Pailin's Trading Corner

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Wed, Nov 19, 2014 - 10:49am
pailin
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ok so not to be a dck or anything, but...

Pulling out to daily...silver looks to be making a nice rounded top, all within the channel defined by the July 10th 'peak' (if you can even call $21 anything to write home about :) and...heading back down again?

Cripes.

Break out of the channel to the upside and there's still some room for a year end 'rally' (again if you can call it that :) :)

And that probably has more to do with how equities play out the next six weeks, since they're running contra to metals.

Or maybe we see something worth buying (bullion) into shortly, a Christmas gift of 14-handle :) :) maybe??

JPY. Ugh. Should have waited another 36 hours to get the extra 1%. BAH!

EDIT: 1180 gold lost (again), so I think we know how this ends...

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Wed, Nov 19, 2014 - 11:50am
zman
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Falling silver demand

https://www.kitco.com/news/2014-11-19/Silver-Demand-To-Drop-In-2014-GFMS.html

"Total physical silver demand is seen down 6.7% in 2014"

"Industrial demand was forecast down 1.8%, with jewelry seen down 4.4% and silverware down 6.3%"

So let me guess, this was because of the paper manipulations? LOL.

Wed, Nov 19, 2014 - 1:19pm pailin
uki
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Re: 1180 gold

pailin wrote:

Pulling out to daily...silver looks to be making a nice rounded top, all within the channel defined by the July 10th 'peak' (if you can even call $21 anything to write home about :) and...heading back down again?

Cripes.

Break out of the channel to the upside and there's still some room for a year end 'rally' (again if you can call it that :) :)

And that probably has more to do with how equities play out the next six weeks, since they're running contra to metals.

Or maybe we see something worth buying (bullion) into shortly, a Christmas gift of 14-handle :) :) maybe??

JPY. Ugh. Should have waited another 36 hours to get the extra 1%. BAH!

EDIT: 1180 gold lost (again), so I think we know how this ends...

FOMC minutes are released today, so I believe extra volatility is included in price of the show. Usually also fake breakouts are included, too. Let's how this one plays out.

Wed, Nov 19, 2014 - 2:30pm
pailin
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Quite correct uki. Silly me -

Quite correct uki. Silly me - I stopped looking at 'news' events since all moves are attributed to them. Easier to just look at charts, but sure FOMC will hit stops on both ends every time. Bummer. Cuz I was getting excited :)

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Wed, Nov 19, 2014 - 2:48pm pailin
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pailin wrote: Paid JPY

pailin wrote:

Paid JPY invoice late yesterday around 116.7. Not the best but not complaining either. Should have taken 117 when it was there briefly. Anyway...headed back up there (it seems) and gold took a pop and (mostly) hanging in there too. Silver looks pretty weak to me. Dan Norcini says 1340 on a weekly close and we can look at gold differently...until then, trend is trend :)

JPY 118. Isn't anybody around here shorting this dog?? With reasonable leverage this thing just pays pays pays :)

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Wed, Nov 19, 2014 - 8:39pm
pailin
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pailin gives up

I mean....really. A moat.

Congressman Proposes “Moat” Around White House, Secret Service Director Confirms “May Be Good Idea”

globaleconomicanalysis.blogspot.com / Mike “Mish” Shedlock / November 19, 2014

I am seldom astonished by ridiculous Congressional proposals to waste money, but here’s an entirely new idea: Congressman Suggests Moat Around White House.

Faced with an increasing number of White House intrusions that led to the resignation of a Secret Service director, a congressman on Wednesday suggested that maybe a moat should be erected around the president’s home.

The suggestion was made by Rep. Steve Cohen, a Tennessee Democrat, at a House Judiciary Committee hearing.

With hand gestures, Cohen suggested a moat roughly six-feet wide may be “attractive” and “effective.”

MarketWatch provides this diagram…

READ MORE

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Thu, Nov 20, 2014 - 10:44am
csquared13
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No one trading natty either?

