The Significance of 1665

I was recording this week's podcast yesterday when it finally dawned on me. Frankly, I'm disappointed in myself that I didn't figure it out sooner. Take your eye off the ball and get a little distracted and this is what you get. No matter, at least now we know.

First, some history. Without a doubt, the $250 run in gold over five weeks in August and September was almost entirely caused by Cartel short-covering and we spent a considerable amount of time discussing this last fall. In summary, the gold CoT numbers told the tale. The CoT from Tuesday evening, August 2 was:

Spec long = 292,000

Cartel long = 155,000

Cartel short = 443,000 (Cartel net short almost 3:1)

Gold price = $1650

By Tuesday evening, September 6, the picture had changed rather dramatically:

Spec long = 248,000 down 15%

Cartel long = 174,000 up 12%

Cartel short = 402,000 down 9% (Cartel net short almost 2.5:1)

Gold price = $1900 up 15%

Again, this is why the reporting of a gold "bubble" was such utter nonsense and any reporter/blogger espousing that idea is to be permanently avoided because that person is either stupid or deliberately misleading you. Gold went up 15% in five weeks because The Cartel panicked and began to rapidly decrease their net short position. As you can see in the data above, the speculative (supposedly dumb) money was selling into the strength, undoubtedly locking in gains along the way.

So, now, put on your thinking cap. Try to recall what happened shortly after August 2, 2011. Anyone? Anyone?

After the close on Friday, August 5, S&P announced that they were downgrading the credit rating of the U.S. from AAA to AA+. I believe this singular event was the "final straw" for the banks that have been willfully manipulating gold and silver for decades. All of the market action since has been a reaction to the S&Ps move. The massive and deliberate takedown of gold and silver in late September was orchestrated to drive price lower so that The Cartel and The EE could continue covering their massive short positions but at a much more profitable, lower price. This effort continues to this day. Look at the latest CoT numbers:

Spec long = 166,000 (down 43% from early August)

Cartel long = 160,000 (flat from early August)

Cartel short = 327,000 (down 26% from early August) (Cartel net short now 2:1)

Anyway, the point of going through all of this again is to demonstrate that The Bullion Bank Cartel clearly got spooked and changed their modus operandi post the S&P downgrade announcement of 8/5/11. Getting back to current day, how does this affect current price and technical action. Well, my brothers and sisters, $1665 is exactly the opening level of gold on Sunday evening, August 7, when the metals resumed trading on the Globex. For the next several weeks, we speculated upon whether or not gold would ultimately fall back and "fill the gap". Nature abhors a vacuum and charts abhor gaps. Always have and always will.

It didn't take too long, unfortunately, for us to have our answer. Here's a reprint of a chart from September 23 where we were watching the 1665 level very closely:

paper_9-23pmgold_1.jpg

Clearly, by reviewing the action of this week, a line has been drawn by The Cartel. They do not want to see gold move back above 1665...at least not yet. They may soon get overwhelmed and lose the battle but, as we've seen on the charts and in the daily growth of open interest, The Cartel would like very much to keep gold under wraps for a little while longer. Do they want to get their gold net short position to 1:1., similar to the progress the EE has made in silver? Maybe, but the fundamentals in gold are so overwhelmingly strong that I don't think that they are going to have the time to pull this off. (It's taken The EE almost 9 months to move from the same 3:1 net short position to the current 1.5:1. It will be nearly impossible to hold gold in its current range for another 6 months.)

Anyway, now we know why 1665 is so important to The Cartel. Hopefully, near-term pressure will force gold higher and through that level. The Pig and DrC are helping its cause. However, next week is option expiry for Feb12 and first day notice, too. You've got to expect that The Cartel will try to keep gold down for a while longer.

paper_1-20amgold.jpgpaper_1-20amsilv.jpg

paper_1-20amcop.jpgpaper_1-20ampig.jpg

By the way, you can bet your batooty that the next, major resistance for gold will be 1705. Longtime turdites will undoubtedly recall the significance of that level, too.

