Short term trades in the stock market •$$$$$•

[SpasticGramps]

Well you see reports where the Fed is saying there's no inflation or it's muted and consumers are pulling back due to rising prices you just gotta go...D'Oh!

Ol Bernanke has a hard time not speaking in contradictions.

Looks like physical silver is going for ~$3 over spot at the Scottia Mocatta. A little dislocation from the paper market. It's even higher at the APMEX. Funny how the free market always finds itself.

Physical Silver Update

And meanwhile, the repulsion to silver as exhibited by both the Comex (where as we predicted yesterday we see the first 32MM ounce handle in registered silver - a new record low), and Scotia Mocatta indicates that the silver paper and physical markets are in perfect unison. Or not. But yes, the feedback loop mechanism of SLV unwinds will likely have a greater impact on the paper market until such time as it once again reverses and aligns paper and physical interests yet again.

I'm going to look at acquiring a small position somewhere around here.

EDIT: Tons of stuff on backorder at the APMEX too. JPMoron's days are numbered.

 

[Mountain]

Interesting disjoint between physical silver and paper trade stuff like SLV and the need to buy physical silver that much over spot. I do think this is a good time to pick up physical silver right around here. At the least about half the position you'd like and if it tanks for some reason average down. Ultimately you'll be sitting in the driver's seat either way.

Strange days indeed

 

[SpasticGramps]

I have some money to burn. All that money from the oil speculation is filtering down to the oil proles and I'm going to stick it right back up their ass.

 

[SpasticGramps]

Interesting disjoint between physical silver and paper trade stuff like SLV and the need to buy physical silver that much over spot. I do think this is a good time to pick up physical silver right around here. At the least about half the position you'd like and if it tanks for some reason average down. Ultimately you'll be sitting in the driver's seat either way.

Strange days indeed

Here is an interesting exchange from two people on ZeroHedge relevant to the spot price disconnect.

Person 1:

Again, I admit I don't know as much about the silver market as most investors here, but I do have a few comments and questions.

Why is there so much focus on the "paper" price of silver as it goes up, but when silver goes down, suddenly the "paper" price becomes meaningless? It kinda sounds like people lying to themselves or being willfully ignorant.

If the great fiat apocalypse happens soon, and silver is agreed upon by the plutocrats and sheeple to become the next currency, I can understand why today's fiat price doesn't matter.

Yet, if the fiat apocalypse doesn't happen soon (which I'm inclined to believe it won't), then I don't understand why the downside "paper" price movements are meaningless. The entire world is a "paper" economy - everything in commerce is measured and resolved with "paper." And while its fun to idealize a retro-world where precious metals are mediums of exchange, it simply isn't reality. Goods and services are still exchanged for paper, everywhere.

So if it's not a medium of exchange, is it a storage of wealth? Yes, indeed it is. But is it better than many other options? Maybe, but not really. I could pick the biggest "sheeple" stock on Earth - Apple - and it's been a better storage of wealth than silver in the past 2 years, and more broadly, this past decade.

I guess that's a long-winded attempt to say that I don't understand all the silver worshipping. As a storage of wealth, silver is just one option among many, and after the slaughter it encountered this week, it doesn't necessarily seem like a standout, nor worthy of worship status. It's just as vulnerable to manipulation and bullshit (on the upside and downside) as anything else.

In your mind, the value of silver may be supernatural and transcend various fiat measuring sticks, but to the rest the world, silver only functions within the sphere of paper denominations.

Either you can attempt to function and invest in the real world (as unfair as it is), or you can drift off into the goofy land of cults and conspiracies and carnival-barkers.

Person 2:

I'll take a stab at it since you are a fellow Texan and you are been courteous in your questions. The reason that the paper price is critical when is going up but not when is going down is because the paper price going up drives the physical price going up. But, the paper price going down, although initially drives the physical price down, it also dries up the available supply driving premiums for the available physical back up.

