Gold Crashes Most in 30 Years (20%) … What Does It Really Mean?

[Selene]

Well. What a great discount sale on silver today…! I bought a few bullion coins this morning at my local bank/ScotiaMocatta. The line was long, some freaked gold holders were selling. But most of my fellow metals buyers were Asians, Indians, Europeans and savvy.

Buy when all others are selling, for sure.

Coupla good indicators of a panic washout: Kitco.com’s site was down, Scotia’s own quote system was slow, the retail/public line was long, instead of the usual three tellers there were eight on duty. Busy day. Good indicator of (quiet) panic. So always buy/sell against a panic. That’s for sure. There may be a very few ‘good days’ of further discounts – but this wave could bounce upward. Or if it collapses into the $12 range – I will toss my credentials overboard (and keep the bullion!). But I love a bargain.

I can’t give any kind of financial advice; you are on your own. Think for yourself. Formulate your own strategy. I’m happy with a good deal; haven’t bought bullion at a decent price in a few years. Loving this.

Cheers,

Selene

[gripreaper]

Posted by Tesseract (here)
Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

[Ron Mauer Sr]

If one has not already stocked up on dehydrated food, garden seeds, a water filter, soap and simple garden tools then precious metals is a foolish investment.

As the system collapse becomes more severe, when food riots start in the cities, does anyone expect food to be restocked on grocery store shelves?

When grocery store shelves are empty:

• How easy will it be for the PTB to manipulate the hungry to give up freedom for a false promise of security and prosperity?
• How many gold coins will it take to barter for one stale loaf of bread, if a loaf can be found?

These are the most important yet uncomfortable questions we should be asking.

In a planned and designed financial collapse, a debt free hobby farm may be the best investment of all. If there is any fiat currency remaining after that, then purchase precious metal to preserve whatever wealth is left.

We all need to deprogram, understand the tactics used to enslave us and start thinking out of the box.

I hope there will be a happy ending for all this and we experience a system of freedom (with our precious Bill Of Rights), well being and joy in this lifetime.

[Jeffrey]

Posted by gripreaper (here)

Posted by Tesseract (here)
Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

Is that a sign that the S&P 500 will drop in a similar fashion as the CBOE Volatility Index? It looks like it.

I'm new to this. Help me learn! Please?

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VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.

[...]

Despite their sophisticated composition, critics claim the predictive power of most volatility forecasting models is similar to that of plain-vanilla measures, such as simple past volatility. However, other works have countered that these critiques failed to correctly implement the more complicated models.

Source: http://en.wikipedia.org/wiki/VIX

[Tesseract]

Posted by gripreaper (here)

Posted by Tesseract (here)
Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

I don't quite understand your chart grip, VIX soared today as you would expect given a 2% loss on the S&P. I also own VIX June calls which greatly increased in value today after the index increased > 40%, however I have not closed my position yet. This week could have some more chaos to come.

[D-Day]

Posted by Vivek (here)
I'm not worried about making money on the metals. I'm counting on buying the silver cheaper and stocking up for the time when people would much rather have the silver to pay for goods and services than the dollar.

If/when TS(really)HTF people won't be trading with silver (or gold for that matter).

The most valuable commodities in a situation like that would be food, water, shelter, tools/equipment, guns (for hunting/protection), and other hunting/gathering/food growing implements.... as well as knowledge of how to use them.

In other words, gold and silver won't be worth a pinch of piss to anyone if things really do take a turn for the worst and the existing system/s start breaking down.

The smart people out there have (or are in the process of) setting themselves up to be self sufficient/reliant.

At the end of the day, whether the system actually breaks down or not, being able to take care of yourself and your family without needing anything from anybody else will be worth more than any amount of gold/silver one might have.

I personally don't think the current sytem/s will collapse any time soon... but I'd rather be prepared for the worst while hoping for the best than be caught off guard with only a sack full of gold/silver to get me through

p.s. I know you already understand all this vivek but your comment just seemed like a good sprinboard from which to make my point

[gripreaper]

I'm just saying, that the fear ran very high and I'd suspect most of the weak hands have been cleared out. The VIX, if you look at the weekly and view a ten year chart, rarely hits such extremes. Don't read too much into it.

Sure, it may take a few weeks to settle out and reach a support level, but I consider this a "blowoff" bottom, which would indicate a reversal in the longer term trend from down, to up. When it starts and how aggressive it will be is anybody's guess at this point.

I usually like to enter on the retest, since I don't like catching falling knives. There is no base, or any indication where that support is at this point.

But, I still think 24 on silver is a bargain, even though the next handle could be as low as 17.

[Jeffrey]

I hear ya D-Day.

All of that is of course important.

Silver and gold lubricate and facilitate trade. A person may have a certain commodity, but they are in need of something they don't have.

