Drop, Dip, Swing, just different terms meaning price goes down but will come back up. I mentioned in an earlier post that today will be a pivotal day and that this week will be volatile, so I totally agree with your assessment that there will be swings, and some of those swings will be extreme. But the paper traders won't be able to keep this up for too long. Just got word yesterday but haven't received confirmation that a "systemically important" bank, a major player in Silver Futures (paper), failed to pay its Margin Call by 2am and was liquidated by the Futures Exchange at 2:47AM Eastern US Time.
Overnight, the Federal Reserve was forced to pump another $34 Billion into the banking system through Emergency Overnight Repo facility. This is on top of the $17B which they had to pump in 2 days ago. The bank in question is described as one of the largest players in the precious metals derivatives market. They apparently "blew past every risk limit, breached every covenant, and exhausted every line of credit".
They were massively short Silver; we are talking massive positions numbering in the hundreds-of-millions ounces. They had until Sunday morning to post $2.3 Billion in additional cash collateral. Every major bank on Wall Street looked at the bank's Derivatives Books and saw that the bank was "already dead", they just hadn't stopped moving yet. The fall of this "systemically important" bank will have immediate repercussions throughout the entire banking system.
At 2:47am, the bank notified the Exchange that they could NOT meet the $2.3 Billion margin call, so at 3:03am, the Exchange began forced liquidation of the Contracts. By 4:15am, the banks positions on the Exchange were fully closed. Sixteen minutes later, Federal Regulators seized the bank to prevent a disorderly unwind.
Again, haven't yet received confirmation on all this but it doesn't surprise me. And if there's one bank in trouble, there's probably more that will soon follow.
Damn, THAT was funny Pepper, laughing pretty hard right now.
