[quote=Strawboss]http://www.zerohedge.com/news/todays-124-billion-targeted-gold-slam-down-makes-mainstream-press
7500 gold contracts sold into thin liquidity within 1 minute.
No rational trader would do that - especially on a day where Asia is on holiday and Europe is getting ready to go on holiday.
If one was conspiracy minded, one would think it was a deliberate smack down. But, I am sure there is a rational explanation - arbitrage or some such thing…
Its getting pretty blatant when even the dullard WSJ is writing stories about it…
[/quote]
Just to keep the message clear… Nobody here has denied that "stop-clearing runs" - where someone sells "sloppy" into thin liquidity - are a very real part of the business. In fact, both Jeff Christian and I have acknowledged this reality earlier in this thread. The point is not to confuse the very real manipulations that do occur with bogus, logically incoherent theories about other mechanisms of manipulation that exist only in the minds of GATA et al.
I just woke up here in Hong Kong, and haven’t yet had a chance to research what happened early this morning. So it’s entirely plausible that this big sale was triggered by news, although frankly I doubt it - the holiday here in Asia is definitely a bit of circumstantial evidence by itself, and my guess is that this was a manipulative action.
The key is not allowing isolated examples of bona-fide manipulation to bias one’s judgment to accept all the silly manipulation theories, which really don’t hold up to even the smallest bit of scrutiny.
All the best,
Erik
[quote=victorthecleaner]Let me repeat: Canada and Australia sold their gold reserve long ago. Especially in the case of Australia, it was mentioned this was no problem because they could always take the gold in the ground. … Now if you really believe the system is going to end, you are basically guaranteed to lose your mining shares, either because they are nationalized outright or because they are forced to sell their gold to the government at a regulated price (which will turn the mine into the equivalent of a telephone or water company, i.e. bascially into a utility company).[/quote]Australia sold 160t and retains 80t. I don’t think "take the gold in the ground" is the correct way to represent the Reserve Bank of Australia’s (RBA) views. If you look at this FOI of an internal advice to RBA Board on gold sales done in late 1996 http://www.rba.gov.au/foi/disclosure-log/rbafoi-101110.html you will see the following quote:
"As noted, Australia’s gold holdings in terms of GDP are towards the top end of the range for countries outside Europe. If anything, Australia, as a large gold producer, should be at the bottom of this range - ie, as a nation, we have very large reserves of gold in the ground and the question arises as to why we would want to hold much in central bank vaults.
You may interpret this statement as them thinking they will nationalise, but it can also be interpreted as reactivating existing dormant legislation (see here http://goldchat.blogspot.com/2008/11/australian-gold-confiscation.html) that requires gold to be sold to the RBA at (non-fixed) market prices.
Now what if - we are only speculating here so bear with me…what if these supposedly isolated acts of manipulation arent isolated/individual incidents but instead are a coordinated plan and practice with a deliberate motive of price suppression to support the various fiat currencies in use around the globe.
Advanced countries are capable of planning and implementing complex military battle plans involving various elements and extensive coordination and planning. Why is it such a stretch to imagine that the most powerful financial interests in the world are capable of collaboratively planning and executing with a similar level of expertise and precision?
Taking that thought process a step further - what would their footprints so to speak look like? What kind of evidence would we seek out to see if we can detect their presence?
Erik,
I am doing research on volume and would like to request that anyone who is able to post a screenshot of the volume price action today do so, it would be much appreciated and I will share the results if they are meaningful.
On a personal note, I am pleased to see that the discussion regarding Andrew Maguire has moved away from the distractions of whether or not he ever worked for Goldman Sachs, and whether or not he doctored emails to Eliud Ramirez at the CFTC, as was implied here.
I got involved in this thread because I agree with you that the issue is: "Andrew Maguire’s substantive allegations about market manipulation" which I see is supported by your statement "Nobody here has denied that "stop-clearing runs" - where someone sells "sloppy" into thin liquidity - are a very real part of the business. In fact, both Jeff Christian and I have acknowledged this reality earlier in this thread" …However, I must say that the acknowledgement you refer to was very subtly expressed. My comprehension has been attacked in this thread, so you might forgive me if I did not pick that up previously. Stop clearing runs is exactly the activity that is the subject of Andrew Maguire’s complaint to the CFTC.
