Ramblings - Let's Talk Dollar, Gold, Silver, Crude and Freedom

One of the major challenges in compiling and writing this website every day is in keeping it all coherent. Since I am currently only able to offer one or two threads per day, I struggle to include all that I feel is pertinent into one, tidy and neat little package. Today is particularly challenging in this regard. Please bear with me.

So, where do we start? How about this? As you know, my Lind/MF account was transferred to RJObrien back in November and the charts I use every day come from the RJO website. When I open the charts window, the default screen is a chart of the ES, which is the heavily-traded, mini S&P futures contract. Every day, I have to look at this silly chart and, every day, it makes me want to puke. Of course, there's nothing to see here. No. The Fed, through the Primary Dealers, isn't slowly goosing the market higher. Of course not. Rrrright... What kills me is the horseshit nonsense that is constantly peddled be the media and the paid, disinformation agents of the blogosphere. Equities can rally 20% in 10 weeks. No "bubble". Not "overbought". Never. However, you get one little sustained move in the PMs, even against constant Cartel suppression, and every deltabravo shill from Christian to Nadler comes out of the woodwork to defame them.

paper_2-9es.jpg

paper_2-9amgold.jpgpaper_2-9amsilv.jpg

Next, let's talk about the U.S. dollar index or, as we affectionately call it around here, The POSX (or The Pig or Pigatha). While it's true that The Pig is, roughly, flat year-over-year while gold is up 25%, DO NOT discount the impact that moves in the index have upon the daily fluctuations in PM price. This has always been the case but it is especially pronounced here in 2012. In the post-MFG world we now inhabit, the paper metal trade is dominated by The Cartels on one side and HighFrequencyTrading computer programs (WOPRs) on the other and most WOPRs are programmed to buy or sell precious metals based upon minute movements on the POSX. So, what we have are PM "markets" that are subject to wild gyrations based not upon their own fundamentals but, instead, the fluctuations in the dollar brought about by ever-changing headlines out of Europe and the Middle East.

Below are charts of The Pig. First, there's a refresher on the makeup of the POSX. Remember, the POSX is an index. This means that it is a measurement of dollar strength against a "basket" of other currencies. As you can see below, though, the primary component is the euro so big moves in the EURUSD have a disproportionate impact on the POSX.

medium_usdx-components_0.jpg

The Pig has been desperately trying to stay above 78.50 for the past two days. Will it hold in there again today? Answer that question and you'll go a long ways toward predicting the next move in PM price.

paper_2-9ampig6.jpgpaper_2-9ampigh.jpg

Below are your PM charts. As you can see, gold is still being suppressed below 1750-55. Silver, however, continues to show some real strength and I'm getting increasingly enthusiastic that it is about to break higher and race off toward 35 and 35.50.

paper_2-9amgold4.jpgpaper_2-9amsilv4.jpg

As we wrap up the "chart section", here are a couple of looks at crude. Study these for a moment because there are some headlines below that will be affecting the fundamentals of this market soon.

paper_2-9amcruded.jpgpaper_2-9amcrude8.jpg

Now, onto those headlines.

It certainly appears that the U.S., NATO, Israel and Iran have all come to the conclusion that conflict, or outright war, is inevitable. Maybe someday soon we can discuss the unpredictable, geo-political, economic and biblical implications of all of this. For now, you should at least be considering how to prepare yourself financially for what seems to be coming over the horizon. Some of you will undoubtedly buy some crude oil futures or options but I know that most of you don't fiddle around with that stuff. My friend Mister Hyde trades the UCO, which is a 2X long crude oil ETF. It's probably not something anyone should sink big bucks into but, if the world is going to end, you might as well go out with a little extra fiat in your pocket.

http://finance.yahoo.com/q?s=uco&ql=1

http://www.wallstreetexaminer.com/blogs/winter/?p=4519#more-4519

http://rockcenter.msnbc.msn.com/_news/2012/02/08/10354553-israel-teams-with-terror-group-to-kill-irans-nuclear-scientists-us-officials-tell-nbc-news

http://debka.com/article/21720/

http://english.farsnews.com/newstext.php?nn=9010174238

http://www.reuters.com/article/2012/02/08/us-iran-russia-usa-idUSTRE8170TM20120208

And Syria is all part of the equation.

http://security.blogs.cnn.com/2012/02/07/us-military-beginning-review-of-syria-options/

http://www.telegraph.co.uk/news/worldnews/middleeast/syria/9070103/International-militarisation-in-Syria-growing-closer-warns-US-official.html

I could keep posting headlines but I think you get the point.

