Silver price discussion and analysis

[Billyb]

huge drop in silver!!

That is a huge drop. This is the problem with silver, too easily manipulated for my liking. Gold is dropping a lot too but not to the same extent. It could also be due to change in margin requirements. The long term view can never be changed by short term factors such as these.

 

[skyQuake]

That is a huge drop. This is the problem with silver, too easily manipulated for my liking. Gold is dropping a lot too but not to the same extent. It could also be due to change in margin requirements. The long term view can never be changed by short term factors such as these.

Why is a price drop always manipulated? Maybe its a big 'risk off' night?

 

[skc]

Why is a price drop always manipulated? Maybe its a big 'risk off' night?

If the price doesn't go where the retail guys want it to go it is always manipulated... But if it goes where they want then it's the fundamentals!

 

[TabJockey]

+1 against "manipulation" whinging. If an asset goes up fast you can expect it to fall just as fast when sentiment changes!

CCU is going to cop it hard today.

 

[Billyb]

Why is a price drop always manipulated? Maybe its a big 'risk off' night?

Did I say price drops are always manipulated? Oh, I'm sorry - oh wait, I didn't say that, you must be just putting words in my mouth.

You only need to look at what happened to silver in April/May and 1980 to begin to consider the possibility that the silver market is small and therefore it can be moved easily and large daily changes in silver is not abnormal. Gold, which is a much bigger market (and therefore harder to move prices), isn't behave like this. Whether the recent price action in silver was manipulation or not is debatable but it would be naive to think it hasn't been done before, and it would be even more naive to think large daily fluctuations of 7+% in silver price cant happen again, at least until things settle down a bit in the world.

Volume on the CME so far was not as massive as April/ May , that's good news IMO, suggests that a lot of the sellers have been washed out.

+1 against "manipulation" whinging. If an asset goes up fast you can expect it to fall just as fast when sentiment changes!

Thanks for your constructive 'input', I hope it made you feel good to label my post a whinge even though it wasn't. Perhaps your ego has been a bit too busy to notice that silver has not been going up fast all all since the recent crash.

 

[Mr Z]

It is the idea that because someone doesn't have the commodity now then they have no possibility of guaranteeing having it in the future. However, every bank in the world works on this principle (with the 'commodity' in question being money). The force that keeps people in check and not over-issuing is risk of default.

You use this as an argument for allowing an entity to short sell more of a commodity that they can possibly acquire? What risk of default? 99% of the market settles in cash, there is a 1% risk of being asked to deliver! Nobody that is serious goes to the Comex for metal, it is just not there!

If you understand how markets work (I mean the real dynamics of a market), you understand the leverage at play and you get that there is no real threat of having to preform in terms of the underlying item being traded... then if you cannot put those things together and work out that if there are no limits the market can be abused by the player with the deepest pockets THEN I CANNOT HELP YOU! Your unregulated market ideas only actually work where the players are trading a REAL market not a market in a derivative. A derivate product offers unnatural features because it is a manufactured item. Futures contracts come with a complete set of obligations, in a sense they are nothing without regulation, they are defined by the rules that the traders of them agree to, one of which is the total amount that they can trade. There is nothing natural about them unlike the natural market examples you use to prop up the "trade as much as you like" free market concept. In a natural market that works, in a derivative market it is insanity. You need to learn the very real differences and stop mixing it all up as the same thing... it isn't.

By your rules I should be able to short sell naked more stock than exists in a companies float, to the point that I can destroy its ability to raise capital and send it broke thus becoming a self fulfilling prophecy and winning the trade. Unlimited selling with no requirement to own.... all I have changed is the instrument. Sound workable? No... Need rules and regulation? Yes... Is controlled and regulated by the ASX? Yes.

The bottom line is where you are trading and artificial construct you need some limitations in place because you are not directly limited by the natural properties of a market. i.e. the laws of supply and demand. Silver is one such case where the Comex's link to supply and demand is so tenuous it can easily be abused. If it where that a mere 30% of the market resulted in a physical deal then it would be different, but as it stands anyone with deep pockets and a degree of financial sophistication and play this market like fiddle. Just read the case against JPM and you will gain and inkling as to how this is done.... No limits... LOL YEAH RIGHT, that will work LOL!

Futures are and have been limited for a long time, there is a reason for that even if you can't get you mind around it.

 

[tothemax6]

If the price doesn't go where the retail guys want it to go it is always manipulated... But if it goes where they want then it's the fundamentals!