Readers will be pleased to note that I have today received written confirmation from Bart Chilton that Eliud Ramirez is an employee of the CFTC… and no, I am not a leading metals analyst with a background in investigative journalism.
SR
[quote=MetalsFacts]Someone mentioned capital costs, saying a geologist told him there were high, around $1,000. They are that high at a few poorly run mines. The average globally last year was around $150 per ounce. That’s not a guess over beers. That is the calculation derived from a thorough quantitative analysis of mines that account for something like 80% of global mine production. That’s the average. If there are a couple of companies with non-cash costs around $1,000, and there are, that average means there are a lot of mines with far lower capital and overhead expenses. Actually, the average is close to typical. The number of mines with $1,000 or so in capital costs are very few with relatively low production: The low production levels in terms of gold being produced at a given mine is what gives them a high per-ounce cost. If they were larger mines, the capital costs would be spread over more ounces and would be commensurately lower.
[/quote]
Jeff,
Counting all the costs - capital, fuel, labor, regulations, etc. - what would you estimate the cost for a typical, well run gold mining operation to produce an ounce of gold? I understand that most mines produce other metals in the process and it would be very difficult to separate the costs for gold only. If the cost is $150 or $1,000, they would still make a reasonable to an enormous profit at current prices. Why wouldn’t they want to produce all they could at these prices?
Perhaps they are producing all they can. Increasing mine capacity involves extracting lower grade ore or venturing out into other areas. It takes time to overcome the regulatory hurdles, appropriate necessary funding, and proceed. I’ve read elsewhere that it takes approximately 10 years to site and build a mining venture. Are the current well run mining companies expanding their domains? If not, why not? If so, when can we expect supply on the market to increase markedly (and by what approximate percentage)? Buying another company with reserves only transfers production rather than increasing it. I’m talking about expansion in current areas or expanding into virgin territory.
Erik,
I wish I could debate you on any of your points. I’m just a small speculator who tries to divine the future from reading flickering shadows of tea leaves. As a result of this thread, I’ll be more critical when reading opinions that aren’t substantiated. I’m more interested in what to expect than who states it.
Grover
As requested:
| PM to PM next day % move | 2000-2012 | 1972-1980 |
| < -5.00% | 8 | 17 |
| -5.00% to -4.75% | 2 | 2 |
| -4.75% to -4.50% | 2 | 1 |
| -4.50% to -4.25% | 5 | 5 |
| -4.25% to -4.00% | 3 | 3 |
| -4.00% to -3.75% | 4 | 4 |
| -3.75% to -3.50% | 4 | 7 |
| -3.50% to -3.25% | 6 | 13 |
| -3.25% to -3.00% | 13 | 13 |
| -3.00% to -2.75% | 10 | 7 |
| -2.75% to -2.50% | 14 | 10 |
| -2.50% to -2.25% | 21 | 18 |
| -2.25% to -2.00% | 31 | 25 |
| -2.00% to -1.75% | 34 | 30 |
| -1.75% to -1.50% | 54 | 40 |
| -1.50% to -1.25% | 84 | 73 |
| -1.25% to -1.00% | 107 | 71 |
| -1.00% to -0.75% | 133 | 97 |
| -0.75% to -0.50% | 214 | 146 |
| -0.50% to -0.25% | 265 | 196 |
| -0.25% to 0.00% | 402 | 240 |
| 0.00% to 0.25% | 368 | 184 |
| 0.25% to 0.50% | 285 | 146 |
| 0.50% to 0.75% | 256 | 142 |
| 0.75% to 1.00% | 181 | 115 |
| 1.00% to 1.25% | 144 | 88 |
| 1.25% to 1.50% | 93 | 61 |
| 1.50% to 1.75% | 75 | 61 |
| 1.75% to 2.00% | 43 | 39 |
| 2.00% to 2.25% | 34 | 29 |
| 2.25% to 2.50% | 27 | 27 |
| 2.50% to 2.75% | 18 | 16 |
| 2.75% to 3.00% | 6 | 17 |
| 3.00% to 3.25% | 8 | 16 |
| 3.25% to 3.50% | 7 | 13 |
| 3.50% to 3.75% | 2 | 11 |
| 3.75% to 4.00% | 3 | 7 |
| 4.00% to 4.25% | 3 | 6 |
| 4.25% to 4.50% | 2 | 4 |
| 4.50% to 4.75% | 1 | 2 |
| 4.75% to 5.00% | 1 | 7 |
| > 5.00% | 9 | 27 |
[quote=Erik T.]It appears that my choice of the word charlatan has triggered these reactions. … I regret that so many people took the word charlatan to mean something other than what I meant it to mean, and what the Dictionary confirms it to mean.[/quote]May I suggest in the future instead of charlatan use the word ultracrepidarian. No chance anyone projecting their own understandings of what it means.
