Saturday Stuff

300
Sat, Feb 23, 2013 - 12:28pm

Just a quick wrap up of some assorted stuff as we prepare for what will be an eventful week ahead.

First of all, the big news from late yesterday...Moody's downgraded Her Majesty's debt. Though this is once again a fundamentally gold-positive event, I wouldn't expect an immediate jump in price because of it. Remember that in the fiat world, Pound weakness inversely means Pig strength. https://www.telegraph.co.uk/finance/economics/9889485/Downgrade-to-pile-pressure-on-pound.html

In the absence of a podcast here at TFMR, please take the time to listen through all three segments of Andy's visit with Eric King yesterday (once they're finally posted). When we spoke yesterday, Andy told me not to expect anything too earth-shattering but I'm confident that it's worth your time, nonetheless. He and I plan hope to record something either Monday or Tuesday so look for that early next week. In the meantime, here are the KWN links:

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/22_Maguire_-_Stunning_225_Tons_of_Physical_Gold_Bought_By_CBs.html

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/22_Whistleblower_-_Gold_%26_Silver_Smash_Orchestrated_By_The_BIS.html

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/23_Maguire_-_Stunning_%2424_Premiums_For_Gold_In_Shanghai.html

If you haven't already, you're going to be reading a lot this weekend about yesterday's Commitment of Traders report. As you know, I like to review it right when it comes out and then post a sort of "instant analysis". Here's a c&p of my thoughts from yesterday, in case you missed them:

GOLD: For the week, price fell about $45. While this was taking place, the LargeSpecs added 1900 longs and a jaw-dropping 25,000 shorts! The LS net long ratio falls to an very bullish 2.12:1. The SmallSpecs got in on the act, too. They dumped 400 longs and added nearly 5,000 new shorts. This is an extremely bullish, contrary signal.
But the real action was by The Cartel. They added 4,300 new longs and covered an incredible 24,200 shorts. Again, who was buying while the specs were busy shorting? And who do you think will, ultimately, profit??
The Cartel net short ratio now stands at an extremely bullish 1.83:1.


SILVER: Almost identical to gold. Simply astounding, amazing and incredible.
For the reporting week, the price of silver fell about $1.60. Look what was happening internally:
The LargeSpecs dumped 1,150 longs and added 4,450 shorts. After reaching an unheard of extreme of 6.5:1 just two week ago, the LSpec net long ratio is all the way back to a mildly bullish 3.1:1
The SmallSpecs added 500 longs and 3700 shorts. Again, as in gold, the specs are racing to get short.
The "commercials"...pretty much all big firms except JPM and their con-conspirators...added another 2,026 longs, bringing their total gross long position to a never-before-seen 54,208. Simply incredible! They've continued to add longs all the way down. What do they know? What are they expecting??
The Silver Cartel...namely JPM and their two or three pals...were finally able to cover 6,800 of their disgustingly large short position. It's still disturbingly high at 92,164 but the total commercial net short ratio, which last peaked in September of last year at 2.6:1 has now declined to a quite bullish 1.7:1 Nearly every drop in The Cartel net short ratio to near 1.5:1 has preceded a substantial rally. We are very close!
All in all, both CoTs are extraordinarily bullish and indicative of a bottom very soon. Hang in there, now. Your patience will soon be rewarded!

Now, let me just add a couple of things:

