<< <i>So, is it the case that paper silver futures and options contracts actually manipulate silver prices higher than they would be in a cash market, because much of the investment demand is for paper derivatives which are easy to get in and out of, because very few traders actually want to take physical delivery of millions of ounces of silver metal which is difficult-to-move, store, and protect ? And if holders of paper actually did take delivery, then the actual market price would be lower because then they would have to get rid of so much actual silver because they can't afford to carry it on the books and in they physical world because of its risk and illiquidity in bulk form? >>
I don't think the price is manipulated. There are arbs who keep the derivatives in line with the cash market. Things such as carrying costs--storage and interest rates and volatility work themselves into those equations.--There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
"Poets are the unacknowledged legislators of the world." PBShelley
In my opinion, the fund was established as a competing instrument vs. physical in order to aid in price manipulation. Removing physical silver from the fund doesn't make the silver any less desireable, but it does insure that it is real silver at the moment of physical transfer. Demand for physical indicates higher prices, not lower. >>
It's simply easier to trade SLV on an exchange floor than order 5000 oz of physical silver, take delivery, store it, and then find a buyer and go through the mess of delivering it when I want to sell. Brokerage firms are terrific corporations that handle the paper work. It's that simple. I pay my $8 commission and look at what gets completed by the firm!! They execute my order, process the paper work, make sure the trade clears, balance my account, and pay a few people who make a living, put their kids through college, and then retire with a 401k. So I'm not buying into the conspiracy theories.
Also, while JPM is not a firm without its flaws, it's a brilliantly run bank and a wonderful American corporation.
"Poets are the unacknowledged legislators of the world." PBShelley
There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders. >>
I've been sensing more anger or frustration in your comments.
<< <i>There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders. >>
Spoken like a die heart true conspiracy theorist.
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
<< <i>There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders. >>
You sound angry. Why should the big banks go bust?? Why should their share holders? Not sure I get your point here.
I guess I didn't convey the message clearly. When trading the derivatives, the positions were always off set by another position. Positions are or should always be hedged.
Those who sell derivatives unhedged might make a lot of money some of the time, but I've never met a trader who sold derivatives naked who didn't go belly up.
So I find it inconceivable that, as you assert, JPM has sold silver derivatives unhedged or naked, to use your term.
"Poets are the unacknowledged legislators of the world." PBShelley
We use to use Black and Scholls...(sp) to help determine derivative prices.
Didn't Long Term Capital Management use this model as well?
JPM & Co. get to value their derivatives any way they like...to ensure they don't weigh them down. Wouldn't want a FMV model to interfere with "posting" a profit.
One of these days a lot of people will get bagged with paper metal trades that don't clear. That will be when it's clear to the market that there isn't enough metal to settle all the trades. Those paper positions will tank overnight and you won't be able to get real silver at anything near the previous day's close. It comes down to how lucky does one feel when playing musical chairs?
<< <i>We use to use Black and Scholls...(sp) to help determine derivative prices.
Didn't Long Term Capital Management use this model as well?
JPM & Co. get to value their derivatives any way they like...to ensure they don't weigh them down. Wouldn't want a FMV model to interfere with "posting" a profit.
One of these days a lot of people will get bagged with paper metal trades that don't clear. That will be when it's clear to the market that there isn't enough metal to settle all the trades. Those paper positions will tank overnight and you won't be able to get real silver at anything near the previous day's close. It comes down to how lucky does one feel when playing musical chairs? >>
Apparently LTCM had naked shorts. The models work when hedged one to one. Any type of ratio in positions means the position isn't fully covered. LTCM went bust because their positions weren't fully covered as did Lehman and Bear Stearns to name a couple of others.
Again, the models work only when one is fully hedged.
"Poets are the unacknowledged legislators of the world." PBShelley
You sound angry. Why should the big banks go bust?? Why should their share holders? Not sure I get your point here.
I guess I didn't convey the message clearly. When trading the derivatives, the positions were always off set by another position. Positions are or should always be hedged.
Those who sell derivatives unhedged might make a lot of money some of the time, but I've never met a trader who sold derivatives naked who didn't go belly up.
So I find it inconceivable that, as you assert, JPM has sold silver derivatives unhedged or naked, to use your term.
Percyb - if I sounded angry it wasn't intended to be directed at you personally. I was a bit frustrated in that you seemed to be defending the big banks (and their wanton use of derivatives). Maybe you don't see the big banks as being total beneficiaries of the free government handouts, even in spite of their obvious malfeasance on multiple occasions - but I do.