So, as a practical example. When the paper price was at 46 the physical price went up to 46 (and a small premium). Now that the paper price is back down to 35, the suppliers are running out of deliverable silver. This causes the dealers to increase the premiums to reduce the demand. So you see the disconnect. If the lower paper price was truly dictated the by a lack buyers, the dealers would not be running out of physical silver now. But because is all paper games, all it accomplishes is spooking the paper holders and making it harder for the physical holders to BTFD.

To be honest, I enjoy the paper games. It lets me get more shinny for my paper tokens.

Person 3:

Willing to bet the premiums normalize within the next 30 days to the extent they have widened materially. Tulving has Maple Leafs at $2.69 over spot -- not sure, but I think it usually is $2.29 or something. Regardless, don't think the wider premiums have compensated for hardly any of the spot price decline from $50 to $38.

But I am with you - my paper silver profits (both long and short) have paid for all of my physical silver holdings -- so I own a fair amount of physical silver at no effective cost.

I need get in on the paper trading part of silver and just focus on it. I may open a Casino Account. I'm going to buy a little chunk somewhere around here for fun and watch it.

 

[TNTBudSticker]

Doesn't have silver or gold in it and was hit 20 points.Have been watching silver on the sidelines.If you're holding...go the other way with the stock or use it as a hedge on days like those. DZZ,ZSL.

Hold 15% going the other way and hold 85% bullish.It gets cheaper for the bears.Lots of money on the bearish side.

I didn't get out of AGQ on the 2nd day and was holding 1/4 position and down $104 and made it up by going full position and made it all back on paper shorting it. Google Paper trading Works! lol

Good news to those who are holding.

"As a matter of fact almost all cycles have been stretched the last two years by the Fed’s printing activities. Consequently all markets have been swinging wildly between bullish and bearish extremes.

Think of it as a rubber band. The further you stretch it the harder it snaps back once the pressure is released. Gold and especially silver (NYSE:SLV) were stretched extremely tight during the last couple of months. Now that the profit taking event is here it is understandably severe simply because the upside was so powerful.

However QE hasn’t ended. So once the correction runs it’s course we should see another massive swing to the upside, again driven by free money and the extremes to which gold (NYSEZZ) moves to the downside. The further the correction goes the more powerful the rebound will be once selling pressure exhausts.

It will also be driven by the many investors and traders that got thrown from the bull during the correction chasing as the metals surge higher out of the cycle bottom."





I used to Chase SKF and MZZ in 2009 and these were cool money makers.Now alot of folks in Gold and Silver.I used to hold silver at $4.00 an ounce and this is pretty cool it has been hitting it's high and even outperforming Gold and Gold used to go up 10% every year.Amazing

I should sneak back into WLT for a few more gains and a week.Did get out too early.But no loss there.

 

[Madrus Rose]

Here is an interesting exchange from two people on ZeroHedge relevant to the spot price disconnect.

I need get in on the paper trading part of silver and just focus on it. I may open a Casino Account. I'm going to buy a little chunk somewhere around here for fun and watch it.

Make sure you get an acct that allows trading in the full spectrum of hours , though the chart below doesn't show it the AGQ tapped lightly down to $166 area twice in the premarket Fri morning which is something always to look for ...those two exhaustion pushes down . The SLV was beautiful buy opp too as it pushed down to $32.30 , this 3day correction took out all the excess margin trading of the past 2mos ...hows that for efficient markets ?

What chart was telling me in premarket was AGQ , $Silver, SLV all just touching into the Oversold rsi30 and since the march high=tops had been violated was then looking at the Feb pivots of $185, $34 , $33 .

Since the AGQ was hitting $166.50 in the premarket almost knew this was bounce time..... and that at least that Feb $185 top was doable with possibleco continued short covering up to $200 . If you look at the intraday on AGQ there was also several attempts to retake $200 a gain of 33pts off the premarket low early on , but the last push up around noon was weaker .

Was telling some friends later on that those several $198 touches from 10am on were the short opp . And look where the AGQ settled, right back down to that Feb high pivot of $185 .

