G-Day

With the looming "confidence" vote in Greece, I expect the PMs to be rather quiet again today. Greece, however, will not likely be quiet. Here are three articles to consider.

First, Gonzalo Lira sums up the situation quite nicely:

http://gonzalolira.blogspot.com/2011/06/if-greece-defaults-what-happens-to.html

Next, the BBC questions whether the Greeks will make a move for outright revolt:

http://www.bbc.co.uk/news/world-europe-13830466

And if you think that sounds crazy, read this:

http://www.smh.com.au/world/greek-austerity-protests-arouse-fury-from-the-man-in-the-street-20110619-1g9xi.html

Two quick charts to start your day. First, here's an updated silver. For the past 3 or 4 expirations, we've had great fun and made quite a bit of money trading options. This time...not so much. Maybe the fun and games will begin anew in August, as we move toward September delivery.

paper_6-21amsilv.jpg

As we discussed yesterday, I think it's going to be tough for the PMs to get any real traction until/unless crude gets back above $96. Unfortunately, this will be no easy task. It looks a lot better than yesterday but still has quite a bit of work to do.

paper_6-21amoil.jpg

OK, that's it for now. As I finish, the metals are rallying so we'll see if they can continue to catch a bid. Be sure to watch how gold acts as it approaches 1550.    TF

43 Comments

SilverTree's picture

Fist!

benoit's picture

Questions Regarding Ratio Trade Theory

1) Is there any evidence that this is what's actually taking place? Can anybody point to a specific hedge fund who is participating and/or leading this trade?

2) Is this trade solely profit-motivated?

3) If this is indeed profit-motivated, would somebody care to explain why haven't we seen:

a) Long oil short oil producers trade?

b) Long grains short AG producers trade?

Thank you for your consideration.

Tesla's picture

Morning Turd

Thanks Turd!

Sterling's picture

Ass, gas, or grass?  Nobody

Ass, gas, or grass?  Nobody rides for free

Sterling's picture

SilverTree

SilverTree said "Fist"  lol!

speconomist's picture

  Turd, what implications on

Turd, what implications on the price of silver can we expect from the fact that options expire on Monday? Another smash on the price by the EE??

tmosley's picture

I am expecting a great deal

I am expecting a great deal of wild shenanigans to take place during this months PM expiry.  Next month has a 50% chance of being the end of the EE, at least in the metals markets, and the chances only go up from there.  And when I say 50%, I don't mean "I don't know", I mean there is a very strong possibility that it will happen.

Don't get caught without physical gold and silver after June 27th.  You might use this opportunity to pick some more up on the cheap, but don't sell your physical stash to try to pick it up again for cheaper later, for God's sake.

Sterling's picture

Shenanigans!

Shenanigans!

pforth's picture

Ratio Trade?

I can see two possible explanations as to why the miners have lagged the metal so badly:

1) The public can no longer be bothered buying miners, now that they have ETFs.  You don't have to worry about windfall profits taxes, nationalization of assets, corrupt boards, dilution of assets or just plan old not finding the metal in the ground.  There's even options for those (like me) that think the mainstream ETF's are fraudulent: CEF and PSLV etc.

2) There is a ratio trade where big hedge funds (backed by banks?) short the miners and go long the metal.  For the EE, this has the benefit of demoralizing a lot of the hardcore gold bugs and helps to defuse excitement in the PM's.

If #1 is the primary reason, it is a systemic problem and points to the miners never really ever catching up (as long as the main ETF's aren't publicly disclosed as frauds).  If #2 is the primary reason, then it stands to reason that one day the trade will be unwound.  PM stocks will soar while the bullion stays constant or falls.

Number 2 is a good hypothesis and a fair number of newsletter writers have mentioned it, but I've yet to see anything indicating that it is anything more than a guess.  Before I can believe in it, I'd love to see at least one example of a hedge fund who is doing this.

taoJones's picture

police provoke violence...

