Who is shorting Gold?

Re: Who is shorting Gold?

When an OTC derivative fails to perform, notional value becomes real value. The notional value of all OTC derivatives exceeds $500 trillion.

Goldisliberty -

I also check in with Sinclair regularly to get his take on things. He's brilliant and from what I understand as a layman he's fairly well connected. It pays to listen to Jim Sinclair.

Having said that he writes with some of the most obscure language. I find myself reading half his posts literally six times over to pull out the points he's making. Sinclair is "thunderous" in his condemnation and analysis, while iTulip, in the hands of E.J. and the senior contributors are more "delicate". Delicate is a misleading term though as these iTuliper's are picking apart the carcasses of failing (all the "dead men walking") and defunct financial institutions with the sentimentality of an forensic surgeon conducting an autopsy of a cadaver (pass the high speed buzzsaw please - scalpel!).

In spite of making sometimes harsh sounding challenges (that's just the way I communicate because I have poor manners - sorry!), I extend my full respects to C1ue, who is one of these archetypical, slightly cold-blooded iTulip financial cadaver dissecters (I surmise C1ue likes to pick through the cadaver entrails to figure out exactly what the deceased bank ate for it's last supper, like an entomologist reslishes collecting skewered bugs. :rolleyes.

But in light of Sinclair's summary above, and in a typically iTulip response, I think someone like Finster for example would be inclined to pick this phrase apart, with an eye to letting out a little of the steam: << When an OTC derivative fails to perform, notional value becomes real value. >>

Much of Sinclair's observations above, as to the quantity of inflationary chips on the table which will require oceans of fiat paper to close out, hinges on this one sentence - but probably strictly speaking that $500 trillion of notional value does not automatically become real value - so there's some room in there to pin Sinclair back into his chair a little bit?

Having said that, in the broadest lines Sinclair is a formidable proponent of the simple idea that this entire mess resolves itself in terms of a degree of currency debasement which understatement might call "very rapid". He's fantastic in the amount of time he makes himself available to the public with lots of really good guidance. The man has a real degree of selflessness in his message.

The very fact that Sinclair makes this central to his entire view of what's to come, at least from an iTulipers perspective, seems a quantum leap ahead of the Mish's and Ackerman's understanding of how things will play out, and most notably, a quantum leap ahead of the Prechter's of this world, who get a hell of a lot of press and propagate some really wobbly interpretations (in my view anyway). Sinclair has it right, and these other zippity doo-dahs have it most egregiously wrong.

The best part of iTulip is that we have people here who take can take Sinclair's own thesis of currency debasement and can parse it down actually a lot more precisely than Sinclair, in that they pick apart precisely which strands of the above "500 Trillion notional value" are going to really command the issuance of fresh fiat to close out. This is the kind of nitpicky, detailed forensics that brings out the hidden wonk in so many of the great contributors here, and we have some truly formidable wonks in this community! ( :p ).

I think iTulip is very much on the same page as Sinclair - but they write better, and make some of the really complex parts real clear so that the rest of us average joes and joettes are steadily getting a stronger grip on what's developing. Still, in moments of doubt, like after this hellacious PM correction, Sinclair's "fire and brimstone" together with the quite evident ring of authority in his general grasp of the broad trend of events, helps us to get back on the main track.

We need, when all is averaged out over the next decade, to stop hopping around perennially anxious about second-guessing KA, and position the bulk of our assets steadily and calmly for - I N F L A T I O N. You and I may think this. Others here may not. We'll keep plugging that viewpoint, and over the larger span of time, I'm betting we'll be in the right, most of the time.

[SeanO]

Re: Who is shorting Gold?

[B]
The problem that no one is focusing on right now is the tracking of the mortgage itself to the structured product, which has broken down. That means in these items many can’t connect the underlying mortgage to the structured investment product (derivative).
So far courts have held that the only entity that can foreclose is the entity that actually lent the money. The average guy does not know that with an attorney to protect him he has a free house!

