Traveling on Thunder Road

As you are all well aware, years of observation and trading has led me to the conclusion that the precious metals "markets" are grossly manipulated, managed and suppressed. My confidence in this assumption is what makes the price analysis we do here relevant.

What is satisfying to me and the many others who have been trumpeting this cause is the gradual awakening of the investing public. The long-term policy of currency debasement combined with the long-term bull markets for the metals has brought attention to the metals sector like never before. With that attention comes additional critical analysis and, not surprisingly, much of this analysis comes to the same conclusion many of us "grizzled veterans" have been spouting for years.

Just in the past 24 hours, we've seen three very important "research" pieces be released. First came the latest newsletter from Sprott Asset Management. Though Eric tries to rein in some of his conspiratorial impulses, he nonetheless lays out some convincing statistics regarding the latest "Leap Day" samshdown:

http://www.tfmetalsreport.com/blog/3586/latest-sprott-newsletter

Hot on Eric's heels came Chris Martenson. I feel like I know Chris a little bit. He is a sober and rational analyst who is trying his best to warn and educate as many folks as possible. Unlike yours truly, he is not prone to bouts of hyperbole, profanity and screaming. He is a serious individual doing serious work. (He's going to be a podcast guest in a few weeks so you'll get to know him better soon.) All of this makes his blog entry from yesterday all the more credible and relevant. If you haven't yet, please be sure to read it:

http://www.tfmetalsreport.com/blog/3587/more-required-reading-chris-martenson

And this brings us to the Piece de Resistance. I first became aware of Paul Mylchreest last year. He's a serious analyst who works hard but likes to keep to himself. Again, unlike yours truly, he's not shouting messages from the rooftops, attempting to draw attention to himself. He takes a long time to study a subject and often writes lengthy and diligent missives, which he releases about every 90 days or so. Yesterday afternoon, he sent me a copy of his latest piece. Out of respect for his effort, I didn't want to just blindly shove it out into the public domain without his permission so I sat on it...which killed me because it's fantastic! As an endorsement, as soon as I read it I sent it off to Santa for his impressions His reply was: "This is spot on. Look at today as a prime example."

Paul lives in England so I didn't hear back from him until earlier today and he has given me permission to post it here but it is also readily available now through GATA and many other metals websites. This is wonderful because this piece needs as wide of distribution as possible. PLEASE read Paul's work. It is 57 pages so it's not a simple and short project. If you have the capability, print it and save it for posterity. Make a few extra copies and share it with your skeptical friends and in-laws. And how can you go wrong with a title of "The Thunder Road Report"? Thunder Road is, of course, the 2nd greatest rock-and-roll song ever written!

OK, now just a few words about the ongoing manipulation. As you heard The Witch and Ruprecht discuss, the chief problem with the Comex now is lack of human participation. Post MFG, the only entities seemingly left trading metals are WOPRs and monkeys. That makes it far too easy for The Cartel to manipulate paper price on a daily basis and it's also disrupting some of the "normal" trading patterns I've been following for years. Case in point, the OI numbers.

You'll recall that back on Tuesday, April12 gold options expired and "first notice" day is Friday. What we would normally be seeing this week is an exodus from the front-month, April12 contract and a "roll" of positions into the next front-month of June12. The curious thing is how this isn't happening in the same manner that it always has in the past and, again, I use this as evidence supporting my theory of declining market participants. 

Tuesday was also the cutoff date for the latest CoT survey and that obviously impacts things, too, but check this out. On Tuesday, the paper gold price fell by about $1 on the regular Comex and then was raided (in advance of yesterday's smash) on the Globex. Usually, a Comex trading day where price was unchanged would lead to very little change in the OI, too. With first notice day right around the bend, I would have expected a flat total OI with a significant drop in April12 but a commensurate rise in the OI of the June12. Instead, we got this:

April12 fell from 113,399 to 68,524 for a loss of 44,875.

June12 rose from 169,283 to 193,335 for a gain of 24,052.

Total OI fell from 437,137 to 417,304 for a loss of 19,833 or 4.54% and is at a level not seen since early January.