There were rumors of that at the G20 in Toronto last year... police setting up bait cars to attract  hooligans & incite rioting...

Larry's picture

It's all Greek

It's easy and almost assured that we at times get overwhelmed, confused, shaken by what is going on in this world. Can you imagine what it must feel like to be a middle aged Greek that has lost their job and is dependent on the government for food, shelter, healthcare and basic necessities of life? Pure tragedy playing out in real time. God, I feel so sorry for the innocents in that country.

The MSM make the Greek tragedy seem so distant and foreign, just as they do wars and all things that TPTB want shrouded in a veil of patriotism and world order, but this chaos is coming to a city and community near all of us in the very near future. Once again, we're reminded to prepare accordingly.

The problems stem from a global economy that is ensnared by an Western elite cabal that has destroyed currencies and poisoned the earth. It is no coincidence that these evils began their increased, systematic and dominating destruction of the earth in 1914. The Fed has not been the only tool, but a very useful tool of the EE.

Now, on this side of the not-so-big pond... will Botox Benny stick to injections in his forehead to hide his emotions in todays meetings or will he also get pricks into his upper lip to control the quivering as he lies?  

Cleburne61's picture

With silver trying to base

With silver trying to base over 36, and gold coiling in the $1540's....things are looking better than a few weeks ago.  WTH knows what will happen in Greece, but with Keiser, Turk, and Sinclair all thinking either bailouts or default would set a flame under our shiny friends, I can see hope from my front porch!

Btw, does anyone know what current silver OI is?  I'm guessing around 116k contracts, and with silver getting above $36 even with those low numbers, hopefully big buyers will be emboldened to step in.

Btw, for those who've considered Bitcoins....here's a must see vid from Brother John.

SilverWealth's picture

don't hold your breath

I wouldn't hold my breath waiting for the Comex to default. We are dealing with great criminal operations and they should never be underestimated especially not JPM. I have been hearing every month for the last year that default was right around the corner. Its the siren song in the PM community. I will beleive it when I see it but I would never underestimate their ability to throw a monkey wrench into the system, completely change the rules, move the goalposts or simply just stall and stall and stall.

Eric Original's picture

Smokin'

Don't know about you guys, but my portfolios are smokin' hot today!  Both my miners and my oils.  :D

Levon Resources is leading the way for me, up 9% on the back of this news release.  Big big numbers on their first resource calculation on the Cordero Project.  cheeky

http://www.levon.com/s/NewsReleases.asp?ReportID=463262&_Type=News-Releases&_Title=LEVON-REPORTS-FIRST-BULK-TONNAGE-NI-43-101-COMPLIANT-RESOURCE-AT-ITS-CORDER...

Quintus's picture

Greek vote will be passed today

I should think there is very little chance that TSHTF today as a result of a failed No-Confidence vote in G-Pap this evening.  It seems much more likely that the motion will be passed so that both sides can see what sort of Austerity measures they can negotiate in advance of that vote which I believe takes place on 28th.

There's little incentive for the opposition to pull the plug now when there is a weeks worth of bargaining time still available.

When the vote is counted and G-Pap survives, expect the MSM to be full of 'Greece is saved!!' headlines.  This may dent the metals prices and pump the Euro for a bit.

The vote on the 28th is much more significant, and will be much more contentious IMHO.

I am coming to the conclusion that the Greek politicians of all colours will try to keep the show on the road and will probably pass the new Austerity measures.  As we speak, hesitant senators are probably being offered yachts and private islands by the Euro politicians in return for their vote.  

Every politician has a price, and the EU will pay it.  The only hope we have that sanity eventually prevails and the Banksters do not win again is if the Greek people force the issue and render the country ungovernable.  

I was hoping that one of these votes would fail, that Greece would default, and Metals would scream higher as a result, but I don't think it will be as easy as that.