Lol, I know, its a hoot.
When its going your way - you're a genius. When its going against you - its because of evil forces beyond your control.

Your unregulated market ideas only actually work where the players are trading a REAL market not a market in a derivative

Whatever, a derivative is just a contract. Anyone is free to write as many contracts as they want. If they breach a contract, the courts are there to deal with them.
To regulate every type of contract there is to ensure it meets some fuzzy regulators idea as to what is OK, is lunacy. It is not workable, it is not moral, and it creates its own problems.

 

[Mr Z]

Whatever, a derivative is just a contract.

Yeah, and the ones called futures have LIMITS! It is a part of the deal!!!!! In the contract so to speak. YIKES, it is like talking to cement.

Anyone is free to write as many contracts as they want.

Not if the contract says you can't! See the irony Spock?

If they breach a contract, the courts are there to deal with them.

Exceeding the position limits is breaching the contract and the courts are being asked to deal with it. That is real, it is happening now...unlike on fantasy island, or where ever it is you are!

To regulate every type of contract there is to ensure it meets some fuzzy regulators idea as to what is OK, is lunacy.

There is nothing fuzzy about position limits and they where bought in at the request of market participants and are easy to understand in structure and intent.

It is not workable, it is not moral, and it creates its own problems.

It is workable, it has worked for the best part of a century, it is moral and you can't cite one problem that position limits in futures causes that has not been dealt with.

Now try coming up with a coherent argument, all you seem to have is dogma!

 

[Mr Z]

Lol, I know, its a hoot. When its going your way - you're a genius. When its going against you - its because of evil forces beyond your control.

Bugs are mad for manipulation, every wiggle on the chart is down to it. Obviously that is not so, but that does not mean there are not periodic efforts to manage these markets. Reality lay in the middle, gold and silver have many powerful vested interests... to believe that it is a market free of manipulation is as naive as to ascribe every price move down to the 'cartel'. It is just not that simple.... years ago it was simpler and you could make good money trading it (I did) but these days it is getting messier and messier.

 

[ROE]

Funny how people complain about manipulation about stuff going down
but when things goes up they don't think otherwise?

it's called systematic/market risk, when you buy stock, silver,gold, houses or whatever you are are facing an unknown future risk of price movement.

no point whining about someone manipulating or insider trading or any of that stuff
that the risk you face when you part with your money hoping for higher return than bonds.

accept those risks and work to mitigate it you have better chance than bitching about someone manipulating the system.

My mitigation risk is I don't buy gold or silver because if **** happen and those stuff tanks and it sit there for decades and doesn't generate me an income...that risk is unacceptable, where I buy a house/stocks and it give me reasonable rent/dividend and house/stock price plummet for decades... I can live with the rent/dividend I get ...

 

[Mr Z]

You call sub bank rates on resi RE with no real prospect of growth for quite a number of year reasonable? Against gold that has compounded at 20% for ten years?

Oh jeez....

Manipulation is part and parcel of most markets and yeah we live with it, but what does go on in silver is quite probably criminal. If I where you I'd take the time to learn more about it before you pass comment.

 

[TabJockey]

Back down to $26. The silver chart reminds me of a pump and dump O&G stock, not a commodity in demand!

In economic theory you can expect commodity prices to move towards Marginal Cost. This is cost to produce + producers profit, which is not exactly set in stone, but for the MC of silver you can probably make a case for about $10 / oz.

Food for thought.

 

[Mr Z]

Junk food.

 

[TabJockey]

I do not agree with your broad brush analysis of the residential investment market Mr Z. Gold has no yield, it is a clear disadvantage. With property prices coming down (and I believe they will continue to come down) yields will continue to get better in property and that is a vehicle that can suit many. The average is pretty average at the moment but its all about picking out the opportunities in the market, which are always there.

More solid analysis, less e-thug trolling perhaps?

 

[Mr Z]

Resi property has as good as no yield, after costs you are less than inflation by a good margin. With growth looking challenged why would you do it? Gold has been compounding at 20%, who needs yield? You are better off in a high % cash account than a house and commercial KILLS resi for yield ATM. There is no sane reason to buy resi property at these yields and multiples... none at all! There are plenty of stocks with MUCH better grossed up dividend yields and far better capital growth prospects.

e-thug trolling? LOL dude....NO that really was junk food for thought! Not applicable to silver at all and shows no understanding of the market. Silver is not your average commodity for many reasons, it simply cannot be analyzed in such a simplistic fashion.

