I don't think so. They even asked the authorities in advance if they could do what they did. In particular, they were given written confirmation that they were permitted to take delivery of their long position.
The mortal sin of the Hunts wasn't to amass a big long position.
Their mortal sin was to ask for delivery.
Had they not asked for delivery, had they kept on playing silver futures, there would have been no illegal, no cornering, no prosecution, no Hunt story, no nothing.
They would just have been fleeced out like every respected silver speculator who dare to take the other side of the bullion banks
If you are playing in derivatives arenas like the Comex and you are looking for trouble, just ask for delivery
No "special interests" were protected, unless you think millions of jewelry dealers around the world conspired together.
Actually jewelry dealers, miners, silver producers... profit from higher, not lower silver prices, so nobody thought of jewellery dealers conspiring against the Hunts
What the CFTC did to the Hunts was unethical if not outright illegal. They decided to prohibit “buy” orders and allowed only “sell” orders so that the price of silver had nowhere to go but down. That’s what drove the Hunts into bankruptcy because part of their position was leveraged. They were NOT breaking any laws.
If TPTB did it then, what’s to stop the any of the stock exchanges from prohibiting the types of orders that go against their own agendas, whenever it’s to their own benefit?
The laws are already in place such that your stocks are held in the name of a brokerage or the much larger opaque clearing organization in a system that is already rigged, and you have no legal recourse if any part of the daisy chain becomes insolvent and breaks down (re: The Great Taking).
Q: Are You Printing Money? Bernanke: Not Literally
@Peter89 said:
The Hunts went so far to ask the authorities if they were allowed to take delivery, getting the go ahead.
Later the authorities changed their opinion.
As you say, this arbitrariness destroyed the confidence in the markets, in particular in the US authorities overseeing >the price wise most important silver market worldwide, the Comex.
The Hunt's were manipulating the price of silver, driving the price up, and FAILING TO DISCLOSE their positions in a timely manner. In addition, they failed to disclose their ownership in Bache Securities which was handling other silver orders and acting as custodian for many holders. The Hunt's were trading on that relationship -- ILLEGAL.
I like the Hunt's, but you can't do that. It's a clear violation of trading rules and insider trading laws.
You guys bash the banks all the time, here's CLEARLY illegal behavior and because the guys bought silver, you want to let them off scott free.
@Peter89 said:
The Hunts went so far to ask the authorities if they were allowed to take delivery, getting the go ahead.
Later the authorities changed their opinion.
As you say, this arbitrariness destroyed the confidence in the markets, in particular in the US authorities overseeing >the price wise most important silver market worldwide, the Comex.
The Hunt's were manipulating the price of silver, driving the price up, and FAILING TO DISCLOSE their positions in a timely manner. In addition, they failed to disclose their ownership in Bache Securities which was handling other silver orders and acting as custodian for many holders. The Hunt's were trading on that relationship -- ILLEGAL.
I like the Hunt's, but you can't do that. It's a clear violation of trading rules and insider trading laws.
You guys bash the banks all the time, here's CLEARLY illegal behavior and because the guys bought silver, you want to let them off scott free.
.
For every long silver contract that the Hunt's bought, somebody was short-selling (naked) that same amount of silver.
Who was allowed to sell that much silver without having it ? Why weren't those short sellers called out instead of the Hunts ?
Why were the Hunts supposedly in violation but the short sellers weren't (or maybe they were in violation, but it was kept hush-hush) ?
@dcarr said:
For every long silver contract that the Hunt's bought, somebody was short-selling (naked) that same amount of >silver. Who was allowed to sell that much silver without having it ? Why weren't those short sellers called out > >instead of the Hunts ? Why were the Hunts supposedly in violation but the short sellers weren't (or maybe they >were in violation, but it was kept hush-hush) ?
I am not sure there was naked shorting. Controls were different back then and the exchange for futures is different than the NYSE/NASDAQ for shorting stocks.
You can't possibly think that the silver price was going to hold $50/ounce. It was a parabolic blow-off in which shorts lost their shirts.
The Hunts weren't stupids.
They knew they were threading on thin ice.
They weren't novices in that world.
They knew it was impossible for the Exchange and the authorities to not learn about their position.
They knew about naked shorting.
They knew many shorts couldn't deliver.
They wanted to exploit this.
Their mortal sin was to ask for delivery
They took all possible precautions, asking - written of course - permission from the Exchange, first for building their position and second for taking delivery.
If they hadn't ask for delivery nothing would have happened to them.
Asking for delivery they were going to destroy the Comex silver market
@GoldFinger1969 said:
That chart alleging that gold outperformed stocks is 100% BS.