  1. Getting the Gold Cartel net short ratio all the way down to 1.83:1 is a very good sign. For perspective, at the lows of late December 2011 and summer 2012, the Cartel net short ratios were 1.98:1 and 2.01:1, respectively. And this week's data was surveyed on Tuesday, before the big drop on Wednesday. All in all, the gold CoT is very bullish.
  2. Please also consider the net short ratio of The Silver Cartel. After the last four price washouts, here are your net short ratios at the bottom: On 8/14/12 it was 1.49:1. On 12/27/11 it was 1.34:1. On 10/4/11 it was 1.48:1 and on 6/28/11 it was 1.79:1. As of last Tuesday, it had fallen 1.7:1.
  3. And, finally, this theory....note the emphasis on theory. Regular readers know how perplexed I am by the silver OI situation. The primary outlier is the Commercial Long position. It "should be" somewhere near 30,000-35,000 contracts by this point in the price cycle. Instead, it grew again last week to 54,208. Chew on this: What if the 20,000 contract difference is, in fact, JPM trying to square away their naked short position that Uncle Ted estimates to be around 30,000. Now, stick with me on this... They tried to lessen it by covering back in April 2011 and the result was a near-cataclysmic event for them that was only rectified by the Sunday Night Massacre and the collusive CME margin hikes. Since then, they've maintained their position as The Big Short but, beginning late last summer, they began to build an equally-large long position. Again, stay with me here... They've added shorts through the fall to keep a lid on prices until they're ready to let it go, either voluntarily or involuntarily. If this is the case...and that's a very big IF...JPM could be approaching the point where they would be short 25,000-30,000 contracts AND long 25,000-30,000 contracts. At that point, if forced to exit the shorts, they'd be fully hedged and even profiting on the UPside.

Anyway, just chew on the 3rd point over the weekend. The more I think about it, the more it explains the "commercial long anomaly" and it provides JPM an exit strategy should the toothless CFTC ever choose to call them out.

Here are your updated charts. Given the CoT structure, I feel very comfortable declaring that a bottom is near. (And obviously hope that, by doing so, my Google ad revenue will increase.)

And just a couple of other items that have found their way into my inbox. First, this interview from last fall that details the whys and hows of gold manipulation:

Gold Market Manipulation Explained

This fun article discusses the effects of the gold repatriation movement: https://wealthcycles.com/features/15-ton-gold-repatriation-hits-jp-morgan-london-vaults

If you haven't read up on this subject yet, I strongly urge you to do so. Just like the German gold repatriation, we may look back on these events and recall them as clear warning signs of imminent events: https://www.sovereignman.com/important-information/red-alert-worlds-biggest-gold-storage-company-dumps-us-citizens-10958/

And our friends at Gold Bullion International do some excellent analytical work. Their latest was posted to ZH and you should definitely take the time to read it: https://www.zerohedge.com/news/2013-02-22/gold-and-potential-dollar-endgame-part-3-backwardation-and-gold

Speaking of GBI, for now they are still the only bullion and storage affiliation that this site has. Many of you have purchased from them and I am very grateful for their support. If you are buying coins and bullion, please be sure to check them out. You can link to them trough the ad on the right side of the page. I'll soon be adding affiliations with GoldMoney, SilverDoctors, Provident and JMBullion, too, so please be sure to always consider them when looking the BTFD. (Which I would strongly encourage you to consider doing this weekend.)

OK, I think I'll stop there. I hope that you have a safe and relaxing weekend. You certainly deserve some serenity after the madness of the past two weeks. But keep the faith as this, too, shall pass. The metals have simply been forced back to the bottom of their 18-month price ranges and will soon begin to rebound as physical demand and the glaringly obvious fundamentals begin to take over.

TF

p.s. You've got to check this out. The trollololo song is going mainstream!! I sure hope that the dead Russian guy's estate is getting a little skin out of it...(Thanks to my pal, DocD, for passing it along!)

Video unavailable

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  300 Comments

SIlverbee
Feb 24, 2013 - 9:25am

Someone last week pointed out a extremely high volume spike down

Was met by an immediate almost equal sized buy order. Could this be jpm selling shorts to itself? After all it is not going to force itself to deliver is it? Since it was so quick it may have caused the price to be sticky and therefore it at that point only went down a bit.

Kcap
Feb 24, 2013 - 9:40am

@trader Dan

He is correct for the immediate term. Yes, metals wil go down more (few weeks) because they Cartel is going long. BUt guess what? When the Cartel gets long, theyn the price flies and they begin to sell AS the hedgies begin short-covering again and then themselves going long. You must understand the sequence. Its a setup....but this time to the upside. 

