Tuesday, October 19, 2021

"The LME is done with the massive backwardation in copper and is taking action."

First up, the FT's natural resources editor:

And next, something we posted for the market newbies back in January: 

Never, ever forget where ultimate power lies....
....Some Thoughts on Futures, Exchanges and Real Power
Apropos of not much I found myself thinking of Bunker Hunt, the Chicago Board of Trade, the Comex and this little tale from 2010's "'Wheat prices ease after Russia predicts stable exports" and '...Speculators ‘Hunt What’s Moving'":
....Should prices see $8.50 the opportunities on the short side would almost be a lock.
I say almost because the serious money in commodities can pretty much get prices to where they want them, at least for short periods.

When the Billionaire Hunt brothers were attempting to corner the silver market in January 1980 the head of one of the world's largest grain traders said "Those boys don't know what deep pockets are".
The "commercials" had been shorting into the Hunt bros. buying and the grain trader was at the top of the "commercial" heap.

On January 21 the COMEX went "liquidation only".
On January 22 the CBOT went "liquidation only".
On Tuesday the 22nd silver closed at $34, down 27% from its close the previous Friday.
The Hunt's still had enormous paper profits but any attempt to book them would smash the markets even further.

Prices declined to $17 by March, down 66% from the January high and the Hunt's were receiving calls of $60 Million per day in variation margin. On March 27 the price dropped from $21.62 to $10.80 and one of their brokers, Bache was in violation of net capital requirements and another, Merrill Lynch was on the brink.
As the attorneys got involved over the next few years, oil prices headed south, destroying the value of Daddy's creation (and the brother's piggybank) Placid Oil.

Bunker Hunt filed for bankruptcy in September 1988 as did his brother and Placid.

At the time the grain trader said "Those boys don't know what deep pockets are" it is probable that the various branches of the Hunt families comprised the wealthiest "family" in America.

That's why I say "almost" a lock.

Then it was, "A Heads-Up To The Gamestop, AMC etc. Crowd: They Are Going to Change The Rules On You":

Market structure is the most important and least understood factor in the entire short-squeeze game.

And if you don't understand every dependent clause and every comma versus period in the rules and regs you are in for a shock.

That's what the homely little story in "Discord has shut down the /r/WallStreetBets server (GME)" is all about....

Which was followed the very next day with: 

Interactive Brokers Goes "Liquidation Only" On AMC, BB, EXPR, GME, and KOSS Options


Ah, and that reminds me of something else the CIA missed. Back in a moment.