potential trouble makers and so put higher surveillance and or list for FEMA camps (oops another word).

3) To promote a constant state of fear.

Sure sounds like the start of a police state. (I suspect that this is how Nazi Germany started).

All I have to say on the subject is: Bomb laden nuke white powder etc. oops oops and oops.

Quick take on 9/11 (sorry turd) Years of planning would not have led to the added complication of bad folk needing to get connecting flights on that morning. Added security - possible delays, missed flights. Nope - not one logical piece of rationale. All had to be on station for this coordinated plan. 

Does not fit either. 

B.

LifeIsPain's picture

I get it now Turd

Okay, that makes sense.  My bad...

twippers's picture

Friday smackdown?

A question for the Turdites....  Many major metal stocks are down today.  Is that an imminent sign of a substantial Friday smackdown?

Dr G's picture

SilverFocker, with the USD

SilverFocker, with the USD above 82, I would think that QE not only must happen but it will happen soon. The dollar simply cannot be allowed to be in that range, much less move up to above 85 via a Euro crisis.

This deflationary period (liquidity crisis) we are seeing right now plays directly into that. They have a need on both sides to formally print.

Your point about the debt ceiling debate is a good one, that I hadn't considered much. I will give it some thought.

Excalibur's picture

Hugo Salinas-Price and Greece

I think Max and Stacey have already co-opted Hugo and his private jet en route to Athens.  The more support and encouragement that he gets about using silver as money, there might be time for him to understand it and put it before the electorate as Salinas-Price proposes. It could be a result changer and tip the scales against the Cartel and the EU mafia.  So, Turd I would urge you to use your good offices and other contacts to speak with Tsipras.

It's a  very complicated situation that Tsipras is in a) before the election and b) afterwards if he wins. He has to understand the mood of the people, who (right or wrong) want to keep the Euro. Will the mention of Drachmas and silver win or lose him votes? Does Greece have any of its gold in Athens, if it wanted to sell some for silver? 

boatman's picture

preciate it IVARS

matches my perception pretty much.

real fireworks start after election with debt ceiling raise redo.

yipppee-i-o-kiiiii-ayyyy Mr. Falconer

***************************************************

i saw the ten year at 1.53 earlier

ONE FIDDY TREE!

*****************************************************

ben's helicopter flight list:

gold n silver beat down as far as they will go..............................................check

dow flirting with 12,234 freefall sell stops...................................................check

paper and ink................................................................................................check

wall street and politicians starting to clamor for QE...................................check

RBOB gas beaten down to $2.60.................................................................almost!!!

Ben reelecting obozo and not having to answer ron paul............................priceless

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