You must pull away from your computer and digest what I just wrote to truly understand this. Close your eyes and drift off to the land of silver rainbows to see where this is going.

Kcap

tpbeta
Feb 24, 2013 - 9:56am

@Kcap

"You must understand the sequence."

This may happen. It may not. Certainty leads to the dark side.

joehappen
Feb 24, 2013 - 10:07am

@ all who responded to the wedding question...

Thanks guys and gals. Some good info and suggestions were given in reference to the wedding idea and silver or gold as gifts. Some of you provided humor and others gave information which may be viable options when the time comes. With no items needed for our home, (I bought it over 3 years ago now) and that we are both in our late 20's maybe just asking for cash is the best option. This way I can get what I want as far as any PM's I would hate to see someone give an ultra high premium coin/over paid that I would have rather bought some type of bullion with. Thanks again for all your help guys.

El Gordo
Feb 24, 2013 - 10:42am

Financial analysis

In dealing with securities, money market instruments, and the like, there is always a paper trail of financial information available for research and analysis. Historically, an astute analyst could figure out how a company was doing, what it's future prospects could reasonably be expected to look like, what value its earnings stream might have, its net worth, stock value and so on and so forth. Alas, with all the government intervention and manipulation, such analysis no longer holds much meaning and the regime in power gets to pick the winners and losers. Now, assuming first of all that proper analysis requires a pretty astute understanding of what all those numbers mean, what the accounting rules are, and generally quite a bit of skill. Conversely, a PM just sits there doing nothing. It generates no revenue, produces no product, and does not even file financial disclosures. Yet there are some out there who claim the ability to determine the future direction of PM values - a few even claim "expertise." Since the PM is generally inert, there must be other information required to predict their future. I suppose that given the universe of data out there to select from and analyze, it should be fairly easy to either support someone's best guess or to dispute it - based on nothing more that utilization of different data or different interpretations of the same data and its impact on PM's. So how in the world could any reasonably competent, thinking person take anyone's prediction for the future price of PM at face value and make their investment decisions accordingly? Answer: they can't. So anyone who does that is at best a fool or has other issues which render him incapable of making good decisions. So, given all that, why do we continue to waste time on here debating what this analyst said or what that analyst said? If one analyst said the price would always go up, he would probably be right about half the time - same with the other analyst who predicted falling prices.

Now, as to our gracious host Mr. Turd, more power to him for presenting his analysis, his methodology, and his conclusions based on such and not just guessed out of thin air. That takes guts as well as some degree of skill I'm sure (although I'm not really qualified to judge the level of skill required since I know nothing about the PM or commodities markets). But to those of you who sit here and say "see, Joe Bob said the opposite of what Turd said and he was right, therefore Joe Bob is brilliant and Turd is just a turd masked as an analyst" I say "show me your work, your analysis, your methodology, and your conclusions and let's compare." There are a couple of commentators on this site who do just that, but to the rest of the nay sayers, how about a hearty KMA. Rant off for now.

¤
Feb 24, 2013 - 10:45am

Syrian Conflict Reaches New Level

Syria Rebels Fight for Police Academy Near Aleppo

By BARBARA SURK Associated Press

BEIRUT February 23, 2013

Syrian rebels used captured tanks to launch a fresh offensive on a government complex housing a police academy near Aleppo and clashed with government troops protecting the strategic installation on Sunday.

The military responded with airstrikes to defend the complex, which also includes several smaller army outposts in charge of protecting the police academy.

Rebels have logged a string of strategic victories over the past few weeks, especially in the northeast where Aleppo is located.

Capturing the complex near Aleppo would be another blow to the regime that has in recent weeks lost control key infrastructure in the northeast including a hydroelectric dam, a major oil field and two army bases along the road linking Aleppo with the airport to its east.

Rebels have also been attacking deeper into the heart of Damascus, posing a stiff challenge to President Bashar Assad regime in its seat of power.