[quote=Strawboss]
Now what if - we are only speculating here so bear with me…what if these supposedly isolated acts of manipulation arent isolated/individual incidents but instead are a coordinated plan and practice with a deliberate motive of price suppression to support the various fiat currencies in use around the globe.[/quote]
That’s always plausible, but I think quite unlikely. First, the goal of central banks seems to be quite clear: to weaken, not strengthen the fiat currencies of the world. I concede that they have good reason to want to avoid an unorderly depreciation (meaning appreciation of Gold), but it’s hard for me to see why this sort of tactic would help achieve that goal. In short, I think the first question has to be: what is the exact motive, who has it, and do the observed phenomena seem to jibe with the intent. In this case, I don’t see the argument. Meanwhile, the observed fluctuation is perfectly explained by the much simpler and more obvious explanation that a sleazy banker saw the opportunity to take out everyone’s stops in a time of thin liquidity, then close their position in the ensuing several hours when the U.S. session was open. I’m not saying that central bank collusion is completely impossible, but in this case I see no reason to suspect it.
Yes, that’s plausible. My contention is that it’s very much worthwhile to keep a skeptical eye on the markets for this very reason. And this is an example of where in my opinion, GATA et al seriously hurt investors’ interests. By making such a fuss over nonsensical theories, they distract attention from any bona fide effort to uncover collusive manipulation.
That’s the key point: The "footprints" observed yesterday point to someone gaming liquidity differences between market sessions to make a quick buck. The full recovery of the price during the ensuing US cash session is very much supportive of a hypothesis that someone spiked the market to take out the stops - it’s easy to see how that could be occurring. I’m not able to perceive how it would fit a central bank collusion scenario, however.
Also, I observe that the U.S. Fed seems very, very comfortable with the idea that what we call "market manipulation" or "interference" is the core of their job, and they show no signs of trying to hide their intentions. In short, the explanation that a bank or online broker perpetrated a stop clearing run to make a short-term buck is orders of magnitude more credible than the theory that this was part of a collusive central bank manipulation theory.
What I think most relevant is the regulatory condition that is allowed to continue to exist. My understanding (could be wrong - experts feel free to correct me) is that when an online broker uses the information in their computer system to intentionally perpetrate a "stop clearing run" designed to fleece their own clients’ pocketbooks, there is nothing illegal about that! When you open the account you agree to let them not only use data they have about your orders against you, but also to sell it to 3rd parties! I have not verified this information, but if true, it seems to me GATA’s efforts would be far better spent lobbying to close really obvious regulatory loopholes, rather than inventing outrageous theories that lack logical substance.
Another aspect of this is that a lot of institutional traders have learned that if they are trying to "buy support", they do better selling it "sloppy" first to trigger the inevitable stops set just below resistance, allowing them to turn around and buy back what they sold and more, to achieve a lower average cost of shares purchased. These traders are not evil perpetrators of "manipulation conspiracies" - they are just people with the mindset that anything that is not actually illegal is perfectly OK, and who have learned that they can get a better price for their clients by triggering an avalanche of sales just before they start buying. Again, I could be mistaken, but my understanding is that this is not illegal.