The metals have pushed higher today because of dollar weakness brought about by headlines of an impending Greek "deal". If the recent pattern holds, look for these headlines to be refuted by later today.

http://latimesblogs.latimes.com/world_now/2012/02/greece-austerity-agreement-debt.html

http://www.businessweek.com/ap/financialnews/D9SPU20G0.htm

As expected and right on cue, there's this:

http://www.zerohedge.com/news/greek-deal-done-not-so-fast-says-imf

Many have asked what I think will ultimately happen here. (Keep in mind that I'm the guy who thought that S&P would never downgrade U.S. debt.) To me, it's quite clear after Santa filled in the missing pieces last week.

http://www.jsmineset.com/2012/01/30/the-impending-undeclared-default-of-5-major-us-banks/

This is all about the word default. On March 20, the Greek government faces a 14.5 billion euro debt payment. Currently, they are unable to make this payment. If they miss this payment, they will be in default. No ifs, ands or buts about it. Regardless of how someone might attempt to spin it, missing your payments is a default. End of story. From Merriam-Webster:

Definition of DEFAULT
1 : failure to do something required by duty or law : neglect
2 : a failure to pay financial debts

If a "deal" is not struck before 3/20/12, Greece will be in default. As Santa has alerted us, a Greek default will trigger a payable event for the Credit Default Swaps issued on Greek debt and 97% of the Greek CDS were sold by the Big 5 U.S. banks. I HIGHLY DOUBT that this triggering event will be allowed to take place. Sometime in the next 5 weeks, A DEAL WILL BE STRUCK which restructures the Greek debt and avoids "default". The impact will be very much precious metal positive long-term. Why?

  • A large proportion of the Greek bondholders are European governments and European banks. The "haircut" that the bondholders will be required to take will stress the already-underfunded balance sheets of many of these entities. So cash must be created to shore up these balance sheets. However, by charter, the ECB cannot simply print money from whole cloth like the U.S. Federal Reserve. Can you say LTRO to infinity?
  • But LTRO will not be enough. The IMF will also be used to funnel dollars to European banks and governments, too, and from where does the IMF get most of its funding? The U.S., of course! Can you say QE to infinity?
  • If, on the off chance, a deal is not struck and the Big 5 TBTF banks get put "on the hook" for billions in CDS, the FED will simply create the funds necessary for the banks to slide to Europe.

The final bullet point is EXACTLY what The Fed did in 2008. Recall that, back then, AIG was the issuer of billions of CDS. When the underlying financial instruments (CMOs, CDOs, etc) went into default, AIG was on the hook for billions that they didn't have and the TBTF bank balance sheets were insolvent without the CDS "insurance". What happened? The U.S. government took over AIG and settled the outstanding CDS debt by having the Fed print money to be funneled to the TBTF banks.

Ultimately, the only question is: Who is going to be stuck with the losses that the Fed will paper over? In the end, it doesn't really matter. The Fed will print dollars to soothe the crisis. These dollars will be sent to Europe either directly, through the IMF and ECB, or indirectly through the CDS payoffs by the TBTF banks. Billions....maybe even trillions...of new greenback is about to be created. The only protection you have against the purchasing power destruction of this event is to buy and hold physical gold and silver.

