WARNING

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!

large_cci_index_as_of_9-6-2011-1.jpg

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.

TF

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.

large_raakhaathngswis.jpg

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

611 Comments

Turd Ferguson's picture

Chinese Margins

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!

speconomist's picture

Volatility - Spidy sense in maximum alert!

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?

Bro D's picture

Thanks

for a word to the wise early this morning!

Tom L's picture

In the face of this raid

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,

Morpheus's picture

Time compression

The time compression of events is getting down right scary!

Over55's picture

Yeah thanks for keeping us

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

GoldMania3000's picture

And the war continues...

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

Colonel Angus's picture

I was hearing 4000 contracts...

...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.

Eric Original's picture

a tip for the turd

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.

Michael222's picture

Re:These are 61.8% retracements

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.

Tom L's picture

Watch Oil

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,

atlee's picture

aint no way

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.

Vincent's picture

Thanks TF!

Thanks TF!

Turd Ferguson's picture

I hear ya

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
unknownrider's picture

Thanks Turd- I've been

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?

1Dae's picture

Chinese Margins = Could it be

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

Tom L's picture

HUI Gap Filled.

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,

tmosley's picture

Any trader doing ANYTHING but

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 ;)

JimmyTheHand's picture

Thanks Turd

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!!!

JP McManus's picture

Thanks

Thanks for the update Turd!

ScottJ's picture

Keep A Sound Perspective

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.

Turd Ferguson's picture

Tmos, thanks.

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.

Turd Ferguson's picture

Scott, thanks.

MODERATOR

Keepin it real.

cris's picture

Trolls are hitting the blog harder and harder

"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".

margaritatime's picture

Turbulent times con't

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.

tpbeta's picture

Monkey time

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.

Number 47's picture

repost from the old thread

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.

OC15's picture

0%

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.

Turd Ferguson's picture

You got it!

MODERATOR

curious-george-yellow-hat.jpg

Response to: Monkey time
Tom L's picture

SVM

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,

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