WARNING

Wednesday, September 7, 2011 at 9:13 am

I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.

We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today. Check out this chart that posted in the overnight comments of the previous thread (thanks, pmahler!):

large_screen_2011-09-06_at_9.47.07_pm.jpg

Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity.

This all wreaks of malicious manipulation. If you are trading, be prepared for anything. If looking to buy, throw all of the charts I gave you yesterday out the window and wait for at least 1725 in gold, maybe even a gap-filling 1650. Since silver is not the object of attack, it shouldn't drop as far but it looks almost certain to drop to the bottom of the channel we've been following, near $40.

Also, it appears likely that we are entering another 4-6 day downshaft in the Continuous Commodity Index. You'll recall we found this pattern last month and it was one of the factors that allowed me to correctly forecast $44 silver by Labor Day. I asked my pal Trader Dan to send me an updated chart and he obliged. Thanks, Dan!

Count the days between moves. Peak early April. Nine day decline. Peak early May. 9 days down. Peak mid-June. 12 days down. Peak early August. 4 days down. Peak early September. Next decline takes it back down to 620-630?

By the way, I just looked at Dan's site. Looks like he agrees with me. I suggest you read this now:

http://traderdannorcini.blogspot.com/2011/09/central-banks-waging-war-on-gold-at.html

So, look, you've been warned. If you're not trading, just sit back and enjoy the free fireworks show. Maybe use the next central bank raid to accumulate some more physical. If you are trading, my advice is to avoid being a hero. Do not try to get cute and "catch the knife". The next few days are going to be extremely volatile. Save your powder for after the dust has settled, when we can all see a bit more clearly.

12:00 noon EDT UPDATE:

Turdite "Zagio" just posted this chart in the comments of this post. It perfectly explains why anyone trying to "catch the knife" should hold off for a while longer.

If you believe as I do that this current beatdown in gold is being engineered by the SNB, then why would you think they would rest before pushing gold all the way back down to the level it was before the devaluation announcement? That level is around 1500 francs/ounce. Additionally, this is a level that would correspond to my potential target buying point of somewhere between 1700 and 1750. It may take till tomorrow or Friday but confidence is high that gold is headed there.

Patience is warranted here. Also, it's now noon EDT which is the hour when follow-through selling usually materializes on the Comex. I for one, am not buying the dip....yet. TF

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Chinese Margins

Submitted by Turd Ferguson on September 7, 2011 - 9:15am.

MODERATOR

I wanted to add this, too: I guess we now know why Shanghai felt it necessary to announce the "temporary" rise margins over the weekend. Do you think they had some foreknowledge of the SNB actions?

p.s. FIRST!

Volatility - Spidy sense in maximum alert!

Submitted by speconomist on September 7, 2011 - 9:18am.

Volatility is here to stay, if you trade be really careful if you try to catch the knife falling. This message has been sponsored by Captain Obvious.

Also, let me quote myself from some days ago:

I think that a final smash-down before the official announcement of OperationTwist2/QEwhatever is something possible and actually makes quite a lot of sense applying some empathy. Anyone else finds it logical or is it completely absurd?

May the wisdom of Santa be with you all.

@TurdleGG

I've read your post in the previous blogpost where you mentioned that you trade too, may I ask how? Futures, CFDs, other?

Thanks

Submitted by Bro D on September 7, 2011 - 9:20am.

for a word to the wise early this morning!

In the face of this raid

Submitted by Tom L on September 7, 2011 - 9:23am.

DrC and Oil are both up. This reinforces the thesis that O-Bomb-Ya has a new plan to fix the economy and there is no need to be fearful. Look! Gold dropped $60 last night. Copper's up and Oil's up. The Smart Money likes this new idea of the President's.

I could write CNBC's commentary while sleeping in the bottom of a slaughterhouse septic tank and dreaming of gorgonzola cheese. (H/T to an old Dennis Miller routine).

Silly crap. We all know this is a raid to cover their debasement schemes.

Ta,

Time compression

Submitted by Morpheus on September 7, 2011 - 9:24am.

The time compression of events is getting down right scary!

Yeah thanks for keeping us

Submitted by Over55 on September 7, 2011 - 9:25am.

Yeah thanks for keeping us updated TF.