35 pts on the long side & 10pts on the short , though intraday in the am at least 5 trades short could have been made from the $198 pivot it hit 5 times at least & pulled back to $195 area ...to tank later after lunch . Thats their way of telling us that $Silver is now back to a proper valuation at $32-$34/oz for now .

AGQ was trading off $166 premarket twice ....nice entry there & right above ...now for the new lower trading ranges , think silver long term is fine and but for now fully valued here . Obviously others were seeing that Feb pivot high of $185 too , why like to use thise price labels , makes these pivots easy to see at a glance .

 

[krunchbubble]

fuck, i wish i knew what you guys were talking about, i have some money to burn.....

 

[Madrus Rose]

One observation on these incredible momo's whether $Silver or PCLN on the charts , where they are so overbought for such extended periods of time that when do you call the top ?

Finding the usual is to count "3 waves " up into the overbought ,which may take a
month usually does the trick, though had no interest in PCLN it did 40pts
on friday up & down .

On the massive rise on the AGQ above theres still those 3 waves up
into the overbought ...of course $50 was a pretty obvious place to sell silver looking back still it will get back too , for now $silver trades under $40 for a while .

 

[Madrus Rose]

fuck, i wish i knew what you guys were talking about, i have some money to burn.....

Well essentially Krunch the Federal Reserve Bank has been pumping/printing money into the market for months now , providing trillions of new "free~cash" for Banks & Businesses to create support for them & repair their past sins , bad loans & all kinds of looseness , which at the same time only ends up massively dilluting the value of our own currency/dollar to an alarming extent .

So we've seen the Dollar fall against other currencies like the Candian or Australian which are considered "commodity based" currencys . What the Banks have done given all this free money is bid up the commidities like silver, gold , wheat, corn , soybeans etc making money on the falling dollar while this increase in commodities starts to drive the engines of Inflation . Prices of Oil go up , Gas goes up , then people start driving less & businesses are hurt more & price of Oil goes down .

Average driver in the US has now found themselves spending up to something like $375 ave per month , as gas prices have gone up which is the equivilient of a monthly payment on a new car loan ! So the last 4 mos the consumption of gas has fallen ,naturally . You can trade soybeans , oil , gas , gold , silver all day long in the commodities market with the right accts . Anyone can .

The Banks using all this free money to trade into these base commidities created a snowball effect & gold/ silver etc all went up & up on an incredible run up this last few months , as well as oil & gas on what eventually becomes pure speculation & complete greed . But it all goes back to the Fed dilluting our money supply to the tune of trillions of new dollars out there . Goldman Sachs for instance was given nearly a Trillion bucks which was to help with repairing excesses of the past & other failed Banks, but Goldman Sachs also is one of the larger commidity & oil traders in the world . So they went on a trading binge into these , to make more money ---> with all that FREE MONEY !!

Oil for instance is traded globally continuously based on our currency the $USD ...so the farther our dollar is devalued the Suppliers & the speculators just bid up the price of Oil to compensate for the falling dollar. Placing bets on Silver & Gold is a way of hedging against the falling value of the dollar which hit some pretty desperate lows just recently as everyone knows the Fed is stuck printing more & more money which everyone awaits the ending of in June .

Its varied thing for they used that FREE MONEY to bet the Dollar would fall by buying/bidding up these other currencies like the Canadian Dollar cause our Brothers to the North are sitting on the 2nd largest oil reserves in the world plus a whole lot of other base minerals both rare & precious plus the some of the larger naturally occuring fertilizer deposits . Greece on the other hand is barely a step above Bankruptcy and almost completely broke requiring huge loans at high interests . Greece has no intrinsic wealth value in terms of any commodity base like Canada has to back itself up .

