Agressive Hedge Fund Buying PlagueD Silver.

Discussion in 'Silver' started by Pirocco, Aug 24, 2014.

  1. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    [imgz=http://forums.silverstackers.com/uploads/1798_silver_cot_dan_norcini.jpg][​IMG][/imgz]
    Note the capital D in my topics title.
    Not present. Past.
    This topic serves to "counterweight" the "Agressive Hedge Fund Selling Plagues Silver" http://forums.silverstackers.com/topic-56006-agressive-hedge-fund-selling-plagues-silver.html

    Shows once again how misleading works.
    These Money Managers bought the price up, and are now selling it down again.
    That's why Noob Trader Pirocco says to NOT add to the stack when the futures market position sits high.

    http://www.traderdannorcini.blogspot.ca/2014/08/agressive-hedge-fund-selling-plagues.html
    Professional Trader Dan Norcini sees a Selling Plague, and calls the Buying Plague some months earlier "Odd".
    Can't sell what ya don't have! :/
    It's just 3 months earlier that the loading up started!
    Is it:
    I CAN'T SEE! I CAN'T SEE! I CAN'T SEE! I'M BLIND HELLUP?
    No it is not.
    It's Professional Vested Interest.
    The professionalism doesn't sit in informing you.
    It sits in disinforming you.
     
  2. JB3

    JB3 Member

    Joined:
    Dec 24, 2013
    Messages:
    263
    Likes Received:
    0
    Trophy Points:
    16
    Location:
    UK
    "Can't sell what ya don't have! "


    That is the essence of shorting...
     
  3. wrcmad

    wrcmad Well-Known Member Silver Stacker

    Joined:
    Jan 2, 2012
    Messages:
    6,644
    Likes Received:
    1,502
    Trophy Points:
    113
    Location:
    Northern NSW
    Probably true.
    That's why he gives you good advice and a tried and tested method to deal with this: ;)

     
  4. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    Remember, both sides of the comparison are the same...

    (Taking a futures position.... dumping a futures position)
     
  5. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    There are more Professional Traders Dan Norcini in the world.
    What they name as "Trading/investment" and "hard and demanding work", is just misleading from their lazy chair.
    There is a population part that produces the things other people want, in return to get what they want.
    There is another population part that tries to frontrun and mislead them, as to get these things, in return for their nothing.
    I'm sure you understand. ;)
     
  6. BiGs

    BiGs Active Member

    Joined:
    Jan 20, 2014
    Messages:
    840
    Likes Received:
    120
    Trophy Points:
    43
    Location:
    Sydney
    Shorting is a contractual agreement. Nothing is actually being sold, period. It's called short 'selling' because it accurately describes the position you are taking.

    A forward/future market does not effect spot directly, and any indirect effect it does have will be neutralised at the contract expiry.

    Please don't go on another silver ETF rant Pirocco!
     
  7. wrcmad

    wrcmad Well-Known Member Silver Stacker

    Joined:
    Jan 2, 2012
    Messages:
    6,644
    Likes Received:
    1,502
    Trophy Points:
    113
    Location:
    Northern NSW
    I think you chose the wrong market for your savings.
    You obviously went in blind without doing your homework, and now want to blame others, criticise how the silver market operates after diving in. :rolleyes:
    You should have purchased real estate instead, then when the prices moved in your favour, there would be no complaints.
     
  8. justin007

    justin007 Member

    Joined:
    Apr 10, 2011
    Messages:
    55
    Likes Received:
    1
    Trophy Points:
    8
    Location:
    Australia
    Yep. We all should have just bought real estate : )