No one trading natty either? Tapping at 4.50's...maybe we see $6 handle like at the beginning of the year?

“Everybody gets what they want out of the market.” -Ed Seykota
Thu, Nov 20, 2014 - 3:38pm
csquared13
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1150ish appears to be

1150ish appears to be providing support to the Russell; however, Weekly candles are showing lower highs, while the ES, Dow, and Nasdaq make higher highs.

I sure do wonder what will come of this divergence.

I'm still short the Russell via RWM (trade + partial hedge for my equity longs) and may add more depending on how this divergence plays out.

“Everybody gets what they want out of the market.” -Ed Seykota
Sat, Nov 22, 2014 - 2:12pm
silverwood
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Off topic , but looking for some help!

Please input an ideas to help me understand...

I belong to Costco and I am pleased with the savings I get from being a member. So I had this idea after watching the price of gasoline dropping. I called Costco and asked them if they could offer members a gas card that would allow them to purchase gallons of gas at the current price offered by Costco. Then they could use this card to purchase gas until the gallons are used up. I told them that this would be a way for "we the people" to take advantage of lower gas prices by locking in what we anticipated would we would use over the next month or so. We could also think of purchasing gallons of gas as better way of saving (preserving purchasing power). I believe you get the gist of my idea. So I have been in contact with one of the vp's of Costco gas. She has told me that their system is not set up to provide this, but it is being updated. She also told me that she spoke with a Costco gas buyer, a separate division, and they told her that they would have to "hedge exposure by buying a futures call option". So my question to the board is, could this gas card idea work using the futures market?

Sat, Nov 22, 2014 - 2:52pm silverwood
pailin
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silverwood wrote: So my

silverwood wrote:

So my question to the board is, could this gas card idea work using the futures market?

Sure, it would work the same way bullion dealers lay their risk (of dust-gathering inventory) off in the derivatives market. This is all about risk management. Let's talk about that.

From your pov, the customer, you're willing to 'bet' that prices will go up more than down (else why pre-pay now for gallons in the future?) So you'll take that "risk" (gallons go down instead of up, short term)...but you're passing it on to Costco. Now Costco is in the business of selling things for a well-understood margin, not a vague or speculative margin. So...they don't really want "your" risk. Because from their pov, they're long your dollars but 'short' the gallons (value of the card they sell you today). So they'll look to pass that 'risk' (that gallons go up when you take delivery at the pump, costing them margin) on to somebody else. That can be done many ways, and one of them is futures, where they'd want to 'hedge' by going long there to offset their short sale to you. And aside from some administrative expense everybody would get what they want. Unless the futures (or other derivative market) fails to deliver risk protection (in any numerous ways you might imagine!) or Costco fails to deliver the gallons (umm, go bankrupt before you get all your gallons, etc etc).

One thing to understand though, very important, is that this derivative chain doesn't necessarily involve only three parties (yourself, Costco, an exchange); it can get very long indeed. There's an assumption that each participant will always seek (and find -big big BIG assumption!) the very best deal relative to size. So you'll always seek and find the best gas futures deal (for you), and who you buy your 'card' (futures) from will do the same, etc. And so by (assumption) definition the chain is never longer than it has to be. Well that's math in a white box. Not the real world. And so, in the real world, the chain can get quite long indeed, and we all know how strong a chain is, yeah? So the weakest link, whenever, wherever, and suddenly liquidity dries up as 'promises' are broken. And maybe Mr. Government (or Mr. Insurance?) steps in and makes everybody mostly or fully whole...or not? And so there are losers, small, big, gigantic, doesn't really matter. The risk wasn't really disappeared...was it? Just masked for a time. And that's probably what most people don't understand. If they even take the time to think about it. We (the collective everybody) all walk around, all day, everyday thinking of ways to 'skate' out of our obligations (risk) by passing them on to somebody else. Car insurance, life insurance, annuity payout schemes, health insurance, all bought under the presumption that doing so only creates good, no harm, for a cost smaller (much smaller in our simple brains) than the benefit, never seeing the big picture and never understanding how much we aid the destruction of our own stability and security. Because, see, when you scale it up to millions, billions of people and contracts and derivatives written on derivatives written on derivatives...whoa. Either there's a lot of inefficiency (overpaying more than once for the same single service) or quite the inverted pyramid (scheme :)