Seems to me that a very worthwhile lobbying effort would be to push for a "no sloppy trading" rule that makes it a crime to buy or sell anything with a motive of moving the price as opposed to an "economic trade" intended to buy something you actually want or sell something you really don’t want. Making it illegal wouldn’t stop everyone, but it would cause a whole lot of institutional guys who do this as a routine part of their jobs to stop the practice. Wouldn’t lobbying for that rule be a better use of resources than whining about completely unproven central bank collusion theories?
The challenge there is, a volume chart of what? The COMEX front-month contract? Spot transactions in London? Both? Assuming you want COMEX futures volumes, I suggest opening a free account with thinkorswim.com or interactivebrokers.com. Both offer charting of price and volume on various time scales, and would facilitate the research you describe. You don’t need any money - just open a "paper trading" account and you can use the charting tools. You’ll get delayed data, but for your purposes it won’t matter.
Everyone agrees stop-clearing runs are a real problem. Maguire and Butler include them in their list of gripes, obviously, because they are well known. My biggest problem with Maguire is his insistence on pretending there is enormous leverage on the LBMA, a thesis which rests on Maguire distorting facts (paper vs. physical clearing volume) so badly that it’s hard to believe it could be an honest mistake. Especially when he continues to insist this leverage exists two years after his early claims were widely debunked. In Maguire’s case (only), I am inclined to side with Jeff Christian, in that I just don’t see how anyone with the experience Maguire claims to have could possibly make such an eggregious error. Jeff’s explanation that Maguire knows perfectly well that he’s full of it and keeps selling his story anyway because so many people continue to buy it seems far more plausible.
Erik
Bron,
Thanks so much for joining this thread! You bring not only market knowledge, but now sesquipedalianism as well! Bravo!
-Erik
I would be interested to follow up any links to you might have in relation to Maguire’s claims regarding LBMA leverage and the resultant debunking of them.
In regard to London’s appeal as the home of rehypothecation, (Lehman, AIG, MF Global), I would be astonished if the LBM were not subjected to the same sort of excessive leverage, but, I am prepared to be astonished. If you can provide guidance I would appreciate it.
I have been provided with several 1 minute charts of the price/volume action today in gold yesterday morning on Comex and thank you for your suggestions. I think the information revealed will be of interest.
SR
[quote=S Roche]
I would be interested to follow up any links to you might have in relation to Maguire’s claims regarding LBMA leverage and the resultant debunking of them.[/quote]
Maguire, GATA, Eric King, et al made a huge big deal over Jeff Christian’s "shocking admission of 100:1 leverage on the LBMA" when he had said no such thing. The KWN interviews with GATA and Maguire from just after the CFTC hearing would be the best place to start. I don’t have a link, but would guess you can still find them at the KWN site.
Some have suggested that they just used a word ("leverage") incorrectly, but that the essence of their arguments still holds. That’s nonsense - note particularly Maguire’s "leverage works both ways" comments in the KWN interview, and his repeated assertions that each time a single ounce of gold leaves LBMA vaults, one hundred more ounces suddenly have to be "accounted for" - a completely illogical assertion that seems to be based on the fallacious idea that gold in LBMA valuts somehow collateralizes cash-settled forwards. Jeff Christian’s argument (and in Maguire’s case I must agree) has been that there is simply no way that a person with the knowledge and experience Maguire claims to have could possibly say something so stupid, unless their intent was deception and they knew perfectly well what they were saying was nonsense. I won’t agree completely with Jeff, however: One possibility is that Maguire is lying ONLY about his experience, and his true lack of any such experience would explain how he might actually believe this nonsense himself.
Several people including myself (here) debunked the absurdity of the notion that the ratio of cash-settled paper transactions to bullion-settled physical transactions (what Jeff was actually referring to in his testimony) had anything to do with leverage. GATA and company stopped making such a big deal over this after they were debunked, but Maguire continues to this day.