It's classic cherry-picking as they started when gold was way down in price, stocks about to enter a bear market, etc.
With dividends, stocks probably outperform. They certainly had less volatility. Better risk-adjusted returns and drawdowns.
I like holding gold, and I'm a buyer here, but that chart is for suckers.
Yes, the chart was just to show this century. But regardless of the obvious cherry-picking time frame, the past 24 years gold did pretty good. I would not even be surprised to see it do better than stocks for another decade, especially if China decides to invade Taiwan and the global economy crashes. Or some black swan risks to stocks out there we don't know about.
For every long silver contract that the Hunt's bought, somebody was short-selling (naked) that same amount of silver.
Who was allowed to sell that much silver without having it ? Why weren't those short sellers called out instead of the Hunts ?
Why were the Hunts supposedly in violation but the short sellers weren't (or maybe they were in violation, but it was kept hush-hush) ?
.
Good point.
I suppose the naked sellers back then were the same entities who are naked selling today, the bullion banks.
But I don't think hunting down the Hunts the authorities were primarily protecting the bullion banks, I think they were protecting the Comex. Anyway, that's another story.
The point is, neither the short sellers nor the Comex were able to deliver that much silver. The Hunts knew it.
That meant default.
Concentrated long positions don't lead the Comex to default.
Asking for delivery does.
Imo the Hunts were smashed because they were knowingly going to tear down the Comex - well at least the comex silver market.
For every long silver contract that the Hunt's bought, somebody was short-selling (naked) that same amount of silver.
Who was allowed to sell that much silver without having it ? Why weren't those short sellers called out instead of the Hunts ?
Why were the Hunts supposedly in violation but the short sellers weren't (or maybe they were in violation, but it was kept hush-hush) ?
.
There you go
In 2017 the so called "big 4" were short - at least for one week - over 140 days of worldwide silver production.
On average each one of them was short 35 days of silver production.
On average means that some entity was net short way more than 35 days of worldwide silver production. That entity had promised to deliver way more than 35 days of worldwide silver production.
How preposterous is that
The Hunts, how many days of silver production were they long?
@dcarr said:
For every long silver contract that the Hunt's bought, somebody was short-selling (naked) that same amount of >silver. Who was allowed to sell that much silver without having it ? Why weren't those short sellers called out >instead of the Hunts ? Why were the Hunts supposedly in violation but the short sellers weren't (or maybe they >were in violation, but it was kept hush-hush) ?
We don't know that to be a fact. And you don't know at what price the shorts entered the market.
Shorting rules for futures might be different than for stocks.
@Peter89 said:
The Hunts weren't stupids. They knew they were threading on thin ice. They weren't novices in that world.
They knew it was impossible for the Exchange and the authorities to not learn about their position.
Actually, they WEREN'T that sophisticated according to their advisors. They weren't like today's super-savvy hedge funds.
They knew about naked shorting. They knew many shorts couldn't deliver. They wanted to exploit this.
Again, not proven. No evidence that I have seen confirms this. This is the talk from Silver Bulls thinking that if the Hunt's hadn't been persecuted, that silver was going to $100/ounce.
It wasn't. Gold and silver were cooked once Paul Volcker squeezed the money supply AND killed inflation.
Their mortal sin was to ask for delivery They took all possible precautions, asking - written of course - >permission from the Exchange, first for building their position and second for taking delivery. If they hadn't ask for >delivery nothing would have happened to them.
Who says that ? Delivery or no delivery, they violated the rules of the exchange and CFTC rules on insider trading.
Asking for delivery they were going to destroy the Comex silver market
Maybe, maybe not. What goes up MUST come down. See, GME (GameStop).
@Goldminers said:
Yes, the chart was just to show this century. But regardless of the obvious cherry-picking time frame, the past 24 >years gold did pretty good. I would not even be surprised to see it do better than stocks for another decade, >especially if China decides to invade Taiwan and the global economy crashes. Or some black swan risks to stocks >out there we don't know about.
Could be. But if you use rolling time periods gold does poorly compared to stocks, bonds, and even real estate.
Not paying a dividend, gold faces a major head-wind compared to stocks (dividends) and bonds (interest) which each yield 3-6% and have a "head start" compared to 0%-yielding gold.
@Peter89 said:
In 2017 the so called "big 4" were short - at least for one week - over 140 days of worldwide silver production.
On average each one of them was short 35 days of silver production.
On average means that some entity was net short way more than 35 days of worldwide silver production. That entity had promised to deliver way more than 35 days of worldwide silver production.
How preposterous is that. The Hunts, how many days of silver production were they long?
That was 7 years ago.
How do you know they aren't short that commodity for dozens of end-users, hedgers, or speculators ? Who is "short" the metal ?