Lastly, here are three items that you need to check out, either today or over the weekend. First, another KWN interview of Santa. (I've tried to get Santa to do a podcast but he won't commit. I'll keep trying.)

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/19_Jim_Sinclair_-_There_Will_Be_a_Run_on_Gold_Stored_in_the_US.html

Someone sent me this article that discusses the PAGE. The author claims that the exchange won't be open until June. Nuts. I've sent a few emails trying to confirm this. I'll let you know if I hear anything.

http://www.marketoracle.co.uk/Article32678.html

And, lest your heart despair with CNBS et al fawning over the "earnings" report of Bank of America, Dave in Denver knocks it out of the park with this analysis. Be sure to read:

http://truthingold.blogspot.com/2012/01/bank-of-america-earnings-comedy.html

That's all for now. Please check back later this afternoon as I will be posting TFMR podcast #11. As I mentioned above, I recorded it yesterday and it's a pretty good one. Thanks again for all of your support!  TF

12:20 pm EST UPDATE:

Very, very nice FUBM rallies this morning, particularly in silver where the price is now $31.50, well clear of $31 and headed toward stout resistance near $33. (Do you recall the significance of that level, too?)

That said, we must watch things very closely here. The charts below are self-explanatory.

paper_1-20amgold4.jpgpaper_1-20amgold2.jpg

paper_1-20amgoldh.jpg

Stay vigilant. TF

275 Comments

SteveW's picture

Silver's run

I thought silver was being capped around $31.50 but its been running since Comex close. If its rise is related to OE then the moment of truth will be the overnight open on Sunday. Waiting to see what happens then, but somewhat annoyed I didn't pick up a little more physical this week. I did sell 1/4 of my CEF for PSLV though.

gatortrader's picture

2pm beatdown

Here comes the beatdown

BASEBALL 13's picture

PHYS Delivery!

Just received my latest purchase! Woot!

Have a great weekend!

BB13

Maryann's picture

Thank you..

TF and Nick for the clarification!

Dr G's picture

I wouldn't call this a beat

I wouldn't call this a beat down. Looks more like profit-taking. Some would be nuts not to take profit here. What a run.

Groaner's picture

We need the miners to kick in here

they are so..so under valued and yet the stay down.

DayStar's picture

Iran Controls Iraq and Southern Lebanon

The Commander of Iran's Quds Force, Brig. Gen. Qasem Soleimani, has said that the Islamic Republic controls in "one way or another" Iraq and south Lebanon, and Tehran is capable of influencing the introduction of Islamist governments in order to fight "arrogant" powers, ISNA student agency reported on Thursday.

"The enemies are trying to besiege the Islamic Republic of Iran, but this symposium [The Symposium on Youth and Islamic Awareness] is an opportunity for thousands of youth who play an influential role in the Islamic awareness to travel Iran and shed sensitivities of Iran-phobia by observing the an Islamic government founded on religious principles in Iran," Gen. Soleimani, who reports directly to Supreme Leader Ali Khamenei, said.  Speaking about Iran and Lebanon, Gen. Soleimani said: "These regions are one way or another subject to the control of the Islamic Republic of Iran and its ideas." 

"General Petraeus, you should know that Qassem Suleimani controls the policy for Iran with respect to Iraq, Lebanon, Gaza, and Afghanistan. And indeed, the ambassador in Baghdad is a Quds Force member. The individual who's going to replace him is a Quds Force member," The Guardian reported.  Petraeus had admitted that most of U.S. diplomatic efforts in Iraq and elsewhere in the Middle East were undermined by the work of Suleimani, according to the Guardian. 

DayStar

Jdawg's picture

Be Prepared

cool I can't tell you what day, month or year, but I do know that we cannot continue with our wreck less ways.   Many are college educated, but lost, many are intelligent, but lost, many are super planner, but lost and finally many are following the herd (99%) and lost like a ball in tall grass.  That is vision I see here in America.  Only 1% are wise.  If you don't have gold and silver you are lost like a ball in tall grass.  Those that collect PMs are like very WISE.  You see a wise person always appreciate wise counsel.  Will 2012 be the year?  Again, I don't know, but I do know that I will be PREPARED MENTALLY AND PHYSICALLY (PM)  Are you ready? 