So what does this mean? In a "normal" market, controlled by human speculators and hedgers, positions get rolled before expiration. One contract is closed and a new one is opened. On Tuesday, we instead saw the predominance of the HFT algos, whose only goal is to rapidly day trade contracts and then close positions before 1:30 EDT. I don't mean to overstate but I also don't want to downplay the significance of this. There is no such thing (yet) as true artificial intelligence. Sure, the WOPRs are programmed by humans but then they are set loose to trade off of technical signals and headlines. They don't think, they simply act. As the opposition, this gives The Cartels enormous, extra power to manipulate the paper price. Influencing price in order to fleece to machines becomes a quite simple project if you know in advance where the machines can be tripped into either "buy" or "sell" mode. And this, unfortunately, is the world we now inhabit.

It's all part of why I beg most of you to simply stack physical and avoid the paper trade. As documented above by Sprott, Martenson and Mylchreest, the paper trade is now a complete sham where the only way anyone can consistently profit is by trading alongside The Cartel. (SPOILER ALERT: We'll be discussing and planning for this in much greater detail next week.) Most of us have neither the time, the tools nor the inclination to fight The Forces of Darkness every day. Therefore, your best strategy is to remain vigilant and use every manufactured correction to accumulate physical metal at a "sale" price.

Lastly, the incessant wailing and grinding of teeth at every downtick has to stop. First of all, it's annoying. Those complaining are acting like little crybaby children and they're driving everyone crazy. Stop it! The metals are manipulated and managed. Period. And if this bothers you and makes you want to sell your only protection against the coming economic disaster, then go right ahead. Let yourself be just another useful idiot member of the masses. However, if you visit this site regularly because you are aware of the inevitable crash of The Great Keynesian Experiment, I must ask you: Why do you even give a shit about today's paper price? Why does it matter? Gold will be higher in fiat-conversion price 6 months from now. It will be higher 12 months from now and it will be even higher 24 months from now. Eventually, your physical metal will become the single most important financial asset you have. So, again I ask you: Why do you care about today's paper price? It doesn't matter. It only matters if you're trading and, as I've tried to lay out above, if you're blindly trading against The Cartels and the WOPRs, you're doomed to eventually fail anyway. The only way to succeed long term is to buy when everyone is selling and you must sell when everyone is buying AND you must cash out whatever profits you generate and take delivery of physical metal. Period. Amen. Hallelujah. Pass the Tylenol.

Additionally, the whiners also need to ease off the KWN people. That site is full of valuable information that is provided for free and nobody is forcing you to read it. To blame "KWN pumpers" for your own personal trading losses betrays your inexperience and casts you as simply another whiny troll who is reluctant to take responsibility for their own actions and decisions. There's way too much of this nonsense in the world today and lack of personal accountability is, in large part, responsible for our current predicament of financial and governmental tyranny. KWN serves a purpose in the "metals world" and all should visit there regularly but, if you get all hot and bothered by James Turk proclaiming that $60 silver is coming by the next full moon and then you rush off headlong into some short-term silver calls, that's your problem not Turk's or King's or mine.

I owe you a few charts so here are a couple. Note that nothing unusual is taking place. The price of paper metal is simply going through a basing period following the manufactured correction and subsequent bottom. Please be patient and, as always, BTFD.

paper_3-29amgoldh.jpgpaper_3-29amgoldd.jpg

paper_3-29amsilvh.jpgpaper_3-29amsilvd.jpg

OK, that's enough for now. I've been at this for about two hours and MrsF has a gardenful of plants she wants me to stick in the ground today. As always, hang in there. Try to relax and smile. You are doing the right thing and you are on the right side of history. Stay the course and be happy.  

TF

p.s. Here's The Boss performing today's theme song.


 

3:45 PM EDT UPDATE:

I don't even know what to say. 

As of the close yesterday, total gold OI fell by almost 10,000 contracts to just 407,387. I personally can't recall a level that low. Even in February of 2010, with gold near $1100, total OI was 450,000+. Here we are at $1650 and 2+ years closer to the end and total OI is 10% lower. Incredible! What other proof do you need that the Comex is now almost entirely populated with Monkeys and WOPRs? Additionally, paper price has now fallen by about $150 (8.5%) from the late Feb highs. Total OI has fallen an amazing 71,657 contracts for a drop of 14.96%. 

