A Wild Week Ahead

The pressure and volatility will only be ramped higher with each, successive day. I hope you're ready.

Sorry for the delay in posting this morning. This week promises to be so consequential that there were several people I wanted to contact before writing today. One of them was my London contact, "Winston", who assured me that physical demand in London continues unabated, even at these higher prices. Winston feels that this demand is putting some serious pressure on The Cartels as they are pinched between massive paper shorts, underwater leases and unrelenting demand for physical. Sucks to be them. That said, they will almost certainly attempt some raids this week so we must be prepared.

For today, we've seen a nice and quiet, consolidative session. Gold has been weak but not overly so and silver refuses to give back any of last week's gains.

This likely sets us up for a Happy Tuesday as Cartel banks cover a few shorts ahead of the CoT survey. Covering on Tuesday provides two positive outcomes for them:

  1. It allows for more momentum-chasing spec money to be drawn into the metals.
  2. It frees up "ammunition" that can be re-applied post-CoT on Wednesday or Thursday.

The comparisons to 2/28-29 are too obvious to overlook. Recall that 2/28/12 was also a Tuesday. In anticipation of a beatdown, look at what was allowed on 2/28 and then look at what occurred on Wednesday, 2/29. Note the timestamps at the top of the charts:

Going further into the weeds, after last week there is little doubt that this week's CoT (when it is released on Friday) will look a lot like the CoT from 2/28. Therefore, WE MUST EXPECT Cartel manipulation this week.

There are two, critical events later this week which will provide plausibly-deniable cover for such a raid. First, on Wednesday, the German Constitutional Court will rule upon whether or not it is within the German constitution for Germany to participate in the ESM. ( http://www.businessweek.com/news/2012-09-09/german-court-decision-on-bailout-funding-looms-over-euro-crisis) This is a a dreaded "double wildcard" in that, first, no one can say with certainty how The Court will rule and, second, what kind of impact the ruling will have on global markets. For example:

  • The Court rules against Germany in the ESM. Maybe the euro tanks and The Pig rallies? Maybe the metals dive because of "dollar strength"? Maybe the metals rally as a safe haven?
  • The Court rules that Germany can participate in the ESM. The euro rallies and the metals rally, too? The euro falls in anticipation of new euro issuance? This rallies The Pig and the metals dive?

See what I mean?? No one can say what the heck will happen. Therefore, you have to expect that The Cartels will attempt to game the situation to their advantage.

And then, of course, we've got the FOMC meeting which concludes on Thursday. First, we'll get Fedlines at the conclusion of the meeting and then we get a Bernank press conference shortly thereafter. To say this this situation will allow for Cartel manipulation would be an understatement and an insult to your intelligence as a Turdite.

Anyway, what I'm getting at is volatility. Serious volatility. And, looming over everything is this: What if The Fed surprises yours truly and actually proclaims new QE via renewed "asset purchases"? Then what? Maybe the metals don't dive, at all. Maybe, instead, they skyrocket on Thursday and into Friday?!? So, anyway, just be careful. Be prepared for a sharp pullback but don't get caught flat or out at the same time. Be smart and stay nimble. Use any weakness to add to your stack. Even if The Cartels are successful in forcing a pullback, their glory will be fleeting. Prices are truly headed much, much higher in the short, intermediate and long term.

Here's a random collection of some stuff for your Monday. First, Jim Quinn is back at his post after some time away. A very interesting article is here: http://www.theburningplatform.com/?p=40182

I have no idea what the heck this means but I guess it's bullish for gold: http://www.zerohedge.com/contributed/2012-09-10/long-term-oscillator-points-towards-gains-gold

This came out on Saturday and I saved it all weekend so that I would be sure to include it today. It certainly falls right in line with all the stuff I blather on a daily basis: http://www.zerohedge.com/news/name-new-reserve-currency-china-imports-more-gold-2012-all-ecb-holdings

And this came out on Friday. When we look back in a few months, we'll pull up headlines such as this one and the story a few weeks ago about Saudi ordering everyone home from Lebanon. We'll then mutter something to the effect of: "Boy, we sure should have seen THAT coming. The writing was on the wall." http://www.montrealgazette.com/news/Canada+closes+embassy+Iran/7206256/story.html

OK, that's it. Today has gone pretty much according to plan. Let's watch now to see if the metals rally strongly tonight and through the day tomorrow. If so, we can begin to prepare for Wednesday/Thursday.

