Archive through June 05, 2006
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     captain_chaza
Member
Username: captain_chaza
Post Number: 1935
Registered: 02-2003Rating: N/A
Votes: 0
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| | Tuesday, May 23, 2006 - 07:35 pm: | 
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Ahoy Officer Red Robert (Bluey)
I will take that onboard as "Seconded" and go down below deck and write up the logs
Thankyou for you well respected support in these difficult seas!
Salute and Be well
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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captain_chaza
Member
Username: captain_chaza
Post Number: 1936
Registered: 02-2003Rating: N/A
Votes: 0
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| | Tuesday, May 23, 2006 - 08:14 pm: |
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Ahoy Officer Smallworld
Did you notice how ONE! Fund manager
(This was TOO BIG for Nuggets)
moved his funds from One portfolio to his other favoured Portfolio at a substantially different price than that at Market Price
TALK ABOUT CHEATS & PIRATES on the HIGH SEAS !!!!!!!!!!!
PS
I wouldn't join such a club even if they begged me
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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ingot54
Member
Username: ingot54
Post Number: 1495
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Tuesday, May 23, 2006 - 09:35 pm: |
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Hey! I'll be the one to say if something is too big for me!
"It's too big for Ingot54"
There!
No, Smallworld, that was my "Buy" order @ $27.39 
I don't get margin calls - I only trade with "set-and-forget" trades - my GSLO orders give me very peaceful sleeps.
"Always know where your exit is."
Sleep well tonight!
Keep Smiling
Trading style :CFD's predominantly long term.
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pasminco
Member
Username: pasminco
Post Number: 39
Registered: 02-2005
Rating: N/A
Votes: 0
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| | Wednesday, May 24, 2006 - 12:40 pm: |
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On your say-so Cap'n I have just bought 200,000 CFD's of BHP, on 2% margin.
Excuse me sir, but did you say you bought 200,000 at $27.39? That would be $5,478,000 would it not?
Flabagasted Pasminco
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ingot54
Member
Username: ingot54
Post Number: 1496
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Wednesday, May 24, 2006 - 04:33 pm: |
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Yes.
Keep Smiling
Trading style :CFD's predominantly long term.
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perler59
Member
Username: perler59
Post Number: 825
Registered: 09-2003
Rating: N/A
Votes: 0
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| | Wednesday, May 24, 2006 - 09:35 pm: |
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There ya go Rederob  Looks like oil may go a bit lower before the next bull run. Yes it is a bit cool here. My toes are turning a funny colour!
http://sttc.net.au/~stever
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rederob
Member
Username: rederob
Post Number: 1793
Registered: 10-2002Rating: N/A
Votes: 0
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| | Wednesday, May 24, 2006 - 11:08 pm: |
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perler
Many thanks for your illuminating charts.
It is apparent that the uptrend remains firmly intact.
However, it seems equally apparent that to get its next impulse north, oil probably needs a dip to around $65/bbl.
My suspicion is we will see a dip to $66 within the fortnight and if we are lucky enough to see $65 I will add to BPT.
At this stage I am tipping oil to launch a strong uptrend in the middle of June that will fail around the $85 mark: I don't see the first run from June hitting $90.
In 2007 I believe we will see oil tip the scales at $100 but the grind to that level could be quite drawn out.
An interesting feature of the gold:oil is that if it remains at or near 10:1, we are likely to also have $1000 gold in 2007.
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ingot54
Member
Username: ingot54
Post Number: 1498
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Wednesday, May 24, 2006 - 11:26 pm: |
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Pasminco - I can not let the sun set on a misconception.
Of course the Captain is correct - Ingot54 doesn't manage funds, and in any case, does not trade to manipulate others. I can truthfully testify that all of my past trading has been to the benefit of others - how unselfish is that!
So, while your maths was correct, my 200,000 CFD's were but a myth - a dream - and hopefully - a prophesy.
I do own 2300 BHP - topped up this morning @ $28.21 and with a Guaranteed Stop Loss Order.
"Always know where your exit is"
I, for one, will sleep peacefully tonight. 
Keep Smiling
Trading style :CFD's predominantly long term.
