It certainly applies to today’s gold market and Bill’s commentary titled “Gold Market Fluctuations Today”.
As you know, I spent my early years in finance as a market maker (specialist) for an average of 35 different companies successfully. Things tend to go to your head as a kid until you get this strange idea that you could never make an error.
Blyth & Co in 1958 had a head trader renowned for his talent. I felt I witnessed some market weakness entering a situation I was a market maker in at that time. I flipped the key on our direct phone wire to Blyth & Co asking for his market on this company. He replied 12 bid 12 1/2 offered (12 to 12 1/2). Being a cocky kid, I offered what was then a considerable block of shares at $12. He bought them all to my surprise. Blyth then asked me if I had any more to sell? I said maybe, but I would be back to him. I knew I was in trouble so I flipped my direct line to Marty McNeill at Vilas and Hickey using him to check Blyth’s market on this item. Marty came back to me with the bad news 12 1/8 to 12 5/8. That was more electric shock that my short was in trouble. Marty did not make this market therefore was not competition to Blyth as I was. I told Marty to cover my short act the market plus 1/8 to him and and take a long position of the same size for me as an agent. Of course by the end of the day it was 14 bid.
Today in gold there was a multi-billion paper sale of gold on the Comex which took gold down only to reverse up and now exceed more than $6 from the low caused by the paper sale of billions in gold in seconds.
This is, in my opinion, a repeat of Blyth’s life lesson to me of trading. Someone bought that multi million offering of paper gold and then continued to buy pushing the price up above the sale prices.
I do not care if there seller was the Fed or King Midas himself. Gold is headed up the magnets to a new high and then higher with of course great drama as only gold can provide.
Correct Wolfgang, not “only” an idiot would do this. These raids are performed by those trying to keep “cover” of the fiat system. It is actually pretty smart (not in the long run) to attack the number one arch enemy of the dollar…and who might have motive?
Anybody with even the slightest inkling of price understands the relationship of the Dollar to Gold.
When the Dollar drops hard, gold goes higher….hard!
It’s simple….gold is priced in Dollars and hence a cheaper Dollar means you must pay more Dollars per ounce.
We all know this.
This morning the Dollar dropped hard…well below 100 on the DXY.
Yet, someone decided to dump 22,000 contracts in the face of a collapsing Dollar. That’s $3, billion notional value!
Only and idiot would not go/stay long gold in the face of a dropping Dollar.
And if this idiot really wanted to get out of gold, he would have sold slowly to get the best price for gold.
Since traders, especially commodity traders, are not idiots…it could only be the Fed.
CIGA Wolfgang Rech
Despite Dollar Dump, Gold Just Got Slammed By $3 Billion Notional Sale
April 18, 2017
While the dollar index tumbles to its lowest level since days after the election…
Someone decided this morning was an opportune time to dump over 22,000 gold futures contracts (almost $3 billion notional) sparking a quick plunge in the precious metal…
I started my summer hours this week and rode early to beat the heat of the day. When I left at 7:00 am gold was up $1.20. When I returned I saw silver down .28 cents and gold off $4 so I figured some sort of shenanigans. The dollar was weak when I left and weaker upon return so it had nothing to do with the dollar. Then I read this…$3billion worth of gold sold …again for perspective, this is nearly 4% of global production or almost two weeks worth. And again, who would sell like this if they wanted the best price for their gold?
Fast forward 30 minutes and gold is now positive for the day. Over the last few weeks we have seen weakness early in gold and strength toward the close. This is a big change. A much BIGGER change will be if gold can hold positive for the day and maybe even close stronger. This would be if my memory serves correctly, the first time a massive amount of paper raided the market which then closed the day positive. Also keep in mind how many “new” contracts (fake supply) it has taken to keep gold’s rise in check.
As Jim and I have said, we are at major inflection points in many (all) markets, a strong gold close today followed by a breakout from here would be a very bad signal for paper markets. An out of control gold market will spell doom for paper markets and lead to the plug being pulled! Monitor this closely!
Courtesy of CIGA Gijsbert. Kim Il-Trump! (Posted for it’s comedic value.)
You are the most optimistic of those that really get it. What future?
We’re looking at the future, and at the risk of appearing “archaic” in my thinking, the outlook is bleak!
Retail will become an anachronism. As will the workforce.
In German, there’s a word for the likes of Amazon…..” Allesfresser” (one who eats and devours everything).
CIGA Wolfgang Rech
Amazon: Engulfing Everything
April 17, 2017
Looking for the trade based on some Amazon Ruminations. All because I saw this.
Behold the Amazon Angie List Killer.
Amazon observations last night:
Sears reinvented for century 21? Catalogue business in reverse?
