From a wall street perspective

Fellow coin and metals collectors,
I had a few postings a while back, and recently injured my back. (Double herniated disc.) So I was out of commission for a while.

I am a Wall Streeter, a Hedgie, whatever you want to call it, I have been for 15 plus years. I am a qualitative thinker, I have traded everything from equities to commodities. For the past 6 years I have done precious metals etfs, options and futures for a major fund. Now that you know a little about me.......

I read this site, as I was new to coin collecting as a hobby, I just new what the intrinsic vauel of the silver or gold was and bought everything under melt for years. I am a believer in AG and AU as the ultimate currencies, they have been and always will be.

I learned much from all of you regarding coin collecting, so I figured I would give you all a little insight on the happenings in the PM and commodity world on a weekly basis, sometimes more if I get a round to it, I will figure this little forum can be about bullion investing and wall street topics, if you have aquestion and Im not super swamped I can try and tell you, I just had a son, so I have a lot of at home time on the weekends now.......

So here are my notes for the week:
Stocks rally on HOPE of QE from the US and Europe
Another ECB member says they want to lower rates in South Europe, but they have bought zero bonds
High tech and beta stock names are falling one by one Chipolte last week down 80.00, Pricleine this week down 115.00
US ten year auction went poorly on Thurs, Bonds and Tens were testing there lower end of the range
Gold and Silver option volatilty hits multi year lows this week gold 12 vol and silver 21
Gold and Silver test there recent range highs and are turned back 1631 in Dec Gold and 28.30 in sep silver
Platinum Gold spread trades at a HISTORIC ALL TIME LOW TODAY, PLATINUM was 231.00 under GOLD
Brent Oil traded up to 113.00 a barrel and 92.00 in euros, BRENTS ALL TIME HIGH IN EUROS IS 96.00, THIS MEANS THE EURO HAS NOTHING TO DO OIL THEY ARE MOVING IN OPPOSITE DIRECTIONS

GOLD HAS HELD ABOVE 1300 EUROS AGAIN CLOSED AROUND 1319.....ALL TIME HIGH IS 1360

one must look at the commodities in focus in the currencies that are the weakest, i was taught that a long time ago

Cash soybeans trade historic all time high in every major currency

Since early june grains are up roughly 40%
RBOB (gasoline up about 20%)
Natty gas up 20%
Gold is pretty flat Silver is down around 3 percent

ALTHOUGH THERE IS NO INFLATION.............(LOL).............THE UNITED NATIONS MADE A PLEA TODAY TO STOP SUBSIDIES TO AMERICAN FARMERS AND ETHANOL PRODUCERS AS THERE WILL SOON BE FOOD RIOTS IN LESS DEVELOPED COUNTRIESAS THESE PARABLOIN FOOD MOVES COME TO MARKET.

The CFTC front.......early this week a story surfaced that the Silver Manipulation investigation was dropped.......THAT IS 100% FALSE!!!!

Commissioner Chilton refuted that story and said the investigation is ongoing, adn they HAVE FOUND MANIPULATION IN THE GOLD AND SILVER MARKETS!!!!!! They will release ther full results by september

Thursday and Friday Gold and Silver futures volume was the lowest in over two years

FACT.......THE COMEX IS LOSING MARKET SHARE TO THE ETFS

PRECIOUS METALS OPTIONS............ with volatilities coming down dramatically large institutional players have been placing massive low risk high reward bets that Gold and Silver are going to move up dramatically by next April
Call spreads and Call butterflies were purchased in the 10's of thousand in the 1900 and above strike ranges in the GC futures and the GLD options

Silver less action, but lots of small call buyers since the notional prices are so low now...........

Metals ratios: Gold/Silver seems to be forming a base at the 59:1 area if it can hold this ratio, and silver flat price can maintain above 28.00 the next major levels in the ratio are 55:1, 52:1, and 45:1............ these silver prices based on 1620 gold would be 29.45, 31.15, and 36.00 even....................it is a very hairy trade, and not for the faint of heart or those light on financial or mental capital, easist way to expose oneslf to this is by buying slv upside calls they are very inexpensive and if you are wrong you lose waht you paid.

Gold/Platinum: The trade is broken, Gold should never trade over Platinum, but it has now for over 1 year, this is very simlar to when corn was over wheat for a year and brent has been over west tex for almost two years now.......i dont know how or when they correct, but when they do its sharp and takes no prisoners.......if you believe gold is priced fairly at 1620 then silver and platinum are very cheap

India: with there currency weakening so much this year, Gold has become very expensive in rupees, and physical demand is waning
China: they have take over the number one spot in ming and consumption, the amount they are mining in unbelievable and the govt is buying it all!!!!!!!
China: reported a horrible trade balance today and there gdp is growth is slowing quite drastically, if the food prices can remain tame, they will lower rates and reserve requirements very soon
China: has been stockpiling crude oil for the past few months as well as gold, but there copper and iron purchases have been about normal

I hope this is useful or helpful to at least one person out there if you like it let me know, if you dont, let me know as well

best wishes
pleasant weekend
sincerely
QSILVER007

 

Log in or Sign up to hide this ad.