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captain_chaza
Member
Username: captain_chaza
Post Number: 1938
Registered: 02-2003Rating: N/A
Votes: 0
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| | Thursday, May 25, 2006 - 11:45 am: |
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Ahoy SCO Ingots
Sometimes She can be so kind to Brave sailors and give us a second chance
With Wind starting to fill into the sails of the Dow Jones Nasdaq and S&P500 a turn around tonite in Wall street can be expected
The Industrial Metals should then find favourable winds
Anyway, That's the Plan !
Bon Voyage and Gods' speed
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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ingot54
Member
Username: ingot54
Post Number: 1504
Registered: 05-2004
Rating: N/A
Votes: 0
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| | Thursday, May 25, 2006 - 02:21 pm: |
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Hope so Captain.
Today we are looking at the old shell trick - the 1-2-3 reversal.
The conspiratist in me says it is another ploy to shake out the weak hands, while lowering the PER's which, concurrently, should raise yields, if earnings are constant.
For us landlubbers, who seldom venture far beyond the breakers, it's understandable.
Meanwhile, let's hope you are right, and the 1-2-3 turns into a 1-2-3-4 reversal!
I wish I had the courage to sail, but I still need the life-jacket.
Keep Smiling
Trading style :CFD's predominantly long term.
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archer
Member
Username: archer
Post Number: 1536
Registered: 11-2002
Rating: N/A
Votes: 0
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| | Thursday, May 25, 2006 - 09:48 pm: |
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Be very careful folks-I can feel an event coming
----------------------------------------
"The spike in copper prices over recent weeks has left a group of banks and operators on the London Metal Exchange (LME) nursing vast losses, raising concerns about the stability of the commodities market. The banks have been caught out by a sudden widening in the gap between the price of three-month futures and that of long-term futures, for December 2010 or April 2011."
The Chairman of the London Metals Exchange (LME), Mr. Simon Heale, has unexpectedly announced his resignation effective by the end of the year. There may be a crisis brewing as the banks find their losses staggering. Large banks will survive the losses. Smaller banks – who knows?
Banks finance $3 trillion in LME trades each year by buying long term hedges from speculators (producers?) and selling short term futures. As futures fall and spot and futures markets diverge the bankers lose. The disparity has become large. Spot price for copper was $8,875 per tonne but futures contracts for April 2011 were priced at $3,778 per tonne on Friday.
David Threlkeld a veteran copper trader noted that the market has been,
"out of control" for months, allowing speculators to run roughshod over industrial producers and users. The LME has been seduced by hedge funds, [which have] pushed prices to levels unsupported by fundamentals. There's a vacuum below and the crash could set off a chain of margin calls running through the whole commodities sector. We've got a crisis on our hands and it is a lot bigger than copper,"
But once the stability of the banking system is in question one must be very, very cautious. Some experts suggest that copper could drop $1000 per tonne in a day. The derivatives markets forge linkages both across commodities and ultimately across financial (stock) markets. Derivatives are extraordinarily powerful market drivers. Bloomberg commentators are calling this a "big commodity sell-off." It is not a sell-off, it will be a "liquidation." It will also be a very interesting day around the world as the recent speculation is liquidated.
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robbo
Member
Username: robbo
Post Number: 38
Registered: 01-2003Rating: N/A
Votes: 0
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| | Friday, May 26, 2006 - 08:08 pm: |
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Dear Archer. Thank you very much for your informative posts on the the risk of liquidation in the copper markets. It may also apply to the gold/silver futures markets.
I am deeply disturbed about the likelihood (risk) of liquidation by Comex or any other commodity exchange because of the huge rise in gold and silver in recent months which is likely t to continue in the years ahead. It appears the gold/ silver shorts have not exited their positions to any great extent. What will happen if gold rises to $1500 per oz. or more and silver to $100per oz and the shorts have not the metal on which the derivative is based? What is the point of investing in futures in Gold and Silver ( including but not limited to ETF's) if the parties obliged to sell can’t deliver? We would all hope that the silver liquidation that occurred in 1980 and described in the article written by Antal Fekete on the Financial sense website. It may not occur again but that may be wishful thinking. However should it occur than there would be lot of innocent investors who have “insured?” against the risk of future inflation and fiat currency crisis ( whether long future holders or physical metal holders) who would be damaged and some quite badly( especially retirees and small investors who need all their capital to live on).
