Saturday, May 8, 2010


401K, Joe public is asking at every party this weekend. "Someone" created a real scare for the "game". It has set the ponzi back into an almost impossible task of allaying the publics frayed nerves. Can they re-establish calm and order to this market? Absolutely. The bigger question is.....DO THEY WANT TO? It is very possible that they want the volatility here. After all...without this volatility that Joe and I discussed would mark this year as a "trading year", then the big trading houses cannot make the gigantic profits. So I believe that we are going to have more volatility ahead as predicted in December.

Could we get a severe 50% collapse this year? ABSOLUTELY. But I do not believe this is a high probability. The rest of this year will see gold and silver moving towards there next consolidation range. probably around 1500 to 2000, before it heads the final phase of incredible verticle heights. If you doubt this then look at what we have faced with just Greece and the Euro currency debacle. And that isn't even settled yet. Add Spain, Italy, Portugal, Ireland, to that mix in the NEAR TERM. Yes. Pure recipe for disaster. The fiat ponzi is unraveling.

Many of us are now finding out the facts regarding the "control" of the precious metals markets. Most of us DON'T want to be conspiratorial nuts but the alternative is to be a schmuck and ignore what is as plain as the nose on your face. We have been DUPED.

Read this excerpt from the below link and enjoy the weekend

The gold derivatives of all maturities declined 1.3 percent to $99.9 billion, which was due to a decline in JPMorgan Chase (JPM) holdings of 1 percent to $82.1 billion and a decline in HSBC holdings of 11.2 percent to $16.2 billion.

But the real shocker is in silver. The precious metals (silver) derivatives of all maturities increased by a mind-boggling 37 percent, from $9.29 billion to $12.8 billion. This came principally from increases in the less-than-one-year maturities where the JPM holdings increased 34 percent to $6.76 billion and HSBC holdings increased 58 percent to $4.7 billion. (Despite the radically different percentage increases, interestingly the increases at JPM and HSBC were identical in dollar amounts at $1.7 billion.)

This increase in notional value of silver derivatives represents approximately 220 million ounces, which is 125 percent of the global production of silver during the quarter -- and that is only the increase. The entire notional value represents 106 percent of annual global production.

What possible legitimate purpose could such a monstrous derivative position be serving with a maturity of less than one year?

The only purpose I can think of is for manipulation of the silver market. I am not a regulator but I can't think of any "mitigating factors" for that.


Adrian Douglas is publisher of the Market Force Analysis letter

update I watch the steve meyers videos.....absolutely spot on


  1. You have a text limit in your comments, so I may need to make a couple posts to put in a the contents of an article from Dan Matthisson that I have (no link), he leads advanced execution services at Credit Suisse. The top shops have access to dark pools, so they run their algos to avoid the alligator pits, or better put, to feed the alligators in an orderly fashion. Rumor has it, that the other day an anomoly occurred that was enough to overshoot targets slightly and trigger some orders as described in Dan's article below. So although the target hit was legit bigger picture, the bleed was not controlled in the way the market "liquidity providers" normally execute to make the market appear legit to the public. So the secrecy he refers to is a dupe related to insiders, although "true" to the average trader. Here is the article:

    There is a strange phenomenon occurring in the U.S. stock markets: No one knows what's going on anymore, and the markets are better for it.
    Traditionally, professional trading largely has been a game of sniffing out the supply and demand in a particular stock to determine if the price is likely to go up or down in the short term. The game involved talking to other players in the markets, getting "looks" from the floor of the NYSE, and intently watching the publicly displayed bids and offers. Similar to expert poker players sitting at a table with novices, short-term traders who could read the signals and detect the presence of buy or sell orders were able to consistently collect a toll from the institutional investors.
    Partly as a result of all the order information available to the Street, there has always been a consistent, measurable loss from the price when a money manager starts to buy a stock versus the average price at which it eventually is bought. This loss is known in industry parlance as "slippage," "market impact" or the fancier "implementation shortfall," and historically it has been a major hidden cost for actively traded funds.
    But the good news is that with the continued growth of electronic trading, signals are drying up and, as a result, slippage will likely decrease. Money managers now routinely send large orders directly into walled-off computer servers that use advanced execution algorithms to slice orders into tiny pieces, which then blend in with the regular order flow. Sophisticated institutional brokers increasingly work orders for their clients using electronic venues that silently match orders with no chance for information to leak out.
    And now, "hidden orders" and "dark pools" are taking order secrecy on Wall Street to a new level. Hidden orders are the name on the Street for electronic orders that do not display on any quote feed. Enter a standard displayed order to sell 5,000 shares on the NYSE at 25.75 and the entire market sees it within seconds, often resulting in a short-term trader stepping a penny ahead of it and offering to sell the stock at 25.74. Enter the same order on NYSE Arca as a hidden order and nothing gets displayed to the world. The order sits in the dark, having transmitted no information to competitors, quietly waiting for a match against another silent electronic buy order.