I feel I must take a moment to touch upon the "robo-signing" settlement, too.

http://www.nytimes.com/2012/02/09/business/states-negotiate-25-billion-deal-for-homeowners.html?_r=2&pagewanted=all?src=tp

Lest you think otherwise, all this "settlement" represents is covert QE for the bankrupt states of the U.S. The banks, which will be forced to shell out the $26B, clearly do not have the funds to do so. From where will the money come? The Fed, of course! As they have for 3+ years now, The Fed will simply journal over $26B in newly-printed dollars for the TBTF banks to distribute to the states. Only a fraction of this money will ever reach the homeowners who were screwed out of there foreclosed homes. The states will simply include these settlement dollars in their "general accounts" and use the proceeds to cover their varying budget shortfalls. It is all just a gigantic scam constructed as a way to covertly give the states the money they so desperately crave.

Lastly, I find myself spending more and more time considering and discussing the ever-encroaching powers of The State. In ways both large (SOPA and NDAA) and small (The Catholic Church vs Obamacare), American freedoms are being constantly nibbled away by the government piranha. It is also happening at the local level as the story below shows. The American nanny-state is now so expansive and inhibiting that children in California are no longer able to dig holes in the sand at the beach. Sadly, it is likely too late to reverse this tide of government intrusion upon the most basic and miniscule components of your daily life.

http://losangeles.cbslocal.com/2012/02/08/la-county-oks-1000-fine-for-throwing-football-frisbee-on-beaches/

That's all for today. I've been banging away here for almost 3 hours and it's time to get on with my life. As I close, I see that the metals have barely budged while I've been at it so at least I haven't missed much. Watch out for volatility though this afternoon and overnight. Not only will the headlines be moving The Pig around but The Cartels would very much like to see silver under 34 and gold under 1750 at the Comex close tomorrow.

Keep the faith.  TF

203 Comments

truthseeker's picture

Anybody willing to offer an opinion on the gold/silver ratio?

FIRST ... question ever:

I need to transfer several ounces of gold to silver at some point. I am relatively new to “stacking” and started with gold over the last couple of years and want some balance (and have no more new funds!).

The GSR has been hanging above 50. My thinking is if EE retreats and we advance from $1750/$34, the GSR will go down (with silver gaining in the advance).

Conversely, I’m thinking if $1740/$34 is rejected, or when there is a stock market correction, silver will lead (percentage-wise) on the downside, and the GSR might move back up to high 50s?

Anybody see the GSR moving back up to 53-55 –ish, or even higher? Should I just bite the bullet and convert now, believing that the we are too close to a major move down in the GSR to try to gain a few extra silver coins?

All opinions welcomed.

Edit: Thanks TF for the new thoughts ... this enthusiam for silver here may just be what I needed to hear!

Dr G's picture

If you have the funds to

If you have the funds to purchase more metals, then I wouldn't convert anything. I'd simply buy more silver. You stated that you don't have any funds at the moment to buy more, so that is out of the question.

How much gold are we talking about? As I understand it you literally have no silver?

For those that have large stacks or medium stacks, and they enjoy playing the GSR trade, that's great. I don't encourage that for those that are new to stacking or have smaller stacks. I'm going to define a smaller stack as anything less than 500 oz of silver. It's one thing to have a core of metal and then play a bit on the side (same with having a core of metal and trading a bit on the size to make fiat to buy more metal) and another thing to be a new stacker and trying to become a stacker without stacking. Sometimes you just have to buy the metal and put it away.

The GSR could go either way in the short-term. Medium term and long term it will go down. I'm not a big believer in 10:1 or 16:1, although it could happen. 25:1 has a more natural feeling to me, but that is just a gut feeling.

Dr Jerome's picture

Going underground

I just thought I'd let everyone know that I will be discontinuing this avatar--Dr Jerome and going underground. I just don't like what I read about the level of "observation" that interested parties can do over the internet. I have been a bit careless in earlier days on this website with personal clues. It's probably not to hard to figure out who I am. I may choose a different name and image (I have always been fond of great Roman and Greek  rhetoric teachers), but those who know me will likely recognize my writing style. I'll still be lurking and posting.