What does this mean? As discussed back in December, is the Comex fading into irrelevance? Maybe.

In the meantime, this has to have price implications. Has to. It has to. Over the past five trading days, total gold OI has fallen by 28,000 contracts (6.5%) while price has actually risen about $11. WTF?!?! ​There is no doubt that the stage is being set for an upward jump in price. The Cartel is clearly lowering its net short position while spec longs are dumping and NOT rolling. This has to mean higher prices ahead. It has to.

In silver, things are equally interesting. Yesterday, while price declined almost 80 cents, total OI surged by over 4,000 contracts. The only possible explanation for this is the establishment of brand new shorts. And, there is no way that its the EE adding shorts down here at $32. Not happening. This has to be almost entirely new large and small spec shorts and they are about to get fleeced. Total OI is back to 114170. The last time total silver OI was over 114,000 was on 2/29/12. Does that date ring a bell for ya???

​Look, I may be dead wrong and we may currently be in a brand new paradigm on the Comex and my way of looking at things may be about to send me the way of the Dodo Bird. However, these numbers truly are astounding and paint the picture that we are on the verge of some solid UP moves in paper price.

 

207 Comments

squib's picture

mmm

The PM markets are manipulated!

Wotta revoltin' development! - Ben Grimm

We are with you Turd, thanks again for spreading the truth.

HeheHaha, if you came here wanting Turd to make you rich tell you what to do and always be right...re-think your existence.

I bought phyzz 2 days ago of course, but realized about a year ago it will not matter if I pay $1650 or, I dunno, $55000 in toilet paper for an ounce of edible metal.

Sometimes I just can't believe they take these FRN's  for real money.

swampman's picture

First?

First, I thank TF for the incredible amount of time he puts in here.

Aw nuts :(

Big L's picture

4th

4th, and that'll do......

edit:

Cib, nobody here is buying any angry, frustrated and petulant declarative statements. You're going to need a really good argument and some facts to back up a position and get anyone to consider your words.

You needn't go any further than common sense and logic to see the validity of this post from Turd. 

So, if you're going to buy into the manipulative trash you're being fed, good luck, but hedge your bets, you'll be glad you did

DayStar's picture

Manipulation

Looks to me like they are trying to get rid of that right shoulder on the inverse head and shoulders.

DayStar

henry's picture

Thanks Turd

Thanks Turd

SV's picture

Platinum Palladium Numismatics

For this reason, I think that platinum and palladium are excellent alternatives to the grossly manipulated gold and silver markets. Where gold and silver are targets of the federal gov, platinum and palladium are less so. They can be an alternative to the oft overpriced numismatic coins. Check out http://compareplatinumprices.com for the best priced dealers in the country.

This article is serious! Lots of political risk in gold and silver!

Turd Ferguson's picture

cib is not retarded but he

MODERATOR

cib is not retarded but he has been deleted. He can go anywhere he wants and say anything he wants about me but there is no reason for me to let him spout his nonsense here.

LOUP-GAROU's picture

Thanks

Thanks Turd, although I get furious on days like today I take this time to turn fiat into pm's! the talking heads keep trashing so I keep stacking!

Nick Elway's picture

2 ea 1/2 oz AE Platinum coins for less than 1 ea 1 oz

Less of a premium on 1/2 oz coins.  Not unusual, but interesting..

http://www.providentmetals.com/bullion/plat/us-plat/ape.html

dropout's picture

More MSM Drivel

Part of the manipulation is these sort of trashy stories from the banker controlled main stream media ~

A so called "gold analysis" piece out this morning carried by Reuters/London, authored by Veronica Brown and Amanda Cooper states in part,  "Gold's inability to outshine cash in times of a credit crunch, has been attributed to strains in the lending market in the latter stages of 2011."

Can you believe that? I almost fell out of my new and very comfortable computer chair! What absolute drivel!  