Nobody is alleging any wrongdoing. You seem to have no problem with BUYS and long positions only with SALES and short positions.
There are rules for shorting -- for equities, you need to get a 'locate' -- but nobody is saying that the rules are being violated. If you know of anything, report it to the CFTC and report back.
@Peter89 said:
In 2017 the so called "big 4" were short - at least for one week - over 140 days of worldwide silver production.
On average each one of them was short 35 days of silver production.
On average means that some entity was net short way more than 35 days of worldwide silver production. That entity had promised to deliver way more than 35 days of worldwide silver production.
You seem to have no problem with BUYS and long positions only with SALES and short positions.
You seem to have no problem with SELLS and short positions only with BUYS and long positions.
I have no problem with EITHER. I do have a problem with conspiracy theories with no basis in fact when dealing with heavily regulated markets.
Rather than admit they made an investment mistake, people would rather blame others.
@jmski52 said:
What the CFTC did to the Hunts was unethical if not outright illegal. They decided to prohibit “buy” orders and allowed only “sell” orders so that the price of silver had nowhere to go but down. That’s what drove the Hunts into bankruptcy because part of their position was leveraged. They were NOT breaking any laws.
They never prohibited BUY orders. That is patently false.
If TPTB did it then, what’s to stop the any of the stock exchanges from prohibiting the types of orders that go against their own agendas, whenever it’s to their own benefit?
That's not how an exchange works.
The laws are already in place such that your stocks are held in the name of a brokerage or the much larger opaque clearing organization in a system that is already rigged, and you have no legal recourse if any part of the daisy chain becomes insolvent and breaks down (re: The Great Taking).
Again, you don't understand the relationship between the clearing houses, brokerage firms, and stock transfer companies.
You seem to have no problem with BUYS and long positions only with SALES and short positions.
You seem to have no problem with SELLS and short positions only with BUYS and long positions.
I have no problem with EITHER. I do have a problem with conspiracy theories with no basis in fact when dealing with heavily regulated markets.
Rather than admit they made an investment mistake, people would rather blame others.
.
Heavy regulation is basically the same thing as central planning.
It is the antithesis of a free market.
@jmski52 said: They never prohibited BUY orders. That is patently false.
I call total BS. The exchange absolutely DID prohibit buy orders until the silver price crashed.
I was in that market with silver contracts and followed it closely. I know what happened because I was in it. We’re >you?
No, I was in high school.
But I spoke to NYMEX traders a few years later who complained about the lack of MARGIN and LEVERAGED buy orders not being allowed. Big difference !
@jmski52 said: They never prohibited BUY orders. That is patently false.
I call total BS. The exchange absolutely DID prohibit buy orders until the silver price crashed.
I was in that market with silver contracts and followed it closely. I know what happened because I was in it. We’re >you?
No, I was in high school.
But I spoke to NYMEX traders a few years later who complained about the lack of MARGIN and LEVERAGED buy orders not being allowed. Big difference !
But they still allowed leveraged sell orders even when buy orders were limited, did they not ?
Leveraged or not - ALL buy orders were prohibited. All of them, not just leveraged buy orders.
“Lack of margin” was a direct result of Paul Volker’s decision to keep bumping rates, and the Exchanges’ decisions to INCREASE margin requirements in an effort to squash speculative buying in the silver market.
The increase in margin requirements IS WHAT PRECIPITATED the Hunts’ bankruptcy.
Prohibiting buy orders is what crashed the silver market.
Two different things - both of which were blatant market manipulation by the regulators AND the central bank.
Q: Are You Printing Money? Bernanke: Not Literally
Without a lot more information, that chart, while somewhat interesting, doesn’t tell us much. For starters, could you post the same chart, but for long positions?
@jmski52 said:
The increase in margin requirements IS WHAT PRECIPITATED the Hunts’ bankruptcy.
Prohibiting buy orders is what crashed the silver market.
Two different things - both of which were blatant market manipulation by the regulators AND the central bank.
Increasing margin requirements is NOT illegal. The Fed can do it on stock purchases at any time.
If a suspension of certain (not all) buy orders ended, then the demand should have come roaring back. It didn't, because it was a manipulated market.
Are you saying the "fair price" and normalized price for silver was $50 an ounce ? $30 an ounce ? If gold gave back most of it's 1979-80 gains...and if rates had peaked and inflation was coming down....what makes you think silver would have even held $15 ?
@jmski52 said: Was there manipulation on the Hunts part?
What would you know about it?
Wanting to take physical delivery of futures contracts isn’t manipulation.
No, but using your 7% ownership in a major Wall Street brokerage firm to obtain material non-public information on trade and order flows, positions, and future sells is illegal.