  2. continued...
    Trading in the old days was trench warfare - you would try to hide your order. But to actually trade, you still needed to have the guts to eventually pop your head out of the trench and publicly expose your order to the markets. Trading today has become more like submarine warfare in a Tom Clancy novel - huge orders lurk beneath the surface, waiting for their opposing target to reveal itself, unseen and unknown to the short-term traders trolling the surface.
    The result of all of this secrecy is that no one really knows what's going on in a stock anymore. Ironically, this state of confusion is likely to reduce transaction costs throughout the Street.
    When an employee pension fund begins buying Hormel Foods through a signal-reducing algorithm, the stock doesn't begin shooting up because no traders are getting "the call" anymore. When a mutual fund sells U.S. Steel through dark pools, the investors don't pay a toll to a floor broker that repeatedly steps a penny in front of the mutual fund's order. The new confidential electronic order types do not feed the experienced insiders, and, as a result, the playing field has become more level than ever before.
    Despite their benefits in reducing slippage, stand-alone dark pools have been controversial primarily because access to them is not universal. There is a fear that the owners of prominent dark pools will be capricious in deciding who can have access to their liquidity, and, indeed, we have seen some of this behavior in the marketplace. But this is not a long-term problem - with the recent introduction of hidden order types on the major exchanges and ECNs, stand-alone dark pools likely will shrink in volume. Most exchanges and ECNs now offer essentially the same "dark" product as dark pools, but with much greater liquidity and lower fees.
    The second point of controversy regarding dark orders is that they damage "price discovery." But when traders have access to hidden orders, much larger aggregate size tends to build up in limit orders near the last price. In the traditional displayed world, there is a huge signaling disincentive to leaving limit orders on the book, which is why we see markets that are 200 shares by 400 shares, even in stocks that trade millions of shares per day. What good is discovering the price of 200 shares at a time?
    When traders post to dark books instead, they tend to put out much larger sizes, since no one will see their order or be able to penny it. So the market may appear to be .32 by .38, 300 up, but it's really .35 by .36, 100,000 up. Dark markets fluctuate less around the last price, with greater liquidity for all players, making meaningful price discovery easier rather than harder. This current proliferation of confidential electronic orders may be confusing to yesterday's insiders on the Street, but that's precisely the goal, and the markets are better for it.

  3. KLI, I have a question for you.

    Why did you become a miner fan? I remember back in 2008 you were big on SKF. SKF made me rich back then. Then FAZ came out. Glory days.

    But now you don't support SKF, SRS, FAZ or shorting. The PPT screwed us all a little, but now that the game is getting back to normal, why don't you switch from miners to shorts?

  4. Even during the glory days those etfs were ripped apart in short squeeze manipulations. That's why they were created. To screw the retail that went into them. If I short it will be individual stocks only. The PPT destroyed these leveraged etfs. the long play will your safer plays until late this year. I am not saying don't go short at the opportune times, I am saying when fear and panic enter into the fray at this juncture of the cycle then shorts had better be prepared. Right now they are probing and stop shopping. They are raising the VIX for a reason. Its costing you a lot more for protection....who do you think pockets that when the next OPex swings around. I have never been a commod or PM player....but I believe that PM offers the retail player the best chance to win. Excellent traders can play them and so can the average person. They don't have to trade ...they can invest. If you are a trader...short away. I am not as convinced that this rattlesnake isn't going to strike back.

  5. Containment dome is failing.....true tragedy for our species.....implications of this enormous

  6. I think I've got a plan. I'm going to go long on gold with my 401K. I need that money to be safe.

    With my daily gambling money on Scottrade, I'll stick with shorting.

  7. btw analyze that is an awsome read.....

  8. Jay, not sure how to buy gold in a 401k but if you are interested in buying physical gold in an IRA, one option is Sterling Trust in Waco Texas. I opened an IRA there and bought 1 oz Gold Maples from Blanchard and had them transferred to Sterling. They store the coins at Fidelitrade in Delaware. After doing that, I thought about potential gold confiscation and figured that I would never get the coins if that were to occur so I withdrew the coins and paid tax/penalties for early withdrawal but I at least have the coins in my possession in case the shit hits the fan.

    Anyway, if you are considering, there's an option for you.

  9. Analyze - f'n awesome, thanx so much.

  10. Jay,
    I've been thinking about doing the same thing (going long on gold w/ my 401k). Since paper gold is still risky, I was wondering if investing in multiple gold ETFs (iShares, Proshares, etc) might mitigate some of the risk. Any thoughts Kli?
    Sterling Trust is one of the IRA custodians that APMEX recommends. The other is Entrust Administration in Oakland, CA.