Have a great day!

TF

266 Comments

Istack's picture

Choppin Broccoli

TD's picture

Recent polls

I understand Obama's ratings have improved in the latest election polling... that is bound to be good for gold and silver prices.

TD

Lapp Nils's picture

Very good!

Smile from Sweden!!

Auric's picture

ready

ready

Dagny Taggart's picture

Still stacking

It's funny how I have NO urge to stop buying and stacking physical even as the price rises lol.

Thanks for the great info as usual TF!

colihondro's picture

still stackin

Thanks for the news!
The QE Twist(ed) operation continues...

Puck T. Smith's picture

I don't get the Gene Autry reference.

Maybe I'm not as old as I think I am.

Turd Ferguson's picture

Sorry, puck

MODERATOR

Back in the "channel" again...

Turd Ferguson's picture

Silver lease rates

MODERATOR

And we would be foolish to NOT recognize the correlation here. The last three times silver lease rates have bottomed and then turned up, paper silver price has been raided.

El Gordo's picture

Clink, clink, clink...

Merrily we keep clinking along, sometimes one clink at a time, sometimes two. 

indosil's picture

Trader Dan

Turd,

      Trader Dan's post blasts people who believe "Cartel Manipulation" is behind the capping of price of Gold & Silver.I am confused...since i am an avid follower of Santa,you & Trader Dan.

Turd Ferguson's picture

Watch this

MODERATOR
Bollocks's picture

A good example...

..of how the MSM can look and sound so convincing whilst speaking utter shite, and how anchors are so stupid they will read anything that's put in front of them.

Did someone say ROBOT ?

Colonel Angus's picture

The article on Chinese gold buying

I'm reading this at the cabin with some friends and family around. I probably said something like "Holy shit!" which sent everyone to asking me what was going on. When I told them that China has bought more gold through official channels, through Hong Kong only, in the FIRST HALF OF 2012, they all gave me a look. I asked, "Would you want to hold trillions of FRNs knowing that the fiscal cliff approaches, knowing we have an unsure election, knowing that the Bernank could devalue with prejudice at any minute?" So they ask, "How much is gold at anyhow? What about silver?"

One of them has some paper gold and some physical silver. The other has neither. Did ZH's graphs convince anyone? Probably not. But there will be no excuse now. (Mr. not much in the PMs asked how much I had squirreled away. His eyes got big when we discussed it. Then I told him that I used to have that much, but that damn canoe right out there on the lake had been bad luck. I don't think he knows whether to believe me or not. Score! Plausible deniability rocks!!!)

Puck T. Smith's picture

OK

Mickey's picture

let's not forget

HFT and algo trading--we can get selling on a raid--or HFT buying on a raid (to cover shorts or just go long)

I think the algos are all changing anyway to be in set up for a move up rather than the last year of beat downs.

what a mess for any viewpoint

Turd Ferguson's picture

link?

MODERATOR

When, exactly, has he said that?

Dan often cites "bullion bank capping" as a reason for price movements.

Response to: Trader Dan
SRSrocco's picture

THIS SHOULD STIR UP SOME STOMACH BILE.....

ARE THE ELITE MISLEADING THE PUBLIC THRU FOLKS LIKE ALEX JONES & LINDSEY WILLIAMS??

Lindsey Williams did an interview with Goldseek last week explaining the upcoming collapse of the U.S. Dollar & economy as well as the shutting down of the biggest oil drilling rig in the world –THE LIBERTY RIG. Lindsey was a pastor to the elite during his stay in Alaska (1970′s) when they were working on the Prudhoe Bay oil field. Lindsey believes he has an ‘INSIDE SCOOP TO THE ELITE” and shares this supposed information on interviews and DVDs.

Some years ago I started to listen to Alex Jones who would have Lindsey Williams on as a frequent guest. While Lindsey was stationed in Alaska, he was told by the elite that there was the biggest oil reserve in the world right off the coast of Alaska near Gull Island. They told him that this oil reserve was secret and they were not going to tap into it until the price of oil was much higher. Basically the elite were telling Lindsey… there was no shortage of oil, rather they were controlling the world by manipulated the price of oil.

As time went by, some of the things that I heard (or didn’t hear) on the Alex Jones show or in Lindsey Williams interviews started to make me quite skeptical.