I am also interviewing for a new position in a month close to my ancestral home n the Western US. Has anybody read anything on how much Fukashima fallout might be expected to hit the US and how far east of the coast any contamination might spread?

au revior

Groaner's picture

The 12 PM fix is in action again

Notice the volume on the downside since 12PM..?  They cant have gold closing over $1750 now can they?

Be Prepared's picture

@Dr Jerome - Regrettably, I understand

I'm glad you will lurk and post... but I hope you won't stay away too long..... your insights and thoughts have been very helpful to me...and I'm sure many others..

Turd Ferguson's picture

Doc, please email me and let

MODERATOR

Doc, please email me and let me know your new pseudonym when ready. 

Response to: Going underground
Dr G's picture

Screw tomorrow. The Cartel

Screw tomorrow. The Cartel wants silver under 34 at Crimex close today.

MonkeySmoke's picture

Thanks, Turd...and @ Dr Jerome

Thanks, Turd for the "ramblings"--personally, I would like to read more of your ramblings, especially, on the current state of affairs regarding the degredation of the Constitution at all levels.

Dr Jerome--I have already cleared out many of my online accounts and will be clearing this one very soon. I am not going anywhere, but...

rpboxster's picture

NOOOO....Dr J!

I've always enjoyed your posts.  Your avatar was easy to find, too, which made skimming for your comments easy.

Back to the discussion for all of Turdtown:  how does this play out?  I agree that ultimately we print which is long term pm positive.  But, (1) if Greece is 'rescued', euro goes up, dollar down, pms go up--shouda bought phyz already.  (2) If Greece gets kicked out of the euro, euro crashes, dollar up, pms go down--back up the truck. 

what happens?  1 or 2.  Or, am I way off on both counts.

Turd Ferguson's picture

Doc and Monkey

MODERATOR

Since I don't have the same luxury, please be sure to write me at:

Turd Ferguson

Prisoner HP4762-2

High Plains Detention Center ND-2

Minot, ND

58701

truthseeker's picture

Thanks Dr. G

... for your thoughts.

I am a small time stacker, and not a player. We have just over 25 oz of gold, no silver to speak of (about 100 oz). There is not enough spare fiat coming to get enough silver in the equation in the short to medium without transferring some gold. I figure about 5 or 6 oz to silver would be a good base? (Any new purchases will be silver for sure).

If 30/1 or less is my conviction, maybe waiting for a small move to 55 or 60/1 is a bit silly? When you are a small timer every coin helps. 

My gut says one more drop (perhaps with a simultaneous stock market drop - to cement QEturd) is in the cards, and that might hurt silver a bit more.

Thanks again.

Tyler's picture

US officials admit Israel killed Iranian nuclear scientist

NBC is carrying a story saying Israel is training and funding terrorist groups in Iran to kill Iranian scientists, etc.  

I'm no expert, but isn't that an act of war?

pbfurn's picture

Ted Butler commentary

http://www.silverseek.com/commentary/enough-enough

Pardon me if this has been discussed previously.  If everybody here did as Ted suggests, one would at least not feel like a lamb when the day of reckoning arrives.  Please be civil.  Takes less than five minutes.

Groaner's picture

I want to puke when you keep seeing this stuff

so blatant.. what a rigged game they play

beinki's picture

Latest video leaves my last shred of dignity behind

Gramp's picture

Well rounded post there TF...

Well rounded post there TF... tough to cover all the bases but that does a good job of it.

thanks!

Groaner's picture

look at the 5 min chart on silver

since the high this morning you can draw a straight line down on the highs.. only a computer could do that.

Mr.Grey's picture

These times

Dr. Jerome, unfortunately the times we are living probably makes this a judicious decision for you.  I for one have enjoyed your posts.  It's hard to judge a persons positions without personalizations and I commend you for  them.  If I don't recognize your new self perhaps we'll  meet in the camps.  I'll be the one with the wire-cutter:)  

apex101's picture

CDS GREECE

The CDS on greek debt is small (putting things in perspective i think it was 50 billion last time i checked). I just dont see why they would risk the perceived credibility of the entire CDS market by not labeling Greece a credit event. Seems odd to me. What a world when you can create financial instruments where no matter what you win. Maybe thats how there going to wind down the entire CDS market? Declare them all voluntary defaults. 