I stand by my statements. Why shouldn't the Wells Fargos who pumped all of the liar loans & forged all of those robo-signings, and who profited from the sale of massive amounts of bad derivatives paper - go out of business, and why shouldn't their stockholders take the hit? Same goes for Citi, and BoA. Please tell me why they shouldn't be the ones to take the hit?
And why should an alumnus from Goldman Sachs by the name of Jon Corzine be given a pass in the face of obvious grand theft of what were supposed to be segregated accounts, and why does he get a pass from the bankruptcy judge when bankruptcy law and legal precedent run 180 degrees in the opposite direction? What about the account holders who did nothing but trust the prospectus from MF Global that their accounts were segregated according to securities law?
Why do taxpayers have to bail out inept and corrupt big banks? I don't remember signing up for that. I guess that I'm in the camp that the big banks who became insolvent through mismanagement and malfeasance should have taken their losses and gone out of business, so that more well-managed and possibly smaller regional banks could have stepped in and handled the job that the big banks screwed up. The malfeasance and uninvestigated probable criminality of it all actually does make me mad.
Read some of what Bill Black has to say about all this. He's a law prof from UMKC who prosecuted over 1,000 cases stemming from the Long Term Capital Management banking frauds in the 1980s. Not a single case has been prosecuted from the Lehman fiasco and the subsequent Fannie & Freddie bailouts or the AIG scandal that resulted in $25 billion of taxpayer money being used to make Goldman Sachs whole from derivative bets that went bad. Doesn't that make you a little apprehensive about what's happening?
But, getting back to the OP and the silver market - why should CFTC keep backing off of an investigation of the massive short positions in silver, where one or two un-named firms are allowed to hold short positions that account for the entire industry's production for a year? This has been going on for years, and all signs point to JPM as the single massive short in the market. Why no transparency in what should be a market. Aren't markets supposed to allow open price discovery?
You would think that, when the government finds it necessary to issue new laws in the thousands of pages that promulgate regulations in the tens of thousands of pages - that someone might stop and wonder who is going to enforce the compliance to all of this when they don't enforce the laws and regs that are already on the books. Why all the extra laws & regs? What's it all for? Let's stop for a moment and ponder - it's not really to make anything better, is it?
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>We use to use Black and Scholls...(sp) to help determine derivative prices.
Didn't Long Term Capital Management use this model as well?
JPM & Co. get to value their derivatives any way they like...to ensure they don't weigh them down. Wouldn't want a FMV model to interfere with "posting" a profit.
One of these days a lot of people will get bagged with paper metal trades that don't clear. That will be when it's clear to the market that there isn't enough metal to settle all the trades. Those paper positions will tank overnight and you won't be able to get real silver at anything near the previous day's close. It comes down to how lucky does one feel when playing musical chairs? >>
Apparently LTCM had naked shorts. The models work when hedged one to one. Any type of ratio in positions means the position isn't fully covered. LTCM went bust because their positions weren't fully covered as did Lehman and Bear Stearns to name a couple of others.
Again, the models work only when one is fully hedged. >>
Just because one party is fully hedged doesn't assure that every party is hedged.
Just because the manipulators can keep issuing new paper to cover the vast mountains of paper already issued doesn't mean the game can last forever.
All that's required for a house of cards to collapse is for a single card to move or fail. The banks have turned the entire financial system into a house of cards and the house always wins... ...for now. And then we all lose.
They are in a no lose situation with endless bonuses and years to feather their nests so they can even win when they're done destroying the world. They'll even get a golden parachute as their companies and the cities burn.
<< <i>Spoken like a die heart true conspiracy theorist. >>
Very little of what we all see is as it appears to be.
We each are a product of our time and place and we each see exactly what we expect and everything else is invisible to us.
We plod along until change is forced upon us. >>
I like your philosophy. Reality is often based on perception. >>
To a very real extent perception is reality. No, I'm not talking about shroedenger's cat or any philosophical construct but the concrete world itself. Ideally, perception is very close to the reality but in practice there doesn't have to be much of a close relationship. There are no ancient Egyptians being born in Kansas and it's always been this way and always will. It would be pretty absurd to suggest ancient Egyptians or Romans were wrong about all their perceptions but none of these are shared today. The belief that we are the pinnacle of human perfection and omniscient is one of our leading superstitions.
