Gold/Silver Sell off today

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bcc87's picture
bcc87
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Gold/Silver Sell off today

What a sell off today...anybody loading up? Or think prices will go lower?? Obviously anybody's guess...

I've been waiting for a pull back to buy....seems like now

txgirl69's picture
txgirl69
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Just returned...

from the local coing store. I bought a few of both.... But, I have to say, I'm not a market guru, nor do I understand exactly why the sudden drop in price. I just didn't want to miss out on a dip. I was planning to buy next week anyway. The price drop was an extra incentive to act a little sooner.

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Not a market guru either,

Not a market guru either, but it looks like this was forced last resort selloff by central banks to generate capital + 

CME just hiked gold margins by 21%, silver by 16% and copper by 18%. Mystery solved. 

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bcc87
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What is CME ?

What is CME ?

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jumblies
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bcc87 wrote: What is CME

bcc87 wrote:

What is CME ?

Chicago Mercantile Exchange - it's their exchange upon which gold/silver (amongst other things) are traded (apart from the new PAGE)

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DEUS X MACHINA
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cme margin hike

the margin hike, i believe, is the reason for the drop in gold.

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Link?

sportivny wrote:

Not a market guru either, but it looks like this was forced last resort selloff by central banks to generate capital + 

CME just hiked gold margins by 21%, silver by 16% and copper by 18%. Mystery solved. 

Sportivny

Do you have a link for that information?  The hits from my Google search are at least a month old.

http://www.google.com/#hl=en&sugexp=pfwc&cp=12&gs_id=19&xhr=t&q=cme+marg...

Welcome to the forums.

Travlin 

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here is the

here is the link

http://www.zerohedge.com/news/case-closed-cme-hikes-gold-silver-copper-m...

thank you for the welcome, been lurking around for close to a year, finally took the plunge:)

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Case Closed: CME Hikes Gold, Silver, Copper Margins

http://www.zerohedge.com/news/case-closed-cme-hikes-gold-silver-copper-m...

And there you have it: CME just hiked gold margins by 21%, silver by 16% and copper by 18%. Mystery solved.

and

Gold Liquidations Open Thread

http://www.zerohedge.com/news/gold-liquidations-open-thread

Update: Yep - it was a leak of a margin hike as just confirmed. Which may very well mean nobody actually had to liquidate, just the herd thundered, as it always does, in the wrong diraction. Expect gold to actually rise on this news.

Everyone knew they were coming... Just not when. Now that the gold liquidation frenzy has struck we still don't know much if anything: who was it, why, and where did the money go? Some rumors have it as a bank in Central, Eastern Europe unwinding massive PM positions, which if true is paradoxically bullish for gold and silver as reported previously, as it means the already tight liquidity situation in Europe is about to come to a head, possibly as soon as this weekend. Others speculate it was a plain vanilla satisfaction of collateral requirements by a big funds who may or may not be liquidating and who have sizable gold positions. Or, the simplest explanation, was it simply an expectation (and leak) of a gold margin hike? For all these questions and more, as well as to vent over anything and everything, use the following open thread.

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Hi sportivny

Hi sportivny

Welcome, welcome, welcome.

kleinhorse's picture
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Timing of price drop

One of the more interesting facets of the drops in silver and gold is the fact that the drop took place on Monday and early Tuesday- before the announcement about the increase in margin requirements.  This implies one of two things:  1) The drop was unrelated to the increase in margin requirements or 2) The drop was mostly a front-run by people insiders who knew in advance that the margin requirements were going to be raised.  I'm not a conspiracy theorist, but 2 seems very likely here.  There is rampant chatter about manipulation in the metals markets, and this is a data point that would support the chatter.  The margin increases early this year were very effective- for a period of two months or so- but the price drops they engendered didn't last forever.  And $40 silver with higher margin requirements means that more actual cash has been put into the game, with less leverage, than $40 silver with a lower margin requirement- so it's a stronger price.  For silver to claw its way back to that level again now will require even more cash invested- in an asset that has shown that it is subject to extreme price shocks. 

For this reason, I can imagine it taking a decent length of time to regain its price, but I think it will have to, eventually, for the reasons Chris has discussed, both on the currency side of the coin, and the industrial side.  Global demand decline and less Fed-provided liquidity have definitely reduced price pressure on silver.  But as with oil, silver is supply-restricted, and becomes uneconomical to mine below a certain price threshold.  If less silver is mined, and supply is crimped, price will rise as long as demand doesn't fall off a cliff. 