You will never hear the term ‘PEAK OIL” on Alex Jones show or from the lips of Williams. Furthermore, I would take it one step further. COAST TO COAST AM — with George Noory and frequent guests like Jerome Corsi also dismiss Peak oil while pushing the theory of Abiotic Oil (which basically means the earth has a creamy nugget center of oil).

We must remember, for MISINFORMATION to work, 90-95% of the information must be true… or the audience would smell a rat.

In Lindsey’s most recent interview on Goldseek last week, he was told by the elite that the biggest oil rig on the planet — THE LIBERTY RIG — was halted due to the supposed reason that THE PRICE OF OIL WAS NOT YET $150 A BARREL. Williams went on to say that once the price of oil would get back up to $150, BP would restart work on the Liberty Rig. Even though this info may sell DVDs and get the Abiotic Oil believers slapping themselves on their backs again… it is complete hogwash.

Here is a recent headline from the Alaska Business Monthly:

Is Liberty Dead?

An ambitious Alaska North Slope drilling project stalls as BP reconsiders

On a manmade island in the Beaufort Sea, a colossal drilling rig billed as one of the most powerful in the world juts 240 feet into the Arctic sky.

BP installed the rig to punch horizontal holes of unprecedented length to a rich, offshore oil accumulation known as Liberty.

Under the original plan, crude from Liberty should have started flowing in 2011, helping to stem the worrisome production decline from Alaska’s North Slope.

But the big blue super rig so far hasn’t sunk a single hole, standing idle for months in a mystery that seems almost as deep as the wells it was supposed to drill.

———————–

Lindsey Williams stated in his interview that the length of the well would be nearly 45,000 feet. He went on to say that commercial airlines cruise at this altitude and the Liberty Rig would be drilling down that deep. Thus, Lindsey was inferring that this ultra-deep well would be tapping into that Abiotic Oil. However, this is most certainly not the case.

The Liberty Oil Field is located six miles off the coast of Alaska. At first, BP was going to build a man-made island above the field, but eventually choose to put it much closer to the coast line and drill horizontally to the oil field. Here is a map of the area:

The BP Liberty rig is located east of Endicott on the SDI (satellite drilling island) west of the Liberty deposit.

This is a diagram on how BP planned on tapping into the Liberty Oil Reserve:

As you can see, BP needed the biggest and strongest oil rig in the world to be able to drill this length of pipe in this horizontal well. According to BP and other sources, the amount of oil contained in the Liberty Reserve was estimated to be 100 million barrels. This may seem like a lot, but it pales in size compared to Prudhoe Bay which has already pumped 12 billion barrels.

If you want to get the details of the real story, you can go to the article link: IS LIBERTY DEAD?? Here is my brief synopsis. After BP’s disaster in the Gulf of Mexico where they were experimenting with ultra deep wells, BP decided to be safe and do a review of the whole Liberty Project. According to the article:

“In November 2010, BP informed us that it was suspending construction on the project to review the rig’s engineering and design, including its safety systems,” the filing said. “The Liberty rig construction contract expired on Feb. 8, 2011, prior to completion of the rig. Before expiration of the construction contract, BP identified several areas of concern relating to design, construction and invoicing for which it asked us to provide explanations and documentation, and we have done so.

BP didn’t stop construction on the Liberty Rig Project just recently… it halted it back in 2010. BP has been in an 18 month review process and now has released their results (as of June 28, 2012):

“We have always said that we will not proceed with the project unless we can do it safely and meet all of our standards. In the end, the project as currently designed does not meet our test,” said Dawn Patience, BP Alaska spokeswoman.

“After a full review of project engineering and economics, BP has decided not to pursue the proposed Liberty project, in its current form,” she said. “BP is in the process of working with regulators to discuss the potential forward plans for the project.”

The decision comes after “a detailed 18-month review of the rig systems, an analysis of the project’s risk and economics, and an assessment of the evolving regulatory framework,” Patience said.

So what really happened to the Liberty Rig? BP realized after its disaster with the Deepwater Horizon in the Gulf of Mexico, that they did not have the technical ability to be able to drill this sort of 6-8 mile horizontal well safely… and to do so correctly, would double the project cost from $1.5 billion to $3 billion…LOL. Thus, the costs would exceed BP’s margin for profitability.

If the Liberty Reserve held 100 million barrels, BP would stand to make $10 billion in revenue if the price of a barrel of oil was $100. At a $1.5 billion dollar investment… this was a money maker. However, if costs doubled to $3 billion, it would be 30% of its future revenues. This would be a 3/1 EROI on its CAPEX only….LOL.