    Between everyone here and me, this became apparent on my journey at around $27

    We live and learn
     
  9. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    Something also take into consideration is that a futures market is a hedging environment et al.
    The shorts as well as the longs are hedging future trades.
    Meaning: they open positions upon which they will receive dollars to compensate for potential losses (and gains, so also giving away windfall gains) due to eventual price changes that would otherwise have costed them money.
    This Professional Trader Dan Norcini names one trader class as 'hedgies', but that's what they all are.
    Commercial hedgers are just a trader class like all the other, only that they form the commodity supply on the market, and the other trader classes the demand for it.
    REGARDLESS their individual net positions (long or short) and even regardless the trader classes themselves.
    In the case gold and silver, the commercial classes of hedgers are always net short, and the trader classes of hedgers always net long, but in many other commodities they sweep between net short and net long alot.
    For example, look at copper:
    [imgz=http://forums.silverstackers.com/uploads/1798_copper_fut_chartashx.png][​IMG][/imgz]
    Every trader class has a color in the trend lines below the price trend. Look at how they all fluctuate around the zero (neutral).
    That just shows that they are all hedging future (not futures contracts, just 'in the future') trades. It's the reason for the futures markets existence in the first place.

    And aside of that referencing specific trader classes as 'hedgies', Professional Trader Dan Norcini's habit of describing them as winners/losers:
    ...is just wrong. Hedgers are neutral. Seen over the whole of the market, they win nor lose. That was their very purpose.

    The winners, and the losers, are their counterparties. Those who they hedge against in the first place.

    Who are these counterparties? Well haha, the 'speculators'. Yes, that's those that temporary buy silver to sell it abit later in the hunt for profit.
    If all those companies - producers, merchants, metal processors, bullion banks, bullion dealers, etcetera, wouldn't hedge themselves, then they would risk to pay that profit.
    And the hedging even happens against speculators on other markets than silver, markets whose price trend has a tendency to move the opposite way.
    With this futures market - hedging environment, they avoid this loss, effectively pushing the speculators alone in a zero sum market.

    The dollar stream just flows through long and short positions, it doesn't start / end there.
    These dollars origin from speculators, and the taking of these hedging futures positions increases the spot price, so speculators that are willing to pay these increased prices, actually deliver the dollars that the hedges compensate losses with.
    And that's why buying silver when the hedge is big, is not advised. :p

    Of course, a futures market is not ALL determining in this. It depends on the amount traded of the commodity, relative to the total amount traded of the commodity.

    Take for ex. again that copper grade #1 chart here above.
    You can see that the hedge never grows above 40000 contracts of 25000 pounds, so 1 billion pounds or 453,592 tonnes.
    The worlds total supply/demand is 18 million tonnes. That's 40 times more than what the futures market hedges against.

    Now compare with silver.
    [imgz=http://forums.silverstackers.com/uploads/1798_20140628_silver_fut_chartashx.png][​IMG][/imgz]
    Same things to look at as in aboves copper case. The futures market hedge reaches almost 70000 contracts of 5000 ounces, so 350 Moz.
    Worlds total supply/demand is 1000 million ounces. That's 3 times more what the futures market hedges against.

    See this futures hedge difference between copper and silver?
    The impact of the futures hedge on the silver price, is 13 times the impact that the copper futures hedge has on the copper price.
    And that's why the correlation between the size of the futures hedge and the spot price, 13 times weaker is for copper than for silver.
    Silver is rather exceptional in this futures hedge.
    And why?
    Simple: a huge presence of short term money for nothing clubbers.
    Beware! :D
    Silvers volatile price is not due to the metal, but due to this money for nothing club.
    It just shows how essential it is to swap fiat to silver AFTER they got out and BEFORE they get back in.
    And the futures market hedge, due to that big 1/3 of total supply/demand, serves as a good indicator.
    It doesn't say it all, it's still "only 1/3", but lol, it's already a big first step in the green direction.

    This was Pirocco, from the SS AntiTheives Department. Put the fiat in the silver not in their pockets. :D
     
  10. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    YEP!
    The Doom of the money for nothing club.
    People that learn. :)
     
  11. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    Instead, I rant your posted crap, mister BiGs.
    A futures position nearly never (1% ?) ends in delivery;
    Because it never was the goal to actually buy/sell the commodity along the futures market.
    The goal was not to receive commodity, but to receive dollars to compensate for price changes of that commodity.
    That's what hedging is.
    Of course a future/forward price does not effect spot/cash price "directly".
    It's not some automated price mechanism - formula that "changes" the latter according to the former.
    It's "arbitration", human (automated programs also possible), that "indirectly" effects spot/cash price.
    Why does this "arbitration" happen? Because a future/forward price difference with the spot/cash price means profit.
    And that profit is grabbed in the 'blink of an eye' of a Speedy Gonzales. :D

    Contract expiration, is just a decision to stop the dollar stream.
    A decision to terminate of the hedge.
    After the money for nothing club again dumped what they temporarly bought.
    No reason to hedge anymore. And this happens at the same Speedy Gonzales speed.
    So the spot/cash price loses the futures/forward share again.