HiHo Silver's picture

So, they are despondent and

So, they are despondent and despairing that they cannot get more of other people's money to finance their lifestyle. Is this America?

Dakini's picture

Link to Bernanke Press Conference Tomorrow

I've seen mention of Bernanke speaking today, but it looks like his press conference is tomorrow. Just an FYI - here's the link for tomorrow's live coverage -

Bernanke FOMC press conference: June 22, 2011 2 pm Eastern time

http://www.bankrate.com/finance/live-chat/federal-reserve/bernanke-fomc-press-conference-june-22-2011.aspx

Quintus's picture

The list of people who would

The list of people who would like more of other people's money to finance their lifestyle is long indeed.

¤'s picture

MSM Blackout/MOPE

If the majority of global paper currencies were like leaf's on a vine, the vine would be noticeably withering in the hot glare of the insolvency spotlight.

I think for the most part that the American mainstream media (MSM) has under reported or at least has not shown the extent and consistency of the Greek riots and how bad it really is over there.

For the most part you could say the same thing about Bahrain, Yemen, Libya, Pakistan, Afghanistan, Iraq and Egypt especially. Don't hear much about Egypt these days and how friendly and democratic it all turned out, do you?  

Back in late February and early March when the risk trade/MSM news was on, the commodities prices and movements reflected the nature of the the MENA threat and now the Euro/Greek financial situation is centerstage while you barely hear of the other chaos that is still going on everyday. Looking up footage on YouTube would disturb you greatly if you saw what is going on everyday for months now.  

If the MSM actually showed the extent of the Greek riots and how dire it feels over there to the average Greek citizen day to day, month to month, then I think our stock markets would gradually or suddenly collapse even further on fear and dread. The commodities would be higher if all of the Wall St. analyst and trader types everywhere were actually viewing on TV the video footage of whats taking place on the streets over there. All the exchanges and brokerages have MSM channels on all day long. They all watch  TV during work to keep abreast of breaking news and events.

The reporting and the footage, whether it be in the MENA or over in Europe or where ever has a negative market effect. I don't believe that the MSM is doing the Gov't.'s bidding or anything silly like that. Just a matter of trying to produce and sell the least negative product so that viewers don't change the channel. It's all MOPE and ratings.

There is in my view a sense of "negative news" exhaustion in the U.S. and a lot of "reality show/attention deficit" by the average American citizen that they don't want to hear or read anything remotely negative or financially stressful. The MSM is keeping a lot of visual negative stuff off the air for the most part due to that negative exhaustion. It probably also keeps any idea's of revolt by citizens off of their minds a bit also if they aren't seeing other people elsewhere riot for the same things we are worried about.

The Greek situation is going to get even more violent and I think they vote "No" on the  Confidence Vote today and they default fairly quickly before a new Gov't. is elected. The concept and the structure of the Euro is going to be the topic about the same time the U.S. debt ceiling situation and our currency problems boil over this summer.

TF's right, anything is possible at this time.

My guess is a flash crash and trading halt within 21-30 days.  

Seacap81's picture

Maybe Comex doesn't default

Maybe Comex doesn't default in one fell swoop, instead it's a painful slow-motion default much like the United States if defaulting on it's massive debt.  Everything functions but the de facto default is happening in real time.  That was quite a run we had in silver since last fall, and I expect spot to at least double again commencing with QE3 or Operation Twist or whatever the hell they call it.  

onewileyz's picture

That's Wild Shenanigans, pal!

That's Wild Shenanigans, pal!

votee's picture

People, why do you expect the

People, why do you expect the Comex to default?

Its very easy to avoid for the Comex to default. There is a spot physical gold/silver market, which is huge, they simply have to buy there. Its simple as that. Usually at best 10M ounces of silver is required to delivered to each delivery month, so its about 300-500M USD to purchase ALL at the open market. But their loss would be only at best a few percent of it, like 10-50M USD.

Do you really believe that the BigBanks and the FED rather dont spend 10-50M monthly, but let the comex default?