From what I've seen on these cases Sinclair is misinterpreting the headlines. The issue has not been to find the "entity that actually lent the money", it is to be able to show that the attorney (trustee, in deed of trust states) represents the lender "on title". Pretty simple fix on that front, just go back and record the required missing documents - the folks that won these cases may have gotten a temporary reprieve, but I have yet to see any credible stories of "free houses".

Sean

[goldisliberty]

Re: Who is shorting Gold?

Jim Sinclair from www.jsmineset.com tonight, 03/23/08:

"This weekend’s meeting of four heads of central banks communicates the size of the OTC derivative disaster. It is a system that is broken. A bailout will require the printing of trillions of dollars worth of monetary stimulation making Bernanke’s helicopter drop look like chump change.
The dollar number of pending derivative bankruptcies is the size of the mountain of garbage paper issued by just those who are to be bailed out. That number is greater than the total world economies.
There simply isn’t enough money in the world for central banks to buy up the mountain of worthless paper sold by those who need bailouts; all of which made fortunes for their directors, officers and key people.
When an OTC derivative fails to perform, notional value becomes real value.
The notional value of all OTC derivatives exceeds $500 trillion.
Credit default swaps (OTC derivatives) alone account for over $20 trillion dollars of notional value and are failing. Major dealers in these items, Lehman and JP Morgan, had their debt downgraded last week.
Maintaining the AAA rating on debt of public companies primarily issuing default swaps as credit guarantees is a sick JOKE of fabrication. This is a JOKE that in all probability will lead to litigation that destroys the rating companies.
You can be absolutely sure that all the biggies have their money out.
No one mentions these firms being bailed out are the ones who created this disaster, making billions for their economic sin. You can be sure the big boys have their money out of the now on-the-rocks international institutions.
No one mentions that bailing out the bankers will leave the average man victimized and paying for the pleasure of the economic rape.
Meanwhile Derivative Traders (salesmen of perdition, not traders) and their hedge fund managers are all in Greenwich Connecticut with their hundreds of millions and billions, now retired playing tennis on their indoor courts at their waterfront mansions as the mess deepens.
Litigation against the officers and directors of these international banking firms, both against the biggies personally as well as the company, will make the biggies occupation one of defending against litigation for the rest of their lives.
For those biggies in these companies who trust no one and therefore have wives with no money will lose everything. Some of them I know. What goes around certainly comes around.
Litigation against OTC derivatives are slam-dunk victories for the injured plaintiffs. The biggies will pay.
This is the greatest act in history of “Public Be Damned” and “Let them Eat Cake.” It will not come about because in the USA it is already the hottest political potato.
The problem is that the plan of the US legislative is down right STUPID. It is an embarrassment that legislators are so publicly moronic when it comes to economics.
The problem that no one is focusing on right now is the tracking of the mortgage itself to the structured product, which has broken down. That means in these items many can’t connect the underlying mortgage to the structured investment product (derivative).
So far courts have held that the only entity that can foreclose is the entity that actually lent the money. The average guy does not know that with an attorney to protect him he has a free house!
The entity that actually lent the money has sold the mortgage and been paid. Therefore where is the incentive for original lender to foreclose? The answer is there is none. Bankers do not help bankers in the same way that sharks do not help sharks.

Conclusion:
Because of the unthinkable size of the problem it is impossible to construct a Resurrection Trust to buy all these worthless and never to be anything but worthless items.
Should any item surface to do this it will destroy all the National currency of the central banks that participate.
If there were an attempt to construct such an entity with the cooperation of the USA, the US dollar would go much lower than .5200. Gold would go to many thousands of US dollars.
Anyone who last week assumed the problem was over and we would be improving from there on out is simply nuts." -- Jim Sinclair

-----------------------------------------------------------------------------------------------------------------

My vote is with LUKESTER on I N F L A T I O N and a gold and silver bull having a healthy number of years more to run and run strongly. As Sinclair has advised, we should gird ourselves for ever increasing volatility.
Get long, stay strong.