PEACE AND A LONG LIFE

Junk Yard Dog - Alway Ready

Maximillion's picture

No point in selling Silver yet

As I posted on the previous thread, if you superimpose the charts showing the 2nd low of last year ($26.86 on 01/27/11) over the end low of last year ($27.06 on 12/28/11), then we're getting a fairly identical up line. If this holds true then there won't be much of a pull back at all from here.

balz's picture

The difference from last year

The difference from last year is that we will run into resistance...

Be Prepared's picture

@JDawg - Great Post Title

The unknowns and changes ahead are real.... though it may feel yet undefined.  It's a terrible place to be when you realize that the system has grown to such an extent that you know that you have very little control over many aspects of your life.  PM's are a part of the big picture for anyone that wants to reclaim a portion of their freedom back to themselves, but its only a start.  Everyone must have a Written and Well Defined "Plan" about what they are going to do by when..... and start living this Plan everyday just like you breathe.  "Being Prepared" is keeping your mind sharp, your bias in check and your plan flexible.

JDawg, great thoughts and I'm glad you put them out there!

SilverLeaf's picture

Thoughts about the next six months

As encouraged as I am by today's move, it's really unclear at this juncture whether we're in for an imminent silver moonshot. My guess is that we stay in a volatile range between $30 and $40 for the next 5 months. Don't lose sight of the fact that precious metals face a number of headwinds in the near term: 

Europe, Asia, and the US are clearly falling into recession, which will reduce industrial demand for silver

Central banks are continuing to play chicken on overt QE. I think they're running out of time, but will still try to hold off until around May. The thing that would force their hand to act sooner is a substantial deterioration in Europe (...which may happen faster than they anticipate)

- Before they announce QE, we can expect a massive beatdown in the metals. To mask the extent of their money debasement, they're going to want silver and gold to launch from as low a level as possible.

- Remember that JPM got an exemption for reporting position limits until May. Makes you wonder, why May specifically? You can bet they'll do their damndest to reduce their silver shorts between now and then, but that implies that we're in for more manipulated take downs for the next 3 or 4 months at least and a continued capping of the silver price.

PAGE is now scheduled to open in June, so it's impact won't really begin until then. Was PAGE delayed by a few months to give JPM some time to clean up its books? The timing of both seems like too much of a coincidence.

Greece is expected to default in March, which could portend a 2008 like crisis. It would be a highly deflationary event with the potential for contagion, and bad for precious metals and the stock market.

It seems like we're just moving back into a more normal trading range after the fall beatdown, but the catalysts aren't there yet to let silver challenge its highs in the next few months. On the other hand, the situation could change fairly quickly if:

- Sprott buys another couple of tranches on the $1.2 billion left in their shelf offering

- Central banks blink on QE chicken and announce massive, overt QE sooner than later.

The awakening about precious metals accelerates, particularly led by Europe, where there are growing indications that average citizens are getting out of the Euro and into gold and silver.

So hard to say which way things will fall, but what seems clear is that we're going to have conflicting head and tailwinds, and that the EE has every motivation to keep trying to beat down the price until they lose control.

Fair Disclosure - I'm currently 100% long on my paper positions, but will be anticipating resistance at $33, $36, and $38, and a range bound market with increasing volatility between now and May.  If we're going to assault the highs, I think it'll likely happen in the 2nd half of the year. But that's just my opinion. I'm going to look to swing trade with a long bias until it's clear we've reached escape velocity.

Patrancus's picture

Edward Bernays would be so proud of his creation

The end game could never happen without the creations of Edward Bernays and his life expansion of his Uncle Sigmunds medical journals. 

beach_bum's picture

$100 Million Dollar Penny

Nice little video found over at Brother John F's blog illustrating the vast sums of our tax dollars being spent by the Fed. May be old news to you but could be useful with those recalcitrant friends and family members.

http://www.youtube.com/watch?feature=player_embedded&v=3dl1y-zBAFg#!

lairdwd's picture

No raid - whew.