I think we need to make as many people we can aware of this HIGH LEVEL RISK. In risk management practice a low level likelihood of a risk occurring with severe/catastrophic consequences is classified as a high level risk and is to be treated( managed) accordingly. Even if such a liquidation in the gold/silver markets occurred i ( as happened in 1980 and described in the article below ) the consequences would , in my opinion, be much more severe today or in the future as the markets have increased substantially in the number of players and in value.
More importantly I believe that a crusade should commence to stop this high level risk from occurring, The Comex and other exchanges should have rules in place to prevent it happening. Persons of influence can play a key role in getting the exchanges to put in place safeguards which would minimize if not prevent such a risk occurring. As a suggestion short sellers should be obliged to prove that they have the gold/silver to sell ( a warehouse receipt or some other hard/safe security such as a charge or lien on future production?) On the other hand longs may need to put down a deposit( 10%?) to prove they are genuine buyers. I would think it unfair indeed if the buyers and holders of long future contracts or holders of the physical metal are damaged because the short sellers are unable to meet their contractual obligations and the exchanges which are supposed to be impartial side with the shorts and excuse them from their obligations (cash liquidations).
The risk highlighted in your post refers to copper and I have no doubt that should it occur in a big way it will have an impact on other commodity futures markets which in turn might spill over into the credit derivative market which is HUGE. In my opinion the authorities and regulators have critical responsibility to ensure that players in the futures markets have the ability to pay ( the longs) and to deliver the commodity/ financial instrument ( the shorts) on which the futures contract is based. In my view,the futures markets must be allowed to function as originally intended and there should be little (if any) risk of liquidation.
"MONETARY versus NON-MONETARY COMMODITIES
by Antal E. Fekete
Professor Emeritus, Memorial University of Newfoundland
May 25, 2006
Sorting out wheat from chaff?
In my last two articles (“Bull in Bear’s Skin?” and “Ultracrepidarian Musings”) I emphasized that gold and silver analysts make a blunder when they dismiss the monetary aspect of these metals. Some of them even brag that they deliberately ignore it lest their vision be blurred by considerations other than supply and demand which alone determine price. To my criticism that supply and demand in case of a monetary metal are indeterminate because of the huge speculative following as it switches its loyalty back and forth between the long and the short side of the market, they mumble something to the effect that they have a unique ability to sort out the wheat from the chaff. Such a claim is preposterous. Speculation is anything but predictable. It is downright scandalous that these analysts doggedly ignore the basis and its variation as an analytic tool. Is it sheer ignorance? Or do they perhaps have a hidden agenda, such as the desire to keep the public in the dark? – I can’t say which answer is worse for them.
A monetary commodity is one that can, in most applications, be substituted by a promise to deliver it. Once endorsed, the promise can be passed on to a third party. The promise itself may take a variety of forms from a warehouse certificate through standard futures or option contracts to an ad hoc forward sales or swaps agreement. On a strict application of this definition there are only two monetary commodities: the senior one is gold, the junior one is silver. Sorry to disappoint platinum and palladium addicts: theirs are not monetary metals
Armored cars in the streets of Geneva
The willingness to accept promise in lieu of the monetary metal itself evaporates if a commodity exchange goes into liquidation-only mode, meaning that the shorts are exempted from their obligation to deliver the monetary metal as contracted, and the longs can realize their gains only through cash settlement. A notorious example was the decision of COMEX in January 1980 to relieve what looked like an incipient corner in silver, by declaring that only liquidation orders for silver contracts would be entertained. As if by magic short squeeze disappeared. The longs were falling over themselves in trying to liquidate positions before their profits went up in smoke. This was a highly visible effect. But there was another, if you like even more highly visible effect, the import of which only one in a million could see. As luck would have it, I was given the opportunity to see it with my own eyes. It left a deep impression on my mind. I take this opportunity to share that experience with you.