You expect the comex default to skyrocket the PMs, and very seriously damage investor confidence, so in essence you expect 10s or 100s Billions USD of losses, and simultaneously expect them NOT willing to spend at best 50 Million every next month to avoid it? When the FED can print them any money as they want?

???

stoneeh's picture

Re: Maybe COMEX doesnt default

Read up on EFS and EFP transactions. J.S. Kim explains them here on ZeroHedge:

http://www.zerohedge.com/article/js-kim-max-keiser-discusses-banker-manipulation-gold-silver-futures

There is no physical settlement, so COMEX inventories do not matter.. unless it drops to a few thousand ounces or something. These guys handle practically EVERYTHING in paper.

And they will never lose the paper game, because they make the paper and they make the rules. So make sure you've got a good physical position and NOT have it in the bank or in various funds or ETFs where the various governments of the countries where the vaults are located will go first once they have decided to confiscate.

- Markus

tranquillity's picture

agent provocateurs

Agent Provocateurs you always see this when you have big protests in more or less any country.

We were trained in applying this when I was in the Military Police ten years back (Swe), seems that it is the rule rather than the exception. Back then I laughed together with all the others in how simple and effective this technique was to get the "lawful right" to violently disburse lawfully gathered crowds of people. Today I see it for what it is, Fascism or at least antidemocratic policy by the so called democracies we live in.

FogHorn LegHorn's picture

Shenanigans

I have seen very few option expiries without shenanigans,I have observed a remarkable lack of stealth this year, its almost like cot reports tracking of market activities are of no real concern to the largest market participants.I wonder sometimes if having some sort of a regulatory body mightent be wise.:)

Chicken Little's picture

Upside Potential for Miners

Here is an article from 3,2,1 GOLD presenting the case for a possible summer reversal to the upside in the mining shares. Do you really want to risk being out of this market? Along with Norcini and Sinclair's audio from the Monday blog I find the logic compelling.

http://www.321gold.com/editorials/thomson_s/thomson_s_062111.html

Oops Sorry. Posted this earlier in wrong forum.

Kindest regards,

Chicken

Jdawg's picture

Ass, Gas or Some Grass

I have not heard that since came home form Vietnam in 1969, but it still true today.  Nobody ride for free

Captain Silver's picture

With Turd on this one

Skipping the trade until later in the year.  Still think there is a strong possibility of a deflationary scare before the POSX really takes a hard dump.  Did buy some eagles yesterday though, cheaper than Prozac.

Larry's picture

Moving goal posts and flash crashes

DarkPurpleHaze - good post as usual. Your first line is poetry. The MSM is IMO half useful idiots that perpetuate half-truths and half just plain idiots that just read what they're handed to report on. They never miss a beat giving us great detail about troubled Hollywood actors and deranged pop music stars. They make us all cringe daily with their endless reports, discussions and dissections of famous murders which are parsed and speculated upon from crime to autopsy to criminal defense speculation... and then we flip to financial news to hear so and so say the economy is in a jobless recovery. Then we flip to political "news" to find pure nonsense about an oligarchy that pretends to be a liberal and conservative two party system. It never ends. 

Our antidote is to turn the tv off or watch nature, history, movie channels or Frazier, Everybody Loves Raymond or some other favorite reruns for pure, unadulterated mind-numbing enjoyment. At some point we are what we eat, drink, listen to and watch. Moderation being key in all things...

SilverWealth - agreed, the 'money changers' and rulers will change the rules at will. Hopefully this will change suddenly and dramatically for at least some of them in the coming months. 

Goal post moving and flash crash or market shutdown, in the future we on this forum may be discussing ways to KEEP what we were wise enough to invest in when the desperate PTB want it and the masses are brainwashed enough to side with them against the "hoarders" and "speculators". Though those conversations may get a bit tricky online.

Syndicate contentComments for "G-Day"