Silver which went on this HUGE run up just recent 2mos just underwent a massive correction in the last 3 days losing nearly 40% of its value . You can trade long or short in the market just like the Cr@p tables in Vegas but its all timing & needs a great deal of study, instinct & experience to know when to time this . So after all that GREED now the FEAR kicked in and silver & gold plummeted ...mainly because they were playing with HOUSE money with HUGE Margins .

* Margin is when you have $25K in an acct your broker will effectively back you to trade $100K worth of secuities during the day , so you have effectively 4-1 margin. But if your acct falls below this set minimum you are restricted until you bring your acct up above that minimum $25k" set limit . If you were to hold something over night & it tanks , your account tanks & you get a call immediately from your Broker requiring you wire in money ASAP , or they liquidate your accts ! These Banks like Goldman & BofA who trade these commodities have been taking advantage of 10-1 margins and more !! Sunday they reduced the amount you can trade on Margin drastically causing this massive sell off . No more buying on excessive margins , therefore triggering massive liquidation of positions raising cash to pay off the new lowered limits of margin requirement .

Though silver was falling down hugely the last 3 days , if your were there on friday am & bought a 1000's shares of the AGQ in the morning , 2hrs later would have cashed out $40k or so ...for it finally bounced nearly 40pts from that HUGE sell off ! ;O)

This a very FUGLY looking chart for the US Dollar , which shows the lack of confidence people have been in the flagging US economy & massive debt situation that required the Fed to try & fix by -->printing more money . Too much of this and you end up going down to the Bank with wheel barrows full of worthless paper and a loaf of bread costs $10-$20!

So traders bought into oil , gold & silver etc , but it got completely out of hand ...but there's still a very good chance that all this still ends very badly for the US & everyone out there . These economic dynamics go on & on but effectively we're looking at some global food, materials & energy inflation that's already killing some people and really killing their biz.

 

[joeuser]

You guys don't get it. It's ALL fixed, all of it. 'Ol Ben IS in charge...he CAN turn it all on a dime. He just did! Ben took out the commodities, Ben took down oil, Ben boosted the dollar. How? He's a market mover. The Fed owns the money. They move it where they want, when they want. The banks are in their pocket with 0% loans. It WILL go on forever as long as everyone is willing to play by THEIR rules. As long as everyone...everyone who counts...makes money, all is good in the world.

Ben knew high oil and commodity prices were squeezing the common man (corporate customers), so he took them out. $3.50 gas is manageable, $5 is not. Remember, high gas prices started the last collapse that took out housing. Oil prices translate into EVERYTHING. Oil is the key!

What do "I" think short term? Either way. Libyan oil tanks are reportedly burning, taking out over a million barrels of very sweet oil from the market every day. That should drive it up Monday. But Ben (the economy) needs low oil prices. So, he'll try to keep them down. I see a short spike at opening and then a slow deflation possibly closing red.

Long term...war in the ME. It's inevitable. We're simply paying too much for oil. We owned that area once already! I think we're setting up to take it back. Imagine the boost to the economy if we didn't have to pay a middleman for our oil. Can you imagine $30 dollar oil? We can do it...and I think we will. The pieces have been being laid since 9-11. We own Iraq, Afghanistan, soon Libya, Maybe a few more soon. Who is left? Iran? It's the ONLY country that would be any kind of a problem. Soon we WILL tell the Saud family to shove it up their ass. Russia won't complain, they've got boatloads of oil themselves. China will bitch...but that's all China is... China is a gnat compared to "the west". China will fall in line or be destroyed. I think the old white guys are getting an itch for a way to begin an economic expansion and cheap oil is the key to it.

 

[Mountain]

You guys don't get it. It's ALL fixed, all of it.

Well I think you're wrong there as I do feel most of us here believe it's fixed. That doesn't mean you can't successfully trade the markets. If anything they take advantage of external influences for better manipulation of things.

Always good to read other peeps opinion on things but I don't think China will be destroyed and I feel they're just biding their time right now.

 

[SpasticGramps]

x2. Everyone in here, or most, knows that Benny has the market completely rigged. We are all just trying to BUY THE FUCKING DIP and run with the FED.

