Silver_Dealar
Member
Ipv6Ready said:
Because then the world financial system is completely fu*ked
Cause of sharp drop overnight?
- Thread starter ClickStack
- Start date
Because then the world financial system is completely fu*ked
Ipv6Ready said:
That's because when it goes up its not because someone decides to buy 2 billion dollars worth notional in minutes. If you were a genuine buyer you want to buy as cheap as possible, or you chase the market because you fear missing out. If you were a genuine seller you want to sell at the best price possible, and dumping 2 billion dollars in minutes is not the way to achieve that. Speaking of which that was insane. $2 billion dump is normally seen in the gold market, never seen it in silver.
It's proven that the silver market, as with all markets, are manipulated. All those who thinks markets are not manipulated, both up and down, needs to get a reality check.
If gold was at $200 and silver $4 there wouldn't be any physical to buy at those prices, and they wouldn't be able to keep their charade going.
screaming eagle said:
I wasn't aware that zerohedge owned any bullion shops. Which shops do they own?
Pirocco
Well-Known Member
You know what Commodity Exchange is?ClickStack said:
That's the futures market, where alot commodities including silver are hedged against price changes caused by temp buyers alike speculators alike stackers. That hedging is done along taking of futures positions (longs, shorts), which are basically future orders, but not ment to let deliver, just ment to influence (increase) the price.
Ex a dealer that orders a stock replenishment on the cash market, in order to be sure of his cost, he "orders" an equal amount along the futures market.
The cash market order has to be paid in the future so only alters price then, but the futures market "order" already alters the price now, causing customers that order now at the dealer, to have to pay already more now. That's how hedging works (where it gets its dollars) and why the futures market as such exists.
So, the net total of all Comex silver positions serves as a measurement for the current/spot prices forward/future component.
It can be calculated from this data (silver section):
http://www.cftc.gov/dea/futures/other_lf.htm
http://www.cftc.gov/MarketReports/CommitmentsofTraders/HistoricalViewable/index.htm
... but is also directly published on sites like http://finviz.com/futures_charts.ashx?t=SI&p=d1
Below the price chart, the green colored line shows the total, and the sum of red and blue colored lines is the same but inverted (negative versus positive, long versus short, buyer and seller).
Example:
Imagine I'm a silver dealer, customers being speculators (so no industrial consumer or so).
I want to make money by buying and selling silver.
For this targeted profit, I need to sell to customers at a higher price than I buy.
But that's what my customers also try, so I have to beat them.
How? By taking future positions directly after I order on the cash market from my supplier.
This causes (along arbitration - being a designed riskfree profit avail as long as spot and forward price differs, bringing both together) the spot price to already climb now, so my next customer already gets confronted with a higher price. Of course, I blame the price change that I caused to manipulation, the market runners (comex cftc), jpmorgan, whoever and whatever).
And when I finished dumping my stock higher to my customers, I dump my futures market order, which causes the extra in the price to vanish again.
And then I order a next chunk. Rinse and repeat.
And in case speculators flee to my door, to sell the silver they purchased earlier back to me, I don't wait for a next replenishment need, of course. I immediately dump my futures positions so that the forward component in the price vanishes again, so that my customers receive less dollars for their silver.
The total annual silver traded is around 1000 Moz.
A 100000 futures market total net position, 5000 ounces per unit, has a price effect sized as 500 Moz. That (50%) is a rather big/huge price impactor. One of the biggest, if not THE biggest of all markets. And that's the main reason, especially 2011+, why silver is so "volatile". To illustrate: golds proportion is 25%. Most other commodities cases sit below 10, and even 5%, simply because smallfish speculators are alot less... busy... on those markets. Governments and industrials and big funds / institutions, those are the buddies that cooperate with me. More than willing to fullfill the opposite futures contract side. When I order 5000 oz at my supplier, I take 1 long against a price increase by delivery time / payment, and that supplier takes 1 short against a price drop by then. I'm sure of mine and he's sure of his. The in-price-change case compensating dollars origin from the suckers that order at me between both moments.
To many silver stackers never watch the broader market or even diversify. We had a huge drop because it's very very likely now that an interest rate rise is happening. Yellen gave a speech the other day on it. Plus the dollar went up a little.