DID LINDSEY MAKE A COMPLETE FOOL OF HIMSELF ON GOLDSEEK?

When you do a little research and look at the facts, you have to wonder….WHO THE HELL IS LINDSEY LISTENING TO? Is this elite source really that stupid…or is he trying to mislead the public through folks like Williams or even Alex Jones?

Lindsey also spoke about the new tactic of the elite to get the price of oil to $150 a barrel. Instead of provoking a war between Israel and Iran, they are causing the overthrows of middle eastern countries and turning over rule to the Muslim brotherhood. Supposedly, the last country to be destabilized is Saudi Arabia. Once Saudi Arabia is a complete mess, the price of oil will shoot above $150 and BP’s Liberty Rig will start the project going again — that is — according to Williams.

Williams stated that this would cause havoc in the United States because Saudi Arabia is our number one source of oil imports. Even though this provides us with additional CONSPIRACY HYPE… the facts reveal the real truth.

Here we can see that Canada is our number one source of oil imports at nearly 2.8 million barrels a day (based on 2011 annual data). In 2011, Canada sent the USA, 2.3 times the amount of oil than did Saudi Arabia. Also, Mexico was the second largest source of oil followed by Saudi Arabia. Interestingly, the United States actually imported more oil from Russia & Venezuela (1.57 million barrels –its supposed rivals) than Saudi Arabia (1.2 million barrels — its supposed ally).

So what’s the deal here with Lindsey? I actually like Lindsey. He is doing what he believes is right. Unfortunately, the information he is being spoon-fed is helping to mislead the public. I believe the elite realize that PEAK OIL is a threat to their very existence. Without cheap and abundant oil, the wealth, equity and systems of our current economy become severely disrupted.

Now, don’t get me wrong… a lot of the information that Williams puts out there is correct. The US Dollar is collapsing and the U.S. economy is heading into the toilet. However, I believe the real reason is PEAK OIL and not some grand conspiracy of the elite controlling the world by oil manipulation. Hell, Bix Weir believes the same damn thing….LOL. It is really quite strange that both Alex Jones and George Noory dismiss Peak Oil, but rather push the theory of Abiotic Oil. They are by far the two largest CONSPIRACY SHOWS on the radio-internet.

Mike Ruppert of Collapsenet and the Lifeboat Hour has mentioned several times… that he believes Alex Jones is being used by the elite to mislead the public about Peak Oil. At first, I thought Ruppert was over the top… but as time went by, it started to make sense

We must remember, all large entities such as the Federal Govt & major conglomerates are the most at risk in a post peak oil environment. If the public is brainwashed to believe that the elite are controlling the price of oil (and there is plenty of oil on the planet)… it keeps them focused on hating the elite bogie-man instead of understanding the ramifications of peak oil. Peak Oil puts the power back in the public’s hands as they must revert back to a more local economy.

Lastly, some very alarming data just came out of the USGS concerning SHALE GAS RESERVES. I plan on doing a much longer post on this very subject and how it will impact the gold and silver mining industry going forward.

 

Puck T. Smith's picture

Re: Watch this

I did not know David Stockman follows the Austrian School.  I saw a blurb about this over on the LRC blog today and they mentioned...

"David will be the keynote speaker at the  NYC Mises Circle this Friday. Meet us there!"

With brains like these, how did Reagan screw things up so much?

indosil's picture

Trader Dan Link

http://traderdannorcini.blogspot.in/2012/09/are-commodities-coming-back-in-vogue.html

I want to repeat what I have been saying and writing about this gold and silver market for the last 8 years or so that I have been writing publicly about this topic - speculative money is what drives the markets. Commercial activity does not. As long as speculators are buying, prices will rise regardless of what the commercials are doing. Only when that buying abates and upward momentum stalls out, will a market reverse course. IF the fundamentals remain strong however, the dips in price will attract new buying once the initial wave of long liquidation from the day traders and other shorter-term oriented traders is finished.



Beware of those who tell you that prices cannot rise further because there is "X" amount of speculators in a market. Who is to say that these same speculators cannot buy more? How high can prices rise before upward momentum stalls out? Anyone who claims that they can predict such things is more full of crap than a Christmas goose. The markets will tell you when they are turning; ignore everyone else and I mean everyone and listen only to the voice of the market. After all, it is the only accurate voice out there when all is said and done.