Interesting take on the margin hike onslaught that eventually pushed silver down and then took the rest of the commodity complex with it. IMO.

How The CBOT, Comex And CFTC Coordinated To Break The Last Silver Price Surge

Just like QE is nothing new in the monetary arena, and has seen some incarnation at least since the early 80's primarily in Japan, so parabolic commodity price surges have occurred periodically, most notably in 1980, when Bunker Hunt brought the price of silver to over $50. However, unlike any time before, never in the history of the world have we seen a coordinated worldwide monetary stimulus via relentless credit money "printing" courtesy of global central banks. In that regard, this time really is different, as there is no other remaining backstop to the world financial system: the global banking cartel has used up all its bullets and now can only double down in the most nightmarish Martingale system ever conceived, where each iteration means further fiat absolute value destruction (on a relative basis it simply means a race to the currency bottom, whereby definition only one can be in the lead at any given moment: usually the one with the biggest printing press, and greatest deflationary threat). And while many still believe that QE2 will be the last of domestic US monetary easing episodes, as Bill Gross noted earlier, it is very possible that the US may be headed into a triple-dip recession, for which the only prescription will be another QE round (with political gridlock in DC at unseen levels no fiscal stimulus is even remotely possible). If this happens, precious metals will once again surge. The only question is what will the exchanges do after the next gold and silver spike? Indeed, as we suggest, margin hikes are just the beginning. For a complete playbook of how the CME may proceed after the margin hike approach fails, we once again go back to the curious case of Bunker Hunt. Below, from the Playbook biopic of the Texas billionaire we posted yesterday, we present the walk through of how the CBOT, Comex and CFTC tried to break silver's back. Back in 1980 they succeeded. Have they, and will they succeed this time?

...The CFTC and the officials of the two exchanges decided to have a little talk with the Hunts. Explaining that they feared a squeeze, the exchange officials asked them if they would consider selling some of their silver. The brothers’ answer was no. What was more, they said, they intended to keep buying silver and to keep taking delivery on it. They thought silver was still a good buy, even at the new high prices. Besides, as Bunker put it with typical understatement. “If you sell, you get into a tax problem.”

On top of all that, Bunker really did believe in silver as a long-term investment, the underpinnings of a new economy. He did not say that in so many words to the CFTC men and the exchange officials, but he did give them a glimpse of his basic apocalyptic vision when he revealed a previously undisclosed feature of his silver play: the fact that he was moving his metal to Europe. This time, he did not fly the bullion overseas in chartered jets with cowboy guards. As he told the CFTC, Bunker simply traded 9,000,000 ounces’ worth of metal he held in Chicago and New York exchange warehouses for an equal amount of bullion held by other traders in London and Zurich. The reason? As he explained to the CFTC and the exchange officials, he feared that the U. S. Government might expropriate silver from Americans just as it had expropriated gold back in the Thirties.

But Bunker’s assurances that he was willing to cooperate as much as possible apparently mollified the CFTC officials; the C.B.O.T., however, concluded that it was time to act. In a move aimed directly at the Hunts and the other big buyers, the Board of Trade raised the margin requirement and declared that silver traders would be limited to 3,000,000 ounces of futures contracts. Traders with more than that would have to divest themselves of their excess futures holdings by mid-February 1980.

With that, the battle lines were drawn. Bunker let it be publicly known that he thought the C.B.O.T. was changing the rules in the middle of the game, and vowed to fight the limits all the way. Privately, he regarded the C.B.O.T.’s action as another conspiracy against him by the Eastern establishment. And for once, he had a good prima-facie case.

The boards of both the Chicago and the New York exchanges were composed not only of “outside” directors but also of representatives of the major, usually Eastern-based brokerage houses. Later testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective regulators. At the same time, though, the C.B.O.T. restrictions made Bunker even more bullish on silver, because, as he put it, “they show a silver shortage exists.”