I believe we'll find over the next half century that we are very wrong in a great number of our perceptions now and our collective estimation of the value of silver is one of them. We are probably most wrong in our estimation of the relevance and completeness of hu- man knowledge.
This article quantifies one particular industrial use of silver as requiring 30-50% of of annual mine production. Also, yet another specialist who believes there is a lot of artificiality to silver pricing.
Percyb - if I sounded angry it wasn't intended to be directed at you personally. I was a bit frustrated in that you seemed to be defending the big banks (and their wanton use of derivatives). Maybe you don't see the big banks as being total beneficiaries of the free government handouts, even in spite of their obvious malfeasance on multiple occasions - but I do.
I stand by my statements. Why shouldn't the Wells Fargos who pumped all of the liar loans & forged all of those robo-signings, and who profited from the sale of massive amounts of bad derivatives paper - go out of business, and why shouldn't their stockholders take the hit? Same goes for Citi, and BoA. Please tell me why they shouldn't be the ones to take the hit?
And why should an alumnus from Goldman Sachs by the name of Jon Corzine be given a pass i? >>
I agree with you on Jon C. He should be in jail for fleecing clients out of millions and millions of $. The banks aren't all innocent either. The whole thing started when Jesse Jackson complained that poor inner city republicans couldn't get loans for houses they couldn't afford in Chicago. So he wanted the banks to pony up. They wouldn't. He went to Barney Frank who in turn decided the banks could ease their lending practices. Next thing you know all those inner city republicans got loans despite not working, collecting welfare etc. So I saw it as the loan companies being forced to make shoddy loans. Give thanks to Jesse Jackson and Barney Franks for the fiasco. And yep, you and I are paying for it.
"Poets are the unacknowledged legislators of the world." PBShelley
<< <i>The whole thing started when Jesse Jackson complained that poor inner city republicans couldn't get loans for houses they couldn't afford in Chicago. So he wanted the banks to pony up. They wouldn't. He went to Barney Frank who in turn decided the banks could ease their lending practices. Next thing you know all those inner city republicans got loans despite not working, collecting welfare etc. So I saw it as the loan companies being forced to make shoddy loans. Give thanks to Jesse Jackson and Barney Franks for the fiasco. And yep, you and I are paying for it. >>
Add the name of republican "willy" Clinton to this and you've got the whole enchilada. That's what I was talking about in an earlier note regarding the entitlement angle of the housing manipulation. In some ways, the banks were victimized (not without profit) by being forced to make the bad loans, then scolded as the bad guys when the loans failed. The entitilement issue isn't clear with the PM manipulation but I suspect it is there (talk about perception). They have created a whole new perception/reality for the US which could be called "the land of 'oppurtitlement'."
Markets (governments) can remain irrational longer than an investor can remain solvent.
Percyb - if I sounded angry it wasn't intended to be directed at you personally. I was a bit frustrated in that you seemed to be defending the big banks (and their wanton use of derivatives). Maybe you don't see the big banks as being total beneficiaries of the free government handouts, even in spite of their obvious malfeasance on multiple occasions - but I do.
I stand by my statements. Why shouldn't the Wells Fargos who pumped all of the liar loans & forged all of those robo-signings, and who profited from the sale of massive amounts of bad derivatives paper - go out of business, and why shouldn't their stockholders take the hit? Same goes for Citi, and BoA. Please tell me why they shouldn't be the ones to take the hit?
And why should an alumnus from Goldman Sachs by the name of Jon Corzine be given a pass i? >>
I agree with you on Jon C. He should be in jail for fleecing clients out of millions and millions of $. The banks aren't all innocent either. The whole thing started when Jesse Jackson complained that poor inner city republicans couldn't get loans for houses they couldn't afford in Chicago. So he wanted the banks to pony up. They wouldn't. He went to Barney Frank who in turn decided the banks could ease their lending practices. Next thing you know all those inner city republicans got loans despite not working, collecting welfare etc. So I saw it as the loan companies being forced to make shoddy loans. Give thanks to Jesse Jackson and Barney Franks for the fiasco. And yep, you and I are paying for it. >>
Inner City Republicans? That's a new one to me. I thought they became extinct in the 1970's
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
<< <i> Add the name of republican "willy" Clinton to this and you've got the whole enchilada. That's what I was talking about in an earlier note regarding the entitlement angle of the housing manipulation. In some ways, the banks were victimized (not without profit) by being forced to make the bad loans, then scolded as the bad guys when the loans failed. The entitilement issue isn't clear with the PM manipulation but I suspect it is there (talk about perception). They have created a whole new perception/reality for the US which could be called "the land of 'oppurtitlement'." >>
I agree. The mess really got legs under "willy" C's tenure.