Rami Abdul-Rahman, the director of the Britain-based Syrian Observatory for Human Rights, said rebels have been trying for months to storm the complex west of Aleppo in the suburb of Khan al-Asal.

Rebels have also been trying for weeks to capture Aleppo's International Airport.

There were no reports of fighting for the facility on Sunday. But there have been battles around a section of the highway the army has been using to transport troops and supplies to a military base within the airport complex.

Assad's forces have been locked in a stalemate with rebels in Aleppo since July, when the city became a major front in the civil war.

Months of heavy street fighting have left whole neighborhoods in the city in ruins, carving it up into areas controlled by the regime and others held by rebels with both sides shelling each other's positions.

On Friday, regime forces fired three missiles into a rebel-held area in eastern Aleppo, hitting several buildings and killing 37 people, according to the Observatory. It said the strike apparently involved ground-to-ground missiles.

A similar attack on Tuesday in another impoverished Aleppo neighborhood killed at least 33 people, almost half of them children.

A senior Syrian opposition leader said Sunday that his umbrella group has suspended participation in meetings with its Western backers and their Arab allies because of their indifference over the regime's attacks on the Syrian people in Aleppo and in other cities.

"Assad has reached the stage of real genocide amid Arab silence and we renounce that," said George Sabra, vice president of the Syrian National Coalition. He spoke to reporters in Cairo after meeting the Arab League chief Nabil Elaraby.

The United Nations says at least 70,000 people have been killed since Syria's uprising against Assad's authoritarian rule began nearly two years ago.

On Friday, a statement posted on the Facebook page of Sabra's opposition group said its leaders would not travel to Washington or Moscow for any talks to protest the international community's "silence over crimes committed by the regime."

The statement also said that the opposition leaders would...

https://abcnews.go.com/International/wireStory/battle-syrias-aleppo-airp...

DPH: Awhile ago I spoke of the probability that at some point we'll see the vulnerable Syrian hilltop presidential palace under fire with smoke coming from it. Nothing at this point has changed my mind and I see it as inevitable now that the rebels recently captured and now have access to many types of heavy weapons from those other two base seizures mentioned. The airport in rebel hands would be a very big deal and appears likely.

Assad's palace sticks out like a sore thumb and has 'bullseye' written all over it. Stay tuned.

murphy
Feb 24, 2013 - 10:46am

@ Joe

My son is getting married this year and is in your same boat. They would like nothing better than cash, to put towards a down payment on a home. They have been together for three years and don't need much in the way of home stuff. Because of this they think that if they don't register at different stores everyone will give cash. But according to one who knows everything (my wife), that would only result in getting more duplication and other unwanted and unneeded stuff. According to the Dear Abby and Emily Posts of the world, it is gosh to ask for cash, while perfectly fine to give it as a gift.

https://news.google.com/newspapers?nid=1310&dat=19830317&id=7qZYAAAAIBAJ...

But according to Peggy Post, author of “Emily Post’s Wedding Etiquette,” that’s the tacky part. “It’s certainly O.K. to give cash and even to register for cash gifts,” said Ms. Post, who is the granddaughter-in-law of Emily Post. “What’s not all right is to dictate to guests what their gift should be.”

Ms. Post has heard of this elaborate tango of registering for gifts and then exchanging them, “but it’s wasteful and potentially hurtful,” she said. Instead, she advises, let the word out among close friends and family that cash is the preferred gift, “and then say why: ‘We’re saving up for a down payment.’

https://www.nytimes.com/2007/08/11/business/11instincts.html?_r=0

murphy
Feb 24, 2013 - 11:07am

Joe

On the other hand I just came across this one

Dear Abby: I am getting married this year and I’d like to challenge the notion that it’s rude to ask for gifts toward a honeymoon or other big-ticket items such as home improvements or a car. My fiancee and I own our home and we don’t need a lot of the traditional items couples receive at their wedding.