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kleinhorse wrote: One of the

kleinhorse wrote:

One of the more interesting facets of the drops in silver and gold is the fact that the drop took place on Monday and early Tuesday- before the announcement about the increase in margin requirements.  This implies one of two things:  1) The drop was unrelated to the increase in margin requirements or 2) The drop was mostly a front-run by people insiders who knew in advance that the margin requirements were going to be raised.  I'm not a conspiracy theorist, but 2 seems very likely here.  There is rampant chatter about manipulation in the metals markets, and this is a data point that would support the chatter.  The margin increases early this year were very effective- for a period of two months or so- but the price drops they engendered didn't last forever.  And $40 silver with higher margin requirements means that more actual cash has been put into the game, with less leverage, than $40 silver with a lower margin requirement- so it's a stronger price.  For silver to claw its way back to that level again now will require even more cash invested- in an asset that has shown that it is subject to extreme price shocks. 

For this reason, I can imagine it taking a decent length of time to regain its price, but I think it will have to, eventually, for the reasons Chris has discussed, both on the currency side of the coin, and the industrial side.  Global demand decline and less Fed-provided liquidity have definitely reduced price pressure on silver.  But as with oil, silver is supply-restricted, and becomes uneconomical to mine below a certain price threshold.  If less silver is mined, and supply is crimped, price will rise as long as demand doesn't fall off a cliff. 

Good observations kleinhorse. Thanks.

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  I listen a lot to TF over

I listen a lot to TF over on TFmetalsreport.com...a man of true integrity!  like CM: I think he's the real deal...anyway, today I plunked down over 17K on silver with my man at the coin shop...and if things do continue down next week...I'll be just like Joe Satriani, and ride my "silver surfer" board down the steep slope of market manipulation, with "all balls to the wall" as my modus operandi! ...and just so, here's a Youtube rocker visual:

...perhaps I'm exaggerating just a little bit...but sometimes you just have to trust your heart, and commit to taking a significant, and "well reasoned" plunge! So, where I might be tempted to look back through my "Way Back Machine," all the way back to '99 when I talked my immediate family into cashing out of stocks and buying 150k of physical... I now might wonder why so many of my peripheral family members and friends are just now warming up to all of my "proven" investigative and intuitive learnings! Well, go figure...but, just like CM, I always say to them: "trust in yourself!" I'm fortunate that within the last year, my 20-something son has taken on the family's "investigative PM mantle" for himself!...but even so, my bottom line tonight is that I'm feeling giddy in having made yet another PM purchase!  I'm heaving a deep sigh, and I realizing that there's nothing like paddling hard, falling in, and catching a fast moving wave...and I'm confident that in any case I can always just hold my breath and swim vigorously!

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Global demand decline and

Global demand decline and less Fed-provided liquidity have definitely reduced price pressure on silver.  But as with oil, silver is supply-restricted, and becomes uneconomical to mine below a certain price threshold.  If less silver is mined, and supply is crimped, price will rise as long as demand doesn't fall off a cliff. 

great point, silver is everywhere in electronics in such small fractions, that recovery almost doesn't pay off at the moment, with constant turnover of tech devices it's being consumed at higher and higher pace. Unless there is a consciencious effort to collect and recycle electronics produced in last 30-40 years, I would think, coupled with energy price increase, cost of silver will rise dramatically. It's finite resource after all, US dollar isn't.

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Mish closer to the mark

I think Mish's take is closer to the mark.

Why did Gold and Silver Plunge? No, It's Not CME Margin Hikes; What will the Fed do Next?

Four Reasons for Metals Plunge

  1.     Fed did far less than expected
  2.     Mutual fund redemptions
  3.     Margin calls at hedge funds
  4.     China growth story fading
sportivny's picture
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Mish is correct if you look

Mish is correct if you look at PMs as industrial commodities only, but when currency cryses are added into the mix, I think longterm ppl will go for something familiar and broken trust in dollar preserving purchasing power will drive PMs monetary recognition.

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The swan dive points to

The swan dive points to central bank manipulation. It's a preemptive strike. Be prepared for some dire economic news on Monday or Tuesday

bcc87's picture
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The manipulation is such

The manipulation is such BS...