Bunker appeared to be right. Through November and December, the price of silver rose faster than ever. By the last day of 1979, the price reached an astronomical $34.45 an ounce. Meanwhile, the Hunts’ silver holdings kept increasing. By the end of December, the Hunts and their Arab partners held 90,300,000 ounces of bullion that the CFTC knew about and another 40,000,000 ounces the Hunts had stashed in Europe. The Hunt group also held about 90,000,000 ounces worth of silver futures, most of them due for delivery in March on the Comex in New York.

By this time, the CFTC became concerned that the silver positions held by the Hunts and the Conti group were “too large relative to the size of the U. S. and world silver markets.” Subscribing to the philosophy that the futures market was not a substitute for the cash market, the commission determined that the time had come to stop Bunker’s perverse buying spree. A meeting to decide what to do was set for January 8, 1980.

Then the Comex stepped in. On January seventh, the exchange announced new position limits restricting traders to no more than 10,000,000 ounces’ worth of futures contracts. The effective date of the limits was set for February 18. The day after the Comex announcement, the CFTC announced that it was backing the exchanges new limits.

Bunker was incensed. “I am not a speculator. I am not a market squeezer,” he protested. “I am just an investor and holder in silver.” Taking the offensive, he accused the exchanges and the Government of destroying the U. S. silver market by changing the rules in the middle of the game. “The market will move to Europe,” he predicted ominously. “The silver market in this country is a thing of the past.”

Strangely enough, the price of silver fell only one day in the wake of the Comex announcement, then started climbing even higher. Part of the reason for the continued price spiral, according to an after-the-fact analysis by the CFTC, was that Bunker kept buying silver. On January 14 and 16, the Hunts made agreements to take future delivery on 32,500,000 ounces of silver (mostly in London) at various dates that spring. The largest of those contracts were with Englehard Minerals. On January 17, silver hit a record high of $50 an ounce.

Bunker could hardly be incensed about that. On that one day, the worth of the Hunts’ silver bullion holdings was nearly four and a half billion dollars. Since most of that silver had been acquired at less than ten dollars an ounce, they had a profit of over three and a half billion dollars. Bunker and Herbert had made nearly as much money in the past six months as their late father had made in his entire lifetime, at least on paper. Of course, if Bunker actually sold all that bullion, he would face enormous tax consequences. The trick now was to figure a way to utilize those huge gains without having them decimated by the taxman.

As Bunker pondered that, the exchanges decided to impose their most stringent restriction yet. On January 21, the Comex announced that trading would be limited to liquidation orders only. There would be no more futures buying. The game was closing down.

The next day, the price of silver plunged to $34, a drop of ten dollars in a single day. It stabilized shortly after that, and remained in the mid to high 30s for the rest of the month. But in February, the price began to slide downward again. By that time, silver was literally coming out of the woodwork. In response to the new high prices, old ladies had been selling their tea sets. Families had been hocking their silverware. Coin collectors had been divesting themselves of their collections. In January and February alone, an estimated 16,000,000 ounces of silver coins and an additional 6,000,000 ounces of scrap silver had come onto the market. With the price of silver now dropping, some of those small sellers and small investors began complaining to the CFTC about the exchange restrictions...

Ironically, while the paper holders of silver may be complaining to the CFTC now, the inverse is true about physical supply-demand dynamics. Indeed, instead of a scramble to convert physical silver to paper, we continue to see the inverse as a material amount of silver wholesale retailers continue to be out of actual silver.

And, as was posted yesterday, those who wish to read the full story of Bunker Hunt and the still historic surge in silver, may do so here.

There is a whole army of people picking up where Bunker left off.

 

[Mountain]

fuck, i wish i knew what you guys were talking about, i have some money to burn.....

I always take peeps recommendations with a grain of salt but I do think now is a pretty good time to buy some physical silver. Better to go with minted coins IMO. Throw a few bucks at it, put it away and forget about it. To me it's rainy day stuff. Like Gramps said he doesn't buy it to make money but uses it as a hedge.