Our families have been very understanding, but I’m sick to death of hearing or reading that it’s rude to ask for money. Shouldn’t wedding guests be happy to celebrate the couple in a way that they need and not force them to register for a bunch of material things they won’t use? — Already Has a Blender

Dear Already Has a …: Your question is very common. I receive variations on this theme in every batch of mail that arrives.

It is considered rude to ask for money on a wedding INVITATION, just as it is considered rude for brides and grooms to raise the subject themselves. When a wedding invitation is accepted, the guests usually contact whoever issued the invitation to inquire where the couple is registered. Once asked, it is then appropriate to reply, “They’re not registered for gifts because they already have everything they need, but monetary gifts would be appreciated.”

Some couples set up financial registries for this purpose with their bank or other financial institution, and there are also honeymoon registries and charitable gift registries if guests would prefer to donate to a worthy cause chosen by the happy couple.

Sounds reasonable to set up a financial registry with Provident or another precious metal charitable retailer of your liking.

ivars
Feb 24, 2013 - 11:07am

Interesting...http://www.mod

Interesting...

https://www.modernmoneyandpublicpurpose.com/seminar-2.html

Check ot this for 100% contrarian view. I like the breadth of specter this opens for policies- from austerity and defaults to constraint free fiscal spending. Very interesting. Have to figure out what it means for PMs as there are so many opposing and evolving and politically sensitive approaches ... I think kicking the can down the road may be quite volatile and long. 

https://moslereconomics.com/

Should be PM positive but not because of them becoming monetary metals,but just as inflation hedge.

Wizard
Feb 24, 2013 - 11:15am

Some Sunday Morning Humor

I wanted to share some Sunday morning humor, Because laughter is the best medicine I believe for the trying times in which we live,

I received this in the e-mail from a friend this morning. the funniest jokes are the ones that are true

W

IT HIT ME LIKE A TON OF BRICKS!!!!!
I Just Realized Something

It just hit me!

My dog sleeps about 20 hours a day.

He has his food prepared for him.

His meals are provided at no cost to him.

He visits the Dr. once a year for his checkup, and again during the year, if any medical needs arise.

For this he pays nothing, and nothing is required of him.

He lives in a nice neighborhood in a house that is much larger than he needs, but he is not required to do any upkeep.

If he makes a mess, someone else cleans it up.

He has his choice of luxurious places to sleep.

He receives these accommodations absolutely free.

He is living like a king, and has absolutely no expenses whatsoever.

All of his costs are picked up by others who earn a living.

I was just thinking about all this and suddenly it hit me like a ton of bricks ~
My dog is a CONGRESSMAN!!

SIlverbee
Feb 24, 2013 - 11:26am

I think next week is dependant on

The reaction of china and to a lesser extent India to the price drop over last week. I think the EE will want to rinse and repeat, what ever trade they have been doing to reduce their shorts. However chindia may see value at thus level and therefore the effectiveness of the EEs actions will be minimal. If chindia does not step in then this may give the green light to continue for another week at least what with potential MOPE ops next week. But a lower price induced by the actions if EE maybe to $27 may entice chindia in. so overall whilst they will want to keep going it is against an Asian headwind.

Chibster
Feb 24, 2013 - 11:27am

Bye mOre

Silver Lords

Published on Feb 19, 2013

"The Fed and the bullion banks are conducting an operation to separate you from your gold and silver. Don't fall for it. All war is manipulation. -- Sun Tzu Fight this financial war peacefully by taking physical gold and silver off the market and out of the hands of the bankers."

Silver Lords
Mickey
Feb 24, 2013 - 11:35am

EE & Hedgies

By now I assume the hedgies just might be getting the feeling they have been sucked in to bailing out the EE on short positions. Not all EE short mind you but quite a bit, and we will not know till Friday what transpired between Tues and Fri this week.

It really appears the EE played the hedgies like a well tuned fiddle, starting wave after wave of selling regardless of time of day and then letting the momo driven algos do their thing.

The issue now is a) whether the banksters have cleaned up enough of their shorts and b) if the hedgies have figured it out this was a man made selloff of large enough proportions that the banksters are happy campers cleaning their portfolios.