 Yet there are some who will believe it unfortunately. Check it out -

http://finance.yahoo.com/news/analysis-gold-richer-poorer-crisis-163819319.html

Dagny Taggart's picture

Thanks Turd

Just for the record.. I NEVER whine when PMs go down... just another sale to buy physical. Thanks, as usual, for all the good information Turd.

Great new video of Keith Nuemeyer of First Majestic. Explains how his company (AG) is the most closely correlated stock price to the price of Silver of all comparable miners.  http://dagnytaggart55k.blogspot.com/

paulindoon's picture

I can never understand why

I can never understand why people come onto this (FREE) site and badmouth the one who using his own resources, perserverance & intelligence and has (benefically) decided to share with us peons his wisdom. And it's FREE for God's sake!!!

I, surely are one amongst many, truly appreciate what TF has/is doing for us thru this site.

TF please ignore (as much as you can) the idiotic trolls who are bend on doing nothing more than show their ignorance.

GoldMania3000's picture

I think people are beat up

If i kicked you 10 times and you fell to the ground.  I let you catch your breath and then you were going to get up and then i kicked you 10 more times..in the face, throat and balls...and then i threw dirt on you followed by some water in your mouth..then kicked you again in the balls...how would you feel.

Welcome precious metals investor. this is your value proposition to the general public.   

¤'s picture

The Mad Hatter strikes again...

Thanks for your fired-up words and the link to that Thunder Road report yes

I hope yourself and the little's T's are feeling better today. smiley

Desert Fox's picture

Trying to keep it together

But, But, But Silver went down 26 cents overnight.

NO WHINING!!!!!cool

Silver Meddler's picture

In Other Words...

Quit yer bitchin', bitchez!

Thanks Turd for the daily insights. This blog is always one of the places I check-in before MAKING MY OWN DECISIONS. yes

jonoso's picture

the boss

be great if you finished out with  "the bosses " tunes every post!!!!!!!!

koan's picture

@Dagny Taggart

Username and avatar choice:

Maryann's picture

Thanks TF

I love that you can just check in with Santa! smiley

Today is a lovely day to plant...I think I'll do the same.  

Larry L's picture

Travel Time

Do you think it's time to call the ladies and travel to the Pawn Shop? That Silver fruit seems ripe for picking and buying.

Let's keep stacking!

thisismynewname's picture

One reason for stacking

I'm mostly a lurker because I don't have anything to offer that hasn't already been expressed - but one reason for stacking (silver specifically) that I don't see getting mentioned very often is the actual supply/demand fundamentals - so here's a little perspective -

Silver use to be abundant - more than abundant - there use to be massive supply overhangs everywhere.  When silver was used as money - there were billions of ounces just lying around - and we were mining billions of ounces out of the ground.  When silver was no longer money, there were massive government stockpiles.  One of the reasons (I believe) that silver was sold by so many banks in paper form was that you could always get massive quantities of silver easily and cheaply.

Now you can't  The supply overhang is gone - but the banks are still trying to hang on to their silver profit center (sell paper - and if someone asks for delivery - you can always get it easily and cheaply) except now it's harder to get easily and cheaply.  The paradigm is changing.  Silver is no longer abundant.  It may not be in shortage now - but it is on the path.

If you stack - you're preparing for the new market price for silver.  The market has been manipulated because of the severe supply overhang for so long - no one knows the market price for silver.  The only thing that is clear is that the supply/demand/price equation is currently wrong - if price stays where it is - then supply dries up.  So price has to rise before supply dries up.  That's why you should stack.

I trade too - and the manipulation of price hurts when you trade - but by stacking - I'm ultimately waiting for the supply/demand/price equation to balance.  Even if fiat survives - the current silver supply/demand/price curves can't.  Either way - keep stacking...

Kcap's picture

One thing is clear

The manipulation is clear.  The banks and media's "public" indifference wrt metals is clear.  And the TA used for micro purposes in todays chart is clear.  

This Reverse H&S is the biggest development in any market in modern day history.  You would literally have to be blind not to see it.  There is no other way to interpret this.  They want it like this.  

Why?