If you really want to know, then I didn't find any of this useful. It's just a list of uncoordinated clippings that is mostly meaningless without any context relative to why we are here.

 

i found it useful. thanks

 

Thanks for taking the time to put together this view from trenches . I'm seeing some trends.
Looking forward to reading your next post.

Mike

 

Interesting about the CFTC. I wonder why we have two 180 degree opposite reports coming out? One that the investigation has been dropped, and another saying it has not.

 

Thank you qsilver, I look forward to hearing your perspective on these things, and find the majority of the post to be relevant, informative, and interesting. Congrats on your new addition as well.

 

My best guess is that they were testing the market reaction to see how much is priced in. JM2cents. Chilton has said on multiple occaisons that there has been nefarious activity in the silver market, although he thinks it is only leveraged 10 to 1 so he isn't exactly well informed as to the market he is regulating.

 

Thanks for the post qsilver007, lots of good info that appears to be lost on somebody here.

 

I liked the read myself.

 

FROM A WALL STREET PERSPECTIVE THURSDAY AUGUST 16TH UPDATE
Precious metals option volatilities made 5 years lows yesterday to pre 2007 subprime crisis levels

yesterday silver had an attack on the european open dropped 45 cents with nothing else really moving

brent crude priced in euros cleared 93 eu per barrell all time high is 96, yet no govt says there is any inflation

at 10:55 am today Platinum made a sharp 30 dollar move up on no news, report of violence and rioting at a mine in south afrcia have been happening all week, i guess th machines chose to cover there short on the re release of news today

for those who like gold at 1620 platinum although it has rallied 50 dollars today is still 187 dollar discount to gold which makes no sense many platinum mines are closing and hlating production in south africa rival unions are literally killing each other to work for lower wages, this trade may take a long time to iron out, but within 6 months it will be trading huge perium to gold again

the gold silver ratio is quietly forming a botton at the 58:1 area since us traders are in the dec forward which is 9 cents higher than te sep future which is 3 cents higher than cash the ratio is breaking thru its 50 day moving average of 57.7:1

Gold and Silver keep knocking on the door of the higher end of there ranges 1630 and 28.30 respectivly and each time are getting turned away

SLV and GLD investors are sittiing tight while the algo machines get shaken out every day

the longer silver can hold above 28, it will eventually get thru 28.30 and then make a run toward 29.40 and 30 ultimately, i have higher aspirations, but we must crawl before we walk

the mainstream media is really reporting no new news out of europe, so the trading machines contiune to buy everything accept gold and silver

10:55 am eastern today was a major deal in the precious metals sector as this was the first parabolic move up by any metal in a long time, a lot of algos got caught short adn in the thinly trade platinum market they must pay

as for my personal thought with the general stock market near the years high, and options vols near 5-6 year lows something bad will be announced very soon

we al know the us debt is a problem

high grain and energy prices are not going to help

europe is still in a major crisis, but the olympics side tracked everyone for a while

i dont know how the precious metals will react in a crisis sitaution i am hoping up, but be prepared for some of the stocks and commodities to get major haircuts in the next few days or weeks

unless we are going into the hyper inflation environment fron the tens of trillions created since 2008 and the global ZIRP rates time will tell

i will write again this weekend

 

Vanguard PM and Mining fund is down 32% in the last year. I think now is the time for me to buy some.

 

You can't compare two staples and use the same assumption with Gold and Platinum there usage is completely different when it comes to industrial vs consumer consumption. Platinum is an industrial metal and its price will flux based on industrial demand and problem is after 2008 demand has declined but production has not (couple that with alternatives emerging for Platinum). Same is true for silver throw that Silver Gold ratio out of the window it would worked in 1900s but know Silver consumption is mostly in industrial not for monetary purposes, if there is WW3 and we need Silver the ratio will drop to 10:1 for example.

 

qsilver, I found your commentary EXTREMELY useful, and will read ALL of your posts, top to bottom. Then I filter your remarks through my own experience. I only have to find one nugget to make a profitable trade, if it fills in the one of the major gap(s) in my own knowledge.

Keep it up! I don't bunt, I swing for the fences. There's some folks here who will wake up some fine morning to discover 10% of their wealth evaporated overnight, they think PM means noon to midnight.

 

Thanks again qsilver, please keep it up. Just going to add a couple cents here

Volume is absolutely in the doldrums right now (typically marks a top, but if QE kicks off in force it will defy), hedgies are waiting for some sign one way or the other for QE3 or LTRO3 (or some equivalent massive money printing bailout), but what they must not know is that QE is already underway by 2 methods. The first is known as 'repos' by the Fed which by definition is the same as QE, creating new money ($600 million for starters last week) for the purpose of buying treasuries and securities (this is why OP Twist was not QE3, because no new money was created). The second is via the Fed's dollar swap lines to the ECB. I read a report last night that ECB dollar swap line demand (Fed money) is currently at a 4 year high which is likely due to the bailout they've promised Spain (Bankia) to keep their bond market afloat.