"Poets are the unacknowledged legislators of the world." PBShelley
We could have lived with banks making bad loans for individual homeowners and businesses. What we nor the govt signed up for were the top 6 banks securitizing and leveraging those loans up by 30X to 50X and offering them as "investments" with no insurance against failure. Barney Frank and Jesse Jackson didn't tell the banks to leverage up those homeowner loans by 40X using otc derivatives. They increased the fraud by 40X. 1X would have been plenty. When J6P was given a sweet heart loan with no money down little did he realize that there were 39 other entities piggy backing on his mortgage....and all 39 had placed bets that he would default on the mortgage. The original loan originator and Joe were the only ones betting/hoping he would succeed on that mortgage. 2 vs. 39. Guess who won?
Bad real estate loans have never been the 800# gorilla. This gorilla grew to adulthood by eating $1.1 QUAD in otc derivatives and hundreds of TRILLIONs in debt. A couple of trillion in MBS losses was a snack. A couple hundred of billion in bad homeowner loans could have been handled easily enough. What couldn't be handled was creating 39 additional bets on each one of those liar loan home mortgages. That ran the losses into the trillions of dollars as the big banks and their friends had to be bailed out. At the same time those same people had to be bailed out for losses of $10-$15 TRILL in highly leveraged credit default swaps.
<< <i>We could have lived with banks making bad loans for individual homeowners and businesses. What we nor the govt signed up for were the top 6 banks securitizing and leveraging those loans up by 30X to 50X and offering them as "investments" with no insurance against failure. Barney Frank and Jesse Jackson didn't tell the banks to leverage up those homeowner loans by 40X using otc derivatives. . >>
Yep. Unhedged instruments...blew up.
"Poets are the unacknowledged legislators of the world." PBShelley
The below excerpt is taken from a report which I am unable to get to link here. In the excerpt is a link to a Reuter's report which gives an informative analysis of silver. It is more conservative than others I have read, but still positive. A table is given which lists available silver and projections.
<< <i>The precious-metals consultancy forecast that implied net investment would jump 82 million ounces to 234 million in 2012 from 2011, even as demand for silver in industrial applications is expected to fall nearly 28 million ounces. Read more on the Thomson Reuters GFMS report. Investment interest also shows in holdings of silver global exchange-traded products, which — at around 600 million ounces as of Nov. 23 — were close to an all-time high, according to ETF Securities. >>
Markets (governments) can remain irrational longer than an investor can remain solvent.
<< <i>We could have lived with banks making bad loans for individual homeowners and businesses. What we nor the govt signed up for were the top 6 banks securitizing and leveraging those loans up by 30X to 50X and offering them as "investments" with no insurance against failure. Barney Frank and Jesse Jackson didn't tell the banks to leverage up those homeowner loans by 40X using otc derivatives. >>
Yep. Unhedged instruments...blew up. >>
The instruments were hedged. Prior to the blow up, both parties assumed they were properly hedged. When Lehman and others were flushed down the toilet it didn't matter that they were "properly" hedged based on their own analysis. Their hedges didn't perform as planned. And those on the other side of the trade still expected to be paid off. If the govt/FED/Treasury didn't pay off the winners, they too would have found out that their hedges wouldn't have performed for them. They'd have been as sunk as Lehman was. The >$300 TRILL carried in otc derivs by our top 6 banks are also "properly" hedged...with other derivatives. When one blows up, they all blow...even the hedges.
<< <i>The below excerpt is taken from a report which I am unable to get to link here. In the excerpt is a link to a Reuter's report which gives an informative analysis of silver. It is more conservative than others I have read, but still positive. A table is given which lists available silver and projections.
<< <i>The precious-metals consultancy forecast that implied net investment would jump 82 million ounces to 234 million in 2012 from 2011, even as demand for silver in industrial applications is expected to fall nearly 28 million ounces. Read more on the Thomson Reuters GFMS report. Investment interest also shows in holdings of silver global exchange-traded products, which — at around 600 million ounces as of Nov. 23 — were close to an all-time high, according to ETF Securities. >>
Comments
<< <i>So, is it the case that paper silver futures and options contracts actually manipulate silver prices higher than they would be in a cash market, because much of the investment demand is for paper derivatives which are easy to get in and out of, because very few traders actually want to take physical delivery of millions of ounces of silver metal which is difficult-to-move, store, and protect ? And if holders of paper actually did take delivery, then the actual market price would be lower because then they would have to get rid of so much actual silver because they can't afford to carry it on the books and in they physical world because of its risk and illiquidity in bulk form? >>
I don't think the price is manipulated. There are arbs who keep the derivatives in line with the cash market.
