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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1804540 times)
smoothie
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July 25, 2014, 09:02:16 PM
 #9881

In regards to the entire cryptocurrency space,

"Most investors will lose money despite a great investment staring them in the face" - cypherdoc

Could you elaborate?

He probably means:

1. People will see Bitcoin and crypto currency and wont invest. The dollar and other fiat collapses in value...and poof.

2. those who end up buying bit coin and alt coins will do so at the peaks when news/media attention is at its peak. Just to to then sell emotionally when capitulation happens.

3. People will buy bitcoin or alt coins and then invest blindly into some hardware/asic/bs-company or other related business and have their coins never returned.

There are many pitfalls for the uneducated in this space.

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July 25, 2014, 09:07:30 PM
 #9882

Having watched the gold market pretty closely for the last 10+ years, the Fed has had a pattern of pre-empting bad news by pushing the price lower in the days before any shocks happen so that when the news comes out and the price spikes, overall things stay pretty even. This week has been a bad news week anyway (more plane crashes, Ebola, Gaza, Ukraine etc) and even though it looks like gold will end the week back over $1300, I'm guessing the powers that be are seriously worried about something extra nasty happening over the weekend. Not that things aren't bad enough already. 
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July 25, 2014, 09:29:07 PM
 #9883

Classic

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July 25, 2014, 10:23:10 PM
 #9884

How can those in the know get their claws on all the gold with a managed crash of the paper gold?

I don't know the details of the paper gold market, so please fill in the blanks (or say I am wrong). Basically, some company writes contracts to sell gold (naked), then to buy those contracts back in the future for the price of the gold at that future time. This in effect expands the gold in circulation and depresses the price of gold. The company earns on fees, plus they are able to use the proceeds of the sale to trade profitably on other assets in the mean time. At all times they supposedly have the resources to fullfill all the contracts. So the first contracts they sold at 1700, now they are 1300, so the company should be solid.

If this is to be unwound orderly, presumably the gold price would rise, and they may or may not be able to fullfill all contracts, anyway they will not earn much.

So the plan is to sell the company, which is a going concern with positive equity, maybe after a power sale of paper gold to depress the price even further, and wait for a point in time when all analysts are negative on the future value of gold. Then, using the proceeds of the sale to buy physical gold. The gold price would rise, and the paper gold company goes bankrupt, the paper gold investors (the last ones) loose. Paper gold market collapses (the great divorce), and the original owners of the paper gold company has a hefty stash of physical gold. (Then they can do the same again after some time).

cypherdoc?


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July 26, 2014, 12:01:29 AM
 #9885

How can those in the know get their claws on all the gold with a managed crash of the paper gold?

I don't know the details of the paper gold market, so please fill in the blanks (or say I am wrong). Basically, some company writes contracts to sell gold (naked), then to buy those contracts back in the future for the price of the gold at that future time. This in effect expands the gold in circulation and depresses the price of gold. The company earns on fees, plus they are able to use the proceeds of the sale to trade profitably on other assets in the mean time. At all times they supposedly have the resources to fullfill all the contracts. So the first contracts they sold at 1700, now they are 1300, so the company should be solid.

If this is to be unwound orderly, presumably the gold price would rise, and they may or may not be able to fullfill all contracts, anyway they will not earn much.

So the plan is to sell the company, which is a going concern with positive equity, maybe after a power sale of paper gold to depress the price even further, and wait for a point in time when all analysts are negative on the future value of gold. Then, using the proceeds of the sale to buy physical gold. The gold price would rise, and the paper gold company goes bankrupt, the paper gold investors (the last ones) loose. Paper gold market collapses (the great divorce), and the original owners of the paper gold company has a hefty stash of physical gold. (Then they can do the same again after some time).

cypherdoc?




that's a pretty hair brained scheme to pull off, even for a central bank or primary dealer.  certainly not for any smaller company to do reliably. what you propose is a company taking triple the risk to manipulate; first by trying to drive down the price thru naked shorting (when ultimately they believe the price is going to rise), selling a company that is loaded with derivatives,  then buying back depressed gold prices after they have been driven down (assuming the price will go back up).  wtf? why not just buy gold outright on dips to eliminate all that need for manipulation and risk?

and that all assumes they know ahead of time which way prices are supposed to go.
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July 26, 2014, 12:46:58 AM
 #9886

the gold price top @1923 back in Sept 2011 and the struggle to hold on since then is telling.  the collapse is near.