It one of them things, Its like when is a good time to buy or do you think it will go down a little more. Thats the question hahaha

No matter what we are heading up, without a doubt IMHO

Too much going on for it not too.

http://www.dailyjobcuts.com

And the war continues...

Submitted by GoldMania3000 on September 7, 2011 - 9:25am.

Just reinforces to me that cash is good to have on hand. If there's another stock down..i guess these folks will also bring gold with it too. Is there any justice...let the story continue

I was hearing 4000 contracts...

Submitted by Colonel Angus on September 7, 2011 - 9:25am.

...out of Asia this morning, but now it is over 6000. Maybe they caught some stops along the way.

I've used two words all morning, "Fucking bastards." Now I want to add "manipulating" in there somehow.

Seems like the Central Banks want to tell us both the price of money (thanks SNB) and now the price of everything else in their phony money. They are the neighborhood bullies. It will work for a short while, but it won't work indefinitely. Just wish I would have waited a couple weeks to finish going all in on the physical. In the long run, all will be well. For the short term, I'm glad I can look at all the PMs in the vault. Should be fun to play around with the brokerage account at least.

a tip for the turd

Submitted by Eric Original on September 7, 2011 - 9:27am.

I seldom hat tip the Turd. It is pretty much implied throughout the blog. But when TF said "FIRST", I had to tip that! LOL I guess we know where TF stands on that malarky.

Re:These are 61.8% retracements

Submitted by Michael222 on September 7, 2011 - 9:28am.

Well, seems Patrick Wright was right in his post (go check it http://www.tfmetalsreport.com/blog/2320/three-great-zh-reads?page=4 )

No troll to me. I wish I had listened at the moment he had shared it. Then I had more fiat to buy the real stuff.

Thanks Patrick. I hope you keep us updated.

Watch Oil

Submitted by Tom L on September 7, 2011 - 9:30am.

for a break of $90-$91. If that happens they won't be able to keep Gold down for long. $87.40 right now. But it's been really volatile as well. If they push this, 'we have a plan' MOPE then Oil will catch a bid and move through the 50% RT line shown on the chart below:

http://www.flickr.com/photos/29681681@N06/6123361001/

That would be a big signal that something's changed.

Ta,

aint no way

Submitted by atlee on September 7, 2011 - 9:30am.

you are going to see 1625 in gold. Gosh a little rain falls and we now have the vision to see 1625? Nothing has changed except the management of perception. Selling gold futures to support currency manipulation is the dumbest thing in a currency war race to the bottom. Gold only goes up in that scenario. Intervention doesn't work in the long run. It only attempts to curb perception and delay the inevitable. Cant stop market forces. This should all be confirmation to you that we are so right and they are presenting the buying opportunities we all hoped for. BTFD. You may go underwater for a while but you will make a ton. Never throw away the charts no matter how disgusted you become with things not performing within your time frame. Can't build a house without saw.

Thanks TF!

Submitted by Vincent on September 7, 2011 - 9:34am.

Thanks TF!

I hear ya

Submitted by Turd Ferguson on September 7, 2011 - 9:34am.

MODERATOR

I hear ya, Atlee. I didn't say 1625, though.

Do not be surprised, however, if in a real beatdown, gold falls back to the lows of two weeks ago, near 1725. Why?

First, that works well technically as it fits gold into a range between 1700 and 1900. Second and more importantly, the SNB deval was 10%. If their goal is to clip 10% off of the gold price you get.....about 1725. Just sayin.

Response to: aint no way

Thanks Turd- I've been

Submitted by unknownrider on September 7, 2011 - 9:35am.

Thanks Turd-

I've been waiting to buy my first physical and now think I'll wait. Never wanted to buy at the all time high anyway. Anybody read M.Armstrong's comments on this?

Chinese Margins = Could it be

Submitted by 1Dae on September 7, 2011 - 9:35am.

Chinese Margins = Could it be advice behind the scene given by Rothchild ?

HUI Gap Filled.

Submitted by Tom L on September 7, 2011 - 9:37am.

Now it's back to 609. The miners don't believe, at this point, the haircut in gold was warranted. Little to no technical damage done on my board so far. If there isn't a washout down to the 590's that would be an amazingly bullish indicator for the HUI.

Ta,

Any trader doing ANYTHING but

Submitted by tmosley on September 7, 2011 - 9:38am.