In January, 1980, I happened to be in Geneva, Switzerland. I was visiting a private bank in the banking district. An unlikely number of banks were lining either side of the river Rhone. The office of my banker was on the first floor with a view of the river and several bridges spanning it. He looked out: “See those uniform trucks crossing the bridge underneath?” I said: “Yes, but I also see trucks crossing the river in the opposite direction through the next bridge. They are similar to those ugly armored vans of Brink’s which are ubiquitous in the streets of New York and other large American cities.” My banker continued: “That’s exactly what they are, making bank-to-bank deliveries. But you don’t often see two convoys simultaneously moving in both directions! After all, bankers have learned how to cross out liabilities at the clearing house a long time ago. It doesn’t take more than one convoy to settle the difference.” I innocently asked: “Actually what is it that those vans carry?” My man smiled: “I knew you would ask that. They carry silver.”
Bring home the bacon and the steak
It took some time before the message sank in. COMEX had just declared “liquidation-only” on its silver contract. This had the immediate effect around the world that banks, traditionally accepting each others’ promise to deliver, refused to honor them and went into cash-and-carry mode. The finely woven fabric of credit, at least as far as the silken metal was concerned, had been blown away in Genev and elsewhere by a local storm brewing in New York. The laconic pronouncement at COMEX paralyzed the normal workings of finance. In less time than the blink of an eye promises to deliver have become worthless. The bulk of trading instruments disappeared, leaving cash silver to do work cut out for a widely-based credit system. Exchanges do not often have recourse to such an extreme measure, because it dilutes the potency of their paper instruments. It has not been used for twenty-six years. Watch out for a dress-rehearsal.
The big unknown is how the crisis will be resolved when it happens again. In 1980 the longs’ knee-jerk reaction of “cut and run” resolved it quickly. Had they stayed the course, the outcome could have been different, with far-reaching implications for the health of the dollar. In that case the shorts might have had to do the cutting and running.
For a non-monetary commodity substitution of promises for the real thing is hardly possible. A live cattle futures contract cannot be slaughtered and served as steak at the dinner-table; a frozen pork belly contract cannot be thawed out, made into bacon, and served at the breakfast-table. You have to bring home the bacon to eat it. Paper bacon won’t do (although Keynesian economists are still working overtime to finish the grand design in alchemy of their master, to turn the stone into bread, thereby making GDP edible for humans.) A breakdown of the delivery mechanism for a non-monetary commodity is no big deal. It is a local affair barely noticed even by other exchanges trading the same commodity in default.
But for a monetary commodity, it is a different story. A breakdown cannot be localized. It triggers a domino-effect. Trading of the monetary commodity at all other exchanges will also come to a screeching halt. Banks go into cash-and-carry mode without delay. No statistics are available showing the volume of credit instruments in use involving a monetary metal but, in view of the derivatives, it must be enormous. All this credit freezes up at the same time, with incalculable consequences as far as world finance is concerned. It is true that derivatives directly linked to gold and silver form but a minor part of the total. Nevertheless, the entire derivatives Tower of Babel is in danger of toppling. Why? Because gold and silver, whether demonetizing governments like it or not, are still part of the foundation of credit. If the credit financing gold derivatives goes, so will soon the credit financing interest-rate derivatives. The domino-effect will knock down all the other pillars supporting the credit structure.
Big Lie Number One
The fact that monetary metals can readily be substituted by promises implies that the stocks-to-flows ratio is a high multiple. Monetary metals are the most hoardable among all the commodities. People want to hold the metal because it is the philosopher’s stone the possession of which allows them to “print their own money”. They don’t have to wait for Helicopter Ben and his air-drop.
For non-monetary commodities the ratio is a small fraction. The price-risk involved in hoarding them is unacceptably high. Supplies are hand-to-mouth. The phenomenon of interest, an exclusive feature of monetary metals, is explained by the observation that interest is the obstruction that checks the hoarding of a monetary metal. It is remarkable and important that this is true regardless whether the country is on a gold standard or not. It is none of the business of governments and central banks to set the rate of interest. Interest is intrinsi | | |
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