So, heh, that's what you're up to...potentially adding just a few more sticks of dynamite to the quadrillion derivatives bubble bomb...to save a few cents per gallon (whoooo maybe even ten or twelve --yippee!) next month. Err...or get smoked if prices keep going down.

Being a true free-market libertarian, I say go for it if you can get somebody else to take the other side of your bet. But don't come around my way whining if prices move against you (you're long and prices drop) or you need a bailout (or demand your gallons if Costco fails to deliver or goes bankrupt). The risk never disappears. Masked at best. For a time. And possibly toyed with even further by WallStBoys too by making your presence 'known'.

All that collective whining? It's why they keep printing more dollars to bailout losers and eroding my hard-earned dollar through inflation into nothingness. And yours too. Perpetuating price instability and causing you to consider this sort of a stopgap strategy, which actually only exacerbates that very cycle.

Not the solution imo.

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sat, Nov 22, 2014 - 10:35pm
silverwood
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Hey Pailin

Pailin,

Thanks for your pov. So my understanding of Costco is they know every dime every member spends at their stores and what they spend it on. They must be able to do trend analysis on their members buying habits. So lets look at gasoline. They must have data on how many gallons are sold over whatever time frame they choose. So if they sold the members gas cards they would know exactly what the demand for future gallons would be without any real complicated math formulas versus current usage. So wouldn't this give them some inside information to be able to hedge the futures market? I don't play futures and I have a limited understanding to how it all works. I do know hedging strategies could be developed because of the edge they have knowing what the demand side is from their members. So then what is in it for Costco, who just wants to make a simple mark up on every product they offer. Could Costco make the mark up and also make some profits playing futures with their inside demand knowledge?

Sun, Nov 23, 2014 - 8:26am silverwood
pailin
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Any business modeled on

Any business modeled on volume that stays in business in this environment knows their customers and buying habits. I bet if they'd answer the question (but probably won't), they're already hedging. Everybody doing volume against thin margins is, especially if underlying price is volatile. How they're doing it and to what extent (coverage isn't always 100% hedge 'per se' :) is a whole 'nother thing, and probably too speculative to be of real use. We'd just be guessing. But they're surely doing it. Again they're in business to move as much product as possible at the best margin they can, that's the wholesale to public model. Plain and simple. There is no room to 'safely' do this and play speculative games too. Companies do this, takes risks above and beyond their core business. And they eventually go under. Example: see Tulving crash 'n burn :) There are other examples too, some pretty spectacular cases that have been explained away as fat fingers and rogue traders...uh huh. Sure. Doesn't matter if it was intentional or not, whether upper management was aware or not, the result is the same. All good when winning, very very bad when losing, sometimes fatal. I'd be surprised to find Costco, Wal-Mart, any other large brand name screwing around like this. To make a point or two, here and there, and risk the whole farm in doing so? Crazy. And you don't want that either, because one day they'll blow up and your favorite cheapie store will be shuttered. The better way, which is done all the time, is segregates some assets have them privately and separately managed. By pros. No different than you and I might do, just on a larger scale. That way the risk is contained and scale of potential losses largely understood.