Any trader doing ANYTHING but buying volatility at this point is totally nuts. Also, any trader buying volatility is also nuts. Only sane thing to do is buy physical gold and silver on this dip (wait a few days for the bottom to come in, look to the last silver raid for an example, but compress the time frame by perhaps 1/3rd).

If I were inclined to trade paper, I would be buying far out of the money puts and calls on gold and silver. The price on those is likely to increase as a renewed wave of volatility sweeps over the PM markets, as they decide whether price should be dictated by paper supply and demand, or physical supply and demand. I suspect they will eventually choose the former, and prices will trend towards zero, but that could be a ways out, so I would refrain from shorting paper vehicles. As for me, the only sane choice seems to be to buy physical, so that is what I have done, and that is what I would encourage everyone else to do. Only trade paper with your Vegas money. I personally would rather go to Vegas. That way they at least comp me a nice room and some buffets ;)

Thanks Turd

Submitted by JimmyTheHand on September 7, 2011 - 9:38am.

The funny/sad thing is that the Chinese are laughing all the way to their gold lined vaults on these take downs. Look at those spikes back up from the first raid! Crazy...

I am wondering if we will get this kind of crazy gold dumping by the banks until Bernanke rolls out QE3? Like speconimist mentioned, it does seem rather logical to smash down Gold and Silver a couple times until then as it helps complete the painted picture. Looks like Bernanke and his central banking buddy's have a paint by numbers and they are filling it in as best as the can.

Anyways, I'm going on vacation in Cozumel next week and I can't wait to get away from it all for a bit!

Thanks for the update Turd!

P.S. Hahah... posting "First" Turd, man I laughed my butt off when I saw that!!!

Thanks

Submitted by JP McManus on September 7, 2011 - 9:42am.

Thanks for the update Turd!

Keep A Sound Perspective

Submitted by ScottJ on September 7, 2011 - 9:43am.

There is little more than a year, if not months left on this horrid keynesian system. The paper game will go where the paper game wants to go, don't let yourself get too caught up in it. We know there is manipulation and inherit evilness in the markets, don't be caught surprised!

Time is more precious than the metals that we discuss.

Keep honing in on preparations of all sorts, for one day not to far away, the comforts of today will be gone, as that is what the EE are really protecting, the dollar standard.

Tmos, thanks.

Submitted by Turd Ferguson on September 7, 2011 - 9:43am.

MODERATOR

Thanks for the reminder as I failed to mention this earlier.

Anyone buying options in this market MUST pay up and buy time. December 11 is probably OK but you might even consider going out to Feb12 in gold.

Response to: Any trader doing ANYTHING but

Scott, thanks.

Submitted by Turd Ferguson on September 7, 2011 - 9:44am.

MODERATOR

Keepin it real.

Response to: Keep A Sound Perspective

Trolls are hitting the blog harder and harder

Submitted by cris on September 7, 2011 - 9:45am.

"Michael222" joins the blog 15 minutes ago and leaves a message that "Patrick Wright" gave us all good advice that we are foolish not to have taken. Hmmmmmmm.........

Thanks for the advice (sic).

BTW, this isn't a retracement to a 61.8% Finonacci level. This is a BLATANT attempt at market manipulation by very nervous and increasingly desperate bankers who are attempting to "paint the tape".

Turbulent times con't

Submitted by margaritatime on September 7, 2011 - 9:45am.

Like I said before, there is going to be an effort to discredit PMs as a safe haven. We are entering the waters that will test people's will to hold through the storm. No matter what happens going forward do not relinquish what you have. It isn't going to make sense to TA's, it never does when unfundos are thrown out there. HOLD, and buy these dips if you have powder, the Chinese sure as hell will be.

Added: What would be interesting to see is a consorted effort in Asia to hold on buying (unlikely, but it has happened before). That is the only case I can see a correction to the 16 range. If you couple that with a gaining POSX - perception is everything. Keep in mind that a margin increase does not just happen when a rise in price happens, I believe the SPAN algos can be triggered on any volatility. In other words, I think it is a round in the chamber, and not all of these factors are going to occur in a single day.. What a better way to taint perception right? After all, it's all about perception and confidence.

Monkey time

Submitted by tpbeta on September 7, 2011 - 9:45am.