Re: Who is shorting Gold?

... What I'm saying is that the $ figures involved are such that it is EASILY possible for one or more large hedge funds, banks, CBs, or what not to perform said manipulation.

C1ue -

Please. This is what requires a clarification - You are suggesting that the "large hedge funds, banks and CB's" have NOT YET unleased determined attempts to manipulate/cap the price?

So, in seven long years of watching the PM prices bull right past what we erroneously concluded were the the CB's best price capping efforts, you are suggesting the reason why the price has been permitted to proceed this far is because the CB's have not yet broken a sweat trying? Not a credible argument in my view.

And as far as suggesting my objections lack credibility because I have "not yet breathlessly predicted the soaring future price of gold with all the other sweaty palmed goldbugs", that's just silly C1ue. If you read a few of the more reputable sources objectively, you'd note the most seasoned and professional market observers expressly point out that such exercises are best left to the fools.

Your suggestion that because I don't venture into breathless price projections about gold my view is in some way inconsistent seems to employ non-sequiturs in place of logic, which is highly unusual for you.

Central banks and the hedges have had seven years during which time they've strenuously exercised themselves to exert an influence upon the gold price sufficient to protect their interests (beat back serious challenges to their FIAT money's acceptance in the world). Their interests have taken a beating in the process - yet you maintain they have not yet really tried?

Methinks you need better arguments.

[c1ue]

Re: Who is shorting Gold?

Lukester,

Once again, your gold bug ways blind and deafen you from perceiving any possible cracks in your knight in gold armor.

What I've said is not that there IS manipulation of the market; only if I had proof would I say such a thing.

What I'm saying is that the $ figures involved are such that it is EASILY possible for one or more large hedge funds, banks, CBs, or what not to perform said manipulation.

My previous threads also say this: that gold price fluctuates significantly with sentiment/investment demand, and historically this investment demand is NOT consistent on any timescale of note. Thus gold price also can change on a dime.

Therefore anyone who buys gold thinking that it is a sure thing, had better think twice or pray they have lucked into the right trend, for the wrong reasons.

Once again, rather than sitting on your ex-post-facto gold performance, how about putting out some hard numbers on when/where gold will be?

Or even shout out what the top might get to?

Given that most of your gold-bug letter 'analysts' scream that dollar devaluation will drive gold to unprecedented heights, I'd think you'd have lots to say on what future Fed/US Gov't policy will be and thus what gold prices 'should' be.

[Honzajs119]

Re: Who is shorting Gold?

How does a mining speculator like McCoach obtain information about BSC with regard to its positioning in gold and 10-year bonds?

Is he such a special person that he can obtain such information when, to my knowledge, it hasn't been reported in the mainstreammedia misinformation.

I do not know
I hope he will explain in issue to be out on Monday

[Jim Nickerson]

Re: Who is shorting Gold?

Comment from Greg McCoach - emphasis mine

How does a mining speculator like McCoach obtain information about BSC with regard to its positioning in gold and 10-year bonds?

Is he such a special person that he can obtain such information when, to my knowledge, it hasn't been reported in the mainstreammedia misinformation.

[Honzajs119]

Re: Who is shorting Gold?

We've heard a rumor of gold to $800 from several sources. Anyone else heard this?

Comment from Greg McCoach - emphasis mine

Mining Speculator Hotline

Hotline

This is Greg McCoach with a Mining Speculator Hotline for Friday, March 21, 2008.

Events this past week have prompted me to send out this communication regarding the sudden collapse of the precious metals prices.

Here is what is happening.

The demise of Bear Sterns, which was reported to the public Sunday evening and Monday, has in turn caused their assets to be sold off in masse this week.

On their book of liquid assets was a rather large, long gold position. It is being sold off in order to raise cash to offset their massive losses. The spot prices have been hammered because of this activity. It will be short-term in nature. If you're looking to buy physical precious metals to diversify your portfolio at this point, you are being given an unexpected gift to do so. It won't last long.