And hiding that ownership from the regulators in violation of a 13-D (5% stake) requirement is also illegal.
That's what you keep forgetting.
Regulators screw up all the time -- the SEC turned a containable 10-12% Black Monday 1987 Crash into a 22% Mega-Drop. But they didn't cause the initial drop and the metals exchanges didn't cause the bursting of the silver bubble.
Increasing margin requirements is NOT illegal. The Fed can do it on stock purchases at any time.
No, it’s not illegal but it sure smacks of favoritism & manipulation.
If a suspension of certain (not all) buy orders ended, then the demand should have come roaring back. It didn't, because it was a manipulated market.
Demand didn’t come “roaring back” for a very good reason. Who, in their right mind is going to take a position in a market when a unelected political appointee can destroy it by changing the ground rules at a moment’s notice?
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said:
Demand didn’t come “roaring back” for a very good reason. Who, in their right mind is going to take a position in a >market when a unelected political appointee can destroy it by changing the ground rules at a moment’s notice?
Why not then for short-selling, where the losses can be UNLIMITED ? Because the same illogic said that if RobinHood didn't pause BUY orders on GME, it would have gone to $1,000. It wouldn't have -- because the buying power to move it to a $60 billion market cap wasn't there.
Why not then for short-selling, where the losses can be UNLIMITED ?
The losses on short selling aren’t unlimited because brokerages require collateral on margin accounts and can suspend, and then liquidate an account that doesn’t meet the margin requirement.
In the Hunts’ case, as I recall the Hunts met their margin requirements UNTIL the CFTC RAISED the requirement.
Thanks for reminding me.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said: Why not then for short-selling, where the losses can be UNLIMITED ?
The losses on short selling aren’t unlimited because brokerages require collateral on margin accounts and can suspend, and then liquidate an account that doesn’t meet the margin requirement.
.
So if the short sellers don't fill the updated margin requirements, they will exit their position only losing what they put in as collateral.
I didn't know that.
Imagine the basis price running away upside... and the buyers (longs) ultimately being the ones holding the bag! considering their lost wins.
The brokerage can liquidate an account that doesn’t meet their margin requirements, but that doesn’t relieve the customer from any losses that were sustained before the liquidation.
All it means is that the customer takes a huge (but not unlimited) loss, with NO recourse. The liability for the forced liquidation still belongs to the account holder, as it should.
If you were such an account holder, you would probably end up in court, just like the Hunts did.
Q: Are You Printing Money? Bernanke: Not Literally
NEM overpaid for other company assets trying to stay big instead of better and have destroyed shareholder value with excess use of stock to pay for their egos. I could go on to say that there needs to be some serious board review of the past 5-year performance and some upper managers must have lost objectivity and put-on rose-colored glasses approving questionable projects. This company is not being operated the way it was 15-20 years ago.
@Goldminers said:
NEM overpaid for other company assets trying to stay big instead of better and have destroyed shareholder value >with excess use of stock to pay for their egos. I could go on to say that there needs to be some serious board review >of the past 5-year performance and some upper managers must have lost objectivity and put-on rose-colored >glasses approving questionable projects. This company is not being operated the way it was 15-20 years ago.
Unlike the energy sector, the ENTIRE mining industry hasn't gotten religion. I think that the miners have stopped doing deals in recent years, though I haven't tracked it too closely. But I thought Barrick's disasters up through 2015 had gotten them to pause.
Gold is going to have to move like 50% overnight for any of these companies to do anything. Terrible shareholder stewardship.
They're lucky the activists and PE guys are focused elswhere.
Jefferies initiated coverage on the gold stocks today. I'm not sure I can attach the PDF. Here's the highlights:
The Golden Opportunity: Initiating on NA Gold Sector with Miners at a Discount
We initiate coverage on the gold mining and streaming sector with a positive view. Gold has been supported near all-time highs by foreign central bank buying, despite high real rates and falling inflation. A slowing global economy could serve as the next tailwind. Meanwhile, equities have detached from near-record gold prices and sit at discounted levels. We think miner margin expansion can soon resume, driving FCF growth.
With this report, transferring lead coverage on GOLD, KGC, NEM.
Real rate headwinds abate, central bank support continues: We view the 10yr US treasury real rate as the opportunity cost of holding gold, and the 10yr has moved from -1% in early 2022 to almost +2.5% in October 2023. Based on historical correlation, this would normally drive a $600/oz drop in the gold price. Instead, gold is still sitting above $2,000/oz. We believe gold's robust performance in the face of higher rates is largely a function of foreign central bank buying, which totaled over 1000t in both 2022 and 2023 (~30% of annual mine production) driven by reserve diversification, especially in China. With the 10yr now off of its peak and the neutral rate somewhere below 1%, we think the rates headwind is becoming a tailwind, and any slowdown of the economy and cuts in rates should be supportive for gold. We forecast gold rising to $2,100/oz this year and $2,200/oz next year, with a real long-term price of $2,100/oz. This puts our forecast at the high on the street.