Mickey's picture

stockman

he was with reagan 30 years ago-people and things change as we get older and wiser, or perhaps just independant

California Lawyer's picture

EKG Price Action

Turd:

I seem to recall that when there are these events, all poised to dramatically affect metals' prices, that the action is predictable.  First, there is a big down draft, wiping out all the stops, shortly followed by a massive spike to the upside, again clearing stops to a new high, followed by a another drop, on a shallower slope to the close.  The net effect is price movement less than 2% by the end of the day.  

So, I see the cartel selling tons of paper right on the announcement of the German court decision, causing algos to drop price immediately, followed by the spike up and the ensuing down draft. 

Then, the next day, before Bernake speaks, same thing.

The net result is that silver and gold will be within 2% of their trading ranges at the end of the day, but the paper players will have been scalped.

Maybe I am just flat out wrong, but I sure remember it going this way in the past.

Puck T. Smith's picture

Re: Williams and Jones.

I never regarded either as more than entertaining hucksters.

harlan07's picture

trader dan link

this is a different link than the one above that goes into more detail about dan's views of cartel manipulation

http://www.traderdannorcini.blogspot.com/2012/08/gold-and-silver-continue-marking-time.html

Turd Ferguson's picture

Again...

MODERATOR

Where is he "blasting people" who "believe in manipulation"? I don't read that at all.

Response to: Trader Dan Link
Turd Ferguson's picture

And from this artcle

MODERATOR

There's this. I believe that all Dan is saying is that those who blame every downtick on Cartel price suppression schemes are fooling themselves.

"As a firm believer in the view that the feds have a vested interest in keeping the gold price under wraps, it is distressing to read some of the recent comments that I have seen attempting to explain why gold and silver are currently not trending higher."
 
Response to: trader dan link
Turd Ferguson's picture

And it's not my job to

MODERATOR

And it's not my job to defend/explain Dan's position. He's entitled to his opinions just as I am.

He's a great guy and he's on our side. Cut him some slack.

stingbee30's picture

Re: MY Take

I don't think the so-called "raids" mean much.   If you have a serious demand for physical, your paper shorting becomes meaningless-it actually exacerbates the losses and it makes the next move more powerful and deadly for them.

Germany will be forced to move ahead-this way they can keep leverage and authority on the European Union. This should help the metals market...If Germany is going to go the other way, then it will force further instability and bank run for the PIGS.  They have no choice but to join the Printing money crowd.  Many Germans don't like this idea of printing and providing a "German Put" via ECB, but they have no choice.  The European markets are interlinked.  The PM will be be up regardless of what Germany does (it might fall briefly, but it will go up).  Instability and bank runs will push more money into hard assets.  The money flow towards Gold and Silver will not stop either way.

The FEDs will start their monthly buying program for a long time- This should also help the metals.

China has no choice, but start doing some easing...will also help the metals.

The Consolidation over $33.00 is significant.  We will have two days in a row trading over $33.00.  We are seeing higher lows with every move. 

We consolidated today again...

New Support 1: $33.40

Next Support 2: $33.20 (this is going to be a major support based on the move on Friday...We breached the $33.00 key resistance area with a huge volume...

Support 3: $33.00 (This will hold even if we see any selling)...

I do agree it will be volatile and with wild swings.  But the option volume on SLV indicates further bullishness.  Tomorrow, we will see Silver trading over $34.00+ (we could see $34.50-$35.00) before Wednesday.

The Short-selling paper is going to pay less dividends going forward.  I do believe JPM Morgan has been warned, and the LIBOR probing is going to lead to Silver probe-a trickle down effect.  JPM doesn't have much leverage and ammunition going forward.   a

The major hurdle will be the $37.00-$37.50 area.

Good Luck....

harlan07's picture

what dan says

what dan says is that the cartel supresses price during rising OI, and that it's the speculative money that makes prices rise - and it that speculative momentum that the cartel suppresses.

then when OI declines and the specs are liqudidating the cartel covers their shorts.

He points out a rare exception to this when gold soared to $1900 last year, i guess the cartel was panicking.

When I first read that article I was confused as well, but I think he and turd are saying the same thing, right?

Mickey's picture

2008 QE

the  morning that occurred gold-which was I think around 800 sold off $40 and then when QE was announced it bounced up 80 for a net gain of 40

I did sell a bit into the downdraft--then woke up and bought-- and bought more after the announcement

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