Silver which went on this HUGE run up just recent 2mos just underwent a massive correction in the last 3 days losing nearly 40% of its value . You can trade long or short in the market just like the Cr@p tables in Vegas but its all timing & needs a great deal of study, instinct & experience to know when to time this. So after all that GREED now the FEAR kicked in and silver & gold plummeted ...mainly because they were playing with HOUSE money with HUGE Margins.

Absolutely and when it comes to dealing with stocks even more so. With them taking away the margin game a bit I'd expect silver to settle down somewhat. A LOT of people got burned with the recent correction so it's lost some luster. Still think the big money is licking it's chops and going to accumulate down about where it's at.

In general great take on things Madrus.

 

[Mountain]

It stabilized shortly after that, and remained in the mid to high 30s for the rest of the month. But in February, the price began to slide downward again. By that time, silver was literally coming out of the woodwork. In response to the new high prices, old ladies had been selling their tea sets. Families had been hocking their silverware. Coin collectors had been divesting themselves of their collections. In January and February alone, an estimated 16,000,000 ounces of silver coins and an additional 6,000,000 ounces of scrap silver had come onto the market.

We'll see how that plays out this time. Sooooo much info to consider...lol.

 

[SpasticGramps]

COMEX?! We don't need no stinkin' COMEX! Finally some competition to destroy those ****s at the COMEX who just fucked everyone on the paper side.

Hong Kong Mercantile Exchange's 1 Kilo Gold Contract To End Comex Gold Futures Trading (And "Bang The Close") Monopoly

30 years ago, Bunker Hunt, while trying to demand delivery for virtually every single silver bar in existence, and getting caught in the middle of a series of margin hikes (sound familiar), accused the Comex (as well as the CFTC and the CBOT) of changing the rules in the middle of the game (and was not too happy about it). Whether or not this allegation is valid is open to debate. We do know that "testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective." One wonders how many short positions current Comex board members have on now. Yet by dint of being a monopoly, the Comex had and has free reign to do as it pleases: after all, where can futures investors go? Nowhere... at least until now. In precisely 9 days, on May 18, the Hong Kong Mercantile exchange will finally offer an alternative to the Comex and its alleged attempts at perpetual precious metals manipulation.

From Commodity Online:

The Hong Kong Mercantile Exchange (HKMEx) has received authorisation from the Securities and Futures Commission and will make its trading debut on May 18, 2011 with the 1-kilo gold futures contract offered in US dollars with physical delivery in Hong Kong.

The ATS authorisation grants HKMEx the right to offer market participants, through its member firms, the use of its state-of-the-art electronic platform to trade commodities. The Exchange will begin trading with at least 16 members including some of the world’s largest financial institutions as well as several well-established brokerages in Hong Kong.

“We are very excited about this historic day. It allows us to establish a liquid and vibrant international commodities exchange based in Hong Kong, linking China with the rest of Asia and the world,” said Barry Cheung, chairman of HKMEx. “Global demand for core commodities has in recent years been driven by Asia, especially China and India. However, market participants in the region have had to rely on Western exchanges for price discovery, bearing the basis risk exposure in the process. Our new platform will offer Asia a bigger say in setting global commodity prices. It will also enable market participants to more actively manage their risk exposures, using products tailored to Asian market needs.”

HKMEx’s broking members at launch include BOCI Securities Ltd, Celestial Commodities Ltd, CES Capital International Co. Ltd, Chief Commodities Ltd, ICBC International Futures Ltd, Interactive Brokers LLC, KGI Futures (Hong Kong) Ltd, MF Global Hong Kong Ltd, Morgan Stanley Hong Kong Securities Ltd, OSK Futures Hong Kong Ltd, Phillip Commodities (HK) Ltd, Tanrich Futures Ltd and TG Securities Ltd. Its three clearing members are Interactive Brokers (UK) Ltd, MF Global UK Ltd and Morgan Stanley & Co International Plc.