Think about the mass confusion that exists when one hand is feeding "indifferent" or negative bias about metals through media and central bank presentations.  While simultaneously, the chart is screaming one definitive thing.  And you all do KNOW what it is.  You may be antsy, you may not like the day to day manipulative machinations of the architects of this chart....BUT....without them, the chart doesn't get finished properly.  And when it does, with hindsight, you'll be as thankful as you can be.

And as a contrarian indicator, as referenced on other sites, when Jeffrey Christian of CPM goes bearish and calls a top, this is your sign to endulge in metals.

Remember what happens to corn kernels when heated....they get hot, bothered, filled with angst, and finally spontaneously combust and explode.  Feel similar to today?

Relax.  Enjoy the heat.

Kcap

Xeno's picture

Laying The Smack Down

Great post Turd! Glad you got that off your chest. For as long as I've been reading, the mantra has always been "Stack" and "BTFD".

We know what to do so spread the word and take these sons of bitches down.

It's strange that a lot of people haven't figured out that no matter if it's a subscription for $24.99 or $10,000.99, nobody ever says when to sell. That's always up to you since nobody has the same situation, reasons, or objectives.

Been there, done that. So if you're down and it's bugging you, seriously rethink why you're invested in the first place. This whole deal is much bigger than a daily scalp of profit.

No doubt this is the greatest time to be alive and will be moreso in the not to distant future.

Holdin' and not foldin'

Chepo's picture

Gracias Turd!

I truly appreciate what you do for all of us. Best site for silver investors, period.

Mickey's picture

the frustration

the frustration is we see waterfall declines , however we rarely see huge spikes up.

then we see the pattern of the waterfall decline followed by another waterfall decline with only small rallies in between.

even last years silver run up was smooth and steady-until the end when it started going parabolic.

Even when I try "probing" positions you cannot make $$ to the upside trading.

Have made nice $$ to the downside however.

Just not my personality to be shorting PM knowing what I think is going to happen in time.

I'd lik eto assume when the momentum shifts to the upside we see spikes up--however, with HFT who knows?

I'd like to think we are just hours or days from a prolonged rally in which case I keep buying into that rally.

SuperLeggera's picture

Currency Wars: BRICS Make There Move Away From USD

​Thursday, March 29th 2012 – BRICS bank on their bank and currencies to withstand financial troubles: http://rt.com/business/news/brics-bank-currency-plan-669/

March 29 2012 – BRICS agree to local currency credits to ease dollar dependency: http://rt.com/business/news/brics-currencies-credit-deal-755/

Thursday March 29 2012 – BRICS: Foreign interference in Syria ‘unacceptable’:
http://rt.com/politics/brics-medvedev-syria-aid-732/

 
Dr G's picture

Classic 1% silver drop in the

Classic 1% silver drop in the 10 minutes before London close. Just classic. Well played LBMA, well played.

And no, I don't give a crap about the paper price. I'm just bored and like to complain. :)

NW VIEW's picture

TODAY'S AMERICAN FREEDOMS !!

There is a current these days to move out of this corrupt land to nations where the grass is greener.  Many will move back to these shores.

In 1913 my Polish grandparents secretly sold their farm in the old country to their cousins.  They then traveled by night and walked to Germany to catch a ship to America.  They had two children and one one the way (my dad).  When the old country officials found out that my family had fled, they executed our cousins that bought the farm for not notifying the local officials.

There are many places within our shores that a prepared family could survive and this may be the best place on the planet.  We have not heard much these days about canned ham, bacon, planting that garden, moving to that small farm, etc.

We still have a huge illegal immigration problem in America and the people fleeing their  former lands see this as a better place but many of us do not.

We will make our stand right here, right now and continue to prepare our family for the continual degenerating of American values. We at least have the option to move to  foreign lands without the execution of the family left behind which my grandparents did not have.  Lets be thankful for what we do have.     jmo

Dr Jerome's picture

low premiums

I noticed that Provident's premium on AG is low. I suspect that this portends a further drop in price. Perhaps they will attempt to blast down through that shoulder. good thing I get a paycheck tomorrow. I'd love to lower my cost average.

SuperLeggera's picture

OOPS!

I was listening to Bob Chapman interview when I posted the above - not quite sure how it got included. Oh well.

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