If that is the case, I see gold/silver rallying from the downturn in pricing ?

It seems like demand will increase. Im going to buy more PM..

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It Just Amazes Me That CME

It amazes me that CME can manipulate the market the way it does!  Is that true capitalism?  I suppose it is.  The rick get richer; forget the rest of us.

Ernest!

[Moderator's note: Edited to fix all-caps.]

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Speaking of BS...

Speaking of BS...this thread is full of it.

Turd #1:

CME just hiked gold margins by 21%, silver by 16% and copper by 18%. Mystery solved. 

If the "safe-haven" investment is being traded with levarage, how safe is it really? What will it be worth when the credit markets dry up again?

Turd #2:

... 2) The drop was mostly a front-run by people insiders who knew in advance that the margin requirements were going to be raised.  I'm not a conspiracy theorist, but 2 seems very likely here.

Again, if "insider" trading determines the value of gold, how can it be considered a wealth-preservation asset?

Turd #3:

The swan dive points to central bank manipulation. It's a preemptive strike. Be prepared for some dire economic news on Monday or Tuesday.

Good'ol central bank manipulation....the tried and true fallback for the goldbugs. But wait...I thought the MO of the central banks was currency devaluation? What is a more accepted barometer for the value of a currency than the price of gold in that currency?

But crashing the price of gold makes the currency more valuable, not less valuable. It seems to me that central banks would want to manipulate the price of gold higher, not crash it.

Turd #4:

The manipulation is such BS...


IT JUST AMAZES ME THAT CME CAN MANIPULATE THE MARKET THE WAY IT DOES!!!!  Is that true capitolism?  I guess it is.  THE RICH ONLY GET RICHER.  FORGET THE REST OF US!!!!

Emotion and investing? You might as well just give Wall Street your money now and save yourself the stress of a drawn out capitulation.

The Truth:

If you own gold and silver, Wall Street owns you. Do you really think you can outsmart them and make it through the coming storm with your wealth intact? 

"The Internet Economy is a new Paradigm" > "Housing prices never drop" > "Gold is a safe-haven" 

Anyone else see a pattern here?

Screw Wall Street, invest in yourself. Produce your own power, grow your own food, and do whatever it takes to insulate your way of life from the games of Wall Street. 

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nice reply

JAG wrote:

Screw Wall Street, invest in yourself. Produce your own power, grow your own food, and do whatever it takes to insulate your way of life from the games of Wall Street. 

Sage Advice there JAG. Strong dose of realism is what was needed :)

Although I'd also add that after personal resilience is built, physical gold/silver is an excellent way to navigate the fragile paper economy of today. Buying physical and not involving oneself in the paper trading games of Wall Street is also another way of insulation. 

Please consider http://fofoa.blogspot.com/2009/03/all-paper-is-still-short-position-on.html for a realistic picture on why gold is wealth reserve. 

May be I cannot convince you for sure, but it's worth a shot!

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Jag: you make some very

Jag: you make some very solid points as far as being self-sufficient and self-preservation.

So are you saying, you'd rather have xxx amount of cash vs. xxx amount of PM stored away?

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Jag wrote:Screw Wall

Jag wrote:

Screw Wall Street, invest in yourself. Produce your own power, grow your own food, and do whatever it takes to insulate your way of life from the games of Wall Street. 

I cant tell you how much I believe in these words.  Unfortunately I have to play the game for a little bit longer. This spring  we finaly get out.

If the "safe-haven" investment is being traded with levarage, how safe is it really? What will it be worth when the credit markets dry up again?

Isn't everything traded with leverage these days? How safe is anything?  Where am I supposed to put my savings while I am preparing to get out and live a sustainable lifestyle. I didn't thnk  the credit markets were flowing all that quickly now.

... 2) The drop was mostly a front-run by people insiders who knew in advance that the margin requirements were going to be raised.  I'm not a conspiracy theorist, but 2 seems very likely here.

Again, if "insider" trading determines the value of gold, how can it be considered a wealth-preservation asset?

Insider trading always has an effect on the price of anything thats traded, thats the point. Nowhere in the original quote did it say anthing about insider trading "determining" the price of gold.  Over 3000 years of history show that gold is the premier wealth preservation instrument. Please show me any "thing" that has kept pace with goods and services as well as gold has. I don't care what happens tomorrow or next week or next year, I know that physical gold/silver will maintain my wealth better than any other asset you can name.