Hold over's picture

Oil may not spike as high as

Oil may not spike as high as you might expect if a conflict with Iran breaks out. 

Alternate routes of moveing crude have been established before hand in an anticipation of such an event ,to keep crude moveing and to minimize Irans ability to respond .They have been busy little bees 

http://www.mercurynews.com/nation-world/ci_19906774?source=rss

Deeper Iran sanctions; US targets its central bank

02/06/2012

The new, stricter sanctions, authorized in legislation that President Barack Obama signed in December, will be enforced under an order he signed only now. They give U.S. banks new powers to freeze assets linked to the Iranian government and close loopholes that officials say Iran has used to move money despite earlier restrictions imposed by the U.S. and Europe.

The action against the Central Bank of Iran is more significant for its timing than its immediate effect. It comes as the United States and its allies are arguing that tough sanctions can still persuade Iran to back off what the West contends is a drive to build a nuclear bomb.

Gulf Nations Aid U.S. Push to Choke Off Iran Oil Sales

“We do mean to close down the Central Bank of Iran,” said a senior administration official, adding that oil purchases were the key to that effort because oil “is the largest source of their revenue.”

http://www.nytimes.com/2012/01/13/world/asia/asia-buyers-of-iran-crude-get-assurances-of-alternate-supply.html?_r=1&pagewanted=all

securi_D's picture

reply to Truth Seeker

The current ratio is what I refer to as kind of a gray area. Not too low, but not too high, so it leaves a lot of people "stuck" so to say. Just based on the fundamentals, I don't think it's too late to get into silver, but as far as how much you are willing to convert is purely up to your comfortability (sp?) level. Considering you are ​not​ a player, I would recommend scaling in maybe an oz every month (or your own date range). If you were to scale in your portion now, and the ratio were to get bigger, you might be kicking yourself down the road, but that's the nature of the beast. If you were to scale in, you could possibly pick up a few extra OZ, but then again, is it really worth it? If the ratio were to go up a few more to let's say 55, that's only an extra $160ish or so, which in the grand scheme of things is not very large.

But if you are waiting for a drop, and it never happens... (I've been telling family and friends a drop in the stock market has been coming since fall of 09 but I've been looking like a bafoon since the printing press is on ludicrous).

I hope this helps you answer your question. Whatever makes YOU comfortable, will be the right decision. cool

-_D

*Edit - Dr. J, I've been a lurker here since the birth and you will be missed. I guess it made me realize I'll try and step up to the plate from now on and try to contribute more. Happy trails

GM Jenkins's picture

Good stuff Turd

Regarding the never-shrinking S&P500 (and note how even on down days there's always a late inning rally turning it green) you have to believe it has partly to do with helping Obama get re-elected (especially since even a Wall Street lapdog like Romney would have to campaign on shitcanning Bernanke). Jim Rickards had an interesting comment on a David Axelrod tweet:

Now you know the fix is in RT  ..when Dow fell to 6,547..after POTUS took office GOP called it "..Obama market." How about now?

Of course, the markets will have to correct 5-10% eventually, and how the metals react will be really important. My guess: the stock market will be allowed to fall hard when gold looks to break past the 1764-1800 barrier, the dollar is at important support, and 10 yr yields are over 2.25.

tpbeta's picture

Default

"I HIGHLY DOUBT that this triggering event will be allowed to take place."

I'm not so sure. Greece is certain to default in some shape or form, and when they do they won't care about the effect on the rest of the world.

Dr Durden's picture

Thanks for the truth on the POSX

As you've probably read, I've been a huge stickler about the metals vs the POSX and the accuracy of the moves. There is so much misinformation floating around that I hate see the House that Turd build become another stat in the misguided PM bug bin. 

As you said in your most recent video, "yeah, we go much higher" and I agree...in some way, shape or form. But it's not ONLY because the POSX "dies." It will never die, it will just slowly erode away with all the others. It seems like an impending bank holiday will be the last straw for all of them.