Improving fundamentals for miners and streamers:The gold equity universe consists of mining companies and mine financing companies that supply capital in exchange for royalties or production streams ("streamers"). We view gold miners as cyclical, best bought at discounted valuations and when FCF is poised to grow. Streamers are less cyclical, but tend to trade at a premium. Cost inflation drove margin contraction for the gold miners over the last few years. We see potential for these inflationary forces to fade as the economy decelerates, labor constraints ease, and energy prices filter through the industrial supply chain. Our companies are guiding to unit cost deflation of ~5% per year in 2025 and beyond. With regard to streamers, management teams are sounding optimistic on their ability to deploy capital in the near future on medium-sized deals given current high interest rates and lacklustre gold equity markets.
Check out our industry scorecard: Our industry scorecard provides a bell-curved score for each company in our sector across a number of parameters including historical and future returns, risk, growth, stability, and future pipeline. NEM tops the quality scales for the miners, with LUG, AGI and GOLD following close behind. In the streaming space, the incumbents FNV and WPM stand-out. We pair the scorecard with valuation to inform our picks.
Sector leaders have broken down versus gold, and intermediates offer great value as well: We are assuming coverage with a Buy on the top quality sector leaders NEM and GOLD, which have underperformed but are both guiding to rising production and falling unit costs in the medium term forecast. We are also initiating with a Buy on two premium intermediate miners (below 2Mozpa production): AGI and LUG. We think these names are poised to continue growing production and free cash flow. We see several intermediate miners at heavy discounts and initiate with a Buy despite slightly higher risk profiles: BTG, CXB, DPM, EDV and OGC. In the streamers we are Buy on
WPM and TFPM. We initiate with Holds on AEM, KGC, PAAS, GMIN, FNV, OR, and RGLD. Included among this list are quality names with currently insufficient return to target.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Comments
What the Hunt's were doing was ILLEGAL
I don't think so. They even asked the authorities in advance if they could do what they did. In particular, they were given written confirmation that they were permitted to take delivery of their long position.
The mortal sin of the Hunts wasn't to amass a big long position.
Their mortal sin was to ask for delivery.
Had they not asked for delivery, had they kept on playing silver futures, there would have been no illegal, no cornering, no prosecution, no Hunt story, no nothing.
They would just have been fleeced out like every respected silver speculator who dare to take the other side of the bullion banks
If you are playing in derivatives arenas like the Comex and you are looking for trouble, just ask for delivery
Actually jewelry dealers, miners, silver producers... profit from higher, not lower silver prices, so nobody thought of jewellery dealers conspiring against the Hunts
What the CFTC did to the Hunts was unethical if not outright illegal. They decided to prohibit “buy” orders and allowed only “sell” orders so that the price of silver had nowhere to go but down. That’s what drove the Hunts into bankruptcy because part of their position was leveraged. They were NOT breaking any laws.
If TPTB did it then, what’s to stop the any of the stock exchanges from prohibiting the types of orders that go against their own agendas, whenever it’s to their own benefit?
The laws are already in place such that your stocks are held in the name of a brokerage or the much larger opaque clearing organization in a system that is already rigged, and you have no legal recourse if any part of the daisy chain becomes insolvent and breaks down (re: The Great Taking).
I knew it would happen.
The Hunt's were manipulating the price of silver, driving the price up, and FAILING TO DISCLOSE their positions in a timely manner. In addition, they failed to disclose their ownership in Bache Securities which was handling other silver orders and acting as custodian for many holders. The Hunt's were trading on that relationship -- ILLEGAL.
I like the Hunt's, but you can't do that. It's a clear violation of trading rules and insider trading laws.
You guys bash the banks all the time, here's CLEARLY illegal behavior and because the guys bought silver, you want to let them off scott free.
That chart alleging that gold outperformed stocks is 100% BS.
It's classic cherry-picking as they started when gold was way down in price, stocks about to enter a bear market, etc.
With dividends, stocks probably outperform. They certainly had less volatility. Better risk-adjusted returns and drawdowns.
I like holding gold, and I'm a buyer here, but that chart is for suckers.
.
For every long silver contract that the Hunt's bought, somebody was short-selling (naked) that same amount of silver.
Who was allowed to sell that much silver without having it ? Why weren't those short sellers called out instead of the Hunts ?