We have a massive amount of shorts right now on silver. It's hit a huge peak. They don't just randomly do that either. They don't risk billions of dollars without a base for being able to do that. The most likely reason there are so many shorts is because there may be up to 3 interest rate increases this year and the fed was pretty bullish on that. Which means the dollar will go higher (and silver lower), and also the money will be chasing better returns on interest and in other markets. All this will slam silver for years. Especially this year, silver won't be able to recover like it did after just 1 increase a year. I'd expect more pain. (but the economy could also all turn bad fast and the interest rate increases are taken off the table and that would be good for silver). As long as things are looking bullish for everything else nobody needs the safe haven of precious metals right now or wants to be stuck in something with no growth, they are going where the money is. They are shorting it because the giant cycle and boom from precious metals is deflating like it has for years, someday it will shift again and boom once more, when that is nobody knows. At some point we'll hit a bottom though, and I can't imagine it's to far away but if things appear all peachy for everything else it's going to be years and years. There are other cycles and other ways to make money and trends will swing that way and this way, we'd all do good to try to learn and profit off not only precious metals but those other ones too. Precious metals are only one small piece of a large puzzle, everyone should have other pieces too and understand what the entire picture looks like.
We have a massive amount of shorts right now on silver. It's hit a huge peak. They don't just randomly do that either. They don't risk billions of dollars without a base for being able to do that. The most likely reason there are so many shorts is because there may be up to 3 interest rate increases this year and the fed was pretty bullish on that. Which means the dollar will go higher (and silver lower), and also the money will be chasing better returns on interest and in other markets. All this will slam silver for years. Especially this year, silver won't be able to recover like it did after just 1 increase a year. I'd expect more pain. (but the economy could also all turn bad fast and the interest rate increases are taken off the table and that would be good for silver). As long as things are looking bullish for everything else nobody needs the safe haven of precious metals right now or wants to be stuck in something with no growth, they are going where the money is. They are shorting it because the giant cycle and boom from precious metals is deflating like it has for years, someday it will shift again and boom once more, when that is nobody knows. At some point we'll hit a bottom though, and I can't imagine it's to far away but if things appear all peachy for everything else it's going to be years and years. There are other cycles and other ways to make money and trends will swing that way and this way, we'd all do good to try to learn and profit off not only precious metals but those other ones too. Precious metals are only one small piece of a large puzzle, everyone should have other pieces too and understand what the entire picture looks like.
Gullintanni
Well-Known Member
monopolize said:
The bit i highlighted is simply NOT TRUE.
We have had gold at $200 and silver at $4 and there was plenty to be had. FACT!
monopolize said:
You're 100% correct, I can't prove that poorly written assertion. However a number of site contributors are infact bullion dealers/shops, such as BullionStar, GoldCore and Sprott Money (in various guises). They are responsible for a large percentage of ZHs commentary on bullion, all of which is punctuated with links to buy physical from or store with the author's company.
Just looking at these three:
BullionStar - From their website, "BullionStar is Singapore's premier bullion dealer. With a worldwide unique walk-in bullion shop, showroom and vault, we can cater to all your precious metals needs. View, buy, deposit, store, audit, sell and physically withdraw your bullion in one and the same location." By virtue of being a dealer, with a scrap business attached, if they aren't hedging utilising the futures markets then they will be out of business quickly. Noting the experience of the board, it would be very safe to assume that they do this.
GoldCore - From their own website, "When it comes to investing in precious metals, there are a wide variety of options to choose. From ETFs, to electronic gold, to physically held gold. Most of these may be quite unsuitable for long term investors, but with our expertise in finding the right product, on the right terms and at a fair price, is what makes us different. We are trusted by governments, pension funds, large corporates and private investors in over 45 countries, to do just that deliver the solution that fits your needs. We are experts in finding that product, shipping it out safely and if needed, storing it for you too in fully insured secure vaults." It's fairly clear from this that GoldCore is active in the paper bullion derivatives world.
Sprott Money - From LinkedIn, "Established in February 2008, Sprott Money Ltd. is a leading precious metals wholesale, institutional and retail dealer selling gold, silver and platinum bars, coins, numismatics, and wafers online and over the phone." Dealing in the institutional world? Dealing with banks/institutions requires paper, so Sprott would be dealing in paper as much as physical. Bad for business not to.
Simply, out of the few dealers with an overt presence on ZH it's easy to see that they're happy to peddle physical and storage to the chump readers whilst crying about derivatives, when infact they're probably more responsible for the derivative market than they care to admit. Yes there are counterparties to those transactions, but if the need for the contracts wasn't there, then the counterparties would invest somewhere else. ZH is upfront about its for-profit status, but who exactly funds things is a bit murkier. At least SS highlights its sponsors a bit better and the owner, who also owns an interest in a bullion dealer has freely spoken in the forums about the use of derivatives by all parties to manage risk.
Gullintanni
Well-Known Member
Gold and silver are not a means to preserve wealth unless you buy at EXACTLY THE RIGHT TIMES and then SELL at exactly the right times.