In the immortal words of Hugh Hendry, 'only monkeys pick bottoms'. Well I'm a monkey this week, and I'm counting on the Turd to find the bottom of this one for us. Go TF.

repost from the old thread

Submitted by Number 47 on September 7, 2011 - 9:46am.

A popular inflation beater in the UK is shelved (again) due to demand. Just where are people supposed to put their money these days?

http://www.bbc.co.uk/news/business-14818516

I'd also like to say thanks for the replies on my allocated storage problem, I slept on it and am still not sure what to do. I'm taking delivery of the gold I have there as there is no VAT, the silver I need to consider the options some more.

0%

Submitted by OC15 on September 7, 2011 - 9:47am.

Thanks for the dip and the 2 more years of 0% interest rates. Now I will just load up another 0% APR CC with physical.

You got it!

Submitted by Turd Ferguson on September 7, 2011 - 9:48am.

MODERATOR

Response to: Monkey time

SVM

Submitted by Tom L on September 7, 2011 - 9:49am.

Putting in a nice little rally here, just broke the 20 hour MA, and it threatening the downtrend line on the hourly chart. A move above $8.05 would be very good news for long-suffering longs. But the 20 hour MA should be stiff resistance for a while.

Ta,

My bad,

Submitted by dziprick on September 7, 2011 - 9:51am.

I knew it. Bought $20,000 of gold yesterday, shorted BAC, GS, and JPM. I thought 'this was the one' for sure when the EE would lose control. Now, as usual, I get to take a 4% haircut immediately. Right call, wrong timing again. EVERY time. I wait, gold gaps up. I jump, I get slaughtered. Fundamentals in the short term mean nothing when the manipulation is so blatant. I just want to short the f*cking banks so I can take some of their money when they finally go down. But I am starting to think it may never happen. Just like Gilligan's Island, the plan always falls through.

Only thing I have is time on my side. I will wait these mothers out. But it is always amazing to see what tricks pop up next. I can hardly wait to hear what and how the Big 'O' speech will be played. This looked like an epic week and now looks like they will pull it out of the fire again somehow.

Morning Turd, Everyone...

Submitted by Tesla on September 7, 2011 - 9:51am.

Looks like the market is holding up pretty well considering opening down this morning... I would have expected additional selling with the GLD and SLV coming on line? BTFD? Looks like a lot of volume for little price movement.

Oil FUBM in process

Submitted by Tom L on September 7, 2011 - 9:51am.

$88.60 and rising.

Ta,

Just because

Submitted by beinki on September 7, 2011 - 9:53am.

No trading here/TF and atlee wisdom

Submitted by IndigoStar7 on September 7, 2011 - 9:54am.

Just sitting on time with what I have. Watching the show as TF put it. Days like this are going to happen as it gets a bit crazier. We have to remember that some massive currency rebalancing is taking place in the last 48 hours. That whole basket is sloshing around. These are just ripples and like TomL pointed out...it's a set-up for Obama's speech and "plan" (gag!).

I have to echo atlee. I don't foresee gold breaking down that far. Too many uncertainties and too much debt and lack of confidence etc.

But if there is a plan among some nations to tolerate each others market manipulations then "wow!", were really up against it. I don't think it runs as deep. Were seeing desperate moves and the turbulence from those huge currency moves, and of course, the banks just completely messing with the PM's as usual.

This PM price action right now sucks. No question. Some day we'll be sitting here and just gasp at the upside. It's coming.

Atlee...drop a nugget on the main thread from time to time. We know where your at during the day, but what you said is relevant.

miners are up off the opening

Submitted by Eric Original on September 7, 2011 - 9:55am.

miners are up off the opening lows, just sayin'!!

Looks good so far Gang, hope

Submitted by Shill on September 7, 2011 - 9:55am.

Looks good so far Gang, hope no one has panicked out of their positions. I just added some dry powder for the occasion.

I love a good sale.

I was just shaken out my long

Submitted by raulv on September 7, 2011 - 9:56am.

I was just shaken out my long silver position.. Im really pissed off!

Those bastards!

I'm still long on calls, which I guess I should exit, just as turd says... 'cause my calls are for november

any thoughts?

similar to 2004 and 2006

Submitted by tksg101 on September 7, 2011 - 9:59am.

the silver prices this year have been moving quite similar to 2004 and 2006 both led in by a semi parabolic move starting in august the previous year. At teh beginning of september for both years, there is a huge crash that would take the price down to around 37s 38s with this year's prices. so maybe this move down is destined to happen, if following patterns is any use that is.