In a crisis situation everything paper will be sold off to cover the leverage. IMO this will create initial drops across the board like we saw in 2008, but as soon as things begin to shake out it would be very bullish for metals which have no counter party risk, no default/haircut risk, no crony theft risk, are safe from inflation, and will have value whether or not the grand ponzi scheme survives.

 

I'll add to InfleXion's theory. When European stock markets finally tank, across the board (not just weak hands like Spain), there will be margin calls all over the place, and among other stores of value, gold will be sold to meet them. This will drive gold prices down during a BRIEF window of opportunity, maybe off 10-12% with a rapidly-declining volume, a week or two, immediately followed by the inflection point with a strong upward surge in all PMs, as holders try to flee European currencies. There will be far more buyers than sellers. Just my opinion.

If you watch the markets every day, it's too soon to buy gold. I am buying junk silver on down days, seems to be plenty available in central Ohio.

If you don't watch the markets every day, and can psychologically stand the jolt from a brief correction, then you can buy gold now.

By strict GAAP standards, all the European countries are now technically bankrupt, including Germany - just less so.

 

FROM A WALL STREET PERSEPECTIVE

With bonds still near all time highs yes they are off five point in the past tow weeks but thats becasue the machines are buying the stock market to new highs

as long as ecb and fed can keep making statements that the new wave algo traders believe ie "we will save the euro"
"we will do what ever it takes" "we will use stimulus when ready" as long as the machines keep buying the stock market on this there will never be an official qe

qe one and 2 were total flops, where all that was accomplished was getting the stock market back to where it was pre 2008 but causing massive surges in commosity prices

i cant predict the future, but 58:1 silver gold ratio is too low, it was our great govt that pegged it at 15:1 in the early years, thats where the hunt brothers pushed it back to in 1980 49 silver vs 850 gold
just last year it got to 31:1, what changed? machines got smoked long silver so they keep selling now, they got burned long at 49 they will get burnedshort at 28.

as for platinum, we can talk about all the practical use of gold vs platinum but in todays world fundamentals unfortunately do NOT matter. the ZA platinum story came out on reuters sunday nite you had 4 days to buy PL under 1400, never went againt you and voila they re break the story....stock market making new highs all the machines panic to cover short. PL went up 28.00 in 16 seconds???????????? im bullish it so im happy but let be realistic that not fundamentals

or the knight trading deabacle where they punched radioshack up 25% in 30 min, store is ok but cmon

no one noted that same day of the knight debacl silver was mysteriously hit for 75 cents right on the comex open and bottomed 4 min and 54 sec later

platinum dropped 38.00 in the exact same 4 min 54 sec check the tape if you like those arent fundamentals

these drops were noted as nervousness before the central banker meetings, wonder what would happen if the dow dropped 400 points in 4 min?????????????

i think we all in here are bullish metals and probaly have been since silver was in the single digits and PL was 400 bucks

yes with etf there are tons of people in these markets that have no idea why they are long or short

as i stated earlier the violence and rioting in ZA started sunday nite at the lonmin mine took 4 days for the machines to take not

a month ago inplats suspended ming for over two weeks pl dropped fifty dollars in that time frame, but back the "europe was a problem"

if you like precious here i especially silver and platinum, gold is kind of blah and you know or understand options use a structure that you think is profitable

if you think up buy a call spread in jan slv
if you are nervous about euope and you own some physical, buy some puts, either way with vol at a 6 year low it is very cheap insurance or a bet, and u can save yourself money or make a bunch

just my thought going to sleep kid sleeps i sleep

check in again this weekend

 

Thank you qsilver007. A lot of us here hold physical silver and gold. After all this is a coin forum.
I am assuming you do not own physical metals or you would be talking about them?

 

Great question?

 

Oh guys cmon, i trade for aliving, meaning i have to being to buy and sell on a daily basis.
I have been investing accumulating gold and silver since i was born part of my heritage (chinese) believe in giving gold or silver in red envelopes "laycee" each lunar new year back in the 70s and 80's i didnt know what they were but my "year of collection" "pandas""perth lunar coins" are significantly higher

when it comes to my persoanl investments if you must know when the nasdaw topped out in 2000 i sold out and this kid that lived across the hall from me was a numistmatist.....I said a what??????

he go me into rolls of unc canadian coins proof sets by the box
sold all my gold last year
still have quite a bit of silver
majority in foreign coin format as until last year u could buy it for well under "melt"

so to answer your question I do hold a good deal of physical metal
Silver, Platinum, small palladium and one last lucky gold coins

 

Thank you qsilver007. Please understand that question was not disrespectful or rude. Just curious as to your involvement in the physical side of things.