I do not think gold or silver are the sorts of commodity to buy and hold as insurance or any other BS you want to tell yourself.
By all means hold it but only the FREE stuff that you have made by continually buying and selling at any price but always making a return.
I know not everyone has time to do this and if you are the person with no time then unless you luck in and buy at THE low then these metals are really not for you.
PM's are a hands on play that need constant attention if you want to profit, and sometimes to not lose money.
Money is what it is all about at the moment and the foreseeable future and if you can find the time to jump in and out and be a flipper you can have your money profit and pm's in the safe.
I do not think gold or silver are the sorts of commodity to buy and hold as insurance or any other BS you want to tell yourself.
By all means hold it but only the FREE stuff that you have made by continually buying and selling at any price but always making a return.
I know not everyone has time to do this and if you are the person with no time then unless you luck in and buy at THE low then these metals are really not for you.
PM's are a hands on play that need constant attention if you want to profit, and sometimes to not lose money.
Money is what it is all about at the moment and the foreseeable future and if you can find the time to jump in and out and be a flipper you can have your money profit and pm's in the safe.
ClickStack
New Member
screaming eagle said:
Skyrocket Silver Stacker, I didn't mean that his actual English was bad - just to elaborate as I'm not fully up to speed with trading concepts and lingo
ClickStack
New Member
Pirocco thanks for the elaboration, I tried my best but can't say I've got 100% handle on it logically - I'll need to keep educating myself. I have always wondered how the dealers ensure they always have a profit since they can't control price nor timing of sale of physical inventory esp in bearish market.
Pirocco I did also wonder why silver has been going up consistently this year but I rationalised it might be repeating last years cycle - although there haven't been clear cut trigger events like last year (Jan share market drop and June China share market drop) - to my amateur naive observation if we have another few years similar to GFC silver is currently in a really good buy position for gains - so it comes down to one's speculative opinion on whether there will be more GFC like volatility or confidence - I think Trump VS establishment scene will have a lot of influence in this - bit too early to tell - could still go either way.
Pirocco I did also wonder why silver has been going up consistently this year but I rationalised it might be repeating last years cycle - although there haven't been clear cut trigger events like last year (Jan share market drop and June China share market drop) - to my amateur naive observation if we have another few years similar to GFC silver is currently in a really good buy position for gains - so it comes down to one's speculative opinion on whether there will be more GFC like volatility or confidence - I think Trump VS establishment scene will have a lot of influence in this - bit too early to tell - could still go either way.
wrcmad said:
That's exactly my point. It won't be at $4 because the futures and physical markets will become detached, which can't happen.
A loaf of bread used to cost 40c and there were plenty to be had. How is that relevant in 2017?
Pirocco
Well-Known Member
Always that focus on shorts. There's an equal amount longs, but nobody talks about.
Can say as well record amount longs. What matters, for the price outlook, is the total net sum of all longs and shorts, one for the supply side trader classes (dominant sellers) and one for the demand side trader classes (dominant buyers). Equal figure, just inverted.
And that total doesn't say it all. It's not the future market alone that drives the price. The cash market (stackers, phys backed ETF's, industrials, etc) also have their part in the price trend.
For ex, in 2011, that crazy price swing from $30 to $50 and back, was NOT due to the futures market. Rather the opposite, in the $4x range, the price went up with the total net position dropping. A likely major cause were ETF's that reached a peak stock then. But actually, that $40 to $50 was a mere 2 weeks story. 2011's average was just $35. It's possible that causes (the actual peaks) weren't even indicated in weekly/monthly reports. $50 itself (actually $49.5) was even a single day story.
And that's why any focus on a $50, or for the matter a $4, is as useful as a single duck crossing the sky 2000 metres away from hundred hungry hunters.
Can say as well record amount longs. What matters, for the price outlook, is the total net sum of all longs and shorts, one for the supply side trader classes (dominant sellers) and one for the demand side trader classes (dominant buyers). Equal figure, just inverted.
And that total doesn't say it all. It's not the future market alone that drives the price. The cash market (stackers, phys backed ETF's, industrials, etc) also have their part in the price trend.
For ex, in 2011, that crazy price swing from $30 to $50 and back, was NOT due to the futures market. Rather the opposite, in the $4x range, the price went up with the total net position dropping. A likely major cause were ETF's that reached a peak stock then. But actually, that $40 to $50 was a mere 2 weeks story. 2011's average was just $35. It's possible that causes (the actual peaks) weren't even indicated in weekly/monthly reports. $50 itself (actually $49.5) was even a single day story.
And that's why any focus on a $50, or for the matter a $4, is as useful as a single duck crossing the sky 2000 metres away from hundred hungry hunters.