K
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July 26, 2014, 01:29:40 AM
 #9887

"that's a pretty hair brained scheme to pull off, even for a central bank or primary dealer.  certainly not for any smaller company to do reliably. what you propose is a company taking triple the risk to manipulate; first by trying to drive down the price thru naked shorting (when ultimately they believe the price is going to rise), selling a company that is loaded with derivatives,  then buying back depressed gold prices after they have been driven down (assuming the price will go back up).  wtf? why not just buy gold outright on dips to eliminate all that need for manipulation and risk?

and that all assumes they know ahead of time which way prices are supposed to go."

Agreed. I can't see anyone aside from the central and bullion banks having the money or balls to carry out such operations, and way too risky for any company with shareholders. Someone dumped $1B in one hit on wednesday and two days later the gold price was back to within a couple of dollars so you would need really deep pockets to make a dent let alone a killing. OTOH if you were just interested in profit, a single entity (Russian Oligarch, Oil sheik) could conceivably buy up a huge part of the silver market and then demand delivery of physical. The Hunt brothers pulled that trick in 1979(?) and sent the price of silver from $6 up to ~$50, which would probably equate to $250+ per ounce in today's dollars. That would also work very well in the BTC market if all you wanted was a short term pump and dump profit.
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July 26, 2014, 01:49:37 AM
 #9888

"that's a pretty hair brained scheme to pull off, even for a central bank or primary dealer.  certainly not for any smaller company to do reliably. what you propose is a company taking triple the risk to manipulate; first by trying to drive down the price thru naked shorting (when ultimately they believe the price is going to rise), selling a company that is loaded with derivatives,  then buying back depressed gold prices after they have been driven down (assuming the price will go back up).  wtf? why not just buy gold outright on dips to eliminate all that need for manipulation and risk?

and that all assumes they know ahead of time which way prices are supposed to go."

Agreed. I can't see anyone aside from the central and bullion banks having the money or balls to carry out such operations, and way too risky for any company with shareholders. Someone dumped $1B in one hit on wednesday and two days later the gold price was back to within a couple of dollars so you would need really deep pockets to make a dent let alone a killing. OTOH if you were just interested in profit, a single entity (Russian Oligarch, Oil sheik) could conceivably buy up a huge part of the silver market and then demand delivery of physical. The Hunt brothers pulled that trick in 1979(?) and sent the price of silver from $6 up to ~$50, which would probably equate to $250+ per ounce in today's dollars. That would also work very well in the BTC market if all you wanted was a short term pump and dump profit.

I agree it could be difficult to manipulate the prices before a sale, but remember, the gold naked shorting in itself depresses the price because it expands the supply of gold+paper gold.

Any suggestion on how the ones writing the paper gold can profit from it (more than the fees)?
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July 26, 2014, 02:11:48 AM
 #9889


Any suggestion on how the ones writing the paper gold can profit from it (more than the fees)?


Depends if their motive is for profit or to manipulate the price for other reasons. Probably both. The market is way too murky for me to understand how it works. There was a pretty good article by Bud Conrad last year that went through some of the details so I'll defer to him

http://www.caseyresearch.com/articles/physical-gold-vs-paper-gold-ultimate-disconnect
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July 26, 2014, 02:20:13 AM
 #9890

Interesting article by Phoenix research on ZH. How GDP is manipulated.

"One of the biggest games played by the bean counters in Washington in the US is the overstatement of GDP growth by understating inflation.

Consider this simple example. Let’s say that the US GDP grew by 10% last year. Now let’s say that inflation also grew by 10%. In this scenario, real inflation adjusted GDP growth was ZERO. However, announcing ZERO GDP growth is a major problem politically.

