Icarus

Gold futures are now being traded on HKMEX. Good news for competition and free markets. Bad news for the CME and the dollar. When commodity futures are traded in RMB the dollar's reserve currency status is gone. A gift to the east from the CME. http://www.hkmerc.com/en/index.html

Suggesting that margin requirements do not affect price reveals gross incompetence. It is a well understood that raising margins decreases price and lower margins increases price. See, for example, the paper 'The role of margin requirements and haircuts in procyclicality' by David Longworth of the Bank of Canada. 'In the upswing, a reduction in haircuts or initial margins increases the maximum leverage available to a borrower even if other credit terms remain unchanged. As the leverage that can be effectively employed increases, additional purchases of collateral assets can be financed.... ...In a downturn, actions taken by individual market participants to protect themselves, such as calling for additional collateral, reducing the amount of credit extended to specific classes of counterparties or ceasing to accept certain types of collateral, can induce further contraction of the supply of credit through collateralised lending. This may lead leveraged investors to liquidate assets, which in turn may lower collateral values and intensify deleveraging pressure through further margin and collateral calls, or other responses by credit providers. In extremis, where calls for additional collateral cannot be met, forced liquidations or seizure of collateral by lenders can result, reinforcing and accelerating the adverse asset price dynamics.' http://www.bis.org/publ/cgfs36.pdf To even suggest that raising margin requirements does not affect price suggests gross incompetence at best. People who do not understand the relationship between margins and prices should not be setting margins at the CME. In which case they should step down. If they do understand the relationship between prices and margins they have knowingly commited fraud.

Over the years I've come to trust my own judgement over the advice of most so-called experts.But there are rare exceptions to this rule. Ted Butler's advice on silver is one such exception. His review of last weeks mess is here http://news.silverseek.com/SilverSeek/1304873055.php

That is a restricted, local metal exchange. I could not buy and sell gold there. 'At present the Chinese regulations stipulate that only the companies or organizations that are organized and registered on Mainland China or Mainland citizens are allowed to participate in the trading of local futures markets.' http://www.shfe.com.cn/docview/docview_410172833.htm The Hong Kong based exchange is aiming to provide a regional benchmark price. I will be able to buy and take delivery of metal. 'While gold futures trading on Asian exchanges has demonstrated significant growth, there is currently no contract that is or will likely become a regional benchmark contract for gold pricing. Without a regional benchmark, true price discovery for gold is either confined to the local in-country market or must depend on the European or North American markets. In-country markets generally restrict foreign participation and often subject it to adverse currency restrictions or tax treatment. Meanwhile, global benchmark pricing from the western hemisphere provides imperfect hedging for Asia’s trading community. HKMEx is well positioned to address the demand of Asia’s trading community for the establishment of a gold futures contract as the regional benchmark.' http://www.hkmerc.com/en/products/products_information/index.html

The 18th should be a big day for gold. The opening of the HKMEx allows gold price discovery to take place in Asia. It will be interesting to see how the comex enjoys a little competition. If they are less corrupt than comex, which means anything less than outright price fixing, they are likely to become the world's preferred trading venue. After recent events in the silver market I think most people would rather trade somewhere where they are less likely to see 5 margin hikes in two weeks. The PBOC might turn out to be less accomodating to JP Morgan than the fed. I shall be looking to the far east for price discovery from the 18th. Hopefully more commodities, such as silver, oil and wheat will be joining gold soon. http://www.hkmerc.com/en/index.html

The sooner the better. My living standards were cut to bits by the boom. I wasn't stupid enough to allow myself to take out loans I could never hope to repay. But those who were bid up prices with money they didn't have, preventing me from buying a nice home. Idiots were calculating the maximum monthly payment they could possibly make after they bought food and petrol and taking out the largest possible mortgage. Prices became ridiculous. The entire got economy turned into a house flipping ponzi scheme. And all though it I was forced out of the market. I kept my cash and waited for the inevitable crash. But no! Instead of a crash I got zero percent interest rates. My savings were and are being eroded, so that the foolish could keep their houses at my expense. Idiots get a free house, and I get to pay for it!