Why were the Hunts supposedly in violation but the short sellers weren't (or maybe they were in violation, but it was kept hush-hush) ?
.
I am not sure there was naked shorting. Controls were different back then and the exchange for futures is different than the NYSE/NASDAQ for shorting stocks.
You can't possibly think that the silver price was going to hold $50/ounce. It was a parabolic blow-off in which shorts lost their shirts.
The Hunts weren't stupids.
They knew they were threading on thin ice.
They weren't novices in that world.
They knew it was impossible for the Exchange and the authorities to not learn about their position.
They knew about naked shorting.
They knew many shorts couldn't deliver.
They wanted to exploit this.
Their mortal sin was to ask for delivery
They took all possible precautions, asking - written of course - permission from the Exchange, first for building their position and second for taking delivery.
If they hadn't ask for delivery nothing would have happened to them.
Asking for delivery they were going to destroy the Comex silver market
Yes, the chart was just to show this century. But regardless of the obvious cherry-picking time frame, the past 24 years gold did pretty good. I would not even be surprised to see it do better than stocks for another decade, especially if China decides to invade Taiwan and the global economy crashes. Or some black swan risks to stocks out there we don't know about.
My US Mint Commemorative Medal Set
Good point.
I suppose the naked sellers back then were the same entities who are naked selling today, the bullion banks.
But I don't think hunting down the Hunts the authorities were primarily protecting the bullion banks, I think they were protecting the Comex. Anyway, that's another story.
The point is, neither the short sellers nor the Comex were able to deliver that much silver. The Hunts knew it.
That meant default.
Concentrated long positions don't lead the Comex to default.
Asking for delivery does.
Imo the Hunts were smashed because they were knowingly going to tear down the Comex - well at least the comex silver market.
There you go
In 2017 the so called "big 4" were short - at least for one week - over 140 days of worldwide silver production.
On average each one of them was short 35 days of silver production.
On average means that some entity was net short way more than 35 days of worldwide silver production.
That entity had promised to deliver way more than 35 days of worldwide silver production.
How preposterous is that
The Hunts, how many days of silver production were they long?
We don't know that to be a fact. And you don't know at what price the shorts entered the market.
Shorting rules for futures might be different than for stocks.
Actually, they WEREN'T that sophisticated according to their advisors. They weren't like today's super-savvy hedge funds.
Again, not proven. No evidence that I have seen confirms this. This is the talk from Silver Bulls thinking that if the Hunt's hadn't been persecuted, that silver was going to $100/ounce.
It wasn't. Gold and silver were cooked once Paul Volcker squeezed the money supply AND killed inflation.
Who says that ? Delivery or no delivery, they violated the rules of the exchange and CFTC rules on insider trading.
Maybe, maybe not. What goes up MUST come down. See, GME (GameStop).
Could be. But if you use rolling time periods gold does poorly compared to stocks, bonds, and even real estate.
Not paying a dividend, gold faces a major head-wind compared to stocks (dividends) and bonds (interest) which each yield 3-6% and have a "head start" compared to 0%-yielding gold.
Proof ? I've seen no books or papers on this.
Positions are marked-to-market to prevent exchange problems. Ever see "Trading Places" ??
That was 7 years ago.
How do you know they aren't short that commodity for dozens of end-users, hedgers, or speculators ? Who is "short" the metal ?
Nobody is alleging any wrongdoing. You seem to have no problem with BUYS and long positions only with SALES and short positions.
There are rules for shorting -- for equities, you need to get a 'locate' -- but nobody is saying that the rules are being violated. If you know of anything, report it to the CFTC and report back.
.
i.e. if the Hunts would have been long that commodity for dozens of friends and family that position wouldn't have been an issue
You seem to have no problem with BUYS and long positions only with SALES and short positions.
.
You seem to have no problem with SELLS and short positions only with BUYS and long positions.
.
.
You sure GF?
Let's agree to disagree
Back to Peak Gold!
I have no problem with EITHER. I do have a problem with conspiracy theories with no basis in fact when dealing with heavily regulated markets.
Rather than admit they made an investment mistake, people would rather blame others.
Unfortunately, what happens with Peak Gold (or silver) is tied to the paper and cash markets so it's not something we can avoid.
They never prohibited BUY orders. That is patently false.
That's not how an exchange works.
Again, you don't understand the relationship between the clearing houses, brokerage firms, and stock transfer companies.
They never prohibited BUY orders. That is patently false.
I call total BS. The exchange absolutely DID prohibit buy orders until the silver price crashed.
I was in that market with silver contracts and followed it closely. I know what happened because I was in it. We’re you?
I knew it would happen.
.
Heavy regulation is basically the same thing as central planning.
It is the antithesis of a free market.