Another item in Bear Sterns closet was a massive short-position in the ten year treasury. This off course is being unwound this week, which is making the dollar looking a bit stronger than it really is. Don't be confused by this nonsense. The dollar will soon resume its downward trend.

The fact that Bear Sterns was shorting the dollar to such a degree shows that they were not playing along with the game of the establishment Federal Reserve banking crowd. They have been severely punished by the powers that be.

What brought Bear Sterns to their knees was their own riverboat gambling mentality that not only jeopardized them, but the financial system as a whole. This kind of story is just the beginning of what will be a long list of companies that meet a similar fate. Will the Fed and the citizens of the United States be able to bail out all the financial sewage that is about to be uncovered?

What the Fed is doing is nothing more than sleight of hand trickery to give to itself the assets of Bear Sterns. As I have said before, the Federal Reserve is no more "Federal" that Federal Express. It is a private organization owned and controlled by shareholders, the largest of which is J.P. Morgan Chase. J.P. Morgan Chase in other words is the Federal Reserve, so don't be surprised that they end up with the assets while you and I pay for the debts from the whole mess.

When are people in the United States going to wake up to the ugly realities that are now upon us? This ongoing calamity of financial chaos is going to cause extremely serious consequences to each and every American. Your wealth, security and lifestyle are all at stake as the coming months and years unfold.

You should be doing everything you can to:

1. Avoid, pay down, pay off debt
2. Buy physical precious metals - particularly gold and silver
3. Get money outside the country or at least in a better currency
4. Get away from dollar denominated risk
5. Get a food storage - you can't eat gold or paper dollars!

There are going to be banking failures in the United States and around the world. You should be evaluating the merits of who you bank with. Most of the big banks are in a world of hurt. The smaller, independent banks have not leveraged themselves like most of the big banks have. They may fare better, even though they don't offer all the nice, online services the big banks have.

As far as our junior mining stocks go, they will rebound. Right now they are getting hit yet again as investors like us prepare to write checks for our capital gains taxes. Yes, it appears many of us have waited till the last minute to raise monies to pay for these taxes. Most of us will have to sell something to pay for this.

So, in the next few weeks, expect further weakness as this takes place. The better companies will be hit with this activity as well. Those who have the cash to buy will be given the best opportunity to buy low and sell high.

After tax season however, and as the precious metals prices begin to make very large moves in April taking them to much higher levels, the juniors will finally begin to move again.

My message is to stay the course in your good positions, especially our Top Ten companies that are listed as Strong Buys.

As we move forward in the next six to eight months, I see a time where we will begin to beef up positions in companies that are either in production (such as Excellon, Jinshan, and Capital Gold, or are near-term producers. Companies that are more speculative and do not have any near-term production capacity will be eliminated. The reason for this is that the risk capital markets are going to be getting much tighter moving forward and many juniors who are still in the speculative phase will find it much harder to raise monies moving forward. I will be talking more about this in the coming months.

That is all for now.

Greg

Re: Who is shorting Gold?

... message from Northwest Territorial Mint. ... They are claiming that it is a shortage silver, but rather a shortage of minted coins. There is plenty of raw silver available, but the sudden surge of demand for coins has caused a shortage between finished product and the ability of mint production to ramp up to meet demand.

I thought this too, but apparently all other forms of silver are in tight supply momentarily as well from many other dealers, so there is some sort of "bottleneck" in the silver fabrication all around. We can't assume that raw silver supply does not factor in there at least partly somewhere. Interesting juncture for silver.

Re: Who is shorting Gold?

Once you throw in the derivatives, I'd bet you could control $1B worth of gold with only $50M (or less). That $30M/day could then drop to as little as $1.5M/day. Read 'Reminisces of a Stock Operator' to see how manipulation is done.

C1ue -

With respect, you are omitting the larger parentheses in your observation. All of this highly effective shorting, which you posit has a stranglehold on the precious metal, has been waging a quite evident rearguard action against the price for the past seven years. What do you prove about the overwhelming power of shorting if it's been losing massive ground to the spot price for so many years in a row?