Stepping away from that, there's other things you may want to consider. Like why are you thinking yourself and others would really want this? Probably because you want to bet on higher prices to come, right? So you want to lock in lower today. Okay. That comes at a price. This is a popular thing in my area, where oil heat is common and the local distributors offer retail 'contracts' to lock in a price pre-season. The price is always higher than it was over the summer (duh) and is likely just a spread higher than what they're being offered by who they buy from (the distributor's distributor :) And on and on up the food chain. No real harm (so far). But think again...all this hedging (from the consumer on up), aggregates future demand and...pushes prices up. A self-fulfilling prophecy. These things don't happen in a vacuum. That's what I meant when I wrote: possibly toyed with even further by WallStBoys too by making your presence 'known'. By sharing all that future aggregate demand (yours, your neighbor's, etc etc), the real advantage is being given to Wall St. They're the beneficiaries of free market data, whether it's gallons of gasoline or gallons of heating oil. I think we all know that Wall St never lets good data go to waste, and that what benefits them usually comes at a direct cost to everybody else. Probably the only way to beat that (since you cannot remove yourself altogether) is to invest in their securities and funds. At least then you can get their dividends and participate in the capital gains ride up (as long as you get off before they crash their own charts :)

So that's a point of view for sure, but pulling all that demand forward by pre-paying (the card idea) makes you 'super' long (card) for present demand and makes Costco (or whomever) short...they 'owe' you future gallons. And so this is how a massive future short position is created (all the Costco customers rolling up to the market, and maybe again Wal-Mart's Sam's if they do it too -to compete, and maybe other retailers as well). All this added to a market that is probably already short via normal business hedging. A huge short position can only be resolved by lower price (see metals!) or losses/bankruptcies. All simple facts and math.

So why again do you want this? Is it not enough that prices at the pump are 20-30% lower today than they were six months ago?? Do we really want to live in a world where synthetics are created for each and every product (and labor) that is or ever will be produced? And then that stepped on in multiples with leverage by everybody on the Wall St food chain? Yikes.

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sun, Nov 23, 2014 - 9:27am
turnoffthewater
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Called market manipulation on a grand scale

I don't usually post here but was reading ZH and ran along an interesting comment to share and discuss here. It seems plausible esp. since the SEC isn't/won't investigate any of the big banks. And Holder, well, is worthless.

HSBC shorts 44 tons of gold paper gold for 1 year delivery at lunch time driving the paper price down to say 1150. Other side of the contract is JPM. In one year time, Gold has say risen to 1300. Delivery is settled in paper not physical. JPM is up 200m on the trade. HSBC is down 200m. Fed receives 200m PandL from JPM who are then flat. Fed pays HSBC 200m therefore Fed and HSBC are flat.

Everyone is flat but paper price for Gold was originally smashed back on the day. Of course Fed pays trading commissions to parties to keep the merry-go-round going. Market manipulation at the grandest scale. All very illegal but who the fuck are you to stop it. These guys can do this all day long and who the fuck is going to find out.

The article is here:

https://www.zerohedge.com/news/2014-11-21/asian-gold-traders-suspicious-recent-turbo-steroid-moves

Comment here:

https://www.zerohedge.com/news/2014-11-21/asian-gold-traders-suspicious-recent-turbo-steroid-moves#comment-5476300

Sun, Nov 23, 2014 - 10:20am turnoffthewater
pailin
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merry-go-round

Quite believable, even quite probable. This happens all the time in the art market.

Example: I sell you "Rothko #12, 1962" for $25m. You sit on it for a few months, then sells it for $28m. That guys sits on it for a year, then sells it for $35m. That guy puts it up the following season at Christie's for $30-40m estimate and it realizes $38.5m, high end of estimate, but within range (so everybody is happy, right?) Too bad everybody before Christie's was "me" or me and a couple of "name" friends (significant collectors, dealers, "soon to croak" Estates). That's how you turn $25m (which by the way was unsellable to anybody else at that level) into a real $38.5m, an ROI of 50%. On big money too! All along till Christie's buyer, the painting may never have even left the vault, and no actual money need ever have changed hands. And don't forget...everybody else that's long Rothko is behind you all the way. Especially the dealers. Your comp makes their collection all the prettier :)

Happens all the time there, why not elsewhere...especially when so many hedgies coincidentally collect art too :) :)

Of course the entire art market isn't crooked, but man it's the ultimate buyer beware landscape! Didn't realize it at the time but my many years there -caveat emptor- actually prepared me well for my (brief) trading career. And helped me figured out in less than 18 months that the only winning play in (paper) metals is SHORT. And flat or long bullion. At least from a conservative risk/reward stance.