2017 Debt Crisis Looms: Congress Will Have 4 Days To Avoid A Government Shutdown On April 29
April 11, 2017
April 2017 could turn out to be one of the most important months in U.S. history that we have seen in a very long time. On April 6th, Donald Trump attacked Syria on the 100th anniversary of the day that the U.S. officially entered World War I, and now at the end of this month we could be facing an unprecedented political crisis in Washington. On Friday, members of Congress left town for their two week “Easter vacation”, and they won’t resume work until April 25th. What this means is that Congress will have precisely four days when they get back to pass a bill to fund government operations or there will be a government shutdown starting on April 29th.
Up to this point, there has been very little urgency by either party to move a spending bill forward. It is almost as if everyone is already resigned to the fact that a government shutdown will happen. The Democrats will greatly benefit from a government shutdown because they can just blame the entire mess on the Republicans. But for the GOP, this is essentially the equivalent of political malpractice.
To me, there is simply no way that Congress is going to be able to agree on a bill that funds the entire government in just four days. And it turns out that this upcoming deadline comes exactly on the 100th day of Trump’s presidency…
Check out this point and figure silver chart. $19, $21, $35, $44, $49 are probably the most important levels, courtesy of CIGA Gijsbert.
Bill Holter’s Commentary
This is the article Bill and Jim discussed for subscribers.
Junior Gold Miner ETF Suspends Creation Orders Due To Shortage Of Underlying Instruments
April 15, 2017
Over the last several weeks, two years after Howard Marks first brought attention to the topic with a letter in which he asked “What Would Happen If ETF Holders Sold All At Once?” some investors have once again quietly voiced concern about the inordinate and rising influence passive investing in general, and ETFs in particular, exert on stocks but especially on fixed income securities, including illiquid bonds and loans. To address some of these concerns, earlier last week, Goldman Sachs released a report titled “A closer look at years of passive (aggressive) investing in credit” in which it observed that the growth patterns shown in Exhibits 1 to 3, particularly the increase in the ownership share of ETFs…
Jim Sinclair’s Commentary
The latest from John Williams’ www.shadowstats.com
– Substantially Adverse Economic Circumstances Have Begun to Unfold, Threatening FOMC Hopes for Normalizing Monetary Policy
– Amidst Mounting Income and Credit Stresses on Consumers, Headline Retail Sales Suffered Major, Near-Term Downside Revisions; Recent Auto Sales Were Not As Strong as Advertised
– First-Quarter Real Average Weekly Earnings Declined Year-to-Year, Along with Back-to-Back Quarterly Contractions, Circumstances Not Seen Since the Stalled GDP of Second-Half 2012
– Real Growth in Consumer Credit Outstanding Has Faltered in a Manner Also Not Seen Since the Stalled GDP of Second-Half 2012
– Headline CPI-U Inflation Fell by 0.29% (-0.29%) in March, Pushing Annual CPI-U Inflation Lower to 2.38% (Was 2.74%), with CPI-W at 2.35% (Was 2.82%) and ShadowStats at 10.1% (was 10.5%)
– March Final-Demand PPI Annual Inflation Hit a 60-Month High of 2.28%
“No. 880 : March CPI, PPI, Retail Sales, Real Earnings, Consumer Update”
The Next Crisis is the Mother of all Counter-Party Risks (Part 2) – Gijsbert Groenewegen
April 15, 2017
In the first part I have been explaining the counter-party risk that is all around us and will come to the fore in the next financial crisis. In this part I reflect on the rescue operations of the Fed following the 2008/2009 recession and the following QEs and ZIRP policies that have led to diminishing returns and that will ultimately weaken the US dollar: the biggest counter-party risk of all counter-party risks.
Ad 8 – CDS, Credit Default Swaps. Ultimately it should be considered that when we encounter these systemic events that it will impact the underlying currency. For example when the pension underfunding gets so problematic that the Government has to print more money to meet and rescue the obligations the counter-party risk will be reflected in the devaluation of the currency or the loss of purchasing power, the goods that you can buy with the same amount of nominal money will tumble.
We saw one of the most poignant examples of counter-party risk in 2008 when AIG that had given off numerous CDS (Credit Default Swaps) to banks because it never expected the markets to tank the way they did (typical Wall Street view, things can only go up, that is what the Japanese thought till 1989!!). So issuing CDS or Collateralized Debt Obligations (CDOs) was a “no-brainer” for AIG. Anyway a breakdown of the system will happen again but this time it will be 10x worse than in 2008 and then the system can’t be saved because all the tools in the toolbox will have been exhausted and therefore won’t carry the weight, credibility or effectiveness they had “solving” the 2008 crisis. It will mean we will go deeper and longer (5 years!?).