In any event, with the hedgies turn off their alsos now?

Tune in next week for the answer.

remember monday is option expiry on futures and strange things happen regardless. Then First notice.

Then we have the itsy bitsy sequestration head fake.

Then we have jobs report the following week which if we can trust it, wil llikely be weak.

gold slut
Feb 24, 2013 - 11:37am

@gold slut: Smart

@gold slut: Smart thinking.

You said:

As my stack is puny at the moment, the longer the prices are kept low the better for me (another 5 years would be nice, but I don't see that happening - sigh). I view my stack as an alternative pension fund. If the price rockets, well that is great, but in the meantime I am more than happy to keep turning what little spare Fiat I have into cheap PMs - win win! 

It is good that you figured that out quickly. I started stacking back in 2010. I was overjoyed as the price shot up to almost $50. Unfortunately a large part of my stack was acquired during that rise. Consequently I am considerably in the hole right now. Since I am confident in the eventual increase in the value of silver, both in terms of fiat and in real purchasing power, I am with you in that I am hoping it actually stays low for the short- to medium-term future. I wouldn't even mind if it goes a bit lower. I would love to have a few more years to accumulate silver (and a little gold from time to time) and I still have other prepping needs to attend to. I'm in no rush for the inevitable reset and the social dislocations it will engender. In fact, I'd prefer it not happen at all. I would rather see our society come to it's senses, but I am skeptical that is going to happen with a strong dose of reality. In the mean time, slow and steady wins the race.

Keep stacking!

SaratogaPrepper
Feb 24, 2013 - 11:38am

She

had a coin collection?

department of truth
Feb 24, 2013 - 11:39am
¤
Feb 24, 2013 - 11:41am

The Wizard

Just about every time I see Wizards moniker I think of the 2nd tune on BS's 1st album. 

Many don't realize this and see Sabbath as strictly a dark band but I think it's overblown (regardless of the lyrics at times) to the extent that they merely played to a target audience that allowed them to thrive.

Previous to renaming themselves to BS they were known as Earth and the mellow positive thing they had going on wasn't working so they dramatically switched 'sides' in their messaging that they never really previously embraced before their rebranding. What sounds like an embrace is a recognition of the dark side of humanity and where some find themselves in it.

Good decision by them back then to rebrand themselves. 

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Torpedo Fish
Feb 24, 2013 - 11:50am

@tpbeta - trader dan

The guy was wrong from the beginning and even now he is not sure about silver market being manipulated. Thanks God he has finally agreed that Gold is being manipulated. It looked like it was hard for him to admit that even knowing that FED chairsatan openly admitted they are manipulating. 

Ferd Torgerson
Feb 24, 2013 - 12:00pm

@ Murphy

Congratulations on your son's impending nuptials. Seems like only yesterday he was just a pup. Not surprised he would prefer cash as gifts. Over the years I'm sure you've taught him various and sundry ways of getting his hands on as much cash as possible - regardless of the legalities.

Ol' Ferd has a solution that will be win-win-win for young Murphy, his friends, Turd and everyone else. We need to persuade our host to add another TAB at the top of the blog - Turd's Bridal Registry

When friends ask what the young couple would like in the way of gifts, direct them to the link for Turd's Bridal Registry. Sure, there will be some whose mouths gape open at the idea of such a name for a bridal registry. But once there, they'll see links to Turd's PM sponsors. They can shop for the best deals and then place their orders. Young Murphy and bride get their PMs, their friends get a warm feeling from giving a gift that will last, the sponsors make a sale and Turd gets a commish.

A year from now, when asked about wedding gifts, the hip, trendy set will simply respond, "We're registered at Turd's."

Not sure how all the mechanics would work but I shouldn't have to think of everything.

Now that the idea is out there, I'd suggest that Turd beat feet to get the registry up and running right away. Otherwise, you'll have Bollocks with his own registry pushing gold-plated tungsten bars and counterfeit Franklins.