Things such as carrying costs--storage and interest rates and volatility work themselves into those equations.--There
are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
<< <i>
In my opinion, the fund was established as a competing instrument vs. physical in order to aid in price manipulation. Removing physical silver from the fund doesn't make the silver any less desireable, but it does insure that it is real silver at the moment of physical transfer. Demand for physical indicates higher prices, not lower. >>
It's simply easier to trade SLV on an exchange floor than order 5000 oz of physical silver, take delivery, store it, and then find a buyer and go through the mess of delivering it when I want to sell. Brokerage firms are terrific corporations that handle the paper work. It's that simple. I pay my $8 commission and look at what gets completed by the firm!! They execute my order, process the paper work, make sure the trade clears, balance my account, and pay a few people who make a living, put their kids through college, and then retire with a 401k. So I'm not buying into the conspiracy theories.
Also, while JPM is not a firm without its flaws, it's a brilliantly run bank and a wonderful American corporation.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders.
I knew it would happen.
<< <i>There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders. >>
I've been sensing more anger or frustration in your comments.
Knowledge is the enemy of fear
I knew it would happen.
<< <i>There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders. >>
Spoken like a die heart true conspiracy theorist.
<< <i>Spoken like a die heart true conspiracy theorist. >>
Very little of what we all see is as it appears to be.
We each are a product of our time and place and we each see exactly what we expect and everything else is invisible to us.
We plod along until change is forced upon us.
<< <i>There are models...We use to use Black and Scholls...(sp) to help determine derivative prices.
Yup, and as long as FASB says it's worth whatever you want it to be worth, it's all good. The big banks should fail, and so should all of their stockholders. >>
You sound angry. Why should the big banks go bust?? Why should their share holders? Not sure I get your point here.
I guess I didn't convey the message clearly. When trading the derivatives, the positions were always off set by another position. Positions are or should always be hedged.
Those who sell derivatives unhedged might make a lot of money some of the time, but I've never met a trader who sold derivatives naked who didn't go belly up.
So I find it inconceivable that, as you assert, JPM has sold silver derivatives unhedged or naked, to use your term.
Didn't Long Term Capital Management use this model as well?
JPM & Co. get to value their derivatives any way they like...to ensure they don't weigh them down.
Wouldn't want a FMV model to interfere with "posting" a profit.
One of these days a lot of people will get bagged with paper metal trades that don't clear. That will be when it's clear to the market that there isn't enough
metal to settle all the trades. Those paper positions will tank overnight and you won't be able to get real silver at anything near the previous day's close.
It comes down to how lucky does one feel when playing musical chairs?
<< <i>
<< <i>Spoken like a die heart true conspiracy theorist. >>
Very little of what we all see is as it appears to be.
We each are a product of our time and place and we each see exactly what we expect and everything else is invisible to us.
We plod along until change is forced upon us. >>
I like your philosophy. Reality is often based on perception.
<< <i>We use to use Black and Scholls...(sp) to help determine derivative prices.
Didn't Long Term Capital Management use this model as well?
JPM & Co. get to value their derivatives any way they like...to ensure they don't weigh them down.
Wouldn't want a FMV model to interfere with "posting" a profit.
One of these days a lot of people will get bagged with paper metal trades that don't clear. That will be when it's clear to the market that there isn't enough
metal to settle all the trades. Those paper positions will tank overnight and you won't be able to get real silver at anything near the previous day's close.
It comes down to how lucky does one feel when playing musical chairs? >>
Apparently LTCM had naked shorts. The models work when hedged one to one. Any type of ratio in positions means the position isn't fully covered. LTCM
went bust because their positions weren't fully covered as did Lehman and Bear Stearns to name a couple of others.
Again, the models work only when one is fully hedged.
I guess I didn't convey the message clearly. When trading the derivatives, the positions were always off set by another position. Positions are or should always be hedged.
Those who sell derivatives unhedged might make a lot of money some of the time, but I've never met a trader who sold derivatives naked who didn't go belly up.