    Futures market 101.

    Recommended read:
    GETTING STARTED IN FUTURES
    COMPLETELY UPDATED!
    TODD LOFTON

    John Wiley & Sons, Inc.
    Professional, Reference and Trade Group
    602 Third Avenue, N.Y. 10158-0012
    New York + Chichester + Weinheim + Brisbane + Singapore + Toronto

    ISBN 0-471-17759-8
    $19.95 USA / $30.95 CAN

    Pirocco bought it secondhand for 1.5 :)
     
  12. wrcmad

    wrcmad Well-Known Member Silver Stacker

    Joined:
    Jan 2, 2012
    Messages:
    6,644
    Likes Received:
    1,502
    Trophy Points:
    113
    Location:
    Northern NSW
    Exactly right BiGs. But Pirocco is not here to listen.... he is here to lecture.
    Informing Pirocco about anything is about as useful and productive as sticking hot pins in your eye.. The time you waste would be better spent nailing your balls to a burning building.
     
  13. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    There are other books out there too.
    Money for nothing clubbers' profit requires others' loss.
    Informing.
    versus
    Disinforming.
    Feel free to waste your time. :)
     
  14. wrcmad

    wrcmad Well-Known Member Silver Stacker

    Joined:
    Jan 2, 2012
    Messages:
    6,644
    Likes Received:
    1,502
    Trophy Points:
    113
    Location:
    Northern NSW
    Case in point. :lol:
     
  15. BiGs

    BiGs Active Member

    Joined:
    Jan 20, 2014
    Messages:
    840
    Likes Received:
    120
    Trophy Points:
    43
    Location:
    Sydney
    You are incorrect. During the lead up to a forward expiry, all the short and long positions are closed off with each other, the rest either takes delivery or is forced to roll over into the next expiry contract at expiry. You cannot always close a position nearing expiry as the amount of short and long positions in lieu never match up with each other and the market becomes very illiquid when closing in on the expiry.

    Contract expiration is necessary because it's a leveraged product without interest or any ongoing cost. If there was no expiry companies with losing position will just hold indefinitely and the economy would fast spiral out of control. Expiry is the only passive regulation these markets have.
     
  16. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    Shifted due to spam.
     
  17. wrcmad

    wrcmad Well-Known Member Silver Stacker

    Joined:
    Jan 2, 2012
    Messages:
    6,644
    Likes Received:
    1,502
    Trophy Points:
    113
    Location:
    Northern NSW
    :lol:
     
  18. wrcmad

    wrcmad Well-Known Member Silver Stacker

    Joined:
    Jan 2, 2012
    Messages:
    6,644
    Likes Received:
    1,502
    Trophy Points:
    113
    Location:
    Northern NSW
  19. BiGs

    BiGs Active Member

    Joined:
    Jan 20, 2014
    Messages:
    840
    Likes Received:
    120
    Trophy Points:
    43
    Location:
    Sydney
    That arbitration between the markets as an ongoing manipulation. It can have a temporary effect. You will see that the future price will get closer and closer to spot price leading up to expiry. When the expiry happens in the future market all "indirect" effects on spot market come to an end and the spot market can sometimes noticeably correct. The arbitrage trading is taking money from the imbalance within the futures market only, not the spot market. The effect on the spot market you mention is small and temporary. A bigger effect is a low cost alternative to holding physical. This would have the biggest indirect effect on spot.

    A forward market is an automated price mechanism. Its relation to spot is completely free and open. It is the arbitrators that keep it close to spot.
     
  20. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    You quote an entire post to claim that what is incorrect?

    You said You are incorrect.
    My question was: what?
    Quote the specific statement that you consider incorrect.
    Without that, your post can aswell be some story that completely takes place at your side.
    If that wasn't obvious?
     

Share This Page