Ferd

¤
Feb 24, 2013 - 12:13pm

@DPH: Black Sabbath - Black Sabbath.

Thanks for the trip down memory lane. That was one of the best Rock albums ever. I think I was about 13 or 14 when it came out. I had it on vinyl. I pretty much played the grooves off of it.

Speaking of Wizards.

Video unavailable

Happy lazy Sunday.

Swineflogger
Feb 24, 2013 - 12:27pm
murphy Ferd Torgerson
Feb 24, 2013 - 12:29pm

Ferd

You never cease to amaze me with your entrepreneurial genius. Folks, the man is a workaholic. Even on a Sunday his mind is looking for ways to make some vig.

I can see the ad in the ladies bridal magazines already.

Ladies , when you think of marriage, think Ferd's Turd Registry. We deliver the hard stuff.

tpbeta
Feb 24, 2013 - 12:32pm

@Torpedo Fish

Did Bernanke openly admit to manipulating Gold? Missed that. Wouldn't want or expect Dan to be too diverted by conspiracy theories, whether they're true or not. He's a trader.

Swineflogger
Feb 24, 2013 - 12:39pm

One more and then I have to go sling hay

I was in LA recently and saw a bumper sticker on a parked car that read, "I miss Chicago."

So I broke a window, stole the radio, shot out two tires, opened the trunk and put in a dead body.

Then I left a note that read: "I hope this helps!"

SIlverbee
Feb 24, 2013 - 12:41pm

Is it a battle of inflationists over deflationists

Could it be that the fate of PMs is down to an internal war within the EE. If the prevailing opinion is deflation then the PMs will be kept down to help signal a deflationary message. However, if the future is determined to be an inflationary one then it might be ok to allow the PM prices to rise. This would then affirm the MOPE that inflation exists allowing policies that counter this which may become the modus operandi or to signal inflation is here to stay

ClinkinKY
Feb 24, 2013 - 12:42pm
Torpedo Fish
Feb 24, 2013 - 1:01pm
¤
Feb 24, 2013 - 1:06pm

BIS: OTC Derivatives & Margin/Collateral Requirements

Below is a link to a recent BIS consultive document that would appear to address their growing concern with OTC derivatives. You get the sense they're worried about whose left holding the bag and if the bag will have anything of real worth left in it. I see the word haircut being mentioned. 

I included the summary and table of contents for the document and a snippet of Element 4/ Collateral to give you idea what it's all about before you open the entire PDF file.

It's almost funny and silly that they list gold as last on that list of fiat or paper IOU's they trade between each other as being eligible collateral.

Who are they kidding?

15 Feb 2013

Margin requirements for non-centrally cleared derivatives - Second Consultative Document

...• High-quality corporate bonds; • High-quality covered bonds; • Equities included in major stock indices; and • Gold. The illustrative list above should not be viewed as being exhaustive. Additional assets and instruments that...

Contents

Part A: Executive summary .................................................................................................... 1

Part B: Key principles and requirements ................................................................................ 6

Element 1: Scope of coverage – instruments subject to the requirements .................... 6

Element 2: Scope of coverage – scope of applicability ................................................. 7

Element 3: Baseline minimum amounts and methodologies for initial and variation margin ........................................................................................................................ 10

Element 4: Eligible collateral for margin ...................................................................... 15

Element 5: Treatment of provided initial margin .......................................................... 17

Element 6: Treatment of transactions with affiliates .................................................... 19

Element 7: Interaction of national regimes in cross-border transactions ...................... 19

Element 8: Phase-in of requirements .......................................................................... 21

Appendix A .......................................................................................................................... 24

Standardised initial margin schedule........................................................................... 24

Appendix B .......................................................................................................................... 25

Standardised haircut schedule .................................................................................... 25

Appendix C .......................................................................................................................... 26

Quantitative impact study on margin requirements for non-centrally cleared OTC derivatives .................................................................................................................. 26

Part A: Executive summary

This document presents the near-final policy framework that establishes minimum standards for margin requirements for non-centrally cleared derivatives as agreed to by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO).