Maryann's picture

Thanks TF and Dr Jerome

Most excellent info Turd, and thank you for the miners update too.  Your posts have been especially informative lately!

Dr Jerome, you are one of my favorite people here!  I totally get your concern, I am always ambivalent when I post, too.  It makes me sad that we are in this state and I pray God will help us turn things around.  In the meantime, we all must do what we can in the best interests of our families, and I wish you all the best, and with the job situation especially.  By the way, the kiddo's paper is coming along quite well...thanks again! smiley

FriedEggs's picture

I am underground

too...

Subterrrain... with the crickets, carpet crawlers, worms, insects, soil, roots, earth... and turds...

.

Nothing fictional about the under gound...a lot of truth is found there. A whole different world exists underground...you may not want to come up. 

.

BTW - off topic, again -  JayZ and Beyonnce want to trademark 'Blue Ivy' so they make baby products and sell them.

The anagram (which Illuminati love using) of 'Blue Ivy' is 'Buy Evil'... yup - makes sense...

http://wordsmith.org/anagram/anagram.cgi?anagram=blue+ivy&t=1000&a=n

.

Fried(e)

Be Prepared's picture

Gold to Platinum Ratio (GPR) Charts

Yes, Platinum will never be a monetized metal so it truly falls into the commodity basket...  Since we do discuss PMs here, I think Platinum has been moving rather briskly since the start of the new year and is close to breaking the 50 mda for the GPR and for its Spot Price.....

Platinum started the year at $1406 and is currently $1661 or an increase of $255.  That's a whopping 18.1% increase.

What are everyone's thoughts?  Does platinum have more steam left in it?  Will it continue to outpace silver and gold?

tyberious's picture

Must see video

http://geraldcelentechannel.blogspot.com/2012/02/us-economic-collapse-collapse-of-us.html

U.S. Economic Collapse / Collapse Of The U.S. Dollar / Warning From The Early 1990s!!!

 
The Crash -- Coming Financial Collapse of America , A very scary and possibly real situation that could unfold very shortly. Understanding how the U.S. dollar's fall is causing real money (Gold and Silver) to rise as well as the Stock Market is key. Early 1990s Video on Economic Collapse:the dollar has been in trouble ever since Nixon ended the Bretton Woods international monetary system August 15, 1971. De-linking the dollar from gold was a mistake and we are still paying for it. Back then the dollar was linked to gold at $35 an ounce... now it $1750 an ounce. Most folks fail or just can't put two and two together and see that it is gold that has and does remain the same. It's the fiat that fluctuates up and down. Yeah, we're in big trouble, have been for many years. I think that their "Strong Dollar Policy" is more about strong arming other countries into using it and smashing countries who do not use it, than any economical policy from the Fed or Treasury. Hence why Iran is in the US Govt's sights...they say Iran is a Nuclear threat yet North Korea has nukes and has missiles able to hit the US West coast (Tapoedong 2 Missiles) Iran can't even fire anything past their own local region
zilverreiger's picture

keywords

nobel energy

leviathan gasfield

israel greece russia

Groaner's picture

Quote from Dan Norcini

"On days like this I actually feel a bit sorry for the many newsletter writers who have to come up with some sort of baloney to explain price action in order to justify their subscription fees. Truth be told, sometimes there are just "a lot of fuss about nothing" days in the market when neither side (bulls or bears) really seems to have a clear edge and the markets end up marking time. This is the sort of environment which produces choppy trading patterns where floor locals make the majority of their income scalping or otherwise generally separating novice traders from their wealth."

​This guy really bugs me.. Its all in the charts he says has nothing to do with manipulation.. Very rarely if ever does he explain how the Cartel just intervened.. if ever! But since I am a great trader I just follow the charts.

​Yeah like the charts says at 3am, 8:20am, 10AM, 12PM THERE ARE GOING TO BE HITS TO THE DOWN SIDE..

​give me a break, you can take your charts and you know what

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