"Only trade paper with your

Submitted by stoneeh on September 7, 2011 - 10:00am.

"Only trade paper with your Vegas money. I personally would rather go to Vegas."

If you trade paper with all the kinds of stops and orders out there and with the outrageous leverage, all you'll accomplish in the end is to both aid in the manipulation (because your combination of momentum trading and leverage will exacerbate price movements in either direction) and make the bankers a fortune with the commissions you'll have to pay. And perhaps make a shitload of $$$ if you get lucky. If.

Make up your gains with DGP

Submitted by Las Vegas Dave on September 7, 2011 - 10:00am.

As long as Deutsche Bank stays in business these double long ETNs will be the way to play the gold market without worrying whether the GLD has leased out their gold bars or if the comex will default.

BTW, picked up 20 more pamp suisse 100 gram bars yesterday. timing sucks but what the hell. cant wait to stack em

@DPH Atlee EricO

Submitted by Tom L on September 7, 2011 - 10:01am.

@Atlee: Thanks for the well-timed comment I almost dropped a position or two on the open out of fear. No need for that yet.

@DPH: I have not made a move up or down. Just watching the show waiting for those 'decision points' to arrive.

@Eric: The HUI is bouncing around in the Gap it left last week. Below 609, but still within the Power Uptrend Channel on my chart from the weekend. So, I'm okay with it right now.

Ta,

raulv

Submitted by IndigoStar7 on September 7, 2011 - 10:01am.

Sucks you got stopped out. I might not head for the door so quickly.

Your money, your decision. Friday after the Prez.'s speech might be a whole new ball game. Again.

here's a good article for your reading pleasure

Submitted by Eric Original on September 7, 2011 - 10:02am.

"Being long gold equals shorting the financial system"

Sounds like the writer must be a Turdite!

http://seekingalpha.com/article/291770-being-long-gold-equals-shorting-t...

@Number 47 & UK inflation linked bonds

Submitted by RaRaRasputin on September 7, 2011 - 10:02am.

WOW pulled after only 4 months :S I have one of these bonds from before they pulled it the last time (2009?) and as soon as they opened this offering I was in like Flynn knowing that this would eventually happen this time. Can't believe it took so little time this time round. If you're in the UK you are screwed for options that might still give you a return if you want to keep some fiat powder dry to BTFD

Dziprick....Gold

Submitted by Maryann on September 7, 2011 - 10:04am.

As one of the representatives of Gilligan's Island on this blog (morning, Ginger) and as the eternal optimist, I would say....congratulations, you bought Gold!

This is just a little blip. I bought a little too (not near what you did) over the weekend, and so what if it's down a little. We know the end of this story!!

RE:- Chinese Margins (& Warfare)

Submitted by Bobbejaan on September 7, 2011 - 10:05am.

Quote:

I wanted to add this, too: I guess we now know why Shanghai felt it necessary to announce the "temporary" rise margins over the weekend. Do you think they had some foreknowledge of the SNB actions?

I recently stumbled upon this article, which readers may hopefully find of interest relative to the ongoing "economic war" (especially when read in conjunction with the Wikipedia "Thirty-Six Stratagems" article)

http://noblenomads.com/2011/09/07/war/

http://en.wikipedia.org/wiki/Thirty-Six_Stratagems

Quote:

p.s. FIRST!

Tchh! ... I reckon Turd should ban you for such flippancy. [wink + DOH!]

Emotion

Submitted by IndigoStar7 on September 7, 2011 - 10:05am.

It is so strong at times. We're right with what we're trying to do.

Tom...the lack of action in SVM is very encouraging. I know it's moved up a little today so far. But the fact that it hasn't gotten completely hammered and has weathered yesterday's global market beatdown and all the PM beatdowns etc. is pretty bullish.

It looks primed.

"I was just shaken out my

Submitted by stoneeh on September 7, 2011 - 10:06am.

"I was just shaken out my long silver position.. Im really pissed off!"

Control your leverage or be driven out. You can still make shitloads of $$$ by just using 2x leverage. I'm using roughly 2x leverage on my father's account and YTD he's up around 70%. Beats the 2, 3% he got at his savings account ;)