So I find it inconceivable that, as you assert, JPM has sold silver derivatives unhedged or naked, to use your term.
Percyb - if I sounded angry it wasn't intended to be directed at you personally. I was a bit frustrated in that you seemed to be defending the big banks (and their wanton use of derivatives). Maybe you don't see the big banks as being total beneficiaries of the free government handouts, even in spite of their obvious malfeasance on multiple occasions - but I do.
I stand by my statements. Why shouldn't the Wells Fargos who pumped all of the liar loans & forged all of those robo-signings, and who profited from the sale of massive amounts of bad derivatives paper - go out of business, and why shouldn't their stockholders take the hit? Same goes for Citi, and BoA. Please tell me why they shouldn't be the ones to take the hit?
And why should an alumnus from Goldman Sachs by the name of Jon Corzine be given a pass in the face of obvious grand theft of what were supposed to be segregated accounts, and why does he get a pass from the bankruptcy judge when bankruptcy law and legal precedent run 180 degrees in the opposite direction? What about the account holders who did nothing but trust the prospectus from MF Global that their accounts were segregated according to securities law?
Why do taxpayers have to bail out inept and corrupt big banks? I don't remember signing up for that. I guess that I'm in the camp that the big banks who became insolvent through mismanagement and malfeasance should have taken their losses and gone out of business, so that more well-managed and possibly smaller regional banks could have stepped in and handled the job that the big banks screwed up. The malfeasance and uninvestigated probable criminality of it all actually does make me mad.
Read some of what Bill Black has to say about all this. He's a law prof from UMKC who prosecuted over 1,000 cases stemming from the Long Term Capital Management banking frauds in the 1980s. Not a single case has been prosecuted from the Lehman fiasco and the subsequent Fannie & Freddie bailouts or the AIG scandal that resulted in $25 billion of taxpayer money being used to make Goldman Sachs whole from derivative bets that went bad. Doesn't that make you a little apprehensive about what's happening?
But, getting back to the OP and the silver market - why should CFTC keep backing off of an investigation of the massive short positions in silver, where one or two un-named firms are allowed to hold short positions that account for the entire industry's production for a year? This has been going on for years, and all signs point to JPM as the single massive short in the market. Why no transparency in what should be a market. Aren't markets supposed to allow open price discovery?
You would think that, when the government finds it necessary to issue new laws in the thousands of pages that promulgate regulations in the tens of thousands of pages - that someone might stop and wonder who is going to enforce the compliance to all of this when they don't enforce the laws and regs that are already on the books. Why all the extra laws & regs? What's it all for? Let's stop for a moment and ponder - it's not really to make anything better, is it?
I knew it would happen.
<< <i>
<< <i>We use to use Black and Scholls...(sp) to help determine derivative prices.
Didn't Long Term Capital Management use this model as well?
JPM & Co. get to value their derivatives any way they like...to ensure they don't weigh them down.
Wouldn't want a FMV model to interfere with "posting" a profit.
One of these days a lot of people will get bagged with paper metal trades that don't clear. That will be when it's clear to the market that there isn't enough
metal to settle all the trades. Those paper positions will tank overnight and you won't be able to get real silver at anything near the previous day's close.
It comes down to how lucky does one feel when playing musical chairs? >>
Apparently LTCM had naked shorts. The models work when hedged one to one. Any type of ratio in positions means the position isn't fully covered. LTCM
went bust because their positions weren't fully covered as did Lehman and Bear Stearns to name a couple of others.
Again, the models work only when one is fully hedged. >>
Just because one party is fully hedged doesn't assure that every party is hedged.
Just because the manipulators can keep issuing new paper to cover the vast mountains of paper already
issued doesn't mean the game can last forever.
All that's required for a house of cards to collapse is for a single card to move or fail. The banks have turned
the entire financial system into a house of cards and the house always wins... ...for now. And then we all lose.
They are in a no lose situation with endless bonuses and years to feather their nests so they can even win when
they're done destroying the world. They'll even get a golden parachute as their companies and the cities burn.
<< <i>
<< <i>
<< <i>Spoken like a die heart true conspiracy theorist. >>
Very little of what we all see is as it appears to be.
We each are a product of our time and place and we each see exactly what we expect and everything else is invisible to us.
We plod along until change is forced upon us. >>
I like your philosophy. Reality is often based on perception. >>
To a very real extent perception is reality. No, I'm not talking about shroedenger's cat
or any philosophical construct but the concrete world itself. Ideally, perception is very
close to the reality but in practice there doesn't have to be much of a close relationship.