So, someone comes along with what that person needed. Yet, that someone doesn't want any commodity that the person is offering to trade.

Silver in this common instance is a useful tool. Silver can be traded because it can be used to purchase goods when one is lacking any particular item to barter.

Historically, it's a healthy hedge to protect against possibilities such as the one just mentioned.

[Mulder]

***duplicate post***

[Referee]

Posted by Tesseract (here)
Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Really with countries demanding their gold back and the US sending Tungsten. The IMF confiscating Cypruss gold....REALLY Gold is being suppressed.

[Mike Gorman]

Posted by Vivek (here)
I'm not worried about making money on the metals. I'm counting on buying the silver cheaper and stocking up for the time when people would much rather have the silver to pay for goods and services than the dollar.

I think you have something there-Silver is a sleeping giant-the demand for it for micro electronics alone will mean it reaches unprecedented highs -i am going to stock up on Silver during this lull also-smart lad.

[Jeffrey]

Posted by Vivek (here)

Posted by gripreaper (here)

Posted by Tesseract (here)
Be very careful about buying any metals right now - there may be a spike up sometime this week, but it will probably be short lived. There are a few ways to try and play this - if there is a slight rebound, going short may be the thing to do.

Did you see the VIX?

Is that a sign that the S&P 500 will drop in a similar fashion as the CBOE Volatility Index? It looks like it.

I'm new to this. Help me learn! Please?

----------

VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.

[...]

Despite their sophisticated composition, critics claim the predictive power of most volatility forecasting models is similar to that of plain-vanilla measures, such as simple past volatility. However, other works have countered that these critiques failed to correctly implement the more complicated models.

Source: http://en.wikipedia.org/wiki/VIX

Alright, well I understand what the VIX is now and how it works. Namely, thanks to the above excerpt from Wikipedia and the following videos ...

Source: https://youtube.com/watch?v=8TFK2hO3pM4

Source: https://youtube.com/watch?v=XMVV4tQ6pm4

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Equity Market

The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.

Source: http://www.investopedia.com/terms/e/equitymarket.asp

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Volatility

In other words, volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

Source: http://www.investopedia.com/terms/v/volatility.asp

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Margin Call

A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when your account value depresses to a value calculated by the broker's particular formula.

This is sometimes called a "fed call" or "maintenance call."

Source: http://www.investopedia.com/terms/m/margincall.asp

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Maintenance Margin Requirement

The required amount of collateral or equity needed to maintain a margin account with an exchange. The minimum must be met at all times, but the particular amount required can vary. In the case of two major U.S. indices, the New York Stock Exchange and Nasdaq, the maintenance margin is 25% of the value of the stocks in the margin account. An investor will face a margin call if unable to maintain this minimum level.

Source: http://www.investorwords.com/6572/ma...quirement.html

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For definitions of other terms and if anyone wants to understand different kinds of derivatives (in simpler terms), then head on over to this thread: https://projectavalon.net/forum4/show...ng-Derivatives

Spend an hour on the first several posts. You will come out of it more knowledgable; the more time you spend on it, the better you'll understand it.

[Jeffrey]

Okay, so apparently there are different types of VIX indexes. If you see the VIX term tied to some asset/commodity, that just means it's a volatility index for that particular asset/commodity (gold, oil, securities). Just thinking out loud here.

Here is an article from Zero Hedge released today.

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Gold's VIX Term Structure 'Most Inverted' Since Lehman

While there are obviously sellers in the gold market, there is also a dramatic spike in demand for protecting what is still being held (remember there is a buyer for every seller). Gold's short-term VIX (implied volatility) has spiked to 18 month highs above 29% but it is the steepness of the term-structure of volatility that shows just how much protection is being sought. The difference between the one-month volatility and one-year volatility is almost 10 vols - the highest level of inversion (short-term risk higher than long-term) since Lehman. It seems the market is extremely fearful of further volatility in the short-term but less concerned longer-term. What is also worrisome is that the last two times that Gold's VIX was this much higher than the S&P's VIX was June 2006 (when the first hedge funds started to implode from Subprime) and Sept 2008 (Lehman). It appears that gold volatility is signalling counterparty risk concerns once again.

Gold's short-term VIX is its highest relative to medium-term VIX since Lehman as protection is bid...



and it seems the last two times that goldprotection was in such big demand relative to stocks was when counterparty risk was rising once again...



Source: http://www.zerohedge.com/news/2013-0...nverted-lehman

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So, if I'm understanding this correctly ... when gold's short-term VIX deviates unusually high or low from the short-term S&P VIX, then that's a good indicator that a big default is on the horizon (or at least the market is concerned about counterparty risk) . Anybody care to clarify?