The bears had every chance to push it down to 31.5. Every time they tried to even get out of 31.7, bulls pushed it right back up. Tells me that they still want to push it up into the 4 PM close.  Now if gold can catch a bid, we should be all set. 

DayStar's picture

Guest Post: You Can't Fool Mother Nature For Long: Mainstream Me

In the link posted above (http://www.zerohedge.com/news/guest-post-you-cant-fool-mother-nature-long-mainstream-media) we find another example of even those critical of the elites who fail to face up to the severity of our situation:

Quote:
There is a difference between now and World War II, though. In a full-blown global war, the nation itself was at risk. Now, it is the Financial and Political Elites who are risk. The Corporate Media's first and most critical line of propaganda is that if America's Financial and Political Elites fall, so too does the nation.

This is of course false. The nation would be infinitely better off if its current crop of craven, corrupt Financial and Political Elites were revealed as financially and ethically bankrupt and delivered from great power into ignominious disgrace.

This is such a crock.  The Financial and Political Elites are NOT at risk.  They have been preparing for this time for decades.(http://www.youtube.com/watch?v=Qm8jNzgcl30
http://www. youtube.com/watch?v=B9EpqBf0oCY&feature=related)
The survival of the nation and of each of us individually is at stake.  The stated goal of these elitists who have seized control of the global levers of power is to reduce world population by 95% (http://www.thegeorgiaguidestones.com/Message.htm).  To see the world rushing headlong toward a situation where food and shelter will not be available and millions will die and to identify this as a threat to the bunkered elites is to totally misunderstand and misrepresent the situation.  The elites WANT the system to crash.  They EXPECT the system to crash.  They are PREPARED for the system to crash.  They are not at risk.  They are currently fighting a holding pattern to secure the schedule and the redemption of their fiat into gold and silver, but they are in control of the situation.

With this I do agree, however.  "The nation would be infinitely better off if its current crop of craven, corrupt Financial and Political Elites were revealed as financially and ethically bankrupt and delivered from great power into ignominious disgrace." 

May God help us all.

DayStar

Be Prepared's picture

U.S. Vehicles hit record 10.8 years old (average)

Average age of US vehicles hits record 10.8 years

The average age of a car or truck in the U.S. hit a record 10.8 years last year as job security and other economic worries kept many people from making big-ticket purchases such as a new car.  That clunker in America’s driveway has reached a record old age, but there are signs that people may be growing confident enough in the economy to get a whiff of that fresh new car scent very soon.

That’s up from the old record of 10.6 years in 2010, and it and continues a trend that dates to 1995, when the average age of a car was 8.4 years, according to a study of state vehicle registration data by the Southfield, Mich.-based Polk automotive research firm.

However, Polk Vice President Mark Seng says that a rebound in sales last year and expected growth for the next couple of years is likely to slow the growth rate in the age of cars as a whole in America. Polk has not predicted if or when the age will start to drop, but Seng doesn’t see that happening for at least two or three years, if not longer.

“It’s going to take the good economy several years of very high sales again, and people being willing to let go of those older vehicles that they’ve been holding onto,” Seng said.

Last year, auto sales rebounded a bit to 12.8 million vehicles, especially in November and December, when sales were unusually strong. In 2010, U.S. sales totaled 11.6 million after hitting a 30-year low of 10.4 million in 2009. Polk expects sales around 13.7 million this year, rising by about 1 million per year through 2015, when they reach about 16 million. That’s back to around what industry analysts consider normal, and approaching the U.S. sales peak of 17 million in 2005.  <Rest of the Article>

I'm not sure that I see a ton of people piling into new cars.  When I was younger, 10 year old car was pretty standard in my neighborhood.  People would fix their cars rather than take on the debt of buying a new car.

ActionFive's picture

Comex spook

They held gold at 1100 forever as I recall. Went to 1400+ with QEs while stocks doubled. As if US downgrade/forever AAA was priced into gold as we are near the same price today. The downgrade did excuse them to turn gold "parabolic" to stop the upward grind of gold against the system. It was painted out much like the silver chart-they let you see what was coming. They were then free to short gold like a spec stock re-priced to a fib number. Paper beats rock in their system.