On a separate topic, SR, if you feel inclined toward forensic volume analysis, I encourage you to dig into the data from Jan. 6 thru 18th. The Jan 6 ZeroHedge article with the backward headline ("Physical surges to 30% premium over Spot, in Backwardation" when in reality it was paper that was trading 30% over physical!) is suspicious as hell. Makes me wonder if someone who knew the date of the coming shelf registration (which collapsed the premium to near zero) planted that article to pump the premium just before they started going short PSLV as one leg of a spread compression trade. Looking at the short interest to see if the selling that began around Jan 10th confirms this thesis would be an interesting exercise.
Best,
Erik
Thanks Erik,
Yes I followed that ZH premium assertion. One of the Tylers is highly suspect and I have clashed with him/her over a story I know was wrong, as I know the person and the circumstances they wrote about. That Tyler showed zero interest in correcting the record. I will start where you suggest.
For those interested in the whole do they/don’t they debate about gold leverage here is Kyle Bass’s first hand account of his Comex audit experience: http://www.youtube.com/watch?v=UQTa66gCggY (2.08).
SR
Oops, I meant to say here.
It would be so much better if the Tylers would separate themselves, i.e. post under "Tyler14" so that each person is recognizable. Yes, I understand these guys are annonymity buffs, but readers tend to develop a credibility index associated with each author over time. If the various Tylers were separately identified, even if still under pseudonym, it would be a heck of a lot easier to separate the ZeroHedge brilliance from the ZeroHedge Bullsh*t.
Erik
Jumping in a little late, but what is this other than an acknowledgement of manipulation:
"Just to keep the message clear… Nobody here has denied that "stop-clearing runs" - where someone sells "sloppy" into thin liquidity - are a very real part of the business. In fact, both Jeff Christian and I have acknowledged this reality earlier in this thread. The point is not to confuse the very real manipulations that do occur with bogus, logically incoherent theories about other mechanisms of manipulation that exist only in the minds of GATA et al."
Why would selling ‘sloppy’ into thin liquidity be a ‘very real part of the business’? It could only serve to drive the price of an asset down, which would only seem to benefit someone who didn’t actually own the asset. There is no need to confuse real manipulation with bogus when they are one and the same.
I just returned from a conference put on by Sprott. I had a couple opportunities to speak to Rick Rule, founder of
Global Resource Investments which was recently bought by Sprott. He utterly rejects the notion of JPM manipulating the silver market, a point upon which he acknowledged differing with his "boss." In fact, he is generally skeptical of conspiracy theories at least partially because alleged conspirators are too incompetent to keep the conspiracies going over the course of years. That’s a theory I have difficulty punching holes in.
I had a number of conversations with other attendees during which the JPM conspiracy came up. If it’s any comfort, no one I spoke to had ever heard of Harvey Organ, including Rule.
Oh yeh, Rule said even if it were true, he’s thankful because he continues to accumulate.
BTW, I was reminded how much I love the city of Toronto. If you’ve never been there, find an opportunity to go.
Doug
It sounds from what you’re saying that he has not put any time and effort into investigating this (if he did, can you point me to such research?) Therefore, his opinion doesn’t matter (even if he’s RR). He has explicitly told you that “he is generally skeptical of conspiracy theories at least partially because alleged conspirators are too incompetent to keep the conspiracies going over the course of years.”. This statement seems to be based on a preconceived belief system (as is your affirmation that “That’s a theory I have difficulty punching holes in.”) not based on research and logic. Basically what you’re saying is that YOUR (and RR’s) theory is better than the opposing theory and therefore need not be examined.