 

[tothemax6]

Yeah, and the ones called futures have LIMITS! It is a part of the deal!!!!! In the contract so to speak. YIKES, it is like talking to cement.

In your case even the cement would be shaking its head.

You yell 'LIMITS!' as though that is some kind of axiom, some kind of universal law beyond question, and a conclusion in itself. And I am called the dogmatic one. The limits themselves are manufactured by men in precisely the manner I have described - thugs telling free men what they can or cannot do by their own mutual free will. Crime is crime, regardless of whether one calls it 'regulation', 'limits', or whatever.

Not if the contract says you can't! See the irony Spock?

This was your rebuttal to "Anyone is free to write as many contracts as they want." If you can read this now and still consider your rebuttal sound, you need to self medicate: http://en.wikipedia.org/wiki/Cognitive_dissonance.
Either way you are entrenching (as indicated by your irrational use of the word 'LIMITS' as a conclusion in itself), refusing to follow logical process, and basically behaving irrationally.
Hence this 'debate' is pointless and done.

 

[Mr Z]

In your case even the cement would be shaking its head.

You yell 'LIMITS!' as though that is some kind of axiom, some kind of universal law beyond question, and a conclusion in itself. And I am called the dogmatic one. The limits themselves are manufactured by men in precisely the manner I have described - thugs telling free men what they can or cannot do by their own mutual free will. Crime is crime, regardless of whether one calls it 'regulation', 'limits', or whatever.

Oh jeeezzzzz.... the whole futures construct is ARTIFICIAL and you are carrying on about limiting them as a crime! They manufactured the limits for the manufactured contracts after long experience showed them that without limits they could easily be manipulated. These people are trading a contract and a part of the contract is a generous limit to the trading of the contract, and that is a CRIME ---> no dude it is a clause in a contract which you agree to by trading the contract. Now breaching the contract is a CRIME which is why they are being dragged through court over it, is that so hard to understand?

This was your rebuttal to "Anyone is free to write as many contracts as they want." If you can read this now and still consider your rebuttal sound, you need to self medicate: http://en.wikipedia.org/wiki/Cognitive_dissonance.
Either way you are entrenching (as indicated by your irrational use of the word 'LIMITS' as a conclusion in itself), refusing to follow logical process, and basically behaving irrationally.
Hence this 'debate' is pointless and done.

Oh dear... it is painful to me that you cannot see how limitless trading of futures can be abused. It clearly demonstrates that you have no idea how these markets really function. Yes it is a pointless debate... you are arguing with reality, you are arguing against a clearing house market design that was developed from long experience and has functioned well for around a century. You are effectively arguing that I should be able to naked short sell any stock into the ground because to limit my right to sell what I don't have is a CRIME!!!!!

Clearing house markets are regulated for good reason, they are designed to create a level playing field, the rules are there to enable the small players to compete with the large without fear of abuse. The ASX has rules and regulations to achieve just that, which is why I can't naked short sell a cash burning junior miner into the ground... a strategy guaranteed to work if no limitation existed!

Without GOOD regulation you simply cannot have and exchange traded, clearing house based instrument like options of futures. To remove regulation is to remove the structure with in which they trade and to remove the reason that they are trusted.

It is truly gobsmacking that you can't see that without some logical regulation these things can be misused. Cripes, and you give me market 101 examples using fish.... futures are not fish!!!! They offer much more sophistication and power than Haddock. I suggest you read the charges against JPM about how options and futures are combined and used to achieve a lower price and profit... all that is required is no limit to selling and deeper pockets than your opposition.

Have you ever traded futures? Do you actually get these markets... oh wait... no look who I am talking at --> Cognitive dissonance, double speak man! I think you swallowed all the coolaid!

 

[Logique]

They're saying est. 7 mill oz (200 tons) of silver ingots, at money value ~150 mill pounds sterling worth, in that newly discovered shipwreck off the west coast of Ireland, sunk by a U-boat.

Salvage attempt next year at depth nearly 5,000m. Co. is Odyssey Marine.

(Radio National this morning).

 

[Mr Z]

Ross Beaty: Silver Demand Defies Conventional Economic Logic (mp3)

 

[adamim1]

I was just doing some charts this afternoon. I've been reading a lot into trading using momentum divergence. Here is a nice chart showing the divergence trade indicator. Would of been a nice short.



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