----------------

If Sprott's buy is timed near a QE next week you have to think he is getting inside information by now.

---------------

Thanks Turd

Turd Ferguson's picture

Our buddy, Ned

MODERATOR

Was on CNBS Europe again today, giving them the straight shit.
Way to go, Ned!
http://www.gata.org/node/10901

Groaner's picture

They have a death grip on the miners

Ranting Andy says forget about them and just go physical

lairdwd's picture

My guess - we'll close right

My guess - we'll close right at 31.9 - which would be roughly a 31 on the SLV.  The 31 handle seems to be what they are shooting for OpEx. 

Pigmendontplayfair's picture

vehicles

The issue is credit score destruction over last 4 years. They have brought subprime ABS back into the financing market as that was all they had left to push sales numbers up. I'm in the industry and predicted subprime would be making a comeback to make up for the CSD mentioned above. Captive lenders are buying sub 580 fica scores to keep production lines moving...84 month loans, sub 580 fica on 25k car....sound familiar..

Watch repo numbers start to climb in bank reports starting this qtr. It's already happening according to some lenders qtrly reports out this last week...

debt pushers are worse than drug pushers, serfdom is hard to recover from...

DayStar's picture

Miners

The elites naked short the miners to keep the gold market under control.  They control many of the sources of financing for the development of expensive mining operations.  They have effectively capped miners and companies whose governance is still independent of the cartel.  They have assimilated or killed effective competition.  Expect all assets denominated in dollars to go to worthlessness.

DayStar

Doc Scurlock's picture

Keep Calling

Keep trying to get Santa on the line.  His wisdom and perspective on the markets is invaluable.  That said, can you really blame a guy with his credentials and prestige for being hesitant to speak publicly with a guy named Turd?

Great post today.  Your analysis confirms some of my armchair quarterback technical work that says we are getting close, but may not be there just yet.  That said, If you need in for the long haul, get on board soon.  The engine is warming up and don't plan on catching the caboose on the run!

Dr G's picture

@lairdwd, my guess is 32.20.

@lairdwd, my guess is 32.20. Look at it right now, going straight up again on the 5 minute chart. 

P.S. Ned N-L is a king man. Love him.

Exbroker's picture

Don't worry Sprott will save the day

Look at Silver.  It's up nicely after Cuntmex close. Probably going to be all kinds of speculation that Sprott is buying. Anyone really think that Sprott is stupid enough too pay up in a sideway market? If I were Sprott, I would raid every coin shop in America and take every ounce of Silver they have...send it to a smelter, and turn them into some good delivery bars. Secondly, why would Sprott telegraph his intentions in the first place? Sprott has an obligation to his clients to buy at the lowest price. Lot's of weird shit going on lately.

DayStar's picture

@balz

Options Expiry is next week, I think.  Look for the cartel to take 'er down.  Waterfall at opening Sunday night?

DayStar

survivalwstyle's picture

just the tip

a fun liTTle game i played as a boy....Ag is playing it now...with a very LONG stick. so that was how 32 felt...

Hang10-Hawaii's picture

SC Primary - Hmmmmm

Hi Kids-

Don't want to derail today's thread topic, but I just got back from a meeting and was checking CNN's website (to look at some sports stuff) and noticed off to the right that their daily "survey" question was "who do you want to see win the PRESIDENTIAL NOMINATION?"  Just out of curiosity, I checked out the results to see what the pinko-commie-liberal readers (myself excepted) at CNN thunk.

Well, whattyaknow?   Clearly they'll pull this survey down pretty quickly since RP isn't exactly CNN's type. But for now, here are the results.

Which GOP candidate do you want to win the presidential nomination?
This is not a scientific poll
Paul
 
32%
38132
 
Romney
 
32%
37919
 
Gingrich
 
22%
25870
 
Santorum
 
13%
15802
 
Total votes: 117723
This is not a scientific poll
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