His misconception is here. 'here is no reason for investors to expect anything more from silver: Why would a metal -- a commodity with no yield -- accrete value?' Silver is a commodity, not a company. Its price responds to supply and demand. Increased demand from China, India et al industrialising pushes up the price of all industrial commodities, like silver and oil. Do you see the price of oil falling anytime soon? But silver is better than oil. Why? Because silver is a store of value. As money is printed increased investment demand pushes up the silver price.

If this were a top I'm pretty sure the CME wouldn't need to raise margin requirements twice per week.

Seeking Alpha's article 'Short Sellers Now Screaming About a Buy Side Silver Conspiracy' is one of the best articles on silver I've read in a long time. 'It was only a matter of time. Now the talk of silver price conspiracies has shifted from long buyers to those on the other side of the fence. On April 21st, the historically anti-precious metals editorial staff of the London Financial Times ran an article titled "Silver Surge Prompts Conspiracy Theorists". Meanwhile, order was reestablished among the short side conspirators once the COMEX trading floor opened on Monday morning.' http://seekingalpha.com/article/265381-short-sellers-now-screaming-about-a-buy-side-silver-conspiracy?v=1303940178

Jim Turk gave a really good explaination of backwardation here. When silver can't be borrowed traders cant fill contracts with borrowed silver and repay with cheaper future contracts. It's very bullish for silver.

The 'experts' have been calling a bubble since gold hit 400 dollars per ounce. Strange that they never noticed the biggest house price bubble in history. Taking into account risk and inflation I don't see anything I'd like to invest in. Take a look at the divident on stocks With inflation, measured using fiddled CPI stats, is four percent. Do I really want to risk my wealth investing in stocks during an inflationary depression? Gilt yields are also about four percent. So if inflation increases I would lose money by buying gilts. European govt bonds yields look good, but I doubt they can afford to pay. Where should I put my wealth to escape the gold bubble? Any suggestions?

Here's an article discussing the length of commodity bull markets by a GEIer - http://www.moneyweek.com/investments/commodities/money-monring-commodities-bull-market-10605 And a video by krassimir petrov - http://video.google.com/videoplay?docid=-4020393826410739752#

In the 20th century there were three commodity bull markets. These were from 1907 -1923, 1933 -1953 and from 1967 to 1982. All three lasted for 15 years or longer. I don't have a crb / dow chart easily to hand, but gold is a good proxy for commodity prices. This gold / dow chart shows the last century's commodity and stock bull markets. The current bear market in stocks and bull market in commodities began 1n 2000. History suggests there are about four years left to go. Interestingly several web forums have actually banned the discussion of commodities and metals during this huge commodity bull. The same sits also encourage people to buy stocks during a major bear market. Such sites have probably cheated a lot of people out of a lot of money.

It's almost magical, isn't it? Wealth is disappearing from savings, pensions, stocks, housing and the like and reappearing in your silver coins. They may still look and weigh the same but, without moving or changing form, they have somehow been imbued with a bunch of extra purchasing power. But the best is yet to come. All the crazy money printing means inflation will be rampant for years. And even small percentage increases are beginning to look good as a percentage of your original investment. A one dollar increase is ten percent! What's more some states are sensibly beginning to reintroduce sound money. Giordano Bruno wrote about that here 'Thirteen states currently have proposed measures which would reinstitute the long suppressed need for a precious metals standard. Utah is the furthest ahead in this battle, its House just recently passing a bill which would make gold and silver officially recognized as legal tender within its borders. All that remains is a signature from Utah's governor' http://www.silverbearcafe.com/private/03.11/return.html So sit back and enjoy. This bull market still has a fair bit of gas in the tank.

I must admit that these charts are very good. My general feeling about using charts to make investments is that the process falls somewhere between hepatoscopy and tea leaf reading. However, your success here does leave me quite impressed. In fact several people on this forum have seemed to successfully use charts to make predictions over the years . Some that go way beyond extrapolation and are actually quite extraordinary. Perhaps there is something to these lines joining seemingly random highs and lows. Yet I remain sceptical. Sure charts are good for identifying general trends. You can visually get a sense of rates of change and such. But I personally would be reluctant to make an investment based on a chart alone. When it comes to money there is no place for superstition.