And while the Chinese market is far more bubbly when it comes to gold and silver purchases, it remains to be seen just how happy a gambling addicted Chinese population will take to spurious and conveniently timed margin hikes that take the air out of the next parabolic move up in gold and silver (our guess is not very).

Far more importantly, the Comex monopoly appears to be over, and going forward the exchange will have to be far more sensitive about angering broad swaths of the population using 5 consecutive margin hikes in 9 days. The new exchange will also make the now traditional "banging the close" operation (or "banging the whatever" as the May 1 15% drop from $49 to $42 in minutes demonstrated) obsolete, as traders will have options of where to route orders from the hours of 0800 HKT to 2300 HKT.

Bottom line: if Chinese demand for gold and silver is as strong as it was a week ago, and it is, the recent Comex-directed plunge in precious metals is about to the BTFDed.

Woooo hooooo!! COMEX is about to take in the ass. I trust Hong Kong more than I do these criminals. At the very minimum free market competition will bring some pain to the COMEX.

 

[SpasticGramps]

Like Gramps said he doesn't buy it to make money but uses it as a hedge.

Yes. Yes. Yes. I have about 15-20% of my portfolio in physical metals. Rest is cash, land, and the funny money in the 401K.

The physical metal market is the most exciting right now which is why I comment on it and follow it. But it's just a hedge against The Drunken Sailor Bernanke.

Absolutely and when it comes to dealing with stocks even more so. With them taking away the margin game a bit I'd expect silver to settle down somewhat. A LOT of people got burned with the recent correction so it's lost some luster. Still think the big money is licking it's chops and going to accumulate down about where it's at.

Yeah the wind is really going to be out of silver for a while I bet. I would expect major action if rumors of QEIII start. I may look at starting the paper thing then.

In general great take on things Madrus.

x2.

 

[SpasticGramps]

Inching closer to the inevitable Greek default and Euro meltdown. 50% haircut for bondholders. Ouch! Markets won't like that.

Greece Downgraded From BB- To B As S&P Believes More Than 50% Principal Debt Reduction Would Be Required

From S&P:

Overview

1. Under our sovereign ratings criteria, a commercial debt rescheduling typically constitutes a default.
2. In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds.
3. Accordingly, we are lowering both the long- and short-term ratings on Greece to 'B' and 'C', respectively.
4. We are leaving both ratings on CreditWatch Negative.

Greece doesn't waste anytime firing back.

Greek Response Is Swift And Brutal

If Too Big To Fail was made into HBO namedropping comedy hour, this certainly deserves its own 90 minute, Bollywood produced, TheOnion directed, 3D motion picture:

GREEK FINANCE MINISTRY SAYS S&P CREDIBILITY IN QUESTION
GREECE SAYS S&P MOVE ISN'T JUSTIFIED

Pretty much says it all. Elsewhere, Greek prosecutors are "investigating" Der Spiegel. No Citigroup bond runs to be scapegoated this time...

S&P credible?

 

[SpasticGramps]

And right on time que the German's enter stage right.

Here We Go Again: German Government Advisor Says Eurozone May Not Remain Intact Over Next 12 Months

Your daily diversion comes from German government advisor Bofinger:

Eurozone needs a very comprehensive solution, or may not remain intact over next 12 months
Need to consider EU stimulus measures for Greece in addition to belt-tightening
Have to change overall approach for Eurozone periphery countries

Euro now sliding since apparently the EURUSD traders did not get the Friday memo that the G-7 have decided fair value for the pair is 1.35 tops. Oh yes, in the meantime we can't wait for Germany to get back to the DEM which will buy about $10 USD and make German exports a thing of the ancient past.

 

[SpasticGramps]

So much for the commodities crash eh?

Silver up 6.00% today. Oil up 4%. Off the races again on the Bernanke Ponzi Bus. Last week was just a mini-cliff I guess.

 

[Mountain]

Regardless of what is happening in the EU area today SLV was very oversold on Friday.