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Silver Wheaton Corp. Message Board

  • chemaes44 chemaes44 Jan 5, 2009 5:49 PM Flag

    No Post about biggest story of day -$USD

    At or around 2:00pm I received 2 phone messages and one text message from friends asking me if I was watching CNBC.

    At or around 2:00pm Steve Liesman broke a story, that I think has to be the biggest story of the last two weeks. THERE ARE FAILURES TO DELIVER WITH THE TREASURIES, THIS IS BIG NEWS.

    I managed to get to a tv and heard Rick Santelli talking about it around 2:30.

    Here's why its big news: It's unbelievably dollar bearish. The treasuries move in tandem with the US dollar.

    The big advantage treasuries had over PM's was that while gold and silver have no yield, treasuries provide good stable long term yields. With the treasury yields recently dropping to zero, or negative nominal value taking inflation into consideration, the advantage treasuries had over PM's dissappeared. But now, wait, if one goes and buys treasuries, the folks you bought it from AREN'T GOING TO DELIVER IT...This is catastrophic for treasuries and the dollar, and super bullish for gold and silver.

    I tried to get to a dollar chart, because I thought it would have fallen off a cliff but it didn't, something else happened, something marvelous, the dollar appears intraday to decouple from the price action of silver and gold.

    At 4 am the dollar rose 1 point, but gold and silver bearly moved. This didn't catch my attention at first. Then at 7 am the dollar rose. At 9 am the dollar started to fall and silver fell with it, this is unusual.

    What's important is at 2:00pm when the news broke, I expected the dollar to fall, it didn't it went sideways. But what did happen was gold and silver WENT UP.

    Summary, what am I trying to say: None of the action in silver or gold today after 9 am, had the normal inverse relationships that have existed for the last 3 or 4 years.

    I want to watch this carefully for the rest of the week to see if it means anything.


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      An acquaintance who works for a small precious metals fund sent this to us today, asking if we had ever heard of anything like it.

      The short answer is no, but this is not a strong area of specific expertise, and we never attribute to a bad intent what we can attribute to sheer incompetency, especially when dealing with large organizations.

      But nevertheless it does bring into question the integrity of the Comex records and their contracts, and the condition of their audits and inventories. We would have a fit if someone did this to us after an online auction or a personal purchase transaction. Why should the Comex be allowed to sell what it does not have, and then dictate new terms after the fact?

      When you are promised specific bars with specific serial numbers of a specific size and weight one week, and they are not available the next when you actually affirm that you wish to receive them, that brings up the same kind of red flags that have been so notoriously ignored by regulatory agencies in other recent cases. Of course the Comex is no Bernie Madoff.

      But it does put a fresh emphasis on the old adage, "When in doubt, take it out."

      We accumulated 3 emini gold contracts on Comex for December delivery and we had been given serial numbers and weights last week for the 3 bars we were to receive.

      Today we are informed that Comex, which is now a division of NYSE Liffe, is invoking a rule in which they can deny delivery of individual mini bars (roughly 33 ounces) and issue you only a Warehouse Delivery Receipt (WDR) against your mini-contract unless you have 3 WDR's, and then they'll issue you a 100 oz. bar.

      Otherwise, if you have only 1 or 2 mini-contracts, you only own a WDR, which you sell by shorting a mini against it. If you own a WDR for a 100 oz., they encourage you to safekeep the gold at the Comex and hold a vault receipt.

      CLEARLY, the Comex has run out of the bars that were being delivered to holders of emini contracts. Our back-office guy told us that he's been doing Comex deliveries for 30 years and he's never seen anything like this, and he's never heard of this NYSE Liffe rule on the mini contract.

      Fortunately we have 3 WDR's and we will be getting delivery of a 100 oz. Comex gold bar.

      But this whole episode brings into the question the validity of the Comex gold inventory. More importantly, the Comex is now going to issue WDR's, which are paper.

      Are they becoming a "fractional" reserve depository, where they can issue several WDR's against the same bar of gold, knowing that some of those people will opt to keep storage on Comex and never require actual physical delivery?"

      • 3 Replies to postironage
      • The article FOLLOWING that one was of equal interest:

        In summary, JP Morgan's forecast of the commodity index rebalancing which will done around January 8-9th is:

        ...we expect the rebalancing to have the greatest impact in gold, COMEX copper, crude oil, gold, and live cattle. We estimate that the rebalancing of the two indices is expected to result in $877 million of selling in gold, $699 million of buying in COMEX copper, $528 million of selling in live cattle, and $523 million of buying in crude oil.

        We would expect the impact of the index rebalancing to be felt this week because of 'frontrunning' of the index changes by the big commodity trading desks. Indeed we may find that by the time the changes are realized, the impact may be significantly discounted.

      • Who's running the back room, Madoff? How many posts did we do in December where I challenged the reality of holding any physical anywhere to support the Comex or any of the ETF?

        You think Madoff is bad, what if the commodities and the Comex and the ETF are merely just in time brokers, allways in cash, only filling the meager orders, waiting for the day when, like Madoff, there is a run on the exchange.

        Looks like it is poking through this month , doesn't it?

        Where does the Comex go to get a bailout?

      • I heard the Comex is being renamed to the Memorial Bernie Madoff Exchange. I memory of the greatest gangster trader of all time, "so far".

    • I posed a question to Mr. Newscentral earlier
      but I value your opinion as well. I too noticed
      unexpected actions between Silver and SLW.Just
      as you posted it opened way low (both) and both
      rallied but during that same 2:00 hour (2:21)
      I think, that stock dropped 14 cents and silver
      continued up ,not greatly, but didnot cause the sell.Was this a Fund of some kind,Margin call
      or possibly something of greater importance??
      All the while the dollar held strong. Thanks

    • Found an article, it seems the fails to deliver have been happening for a while and todays news was more about legislation to penalized those who do not deliver.

      Normally 165 billion is average no delivery, now its at 865 billion.

      I'm not sure how this isn't making the market cringe all over, almost 1 trillion not being delivered and 5 trillion at peak.

      I can theorize, legislation is spooking the market straight, so that the dollar will behave more like it should because those pretending to have treasuries for sale and helping to stabilize the dollar, indirectly/directly, can not pretend to have treasuries for sale anymore.

      Maybe my bias is wanting to see something here, when nothing is there.

      we'll see

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