1 This near-final framework was developed in consultation with, and with the active participation of, the Committee on Payment and Settlement Systems (CPSS) and the Committee on the Global Financial System (CGFS).

This is the second consultative document on the margin requirements for non-centrally cleared derivatives. This consultative document reflects the near-final policy framework after careful consideration of the responses to the first consultative document issued in July 2012

2 as well as the results of a quantitative impact study (summarised in Appendix C). This consultative document seeks comment on four questions on certain specific aspects of the near-final margin framework.3 This consultation focuses only on the remaining open issues and not on other aspects of the margin framework which have been broadly agreed by the BCBS and IOSCO.

Background

The economic and financial crisis that began in 2007 demonstrated significant weaknesses in the resiliency of banks and other market participants to financial and economic shocks. In the context of over-the-counter (OTC) derivatives in particular, the recent financial crisis demonstrated that further...

Element 4: Eligible collateral for margin

Background discussion

4(a) Even in cases where margin is collected in an amount sufficient to fully protect a firm from the default of a derivative counterparty, the firm may nonetheless be exposed to loss if that margin is not in a form that can be readily liquidated at full value at the time of default, particularly during a period of financial stress....

Requirement 4

4.1 National supervisors should develop their own list of eligible collateral assets based on the key principle, taking into account the conditions of their own markets. As a guide, examples of the types of eligible collateral that satisfy the key principle would generally include:

• Cash;

• High-quality government and central bank securities;

• High-quality corporate bonds;

• High-quality covered bonds;

• Equities included in major stock indices; and

Gold.

The illustrative list above should not be viewed as being exhaustive

 Additional assets and instruments that satisfy the key principle may also serve as eligible collateral. Also, in different jurisdictions, some particular forms of collateral may be more abundant or generally available due to institutional market practices or norms.... (cont.)

https://www.bis.org/publ/bcbs242.pdf

Admiral Ag Bar
Feb 24, 2013 - 1:15pm

The next step in our narcissistic devolution

Are you tired of always updating your FB status so you can prove your hampster-on-a-wheel-consumer-driven lifestyle is still worthwhile? All those tweets seem so.... 2012? Emails so 1996? Welcome to the brave new world!

Google Glass. Strap a tiny computer to your face and record every stupid thing you do while being constantly geo-located by the NSA. How fun!!!

I think I'll go stand in line so I will be the first sheep to have one!

Google Glass Can Kiss My Ass!

Actually, I'm going outside to enjoy this beautiful Sunday afternoon. wink Things just keep getting more strange by the day...

Biochar
Feb 24, 2013 - 1:16pm

Balance... plus LCS visit

In the past few months I've put nearly 2k into freeze-dried foods. Mostly ordered from Costco online (free shipping)... Chef's Banquet and Shelf Reliance products, lowest price per ounce I found yet. Also bought a nice variety of Mountain House entrees. These will augment our rotating stash of canned tuna/salmon/chili, rice, lentils, beans, nuts, etc. The good thing about the freeze-dried is we know we're OK for 15 years at least, so the hassle of rotating is lessened. This spring begins year 4 of expanding our garden. Last year added a Reliance peach tree, we live near Seattle, and to our amazement it (2 year old) produced 27 medium size juicy peaches, bought at Home Depot. Don't forget to have a couple of sprouting kits and plenty of seeds, great for nutrition during the non-growing season, and a healthy addition to your salads and sandwiches anytime. We also are adding to our propane stash, shelf life is for all practical purposes forever.

Went to my local LCS yesterday. Out of 12 or so buyers waiting all but 2 were from India, all ordering gold (only a few beat up fractionals available in house). Sales guy said orders have been off the charts the past 3 days, weighted heavily in favor of maples. Lots of peeps from India work at Microsoft locally, over 3,000 Chinese at Microsoft too (I attended their Christmas event 2 years ago so I know that's a fact) and I often see them buying too, only they go for silver as well.

peace/out

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