I never do understand why you take up these admittedly highly articulate and wonkish arguments, buttressed by apparently unassailable data but so often build arguments from the short term data. When the larger premise (soaring silver price) negates any theory of effective price-capping, even if your short term data seems to overwhelmingly support the validity of shorts controlling the price, it's in fact easy enough to observe that they don't merely by dialing your observation out a few years, no? The price capping you are talking about is short term, within a longer term trend of evident failure of price manipulation. Any ten year chart reveals it at a glance. Isn't this evident?

[touchring]

Re: Who is shorting Gold?

Sapiens hears $750, Fred hears $800. Is anyone here going short or taking a speculative hedge against their long position? I'm a novice at options trading, but it seems like there would be a way to play it if we're looking at ~15% down before resuming the uptrend.

I know, don't try to time the market. Just wondering if anyone is trying to.

Jimmy

Try averaging, if it falls to $800, buy some, and then if it falls further to $750, buy another batch,and so forth.

By the way, has anyone seen the uranium chart?

http://www.uxc.com/review/uxc_g_price.html

Investing in uranium ore is more profitable than gold or silver.

[touchring]

Re: Who is shorting Gold?

Sapiens hears $750, Fred hears $800. Is anyone here going short or taking a speculative hedge against their long position? I'm a novice at options trading, but it seems like there would be a way to play it if we're looking at ~15% down before resuming the uptrend.

I know, don't try to time the market. Just wondering if anyone is trying to.

Jimmy

Try averaging, if it falls to $800, buy some, and then if it falls further to $750, buy another batch,and so forth.

[dbarberic]

Re: Who is shorting Gold?

Silver Stock Report has a new update on the shortage of physical silver coins:
http://www.silverstockreport.com/2008/shortage.html

Silver Shortage gets Worse, Price Drops Again!

(If you don't hold it, you don't own it)

Silver Stock Report

by Jason Hommel, March 20, 2008

Three more major silver dealers are reported to be out of silver today: The U.S. Mint, Kitco, and Monex. This, on top of the major dealers yesterday, Amark, Perth Mint, CNI Numismatics, and APMEX, all reported sold out. Further, nearly all of Canada is reported to be out of silver, from Vancouver to Toronto.

More in link to story.....

If you scroll about half way down you find a message from Northwest Territorial Mint.

They are claiming that it is a shortage silver, but rather a shortage of minted coins. There is plenty of raw silver available, but the sudden surge of demaind for coins has caused a shortage between finished product and the ability of mint production to ramp up to meet demand.

[c1ue]

Re: Who is shorting Gold?

Lukester,

We'll just have to agree to disagree.

MSM has talked about these giant numbers flying around concerning commodities trade around the world, but any and every market can be manipulated via a straightforward fraction of daily, weekly, and monthly volumes. But this is stupid talk.

The 2006 numbers show QUARTERLY investment consumption of gold to be in the 100 ton range.

This breaks down to an average of around 1 ton per day.

Given that @$910/ozAU, this ton is about $30M.

Even discounting the fact that a significant portion of this $30M consumption per day is fixed (i.e. won't change much as it hasn't changed much in the last decade), do you really think there aren't MANY funds out there that can play with $30M/day for a month?

Once you throw in the derivatives, I'd bet you could control $1B worth of gold with only $50M (or less). That $30M/day could then drop to as little as $1.5M/day.

Read 'Reminisces of a Stock Operator' to see how manipulation is done.

[jimmygu3]

Re: Who is shorting Gold?

We've heard a rumor of gold to $800 from several sources. Anyone else heard this?

Sapiens hears $750, Fred hears $800. Is anyone here going short or taking a speculative hedge against their long position? I'm a novice at options trading, but it seems like there would be a way to play it if we're looking at ~15% down before resuming the uptrend.

I know, don't try to time the market. Just wondering if anyone is trying to.

Jimmy