[Conchis]

I'm no expert in this area by any means Vivek, but I think a little clarity in what we're actually looking at will make this make a little more sense. The volatility index is tied to how far out or in the money an option is. So, wide swings in the actual price of the underlying stock (and we are talking paper gold here not physical gold) will drive the volatility index higher. We've had large swings in the price and so, by necessity the index is driven higher. Looking longer term, these short term swings don't have as much impact on the market down the road. There is a lot going on in the financial world right now, not the least of which is the whole EU situation, Japan teetering on the edge of the precipice and the US doing the herky jerky.

The price of gold traditionally has been tied to how well the stock market is doing. When the market is doing well, folks pull money out of gold and put it into the market (it's been doing well), when the market is doing poorly or there are huge inflationary risks, gold rises. A few posts back there somewhere I mentioned that high volatility is where money is made. You can make money in a falling market or a rising market if the market moves enough. It's the stable market that kills short termers. No movement, no money. I think there is a lot of manipulation going on in all of the markets.

I'd be interested in learning more about the relationship you are perceiving though. This may be predictive of Japan's default? That would be interesting.

[Selene]

Very good summary, Conchis. When the VIX goes outside of two sigma as it has here, all that generally means is "instability/stress detected in system ..."

"Something" is likely to give way, "somewhere." But an extreme VIX in itself can't tell you where that weak link actually lies.

We'll see, very possibly. Or else there's a whole lot of scurrying around and papering-over going on at the major players right now, not for the first time. It's like a smoke detector that's going off - where's the fire? Lots of candidates, unfortunately.

Cheers,

Selene

[Ron Mauer Sr]

What does the drop in price mean?

[Selene]

The Accumulation Zone is a really cute idea - but, regrettably, accumulation is nothing new nor unsupported by the historical data. The rich/smarter get richer... no matter what kind of tax system, social system, civilization, history etc you look at. The final result is always the same: 1% of the players end up with 99% of the assets. Every time. Every time. No matter how you structure the game, that's the results. The structure, of course, eventually collapses of its own weight and begins again - but that's also natural.

I've begun to think there is a kind of natural ecology involved in this. It's 'way 'way beyond probability. It's probably part and parcel of our DNA and human nature..

So here we are. The rich are getting richer...

Cheers,

Selene

[donk]

I agree, and often compare it to thermodynamics, which "natural ecology" tends to obey. We run into problems when the system is manipulated counter to those fundamental "laws".

Within the context of our understand, and therefore the models "economy" is based:

Money = energy

Energy cannot be created (or destroyed)

So in theory, the amount of extant money (a store of energy ie "future work") only represents the amount of energy (future work) we are actually capable of producing.

When you mess with that, the "laws" will eventually catch up (ie conservation of energy)


These things tend toward entropy (I feel inflation tends to be indicator of this, perhaps desperate rule changing acts are another example--but in any event, if it is not tightly managed--it will fly apart).

I think your comment selene speaks to the 2nd law--or perhaps how life (and so the abstract systems we create which mimic it) tends to violate it?

[Jeffrey]

The chatter is that the COMEX and LBMA will default soon. This prediction has been touted before. There are many sounding the alarm though. There was an article on Zero Hedge, Silver Doctors, and one other one I can't recall right now. Jim Willie also just did an interview where he said the same thing.

Apparently, this manipulation/naked shorting scheme of the silver market by the Fed and J.P. Morgan may soon unravel.



Oh, and I think I remember Clif High saying last Sunday that the data indicated something "severe" in the news later this week for gold and/or silver (it could have been the fall on Monday, in which case he nailed).

[WEAREONE]

Native Americans have a different way of living with the land. The 1% of traditional Native Americans and othe Native people does not really fit into the historical model you describe. I think it is possible for a future humanity that has a more balanced approach to living, we will have less stuff. But what we do have will be in many ways priceless, clean water, clean food, working to live, not working to accumulate.. TPTB do not want that system. Luckily I think our true D.N.A/true self longs for this way of living. I think a big enough collapse of the current sysytem is likley to occour soon, We have already fallen of the cliff, just havent landed yet. The current system is not sustainable, IMO the coming correction will start a whole new system.

Posted by Selene (here)
The Accumulation Zone is a really cute idea - but, regrettably, accumulation is nothing new nor unsupported by the historical data. The rich/smarter get richer... no matter what kind of tax system, social system, civilization, history etc you look at. The final result is always the same: 1% of the players end up with 99% of the assets. Every time. Every time. No matter how you structure the game, that's the results. The structure, of course, eventually collapses of its own weight and begins again - but that's also natural.

I've begun to think there is a kind of natural ecology involved in this. It's 'way 'way beyond probability. It's probably part and parcel of our DNA and human nature..

So here we are. The rich are getting richer...

Cheers,

Selene