.
No, I was in high school.
But I spoke to NYMEX traders a few years later who complained about the lack of MARGIN and LEVERAGED buy orders not being allowed. Big difference !
But they still allowed leveraged sell orders even when buy orders were limited, did they not ?
Leveraged or not - ALL buy orders were prohibited. All of them, not just leveraged buy orders.
“Lack of margin” was a direct result of Paul Volker’s decision to keep bumping rates, and the Exchanges’ decisions to INCREASE margin requirements in an effort to squash speculative buying in the silver market.
The increase in margin requirements IS WHAT PRECIPITATED the Hunts’ bankruptcy.
Prohibiting buy orders is what crashed the silver market.
Two different things - both of which were blatant market manipulation by the regulators AND the central bank.
I knew it would happen.
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Was there manipulation on the Hunts part?
Knowledge is the enemy of fear
Was there manipulation on the Hunts part?
What would you know about it?
Wanting to take physical delivery of futures contracts isn’t manipulation.
The Hunts weren’t in a position to start changing all of the rules.
Like the CFTC did to the Hunts. Like the Fed does regularly.
I knew it would happen.
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Why is there such an concentration of short positions only in the precious metals markets?
Imagine such a traders concentration in the oil market.
An investigation would be on his way tomorrow morning!
@Peter89
Without a lot more information, that chart, while somewhat interesting, doesn’t tell us much. For starters, could you post the same chart, but for long positions?
Because the market is illiquid and the producers would like to secure a price.
Knowledge is the enemy of fear
Increasing margin requirements is NOT illegal. The Fed can do it on stock purchases at any time.
If a suspension of certain (not all) buy orders ended, then the demand should have come roaring back. It didn't, because it was a manipulated market.
Are you saying the "fair price" and normalized price for silver was $50 an ounce ? $30 an ounce ? If gold gave back most of it's 1979-80 gains...and if rates had peaked and inflation was coming down....what makes you think silver would have even held $15 ?
It wouldn't have.
No, but using your 7% ownership in a major Wall Street brokerage firm to obtain material non-public information on trade and order flows, positions, and future sells is illegal.
And hiding that ownership from the regulators in violation of a 13-D (5% stake) requirement is also illegal.
That's what you keep forgetting.
Regulators screw up all the time -- the SEC turned a containable 10-12% Black Monday 1987 Crash into a 22% Mega-Drop. But they didn't cause the initial drop and the metals exchanges didn't cause the bursting of the silver bubble.
Because the short positions reflect commercial hedgers (i.e., miners) who actively lock in prices.
Happens all the time. That's how we got NEGATIVE oil prices in April 2020. Ever see negative metals prices ?
No, because if you understand how markets work, you know there's nothing unusual here.
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For enders, no : ) sorry
Well I could if I find it...
'Round here they call that naked short selling. Lol
Knowledge is the enemy of fear
Increasing margin requirements is NOT illegal. The Fed can do it on stock purchases at any time.
No, it’s not illegal but it sure smacks of favoritism & manipulation.
If a suspension of certain (not all) buy orders ended, then the demand should have come roaring back. It didn't, because it was a manipulated market.
Demand didn’t come “roaring back” for a very good reason. Who, in their right mind is going to take a position in a market when a unelected political appointee can destroy it by changing the ground rules at a moment’s notice?
I knew it would happen.
Why not then for short-selling, where the losses can be UNLIMITED ? Because the same illogic said that if RobinHood didn't pause BUY orders on GME, it would have gone to $1,000. It wouldn't have -- because the buying power to move it to a $60 billion market cap wasn't there.
Why not then for short-selling, where the losses can be UNLIMITED ?
The losses on short selling aren’t unlimited because brokerages require collateral on margin accounts and can suspend, and then liquidate an account that doesn’t meet the margin requirement.
In the Hunts’ case, as I recall the Hunts met their margin requirements UNTIL the CFTC RAISED the requirement.
Thanks for reminding me.
I knew it would happen.
.
So if the short sellers don't fill the updated margin requirements, they will exit their position only losing what they put in as collateral.
I didn't know that.
Imagine the basis price running away upside... and the buyers (longs) ultimately being the ones holding the bag! considering their lost wins.
Don't forget the lesson from MF Global. If the market runs too hot, they can just sacrifice a pawn.
Yelling at clouds on pmbug.com
The brokerage can liquidate an account that doesn’t meet their margin requirements, but that doesn’t relieve the customer from any losses that were sustained before the liquidation.
All it means is that the customer takes a huge (but not unlimited) loss, with NO recourse. The liability for the forced liquidation still belongs to the account holder, as it should.
If you were such an account holder, you would probably end up in court, just like the Hunts did.
