Has Silver Bottomed Out?
- Thread starter Dynoman
- Start date
Pirocco
Well-Known Member
Last tuesday (04/06/2013) the Comex position situation was this:House said:
Supply side:
Producer/Merchant/Processor/User Long 20759 Short 46587 Net: -25828
SwapDealer Long 35966 Short 18537 Net: 17429
Demand side:
LargeTraders Long 24938 Short 23004 Net: 1934
OtherReportables Long 10113 Short 6691 Net: 3422
SmallTraders Long 19615 Short 16572 Net: 3043
-25828+17429 gives a net total position of -8399
That's about a year production of ASE's by the US Mint.
So yes, they can have a bit of fun. A bit. They lack the positions for more fun, haha.
Nevertheless, my revisit of that march/april 2011 situation (see earlier post here), caused me to think.
Due to a source that confused total ETF holdings of silver with IShares Silver Trust holdings, I confused a part with a total that included that part.
This caused me to erroneously think that IShares caused the silver price $32>$50 runup in 2011.
Since this turned out to be false, the question who bought and sold there, remains unanswered.
Much like this latest (mid april) silver price drop. The Comex position didn't drop, the ETF stocks didn't drop, at dealers no signs of massive purchasebacks of silver from customers (instead temp shortages of the most popular coins). And that newly mined silver gets thrown on the market in one time, knowing that the demand isn't big enough to buy it, would mean some miners/recyclers overproduced and instead of using producer (de)hedging to evade losses by all in one time sales, it was just dumped all in one go.
I just thought of a new explanation for both unexplained price trends. Dark pool markets (see wikipedia), where institutionals like pension funds / 'charity' organisations / and other heavily state-sponsored/privileged entities buy and sell outside the public/private markets, and have not any reporting duty.
Golds price drop was mainly caused by IShares Gold Trust shareholders dumping. Is it known how many different entities dumped there? Because the Comex COT report gives clues by linking amounts traders to amount positions (hence 'Cartel' appears in the talk about it). So that dump>price drop happened was initiated in public markets.
In this scenario, institutionals bought and sold silver in a disguised fashion. And this is also plausible, since golds market 'enjoys' some governmental legal benefits, and silvers not. Dark pool trading may have been the way to manipulate / drain off the silver market, without raising eyebrowns.
And there is another element that indicates dark pool activity around mid april. It's part of a complex story involving the Belgian system bank Fortis, that defaulted and was split up in a 'good' and a 'bad' part. The 'good' part was bought by the French BNP Paribas. The bad part was given an english name: 'Royal Park Investments' and was bought by the Belgian government through one of its institutionals. End april, the US fund Lone Star and the big Swiss system bank Credit Suisse Group AG bought Royal Park Investment from the Belgian governmental institution behind Royal Park Investments.
The funny thing is that last year, Royal Park Investments sued (New York State Supreme Court in Manhattan) 11 large system banks around the world, JPMorgan Chase & Co. (JPM), Deutsche Bank AG (DBK), Goldman Sachs Group Inc. (GS), Credit Suisse Group AG (CSGN), Royal Bank of Scotland Group Plc (RBS), Bank of America Corp. (BAC) and its Merrill Lynch unit, Morgan Stanley (MS), Barclays Plc (BARC), Citigroup Inc. (C) and UBS AG, for their roles in the Belgian Fortis bank losses.
Look at the bold one. Credit Suisse. The same one that bought Royal Park Investments end april this year.
Also remarkable, nowhere is said which part of the price of Royal Park Investments was paid by Credit Suisse / by Lone Star.
And exactly there, 1 week ahead of the purchase, the link with dark pools appears.
http://dealbook.nytimes.com/2013/04...e-dark-side-of-trading/?ref=creditsuissegroup
http://www.bloomberg.com/news/2012-...han-3-billion-in-investment-bank-lawsuit.html
http://nl.wikipedia.org/wiki/Lone_Star_Funds
This all shows that Dark pool trading activity shouldn't be ignored, and may have been responsible for weird/sudden/unexplaineable price movements here and there, alike those 2 silver market ones.
