01-07-2009, 05:08 PM
(This post was last modified: 16-07-2009, 02:33 PM by Peter Presland.)
My take -FWIW - as a guy who day trades the COMEX PM's complex for a living and whose modus operandi depends upon an account which is small enough not to attract attention together with an understanding of what TPTB (ie Fed CB's and friends) want WRT PM's - particularly Gold - prices. Also a good few years experience of how the market has operated historically, particularly WRT Open interest movements through the life of a contract for the various categories of trader and the spreads between current and forward month contracts. Those are 'the tools of the trade' so to speak.
Briefly TPTB are desperate to keep a cap on prices. Da Boyz (JPM, GS, DB, London Bullion Banks etc) know this. They understand that their status as 'Friends' of the Fed/CB's is dependant upon their assistance in this endeavour. On no account can they be seen to profit from an Upwards step change in the PM's trading ranges. My perception is that their task is becoming more and more difficult but, so long as they don't throw in the towel (which would be evidenced by a parabolic spike above $1,200 say) their modus operandi will not change much and nimble day-traders who assume it will continue (as I do) will continue to make a few bob from the crumbs.
The basis of their control is twofold:
1. Knowledge of the percentage of expiring contract long open interest that will demand delivery and an expectation that it will continue to run at historically miniscule levels (ie 2-5% max)
2. Collusion and privillaged inside information about such things as the CFTC's tolerance of market concentration and evidence of significant new players accumulating long positions and possibly intending to take delivery.
The info in Chris's post is evidence of the stress involved in TPTB maintaining control. It's common knowledge that Deutsche Bank was effectively rescued by the ECB at the March contract expiry. They were on the hook for big unexpected deliveries when roll-overs were expected. A default was avoided and the MSM hardly noticed. All the big COMEX Shorts are now acutely aware of being ambushed on unexpected delivery demands whilst the likes of GATA and its supporters agitate continuously for unambiguous evidence that the COMEX does actually hold sufficient physical to deliver ALL the short positions of its members. As always obfuscation is the name of the game.
We have now had 2 further contract expiries since a possible default was first mooted on the December 2008 contact. March was a close run thing but June was a bit of a damp squib.
The only way I can see a default occuring is if someone with sufficient resources (ie a BIG fund -Sovereign or otherwise or an Agent for a State entity) that doesn't care too much about upsetting Uncle Sam, the EU etc, succeeds in engineering a sufficiently large long position (ie in the several millions of ounces plus) without Da Boyz spotting that they intended taking delivery and then following though with a demand for delivery. The Hunt Brothers tried it with silver many years ago and look what happened to them !
Not saying it won't happen but a liitle guy can lose his shirt smartish by betting against the system, no matter how corrupt and self-serving it is. For sure all the bleating about manipulation etc will continue to be water off a ducks back. I mean does ANYONE seriously suggest that we have genuinely free markets in anything these days?
Briefly TPTB are desperate to keep a cap on prices. Da Boyz (JPM, GS, DB, London Bullion Banks etc) know this. They understand that their status as 'Friends' of the Fed/CB's is dependant upon their assistance in this endeavour. On no account can they be seen to profit from an Upwards step change in the PM's trading ranges. My perception is that their task is becoming more and more difficult but, so long as they don't throw in the towel (which would be evidenced by a parabolic spike above $1,200 say) their modus operandi will not change much and nimble day-traders who assume it will continue (as I do) will continue to make a few bob from the crumbs.
The basis of their control is twofold:
1. Knowledge of the percentage of expiring contract long open interest that will demand delivery and an expectation that it will continue to run at historically miniscule levels (ie 2-5% max)
2. Collusion and privillaged inside information about such things as the CFTC's tolerance of market concentration and evidence of significant new players accumulating long positions and possibly intending to take delivery.
The info in Chris's post is evidence of the stress involved in TPTB maintaining control. It's common knowledge that Deutsche Bank was effectively rescued by the ECB at the March contract expiry. They were on the hook for big unexpected deliveries when roll-overs were expected. A default was avoided and the MSM hardly noticed. All the big COMEX Shorts are now acutely aware of being ambushed on unexpected delivery demands whilst the likes of GATA and its supporters agitate continuously for unambiguous evidence that the COMEX does actually hold sufficient physical to deliver ALL the short positions of its members. As always obfuscation is the name of the game.
We have now had 2 further contract expiries since a possible default was first mooted on the December 2008 contact. March was a close run thing but June was a bit of a damp squib.
The only way I can see a default occuring is if someone with sufficient resources (ie a BIG fund -Sovereign or otherwise or an Agent for a State entity) that doesn't care too much about upsetting Uncle Sam, the EU etc, succeeds in engineering a sufficiently large long position (ie in the several millions of ounces plus) without Da Boyz spotting that they intended taking delivery and then following though with a demand for delivery. The Hunt Brothers tried it with silver many years ago and look what happened to them !
Not saying it won't happen but a liitle guy can lose his shirt smartish by betting against the system, no matter how corrupt and self-serving it is. For sure all the bleating about manipulation etc will continue to be water off a ducks back. I mean does ANYONE seriously suggest that we have genuinely free markets in anything these days?
Peter Presland
".....there is something far worse than Nazism, and that is the hubris of the Anglo-American fraternities, whose routine is to incite indigenous monsters to war, and steer the pandemonium to further their imperial aims"
Guido Preparata. Preface to 'Conjuring Hitler'[size=12][size=12]
"Never believe anything until it has been officially denied"
Claud Cockburn
[/SIZE][/SIZE]
".....there is something far worse than Nazism, and that is the hubris of the Anglo-American fraternities, whose routine is to incite indigenous monsters to war, and steer the pandemonium to further their imperial aims"
Guido Preparata. Preface to 'Conjuring Hitler'[size=12][size=12]
"Never believe anything until it has been officially denied"
Claud Cockburn
[/SIZE][/SIZE]