I knew it would happen.
Rules can change, everybody knows that. The Fed hasn't changed stock margin requirements in forever...doesn't mean they can't.
Newmont Mining (NEM) is back at May 2019 lows -- when gold was $1,300 an ounce, 35% lower than today.
It's down 60% from the April 2022 high, even though gold is UP 5% since then.
These guys should just close up shop. They clearly couldn't run a successful lemonade stand in the Sahara Desert.
NEM overpaid for other company assets trying to stay big instead of better and have destroyed shareholder value with excess use of stock to pay for their egos. I could go on to say that there needs to be some serious board review of the past 5-year performance and some upper managers must have lost objectivity and put-on rose-colored glasses approving questionable projects. This company is not being operated the way it was 15-20 years ago.
My US Mint Commemorative Medal Set
Unlike the energy sector, the ENTIRE mining industry hasn't gotten religion. I think that the miners have stopped doing deals in recent years, though I haven't tracked it too closely. But I thought Barrick's disasters up through 2015 had gotten them to pause.
Gold is going to have to move like 50% overnight for any of these companies to do anything. Terrible shareholder stewardship.
They're lucky the activists and PE guys are focused elswhere.
Jefferies initiated coverage on the gold stocks today. I'm not sure I can attach the PDF. Here's the highlights:
The Golden Opportunity: Initiating on NA Gold Sector with Miners at a Discount
We initiate coverage on the gold mining and streaming sector with a positive view. Gold has been supported near all-time highs by foreign central bank buying, despite high real rates and falling inflation. A slowing global economy could serve as the next tailwind. Meanwhile, equities have detached from near-record gold prices and sit at discounted levels. We think miner margin expansion can soon resume, driving FCF growth.
With this report, transferring lead coverage on GOLD, KGC, NEM.
Real rate headwinds abate, central bank support continues: We view the 10yr US treasury real rate as the opportunity cost of holding gold, and the 10yr has moved from -1% in early 2022 to almost +2.5% in October 2023. Based on historical correlation, this would normally drive a $600/oz drop in the gold price. Instead, gold is still sitting above $2,000/oz. We believe gold's robust performance in the face of higher rates is largely a function of foreign central bank buying, which totaled over 1000t in both 2022 and 2023 (~30% of annual mine production) driven by reserve diversification, especially in China. With the 10yr now off of its peak and the neutral rate somewhere below 1%, we think the rates headwind is becoming a tailwind, and any slowdown of the economy and cuts in rates should be supportive for gold. We forecast gold rising to $2,100/oz this year and $2,200/oz next year, with a real long-term price of $2,100/oz. This puts our forecast at the high on the street.
Improving fundamentals for miners and streamers:The gold equity universe consists of mining companies and mine financing companies that supply capital in exchange for royalties or production streams ("streamers"). We view gold miners as cyclical, best bought at discounted valuations and when FCF is poised to grow. Streamers are less cyclical, but tend to trade at a premium. Cost inflation drove margin contraction for the gold miners over the last few years. We see potential for these inflationary forces to fade as the economy decelerates, labor constraints ease, and energy prices filter through the industrial supply chain. Our companies are guiding to unit cost deflation of ~5% per year in 2025 and beyond. With regard to streamers, management teams are sounding optimistic on their ability to deploy capital in the near future on medium-sized deals given current high interest rates and lacklustre gold equity markets.
Check out our industry scorecard: Our industry scorecard provides a bell-curved score for each company in our sector across a number of parameters including historical and future returns, risk, growth, stability, and future pipeline. NEM tops the quality scales for the miners, with LUG, AGI and GOLD following close behind. In the streaming space, the incumbents FNV and WPM stand-out. We pair the scorecard with valuation to inform our picks.
Sector leaders have broken down versus gold, and intermediates offer great value as well: We are assuming coverage with a Buy on the top quality sector leaders NEM and GOLD, which have underperformed but are both guiding to rising production and falling unit costs in the medium term forecast. We are also initiating with a Buy on two premium intermediate miners (below 2Mozpa production): AGI and LUG. We think these names are poised to continue growing production and free cash flow. We see several intermediate miners at heavy discounts and initiate with a Buy despite slightly higher risk profiles: BTG, CXB, DPM, EDV and OGC. In the streamers we are Buy on
WPM and TFPM. We initiate with Holds on AEM, KGC, PAAS, GMIN, FNV, OR, and RGLD. Included among this list are quality names with currently insufficient return to target.
Banking and Finance 101: How markets work
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Peak Gold in action ? Time will tell.
Goldminers, how would you compare the "richness" or ore content of existing mines today vs. 10 or 20 years ago ? What about 30 years ago ?