Edit: This article gives a good insight in how trading happens and is performed as a marketwide operation which includes dark pools as a common business. Common for them, not for us.
http://www.advancedtrading.com/algorithms/credit-suisse-introduces-block-algos-to/223900065
And it also says that Credit Suisse (AES) is the industry leader in algorithmic trading and operator of the largest U.S. dark pool.
Yeah the falling AUD is hurting us here ...but on the other hand, that's one great thing with PM: we have been able to lock in the high AUD relative to the USD so far.
Now, personally I don't see the AUD going above parity in the short future - looks like the rate are gonna be dropped again next month, and somehow investors are going back in USD.. That can change quickly, but the dropping rates is going to make the AUD less attractive, that's for sure.
Now, personally I don't see the AUD going above parity in the short future - looks like the rate are gonna be dropped again next month, and somehow investors are going back in USD.. That can change quickly, but the dropping rates is going to make the AUD less attractive, that's for sure.
Dynoman
Active Member
Well I decided to buy again today from the Perth Mint, my thinking is that anything under $25 AUD is ok & where it will be in a decade well who knows? Normal market factors drove silver to it's recent highs. There's no reason to believe the same thing won't happen again. I'm wondering if the global glut of Solar PV's has anything to do with the lower prices. China not stockpiling at the moment?
Pirocco
Well-Known Member
It weren't normal market factors driving silvers price.
Because the rest of the market didnt follow the speculation based on the dollar/euro creation.
Will people again easily pay $30?
Maybe next time they want to see the price of their bread and movie ticket doing +50% first?
In 2011 they were willing to pay $50
In 2012 they weren't willing to pay $40 anymore, only $37.
And the last cycle only $35.
And every cycle concerns existing silver owners and makes them decide to 'get out' upon a next one.
How many here on this forum would think of selling if the price reached $28 in september? Would they even wait till there?
Because the rest of the market didnt follow the speculation based on the dollar/euro creation.
Will people again easily pay $30?
Maybe next time they want to see the price of their bread and movie ticket doing +50% first?
In 2011 they were willing to pay $50
In 2012 they weren't willing to pay $40 anymore, only $37.
And the last cycle only $35.
And every cycle concerns existing silver owners and makes them decide to 'get out' upon a next one.
How many here on this forum would think of selling if the price reached $28 in september? Would they even wait till there?
One thing is true of human nature.
When something is cheap, no-one wants it.
Once it doubles or triples in price then there is a mad rush to get some of it.
Same thing happened in our area with housing.
Nobody wanted them at $25,000 but there was a mad rush once they got to $70,000.
So it will be with silver. People will have short memories once the price resumes its upwards trajectory. Greed is a predictable thing.
When something is cheap, no-one wants it.
Once it doubles or triples in price then there is a mad rush to get some of it.
Same thing happened in our area with housing.
Nobody wanted them at $25,000 but there was a mad rush once they got to $70,000.
So it will be with silver. People will have short memories once the price resumes its upwards trajectory. Greed is a predictable thing.
pdkbffwleo
New Member
Pirocco said:
I'm selling at $35, as I did last year.
I'm a fan of "stacking" only if I feel that silver is under valued. Right now, I believe it is.
Most "stackers" say they LOVE when the price drops, so they can "buy more." Yes, maybe in the short term....but, would this remain true if silver drops to $9.00 and stays under $20 for the next 50 years?
Obviously, we'd all love if the price of silver was predictable...I"m sure most would sell high, then buy low again. Repeat the process, over and over.
But, this whole idea of "I'll just buy more" is stupid without some end game that ends in higher prices, i.e., profitability.
After purchasing 500 oz's last summer at $26, I ended up selling at ~$34 last fall. I'm glad I did. I purchased again at $26 and $22, and I'm sort of pissed my stack has an average of just under $24.00.
I'll buy more, as it drops...adjusting my average lower along the way...but, I'm selling at $35 again.
I'm probably not a "stacker" because I actually want to sell when I can make a 30-50% profit.
I guess many of us would rather die with 3,000 oz's of silver in the coffin.