There are no ancient Egyptians being born in Kansas and it's always been this way and
always will. It would be pretty absurd to suggest ancient Egyptians or Romans were wrong
about all their perceptions but none of these are shared today. The belief that we are the
pinnacle of human perfection and omniscient is one of our leading superstitions.
I believe we'll find over the next half century that we are very wrong in a great number
of our perceptions now and our collective estimation of the value of silver is one of them.
We are probably most wrong in our estimation of the relevance and completeness of hu-
man knowledge.
Leeb article
<< <i>
Percyb - if I sounded angry it wasn't intended to be directed at you personally. I was a bit frustrated in that you seemed to be defending the big banks (and their wanton use of derivatives). Maybe you don't see the big banks as being total beneficiaries of the free government handouts, even in spite of their obvious malfeasance on multiple occasions - but I do.
I stand by my statements. Why shouldn't the Wells Fargos who pumped all of the liar loans & forged all of those robo-signings, and who profited from the sale of massive amounts of bad derivatives paper - go out of business, and why shouldn't their stockholders take the hit? Same goes for Citi, and BoA. Please tell me why they shouldn't be the ones to take the hit?
And why should an alumnus from Goldman Sachs by the name of Jon Corzine be given a pass i? >>
I agree with you on Jon C. He should be in jail for fleecing clients out of millions and millions of $. The banks aren't all innocent either.
The whole thing started when Jesse Jackson complained that poor inner city republicans couldn't get loans for houses they
couldn't afford in Chicago. So he wanted the banks to pony up. They wouldn't. He went to Barney Frank who in turn decided the banks could ease their lending practices. Next thing you know all those inner city republicans got loans despite not working, collecting welfare etc. So I saw it as the loan companies being forced to make shoddy loans. Give thanks to Jesse Jackson and Barney Franks for the fiasco. And yep, you and I are paying for it.
<< <i>Reality is often based on perception. >>
True! And perception is our reality.
<< <i>The whole thing started when Jesse Jackson complained that poor inner city republicans couldn't get loans for houses they couldn't afford in Chicago. So he wanted the banks to pony up. They wouldn't. He went to Barney Frank who in turn decided the banks could ease their lending practices. Next thing you know all those inner city republicans got loans despite not working, collecting welfare etc. So I saw it as the loan companies being forced to make shoddy loans. Give thanks to Jesse Jackson and Barney Franks for the fiasco. And yep, you and I are paying for it. >>
Add the name of republican "willy" Clinton to this and you've got the whole enchilada. That's what I was talking about in an earlier note regarding the entitlement angle of the housing manipulation. In some ways, the banks were victimized (not without profit) by being forced to make the bad loans, then scolded as the bad guys when the loans failed. The entitilement issue isn't clear with the PM manipulation but I suspect it is there (talk about perception). They have created a whole new perception/reality for the US which could be called "the land of 'oppurtitlement'."
<< <i>
<< <i>
Percyb - if I sounded angry it wasn't intended to be directed at you personally. I was a bit frustrated in that you seemed to be defending the big banks (and their wanton use of derivatives). Maybe you don't see the big banks as being total beneficiaries of the free government handouts, even in spite of their obvious malfeasance on multiple occasions - but I do.
I stand by my statements. Why shouldn't the Wells Fargos who pumped all of the liar loans & forged all of those robo-signings, and who profited from the sale of massive amounts of bad derivatives paper - go out of business, and why shouldn't their stockholders take the hit? Same goes for Citi, and BoA. Please tell me why they shouldn't be the ones to take the hit?
And why should an alumnus from Goldman Sachs by the name of Jon Corzine be given a pass i? >>
I agree with you on Jon C. He should be in jail for fleecing clients out of millions and millions of $. The banks aren't all innocent either.
The whole thing started when Jesse Jackson complained that poor inner city republicans couldn't get loans for houses they
couldn't afford in Chicago. So he wanted the banks to pony up. They wouldn't. He went to Barney Frank who in turn decided the banks could ease their lending practices. Next thing you know all those inner city republicans got loans despite not working, collecting welfare etc. So I saw it as the loan companies being forced to make shoddy loans. Give thanks to Jesse Jackson and Barney Franks for the fiasco. And yep, you and I are paying for it. >>
Inner City Republicans? That's a new one to me. I thought they became extinct in the 1970's
<< <i>
Add the name of republican "willy" Clinton to this and you've got the whole enchilada. That's what I was talking about in an earlier note regarding the entitlement angle of the housing manipulation. In some ways, the banks were victimized (not without profit) by being forced to make the bad loans, then scolded as the bad guys when the loans failed. The entitilement issue isn't clear with the PM manipulation but I suspect it is there (talk about perception). They have created a whole new perception/reality for the US which could be called "the land of 'oppurtitlement'." >>
I agree. The mess really got legs under "willy" C's tenure.
