6-May-11 News -- Crash of silver may signal market plunge

[John]

6-May-11 News -- Crash of silver prices may signal further market plunge

Contagion may spread from silver to commodities to stocks

** 6-May-11 News -- Crash of silver prices may signal further market plunge
** http://www.generationaldynamics.com/cgi ... b#e110506b


** 6-May-11 World View -- Turkey braces for Syrian refugees
** http://www.generationaldynamics.com/cgi ... 06#e110506



Contents:
"Crash of silver prices may signal further market plunge"
"Danger to stock prices"


### World View
"Turkey braces for possible refugee influx from Syria"
"Republican terrorists in Northern Ireland raising money in U.S."
"Portugal's Jose Socrates apparently misrepresented bailout agreement"
"Turkey reverses position and calls for Libya's Gaddafi to step down"
"India considers hunting down terrorists on Pakistan's soil"
"Europeans consider resettling Roma Gypsies in Russia"
"France considers early troop withdrawal from Afghanistan"

[OLD1953]

The plunge in commodities may be a bit early, I expected that to happen later in the summer, so I'd not be surprised at a rebound. But they are horribly overpriced and those prices can't be related to reality in any way. Commodity prices can't possibly remain at these levels.

Resettlement for Roma, reminds me of the Jewish resettlement programs in the 30's. I hope this one turns out better in the end.

The MidEast is a mess, and nothing I see apart from major attitude change in the players will shift that mess.

[vincecate]

Contents:
"Crash of silver prices may signal further market plunge"
"Danger to stock prices"

I have expected interest rates to go up and that to signal the stock market plunge. So far interest rates, even long term, are staying low. I expected the dollar index to go down and it is at 3 year lows. I expected silver and commodities to go down with stock market crash, but did not think they would lead things down. In my dream scenario I make lots of money on S&P puts and am able to buy up lots of silver calls at really low prices. Silver prices are getting lower but S&P puts are not up all that much yet. It does seem like things are building to a climax in the next few months, but it has seemed so to me for awhile now.

One definition of hyperinflation is "where inflation rates are so high that they are reported in monthly or shorter periods". It is interesting to note that the world inflation rates are being reported for monthly, not yearly, periods. We are around 1% per month.

http://bpp.mit.edu/world-inflation-index/
http://www.businessspectator.com.au/bs. ... ent&src=mp

[OLD1953]

Again, that's price inflation, which has little to do with monetary inflation. And how do you do a "worldwide" price check anyhow? Are they prepared to defend the idea of converting prices to dollars instead of euros or kuwaiti dinar or whatever? Many exchange rates are government dictated and not reflective of reality in any way.

[mannfm11]

The only inflation we are getting is in speculation. The real markets for most commodities are pretty thin, which means speculators can drive up the prices, but they can't get out of the trades once the real sellers show up. I saw a write up about the structure of the oil markets. Oil has been in glut for over 2 years now and to drive the price up takes a lot of Wall Street collusion along with massive speculative action. The commercials showed up recently on the short side, which means it is put up or shut up time. When these markets turn, it is like a steam roller running over a mouse. Commercials in oil means they have the goods to deliver. There might be as much as an 8 day surplus above shortage in oil products in the US, an amount that used to crater the world market price. The refiners would just as soon let someone else store this stuff and buy it as they need it as to store it themselves and have their money tied up in it. To whom are they going to sell it to anyhow. Silver was even more absurd. It is total nonsense about it being much in the way of money. Anyone really stupid enough to believe that products like this go to the moon while the pay for the typical person stays about the same and that things like cars aren't going to go up as well? Who can carry enough silver to buy a car? Even at $50 an ounce, it would take 600 ounces to buy a $30,000 car. Real demand for silver isn't that high. It is a fabricated story. The other joke is the 16 to 1 silver/gold ratio to induce people to buy more of it. That was fiat, in that governments bought silver cheap and coined it at a profit. It was 75 cents an ounce or less when we went off the silver standard in the 1960's, despite the demand out there for coinage. Now the photo demand has disappeared and I wouldn't hold my breath to see governments making silver coins again for circulation. Gold, on the other hand, could come back as a means of settling international trade accounts. It would be realistic to tote 30 double eagles down to the car lot and buy a car. In the meantime, I wouldn't let government decree muddy the water of the commodity value of these metals.

Other commodities work the same way. Once the price gets high enough, the commercials just step up and find out how much of this stuff the hedge funds want dumped in their yards. Also, the farmers give up what they have as well. A farmer not selling out at these prices is flat stupid. I read they were holding out on wheat a few years ago in Oklahoma and got stuck with their crops at half the price. The guys that sold were looked at as geniuses. There is a hell of a lot of difference between speculation and business and business eventually takes control of these markets once the speculators have had their thrills. Generally the speculators end up selling what they bought back at half price and they end up selling twice what they bought. There were thousands totally wiped out.

One of the funnies I read over and over again was how JP Morgan was going to go broke being short silver. Morgan would most likely drop so much silver on the market that the longs couldn't get out. A herd of rabbits rarely ever pulls an elephant through a keyhole. If things got to tough on Morgan, I believe they would merely pull the credit lines from a couple of major hedge funds and trip the whole market. If you believe ADM and Cargill wouldn't let speculators have their entire storage at some price and start all over again, think again. These markets are going to be shot for some time. They imploded on themselves. Some will blame the exchanges for raising margins. Well, they probably saved some small guys from being crushed by a market that was sure to come down. There were thousands of tons of silverware and other scrap that came out of the closet when prices hit the ceiling.

Who has this money Bernanke supposedly printed? Someone who no longer has what they gave up for it. the actions of the Fed have probably stopped the money supply in the US from collapsing. I don't agree with what he has done because it is covering up the malfeasance of bankers and the insolvency in the system. But, it has restored reserves, as the system was operating almost totally on interbank credit, the credit between banks, as the reserves have been gone for years. The problem isn't reserves now, it is capital. That will show up next in the stock market, as the books of US corporations are contingent on continued debt expansion and accounting trickery. Where is the next dose going to come from, since housing is no longer capable of generating credit for the system? Are we going the path of China and build empty cities to keep it going?

[vincecate]

Who has this money Bernanke supposedly printed?

Bernanke is buying around $100 billion in US government bonds each month with newly created money and the US government is making about $100 billion in new bonds every month. The net result is that the government deficit is being funded by newly printed money. Yes, sometimes it is just on the computer so far and not even printed yet, so what.