[quote=Duclan]It sounds from what you’re saying that he has not put any time and effort into investigating this (if he did, can you point me to such research?) Therefore, his opinion doesn’t matter (even if he’s RR). He has explicitly told you that "he is generally skeptical of conspiracy theories at least partially because alleged conspirators are too incompetent to keep the conspiracies going over the course of years.". This statement seems to be based on a preconceived belief system (as is your affirmation that "That’s a theory I have difficulty punching holes in.") not based on research and logic. Basically what you’re saying is that YOUR (and RR’s) theory is better than the opposing theory and therefore need not be examined.[/quote]My impression of Rick is that he has a wealth of knowledge about PMs from extraction, to smelting, to accumulation, to where most of the above ground metal is. Trying to follow a presentation by him this morning was like taking sips from a firehose. The presentation was on miners, private placements and where he sees the industry currently in terms of cycles and timing. Afterward I asked him for sources I could read to begin understanding the fundamentals and, as he put it, he gave me about 40 days of reading to get a handle on how it all works, and then said when I’m done he can point me to more. After 40 years of experience in the field, he knows more about it than I ever will. Now, would I trust the opinion of someone like that, particularly when he has no idea whether he’ll ever make any money off me, over some guy who has a blog and claims to have all kinds of insider info? Yeh, I think so.
BTW, welcome to the forum. There is a lot to learn here.
Doug
I am not challenging Rick Rule’s expertise. I am only challenging his stated belief regarding manipulation and I have not seen any research done and published by him which aims to prove or disprove the manipulation. Eric sprott, on the other hand (to whom I heard Rick Rule refering as “not just my boss but also my mentor”) has done and published plenty of analytical research on the topic, he has met with Andrew Maguire and believes him to be authentic. I don’t know how RR can reconcile between his stated belief and his mentor’s hard research. I think it has something to do with his general attitude which I perceive to be something like: “I am too cool and important for this manipulation stuff.” Perhaps this is just my perception and I could be wrong, but this is what I perceive.
heresay. Let’s stick to what we can verify.
In case you have not seen it, Turd Ferguson weighed in today and gives a clear nod to this momentous thread. He pretends to give up all his previously held beliefs… I have to say, reading the post gave me a much needed gut laugh… see if you can read it and not start laughing yourself…such a crazy world we live in - we have to make sure we don’t lose our perspective here and let debates around manipulation divide us …;
http://www.tfmetalsreport.com/blog/3749/succumbing-trolls
And my favorite line from the tongue-in-cheek rant, showing that our own Erik T has now singlehandedly reinvigorated the use of the word, "charlatan" and created an internet meme of his own, is highlighted in the excerpt below;
The Federal Reserve never has, and never will, intervene in the equity, treasury and/or currency markets.In closing.. I appreciate a good laugh more than ever... a necessary mini-catharsis as the level of cognitive dissonance rises to levels I never would have imagined. Hugh Hendy sums it up well in this piece referenced on ZH today,Ben Bernanke is an Einstein-level genius. We are very fortunate to have him as Fed Chairman at this critical point in history.
Silver is simply an industrial metal. Always has been, always will be.
As a byproduct of mining for other base metals, the amount of silver is infinite.
Those hoarding silver are mindless robots, fooled by internet charlatans.
Jim Sinclair is a disinformation double-agent of the Rothschild family.
Trader Dan is a mindless pumper whose sole motive is personal gain.
Andrew Maguire is a figment of Bill Murphy’s overactive imagination.
Ted Butler, Jim Willie and John Williams are scam artists who dupe the easily-frightened into paying for their over-priced and worthless analysis.
FOFOA, Keiser, VonGreyerz, Hoffman, Krieger, Embry, Russell, Pento, Schiff, Rickards, Celente, Rule, Fleckenstein, Faber, Quinn, Nielson, Naylor-Leyland, Turk, Martenson, Lira. All of them are nothing but 21st century snake-oil salesmen.
GLD is 100% backed by gold and it’s custodian has no conflicts of interest.
SLV is 100% backed by silver and it’s custodian has no conflicts of interest.
Link: http://www.zerohedge.com/news/hugh-hendry-europe-you-cant-make-how-bad-itWe have reached a profound point in economic history where the truth is unpalatable to the political class - and that truth is that the scale and magnitude of the problem is larger than their ability to respond - and it terrifies them."we are single-digit years away from the most profound market clearing moment"