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Tuesday, July 11, 2017

Silver consipracy theory du jour


For your consideration:

Macro Tourist - there's no such thing as a bad tick.

Where the wharrgarbl is advanced that the fat finger yesterday in silver was an attack on the silver price by the JCB in an attempt to protect their bond yields, because of course it is.

Just typing this right now, the theory looks utterly fucking childish. Really? Japan is going to pursue a monetary policy strategy of selling silver calls into an illiquid market?

What does that accomplish? Silver is a fucking industrial metal. And its futures market is fuck, I dunno, must be something like 4 to 6 orders of magnitude smaller than the market for JGB or yen. A half a billion silver notional can be traded by some bro at a prop desk, and he'd definitely have the psychological makeup necessary to think it clever to pull that stunt at an empty book time of day; but a central bank?

You fucking serious?

He offers this as evidence:

Somehow, and I am not sure of the exact details, the Japanese government is using precious metals as part of their monetary policy. Now they might be doing it through the Postal Service Pension plan (GPIF) - after all, they have openly admitted to the BoJ buying JGBs from the plan, and the postal service pension investing in foreign stocks with the proceeds. There might be some sort of similar arrangement with precious metals. Who knows?

The fuck?

Gold doesn't matter to Japan. Japan's money supply is larger than the value of all the gold ever mined in the history of the world. Look it up.

Dude, you have no fucking clue about how monetary policy is conducted if you think Japan is going to go around cratering commodity prices to defend their bonds.


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