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sun, Nov 23, 2014 - 10:57am csquared13
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I'm in

But I'm a nobody in trader's terms, just like to buy low is all, up 6%, waiting for 10. Winter demand.

flyinkel
Sun, Nov 23, 2014 - 4:04pm
pailin
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hooboy EUR

EUR just opened gap down to 1.236. Let's see what the rest of the evening brings :)

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sun, Nov 23, 2014 - 4:58pm turnoffthewater
HappyNow
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No doubt.  It is frustrating

No doubt. It is frustrating and oh by the way one kind of manipulation or another has been taking place at any/all exchanges (eg pork) since the first ever exchange opened up.

We can rant in the name of justice or rant in the name of our own burns but it isn't going to change.

Swing trade indexed ETFs. Long physical gold, silver, and 1 miner.
Sun, Nov 23, 2014 - 5:37pm HappyNow
pailin
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HappyNow wrote: ...one kind

HappyNow wrote:

...one kind of manipulation or another has been taking place at any/all exchanges (eg pork) since the first ever exchange opened up.

Surely not everybody round here is libertarian (forget the capital-L folks, they're as power-hungry as the Big Two :) but if you are, what is your stance on truly free markets? Here's my take:

Manipulation is fine. Just fine! That's the free market, as in free = anything goes, don't step on my d.ck!, and it includes liars and cheats among the many honest and hardworking. Knowing that means being mighty skeptical and triple-checking your homework every time.

Where we've gone wrong is creating this "government-thing" that supposedly watches out for us and stomps all over wrong doers. Well guess what? It doesn't do any such thing and actually makes it easier for the nefarious to go about their business. Because there are more sheep than ever, as the world is no longer a dangerous place (thanks to "government-thing"). Yippee! Or so they tell us :)

Similar to how domesticated animals cannot survive in the wild, neither we governed humans. Cripes...we're actually just pets of The Elite. Bummer :(

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Sun, Nov 23, 2014 - 7:06pm
Tesla
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Monetary Base and

Monetary Base and deflation The Monetary Base consists of currency in circulation and commercial bank deposits at the Federal Reserve. Currency in circulation includes notes and coins both in circulation and held in the vaults of commercial banks. Commercial bank deposits at the Fed can be further broken down into required reserves and excess reserves. Excess reserves on deposit have soared — since late 2008 when the Fed started paying interest on reserves — to a level of $2.6 Trillion. By varying the interest rate payable on excess reserves the Fed can manipulate the amount of currency in circulation. https://goldstocksforex.com/2014/11/16/monetary-base-and-deflation/

Sun, Nov 23, 2014 - 10:10pm
eyeswideopen
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Been reading about the Madoff scheme

https://jpmadoff.com/foreword/

Four chapters currently online.

Complex is an understatement. Feeder funds, LLC's, check fraud, and JPM (and who knows how many others) knew for years it was a scam. The money and movement of it is just mindblowing. One could easily conclude that elements of 'The Structure' were waist deep in all of it, and had even more to lose if the whole nasty thing reared its ugly head. Portions of the story paint some at JPM as being responsible in their DD, but only after they had clear evidence of the fraud AND the risk was impossible to gauge.

So, where do the billions in settlement money end up? Anybody? Would it be too conspiritorial to believe that some funds find their way into the markets?

I've taken advantage of depressed prices to research and purchase a couple numismatics. Only seeking out a few particlar types, primarily because they're great pieces to look at. One door into the art world for a peasant like me. I do have concerns about fakes down the line and wonder if anybody might like to add their two cents.

I know there's a stackers blog, but I do respect the opinions here over any other place, and also wonder what the crew thinks about numismatics in general.

Thanks in advance for the tolerance. Peace