My view
I think silver is probably at the bottom. When you look at mining costs and premiums..
If it stays below mining cost for any length of time, mines will close and eventually silver production will be compromised.. hence Scarcity
With premiums.. no matter what the paper price is. To buy you have to look at spot plus pemium.. That is probably the true spot price
It may fall below $20 but that would be for a very short time and would the price plus premium follow? probably not
I think silver is probably at the bottom. When you look at mining costs and premiums..
If it stays below mining cost for any length of time, mines will close and eventually silver production will be compromised.. hence Scarcity
With premiums.. no matter what the paper price is. To buy you have to look at spot plus pemium.. That is probably the true spot price
It may fall below $20 but that would be for a very short time and would the price plus premium follow? probably not
Pirocco
Well-Known Member
Short story, you're pissed because some1 inflicted you the same as you inflicted others.pdkbffwleo said:
I guess that's the difference between hedging against inflation, and hunting the profit.
And you're indeed not a "stacker". All you do, is the same as the ones bringing the inflation, do.
Higher prices don't mean profit. Double all prices, and you can still buy the same.
I guess many of those money for nothing clubbers don't like "stackers" to hold silver upto their time horizon.
Because it doesn't fit with the buy back in part of their cycles.
And, you say you'll wait again to sell, for $35.
As I said, if the other money for nothing clubbers don't wait till there, that sale at $35 won't be possible. It needs some1 to buy, once again, at that price. I'm not sure about that, considering the recent history and the lack of general price increasings. Some out there bought at $40 and even $50, with the plan to sell at $70 $100. Remember?
Pirocco said:
Got a question for you Pirocco.
What is the difference between the money-for-nothing clubbers inflicting on others by selling high, and
the "stackers" inflicting on others by buying low?
Both groups inflict financial cost on the other party, but only one group claims the high moral ground whilst doing so.
Pirocco
Well-Known Member
The difference between a price "bloated" by the frontrun of the money for nothing club, and a "normalized" price after they dumped.wrcmad said:Got a question for you Pirocco.
What is the difference between the money-for-nothing clubbers inflicting on others by selling high, and
the "stackers" inflicting on others by buying low?
Both groups inflict financial cost on the other party, but only one group claims the high moral ground whilst doing so.
Which price do you prefer to stack and hold at?
The "bloated" price?
Or the "normalized" price?
Stackers that just hold and sell according to their time horizon much like a longterm bank savings account, do not inflict others a financial cost.
Only the money for nothing club does.
Without the money for nothing club, there would be no cycle, no 'high' and no 'low'.
Did you like to read this?
Pirocco said:The difference between a price "bloated" by the frontrun of the money for nothing club, and a "normalized" price after they dumped.wrcmad said:Got a question for you Pirocco.
What is the difference between the money-for-nothing clubbers inflicting on others by selling high, and
the "stackers" inflicting on others by buying low?
Both groups inflict financial cost on the other party, but only one group claims the high moral ground whilst doing so.
Big assumption that price is normalised after a dump.
Also, this assumption flies in the face of a huge proportion of stackers and their belief of price suppression - which suggests price is undervalued after a dump.
To suggest prices wouldn't cycle without traders is ludicrous.
But these assumptions do conveniently fit the feel-good fantasy image of upholding moral superiority that some stackers like to cling to.
IMO stackers that chase dips and buy physical low inflict the same financial opportunity loss to the unsuspecting seller, as does a trader selling high to another unsuspecting buyer.
To believe otherwise is a tad farcical.
Yes, I always like to read your posts.Pirocco said:
Pirocco
Well-Known Member
The difference between a price "bloated" by the frontrun of the money for nothing club, and a "normalized" price after they dumped.wrcmad said:
That was the sentence.
Try to react on sentences instead of parts of it.
That seems to be a problem over there.
Ignoring what is uncomfortable, and a reply that actually isn't a reply, just a strawman based on a word, a part of a sentence, a part of a text.
Also, you talked about moral grounds.
Wel lol, what has trying to get somebody elses money/product without having to give something in return, to do with 'moral grounds'? It's just thievery.