Good'ol central bank manipulation....the tried and true fallback for the goldbugs. But wait...I thought the MO of the central banks was currency devaluation? What is a more accepted barometer for the value of a currency than the price of gold in that currency?

Are you saying that the banks don't manipulate the markets? Or do you think that they just don't manipulate the precious metals markets?  So the value of gold vs any given currancy fluctuates on a daily basis. Again, what happens day to day has no bearing on long term performance.

But crashing the price of gold makes the currency more valuable, not less valuable. It seems to me that central banks would want to manipulate the price of gold higher, not crash it.

Here we go again. Volatillity is the name of the game when a very complex system start falling apart. The bankers don't get what they want every every single day. Of course the market is manipluated, but its not controlled.

I think all of the mentioned "reasons" for the price drop are likely causes.  None of them could have caused a drop this significant by themselves. However, if they all happened together ( I am not thinking a conspiricy, just a complex system falling apart) the losses would add up real quick. I also heard Bill Haynes on KWN give another reason. In a nutshell gold/silver are just about the only "things" that have made money this year. Losses in other areas have caused margin calls and people are taking their profits in gold/silver to cover those margin calls.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/9/24_KWN_Weekly_Metals_Wrap.html

You sound a little jaded and emotional in your post JAG. Not all of us are in the same place as you are but we are trying. Have a little patience.

Rich

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Thanks for the feedback

Thanks for the feedback guys.

And I'll admit that I'm jaded towards Wall Street, but please don't assume that I'm any better off, or any further along the path to freedom than anyone else here, because I'm not.

As for fofoa and kingworld news....it's just marketing to me. Sorry to disappoint.

Take care....Jeff

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sportivny wrote: Mish is

sportivny wrote:

Mish is correct if you look at PMs as industrial commodities only, but when currency cryses are added into the mix, I think longterm ppl will go for something familiar and broken trust in dollar preserving purchasing power will drive PMs monetary recognition.

I don't think that Mish disagrees with the longterm trend of higher and higher PMs. His take was on the short term rout in PMs.

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PM's down.

@agitating prop. I am suspicious too. As Volker recently said about previous $ devaluation, "we should have taken down pm prices first" (or something very similr)

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Silver up over $40 in 2-3 months?

Anyone concerned about silver prices maight want to view this. I saw it a while back, unfortuantely I did not heed the warning. But, I am now buying more.

http://www.financialsense.com/contributors/cris-sheridan/2011/09/23/amaz...

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Damning quotes

[quote=mryuri]

I am suspicious too. As Volker recently said about previous $ devaluation, "we should have taken down pm prices first" (or something very similr)

[/quote]

This looks like the quote you were referring to. Pretty damning statements. http://forums.wallstreetexaminer.com/topic/756499-volker-on-controlling-gold-price/

Travlin 

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disappointing

JAG wrote:

As for fofoa and kingworld news....it's just marketing to me. Sorry to disappoint.

JAG,

Your intelligent arguments against gold make us think twice and I'm very thankful for that. At the same time, stating FOFOA is just marketing makes no sense to me. Without critiquing the content of FOFOA's writing, brushing it off seems unfair. It's fine if you don't have the time to read it (FOFOA's articles are very long) but having read a few of the blog's articles, I think he makes the most intelligent argument towards hyperinflation. Gonzalo, Jim Willie etc. don't even come close. Which is why I'm asking you to consider it.

Hyperinflation is really a misnomer, because severe deflation is what really happens and saving debt at all costs leads to hyperinflation. In fact, his hyperinflation analysis acknowledges all that the deflationists say - its just a different end game as he sees it.

Here's the quote by Paul Volcker:

"That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."

Paul Volcker, Nikkei Weekly 2004

Hope you take time to digest a few facts presented here :)

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Adjusting my thoughts

Having read Mish's discussion of the price drop, I have to admit that his explanations:  redemptions, Fed disappointment, etc., may be more to the point than the increased margin requirements and the possible leak thereof.  Of course, they both probably have something to do with it, but it's hard to deduce exactly how much of the drop was caused by each factor.   A bit of a bounce here Sunday night, but hard to know what to expect tomorrow.

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Jag:   It's nut exactly

Jag:

It's not exactly nice to call other people's comments Turds.

Ernest

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