So what do the Feds do? They claim that inflation was just 8%, and BOOM you’ve got 2% GDP growth announced for a year in which real GDP growth was actually zero."

http://www.zerohedge.com/news/2014-07-25/based-non-massaged-data-us-back-recession

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July 26, 2014, 02:21:34 AM
 #9891

"that's a pretty hair brained scheme to pull off, even for a central bank or primary dealer.  certainly not for any smaller company to do reliably. what you propose is a company taking triple the risk to manipulate; first by trying to drive down the price thru naked shorting (when ultimately they believe the price is going to rise), selling a company that is loaded with derivatives,  then buying back depressed gold prices after they have been driven down (assuming the price will go back up).  wtf? why not just buy gold outright on dips to eliminate all that need for manipulation and risk?

and that all assumes they know ahead of time which way prices are supposed to go."

Agreed. I can't see anyone aside from the central and bullion banks having the money or balls to carry out such operations, and way too risky for any company with shareholders. Someone dumped $1B in one hit on wednesday and two days later the gold price was back to within a couple of dollars so you would need really deep pockets to make a dent let alone a killing. OTOH if you were just interested in profit, a single entity (Russian Oligarch, Oil sheik) could conceivably buy up a huge part of the silver market and then demand delivery of physical. The Hunt brothers pulled that trick in 1979(?) and sent the price of silver from $6 up to ~$50, which would probably equate to $250+ per ounce in today's dollars. That would also work very well in the BTC market if all you wanted was a short term pump and dump profit.

I agree it could be difficult to manipulate the prices before a sale, but remember, the gold naked shorting in itself depresses the price because it expands the supply of gold+paper gold.

Any suggestion on how the ones writing the paper gold can profit from it (more than the fees)?


the only way to reliably manipulate the gold price down would be for the Fed to sell down their physical stores.  given their refusal to submit to an audit, that is probably a likelihood.  doesn't mean i'd be bullish for a price rebound since that still depends on whether the gold bugs are right that gold will still be considered money going forward.  i don't think so given Bitcoin.

the other way is to naked short.  but that could only be done by primary dealers in cahoots with the crimex who would let them settle bad trades or demand for physical via forced paper settlements.  that's also being done to a degree i'd bet.  gold bugs scream that means eventually the price has to go to the moon, but again, i think the bull cycle is over for gold and Bitcoin has arisen as a Black Swan for gold.
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July 26, 2014, 04:51:00 AM
 #9892

How can those in the know get their claws on all the gold with a managed crash of the paper gold?

I don't know the details of the paper gold market, so please fill in the blanks (or say I am wrong). Basically, some company writes contracts to sell gold (naked), then to buy those contracts back in the future for the price of the gold at that future time. This in effect expands the gold in circulation and depresses the price of gold. The company earns on fees, plus they are able to use the proceeds of the sale to trade profitably on other assets in the mean time. At all times they supposedly have the resources to fullfill all the contracts. So the first contracts they sold at 1700, now they are 1300, so the company should be solid.

If this is to be unwound orderly, presumably the gold price would rise, and they may or may not be able to fullfill all contracts, anyway they will not earn much.

So the plan is to sell the company, which is a going concern with positive equity, maybe after a power sale of paper gold to depress the price even further, and wait for a point in time when all analysts are negative on the future value of gold. Then, using the proceeds of the sale to buy physical gold. The gold price would rise, and the paper gold company goes bankrupt, the paper gold investors (the last ones) loose. Paper gold market collapses (the great divorce), and the original owners of the paper gold company has a hefty stash of physical gold. (Then they can do the same again after some time).

cypherdoc?




JPM is the biggest underwriter for PM's and can issue unlimited amounts of contracts, as witnessed by times where there were big buy walls... the FED basically gives JPM unlimited credit to basically short any amount they desire to keep the price down (without making it too obvious) that is why GATA was established. Since they are the underwriter they should have the stock in hand, but it known that their inventory is depleted yet they continued to issue more contracts they cannot fulfill. It is the biggest hoax that ever existed and it is legal.. yet there are laws to put ppl behind jail for alot less and ruin their lives while these vultures suck the blood of the rest of us, this is why I love when gold comes back down, I know dimon wanted to crash the 1550 barrier so he can buy at 12xx-13xx... and thats why it never crashed below that price even though there was sell pressure.. but I'd love to see it go farther down so that these guys can go underwater... and real money to switch over to something like bitcoin where you can't write unlimited amounts of contracts based on what you don't have...
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July 26, 2014, 01:04:22 PM
 #9893

more allegations of price fixing related to "daily fixes" by primary dealers which, again, is why i'm leery of Second Markets model:

“The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

http://www.businessweek.com/news/2014-07-25/deutsche-bank-hsbc-accused-of-silver-fix-manipulation

also, Eric Sprott on price fixing:

The gains to be made by gaming the system are very substantial – we’re talking billions of dollars, and the fixing process appears to be a complete joke. When the Chairs of the committee to fix the price of gold in London got together, about four or five people knew where the price was going to be post-fixing. They were probably the same people doing all the trading around it, including the derivatives trading, which is an easier way to make money because it is a much bigger market.

http://sprottglobal.com/thoughts/articles/eric-sprott-gold-shortage-coming-data-shows/
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July 26, 2014, 02:12:20 PM
 #9894

Bitcoin dwarfs alts:

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July 26, 2014, 03:12:39 PM
 #9895

Obama is a joke:

If Nero fiddled while Rome burned, then Obama is dining out, golfing, and raising money while the world collapses.

http://www.telegraph.co.uk/news/worldnews/barackobama/10992654/Barack-Obama-has-already-checked-out-of-his-job.html
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July 26, 2014, 03:35:41 PM
 #9896

Obama is a joke:

If Nero fiddled while Rome burned, then Obama is dining out, golfing, and raising money while the world collapses.

http://www.telegraph.co.uk/news/worldnews/barackobama/10992654/Barack-Obama-has-already-checked-out-of-his-job.html

Haha, granted, Obama isn't perfect. But do you really think that he is such a bad president or neglecting everything, rather than that newspapers write dramatic stuff just to sell more copies?

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July 26, 2014, 03:45:43 PM
 #9897

Obama is a joke:

If Nero fiddled while Rome burned, then Obama is dining out, golfing, and raising money while the world collapses.

http://www.telegraph.co.uk/news/worldnews/barackobama/10992654/Barack-Obama-has-already-checked-out-of-his-job.html

Haha, granted, Obama isn't perfect. But do you really think that he is such a bad president or neglecting everything, rather than that newspapers write dramatic stuff just to sell more copies?

Good point. If only they all would "do nothing" and leave us alone. Smiley
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July 26, 2014, 03:51:33 PM
 #9898

Obama is a joke:

If Nero fiddled while Rome burned, then Obama is dining out, golfing, and raising money while the world collapses.

http://www.telegraph.co.uk/news/worldnews/barackobama/10992654/Barack-Obama-has-already-checked-out-of-his-job.html

Haha, granted, Obama isn't perfect. But do you really think that he is such a bad president or neglecting everything, rather than that newspapers write dramatic stuff just to sell more copies?

Good point. If only they all would "do nothing" and leave us alone. Smiley


Hahah, yes. Funny: If you ask people whether they like 'Obama Care' they deny it and when you then explain the 'Affordable Care Act' they are all in favor and say it's a good thing. The look on their faces is priceless when you then proceed to tell them it's the same very thing! HAhaha!

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July 26, 2014, 09:40:03 PM
 #9899

Required reading from Sean King:

http://wefivekingsblog.blogspot.co.uk/2014/07/here-are-my-official-comments-on-new.html
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July 26, 2014, 09:46:30 PM
 #9900

Obama is a joke:

If Nero fiddled while Rome burned, then Obama is dining out, golfing, and raising money while the world collapses.

http://www.telegraph.co.uk/news/worldnews/barackobama/10992654/Barack-Obama-has-already-checked-out-of-his-job.html

Haha, granted, Obama isn't perfect. But do you really think that he is such a bad president or neglecting everything, rather than that newspapers write dramatic stuff just to sell more copies?

Good point. If only they all would "do nothing" and leave us alone. Smiley


Hahah, yes. Funny: If you ask people whether they like 'Obama Care' they deny it and when you then explain the 'Affordable Care Act' they are all in favor and say it's a good thing. The look on their faces is priceless when you then proceed to tell them it's the same very thing! HAhaha!

Placing governments in charge of when people die always struck me as a bit ironic, considering they are also responsible for paying out the survivor benefits via social security.

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