Friday, December 4, 2009

What the Market REALLY Thinks About $ Weakness


Silver (SLV), April 2010 Open Interest:

CLICK TO ENLARGE
Posted by fdralloveragain at 10:56 AM

11 comments:

  1. newbie oneDecember 4, 2009 at 12:56 PM

    sorry, FDR, i dont understand what it is telling us .

    ReplyDelete
  2. fdralloveragainDecember 4, 2009 at 1:58 PM

    It shows that "the market" has a HUGE bet on silver plunging (= dollar strengthening even more).

    Contrary to all news.

    The STRIKE column is the anticipated silver price in dollars. I guaranty you the people holding the 15,000, 12,000, and 26,000 put contracts (minus mine of course :) are the same people who were pumping PM prices in the news.

    It been that lopsided for a while, too.

    ReplyDelete
  3. hettygreenDecember 4, 2009 at 2:10 PM

    FDR I read and listen occasionally to an old guy named Bob Hoye over at HoweSteet.com (probably should be renamed the yellowbrick road). He's been around forever, cut his teeth on the old corrupt VSE and seems to understand the gold market better than many of the hucksters I have read. His theory is that gold's price rise is making the mining business more profitable and that by next year (after the current "consolidation") everything will be coming up roses for the precious, from the lowliest of producers to the majors. He seems to envision a similar frenzied version of Nasdaq '99 for the gold market going forward, complete with numerous takeovers. If you read enough you will see he is actually arguing for the gold sector to reliquify the banking system at some point (1930s theoretical redux?) Not sure how this works in a world of insolvency. Anyway thought you might care to read some of what he has archived or have a listen and comment. Thanks. Here is the link: http://www.howestreet.com/

    ReplyDelete
  4. AnonymousDecember 4, 2009 at 2:10 PM

    The government is now going ahead with another $170 billion stimulus package. They will try anything to bring down the dollar, but it won't work. As the dollar strengthens it will bring down the Yen and Japan will not look to sell treasuries. The Chinese will continue to buy treasuries as the dollar appreciates, thus the bond market will remain well bid and the government can keep spending money and rolling over debts with low interest payments into infinity. What under this scenario does the equity market look like? I am short GLD and almost all equities. I have been removing cash from Citibank at a steady clip and piling it into a safe in my office. have not gone crazy but just 10k here and there for a rainy year as you say. The equity shorts have hurt the most as they seem to catch bid regardless of the news. DXY gets hit they rally, better jobs number higher DXY they rally as they say the economy is turning around. blah blah blah

    ReplyDelete
  5. newbie oneDecember 4, 2009 at 3:10 PM

    Ok , let's see if i get this: 82k contracts think/want a lower price than $18.50

    31k contracts think/want a higher price than $18.50. am i correct?

    ReplyDelete
  6. fdralloveragainDecember 4, 2009 at 3:34 PM

    "Ok , let's see if i get this: 82k contracts think/want a lower price than $18.50

    31k contracts think/want a higher price than $18.50. am i correct?"

    Yes. And weighted lower than a simple sum.

    ReplyDelete
  7. Russ WraithDecember 4, 2009 at 3:40 PM

    FDR

    Just happened to catch Rick Santelli say that he can not remember the last time he saw the dollar make a move like today, smiling ear to ear.

    Was this one of those eye watering moves you were talking about .or do you think this was a baby move up?

    ReplyDelete
  8. fdralloveragainDecember 4, 2009 at 3:43 PM

    "If you read enough you will see he is actually arguing for the gold sector to reliquify the banking system at some point "

    The gold market is tiny, it really can't liquidate anything.

    There is perhaps $5T in gold above ground. That's counting jewelry, fillings in teeth, and pins in computer chips. Maybe a trillion or two is openly tradable.

    Bank leverage is somewhere around $600T.

    ReplyDelete
  9. AnonymousDecember 4, 2009 at 4:21 PM

    the equity markets seemed to decouple today from the weak dollar trade. Is short GLD long Equities the best trade here?

    ReplyDelete
  10. fdralloveragainDecember 4, 2009 at 5:09 PM

    Paper gold and paper stocks have been "coupled" for 87 years. It'll take more than a day to drain the ocean of excess liquidity.

    ReplyDelete
  11. fdralloveragainDecember 4, 2009 at 9:57 PM

    "Was this one of those eye watering moves you were talking about .or do you think this was a baby move up?"

    Oh, just wait. The USD has a multi-year W3 cocked that is still embryonic.

    ReplyDelete

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