<< <i>
Inner City Republicans? That's a new one to me. I thought they became extinct in the 1970's >>
No. They're all alive and well and Obama lovers who are thriving and enjoying the entitlement frenzy!!
securitizing and leveraging those loans up by 30X to 50X and offering them as "investments" with no insurance against failure. Barney Frank and Jesse
Jackson didn't tell the banks to leverage up those homeowner loans by 40X using otc derivatives. They increased the fraud by 40X. 1X would have been plenty.
When J6P was given a sweet heart loan with no money down little did he realize that there were 39 other entities piggy backing on his mortgage....and all 39 had
placed bets that he would default on the mortgage. The original loan originator and Joe were the only ones betting/hoping he would succeed on that mortgage. 2 vs. 39.
Guess who won?
Bad real estate loans have never been the 800# gorilla. This gorilla grew to adulthood by eating $1.1 QUAD in otc derivatives and hundreds of TRILLIONs in debt.
A couple of trillion in MBS losses was a snack. A couple hundred of billion in bad homeowner loans could have been handled easily enough. What couldn't be handled
was creating 39 additional bets on each one of those liar loan home mortgages. That ran the losses into the trillions of dollars as the big banks and their friends had
to be bailed out. At the same time those same people had to be bailed out for losses of $10-$15 TRILL in highly leveraged credit default swaps.
<< <i>We could have lived with banks making bad loans for individual homeowners and businesses. What we nor the govt signed up for were the top 6 banks
securitizing and leveraging those loans up by 30X to 50X and offering them as "investments" with no insurance against failure. Barney Frank and Jesse
Jackson didn't tell the banks to leverage up those homeowner loans by 40X using otc derivatives. . >>
Yep. Unhedged instruments...blew up.
Thanks,
BC
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
<< <i>The precious-metals consultancy forecast that implied net investment would jump 82 million ounces to 234 million in 2012 from 2011, even as demand for silver in industrial applications is expected to fall nearly 28 million ounces. Read more on the Thomson Reuters GFMS report. Investment interest also shows in holdings of silver global exchange-traded products, which — at around 600 million ounces as of Nov. 23 — were close to an all-time high, according to ETF Securities. >>
<< <i>
<< <i>We could have lived with banks making bad loans for individual homeowners and businesses. What we nor the govt signed up for were the top 6 banks
securitizing and leveraging those loans up by 30X to 50X and offering them as "investments" with no insurance against failure. Barney Frank and Jesse
Jackson didn't tell the banks to leverage up those homeowner loans by 40X using otc derivatives. >>
Yep. Unhedged instruments...blew up. >>
The instruments were hedged. Prior to the blow up, both parties assumed they were properly hedged. When Lehman and others were flushed down the toilet it didn't
matter that they were "properly" hedged based on their own analysis. Their hedges didn't perform as planned. And those on the other side of the trade still expected to be
paid off. If the govt/FED/Treasury didn't pay off the winners, they too would have found out that their hedges wouldn't have performed for them. They'd have been as sunk
as Lehman was. The >$300 TRILL carried in otc derivs by our top 6 banks are also "properly" hedged...with other derivatives. When one blows up, they all blow...even the hedges.
<< <i>The below excerpt is taken from a report which I am unable to get to link here. In the excerpt is a link to a Reuter's report which gives an informative analysis of silver. It is more conservative than others I have read, but still positive. A table is given which lists available silver and projections.
<< <i>The precious-metals consultancy forecast that implied net investment would jump 82 million ounces to 234 million in 2012 from 2011, even as demand for silver in industrial applications is expected to fall nearly 28 million ounces. Read more on the Thomson Reuters GFMS report. Investment interest also shows in holdings of silver global exchange-traded products, which — at around 600 million ounces as of Nov. 23 — were close to an all-time high, according to ETF Securities. >>
>>
Is this it?
Click on the "read more on the Thompson Reuters GFMS report."