Things are gonna get reallllllllllll interesting the next week or so. Don’t believe what you might see and hear from the talking heads on CNBC and Bloomberg, which by the way will look and feel something like this:
From King World News, I am including a link for your perusal. In a nutshell, the silver shorts are all Fed supported large banks [hello JP Morgan & HSBC], and more significantly demand out of Asia is “insatiable”. Read the entire post here:
While I generally discount stories of large “mystery” buyers, the recent lawsuits against JP Morgan & HSBC finally shed light on what has been an open secret in the trading community for a very long time; viz., these two along with Goldman et al are government supported market manipulators that do not want precious metals prices going higher. They exist to prey on retail traders in the “paper” futures markets and give cover to spendthrift governments.
However, with the gig all but totally up, the U.S. government simply cannot hide the fact that they have embarked on total monetization of the U.S. currency. [See my remarks in earlier blogs for Weimar Ben’s actions if you haven’t already.] It makes perfect sense that the Chinese are stockpiling silver [and just about everything else] for future needs. Put yourself in their shoes: going forward at 9% - 10% internal growth, with total debasement of the dollar thrown in as well, where do you think prices are going to be in 3 – 5 years since mine production has slowed and costs are rising? Yeah, that’s what I thought!!
Take the tens of thousands of futures contracts these banks are short in the gold and silver December 2010 maturity, coupled with insatiable demand, and you end up with a total melt-up clusterfark. Say hello to the next big bank bailout!!
Exit question part I: If you were short numbers like these, would you not engineer a “run-the-stops-on-the-downside” like we saw yesterday and today in gold and silver, in a last ditch effort to save your firms ass, hoping to send prices low enough into the stops so you could get out or at least get lower prices for your losses?
But wait, it only gets better.
Today, the Weimar Fed announced the buy back for notes and bonds over the next month. Starting Friday, the Fed buys $105 BILLION in 18 almost daily operations over the next month. Let the asset price rise orgy begin!!
I caught up with my head mathematician this morning,
and doing some serious cipherin’ I figure this means another 10% - 15% rise in just about every asset class from stocks, precious metals to Barbie dolls by the December futures expiration!
The way I see it, the shorts had yesterday and today to ride the back of the large banks to force the gold and silver markets lower. I’m talkin’ about quick, very vicious spikes down that get your stops filled no where near where you might think. Yesterday and today were not the days to get long; too much risk. By the end of tomorrow though, I will be long, expecting the front-running of the Feds printing money monetization to start in earnest by days end or sometime Friday.
Exit question, Part Deux: What does $108 Billion dollars go into within 30 days that won’t lose its value but keep appreciating?
One more tidbit: yesterday the Intercontinental Commodity Exchange [ICE] announced that accounts can use gold for margin purposes.
Over the next month, this is going to be one hell of a ride up. Hide the children.
holy melt-up clusterfark vegas!
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