A New Week Begins

Actually, it began last night at 6:00 pm EDT and we've already seen more action and volatility than we saw in the first four days of last week. Be ready for a wild week ahead.

First of all, I have to give you a chart of The Pig. When considering ole Pigatha, you must remember the convenience of expressing PiggyWiggy in terms of an index versus other fiat currency. That the dollar is "strengthening" is only another way of saying that it is currently some other fiat currency's turn in the barrel.

Regardless, that Porky is actually UP over the seven days since the announcement of QE∞ is a feat of structural engineering on par with Giza.

In the end, it matters little. Everyone else can worry about fiat. We'll stick with the only real currencies, recognized through millennia as true money.

True money has been under pressure for 24 "trading hours" now as gold has fallen about $30 and silver over $1.50. OK. Fine. Sure. Whatever. This is exactly the type of dip for which you need to be on the lookout. Because of relentless physical demand brought about by the ongoing fiat currency debasement, it is going to be very difficult for The Bullion Banks to mount an aggressive move to the downside. More likely, they'll let the HFT algos do all of the paper selling and then they will utilize any brief bouts of weakness to obtain allocated metal to deliver to insatiable London buyers. You should do the same. QE∞ means direct monetization of government debt and a permanent state of fiat decay. Buy all significant dips and take delivery. While you can.

Now for some reading material to help you through your day. First up, this interesting article from the WSJ. Feel free to disregard the source and some of the overt political stuff contained within. The economic message, however, is sound, regardless of what you think about the authors. Here's a snippet and a link to the full text:

http://online.wsj.com/article/SB10001424052702303561504577497442109193610.html

"Did you know that, during the last fiscal year, around three-quarters of the deficit was financed by the Federal Reserve? Foreign governments accounted for most of the rest, as American citizens' and institutions' purchases and sales netted to about zero. The Fed now owns one in six dollars of the national debt, the largest percentage of GDP in history, larger than even at the end of World War II.
The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself. It determines the interest rate by declaring what it will pay on reserve balances at the Fed without regard for the supply and demand of money. By replacing large decentralized markets with centralized control by a few government officials, the Fed is distorting incentives and interfering with price discovery with unintended economic consequences.
Did you know that the Federal Reserve is now giving money to banks, effectively circumventing the appropriations process? To pay for quantitative easing—the purchase of government debt, mortgage-backed securities, etc.—the Fed credits banks with electronic deposits that are reserve balances at the Federal Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion in September 2008.
The Fed now pays 0.25% interest on reserves it holds. So the Fed is paying the banks almost $4 billion a year. If interest rates rise to 2%, and the Federal Reserve raises the rate it pays on reserves correspondingly, the payment rises to $30 billion a year. Would Congress appropriate that kind of money to give—not lend—to banks?"

And this is interesting. Despite all of his (empty) promises to end the 4-year silver investigation by "late September or early October", ole Thunderlips seems to be getting a case of "froze toes":

"The Commodity Futures Trading Commission is wrapping up its investigation of the silver market and while some sort of public announcement may come “in the near future,” nothing is “imminent,” said CFTC Commissioner Bart Chilton Friday." ( http://www.forbes.com/sites/kitconews/2012/09/21/update-cftcs-chilton-silver-investigation-continues-expects-something-public-in-near-future/)

I can certainly understand why so many of you have zero faith in this character. He certainly seems to relish being the "good cop" in the other four commissioner's "worthless cop" routine. We'll soon know for certain whether or not they have any integrity. I'm looking forward to finding out. (Images below provided for the sake of nickname clarity.)

And, oh boy, this one's a real eye-opener. All European Turdites (but in reality everyone) should read this interview/article: http://www.telegraph.co.uk/news/worldnews/europe/eu/9559937/Vclav-Klaus-warns-that-the-destruction-of-Europes-democracy-may-be-in-its-final-phase.html

OK, that's all for this morning. We are now 45 minutes post the London pm fix and prices are hanging in there quite nicely. Again, all I'm hoping for are NY closes back above $34 and something between $1760 and $1770 in gold. Given all of the containment efforts of last week, there's a reasonable high likelihood of a "Happy Tuesday" tomorrow. In anticipation of an exciting autumn, I actually added some fiat to my options account last week and I'm looking for an opportunity to buy some additional calls. I will, of course, keep you posted on any purchases I make. Have a great day!

TF

396 Comments

proformatrillionaire's picture

First again!!

First again! Going to buy  a gold eagle this time. Tired of buying silver.

The Green Manalishi's picture

Desmond TwoTwo

SilverHawk's picture

First?

?

Rats! Keep stackin' friends!!!

Air Garcia's picture

i'm sick of it all

there. i said it. 

Lightning's picture

Boom

Lightning usually strikes first.

But not today.

Swineflogger's picture

3rd

Turd! I'm thurd  .  .

EDIT:  Rat Puke!

Money By Trading's picture

Downside Target $1728

This seems to be a good time to share my look at the days ahead.

I hope we get there...I can't justify buying silver up here. :)

http://wp.me/p2CT0a-5Z

agNau's picture

Squeeeeeezing ..

Towards a move sooooon.....

and.......not first.........to infinity!

Eman Laer's picture

MACD

SIlverbee's picture

Whilst I have been an avid reader

Turd, can you give a more detailed explanation of:-

" they will utilize any brief bouts of weakness to obtain allocated metal to deliver to insatiable London buyers" (the whole quote)

Also since we have dropped out of the channel does this mean it's not a reliable guide anymore?

Finally, there must be a huge market for a device like a chip and pin machine that does electrical, magnetic, ultrasonic and other non evasive tests on coins and bars. 

If gold and silver are to become the deposit money of the future it would make sense to test it on transfer.

tyberious's picture

Quote of the day!

"Regardless, that Porky is actually UP over the seven days since the announcement of QE∞ is a feat of structural engineering on par with Giza".

Turd Ferguson

Good one!

realitybiter's picture

Chilton

Hulk Hogan = Chattin' Chilton

Blah, blah, blah

He is simply a tool to give the dupes an illusion that someone gives a shit about the systemic rot.

I'll repost my Tungsten position (sorry to bore those that already read it, but it was at the tail end of the last thread):

Tungsten:

The last time this happened was Mar 26, 2012.  The drilled, then refilled with Tungsten bars made the rounds.

This was about 2-1/12 months after the market bottomed and started its run up to the mid 30's

And now.  Geez...It was July/August when the market bottomed....I'd guess that a Tungsten story should show up around the end of September.  How stupid do "they" think we are...

Did the FBI get the guys who did the Tungsten job in March?  Surely, the folks that bought this stuff told them who they bought it from....This stuff is not difficult.  You just threaten jail time until you hit the rung on the ladder that sticks.

The Tungsten story is bullshit propaganda.  Is it real?  Probably.  Is it much of the market?  How could it be?  If it were true an pervasive the price would be skyrocketing as those with real pure gold would be holding something which suddenly was found to be very very dear.  I guess if gold goes up $200 today we will all need to re-assay our holdings....

Larry's picture

Some rats leave. Some climb aboard.

Just happened to catch Tim Pawlenty on CNBC’s Screech Box this morning as I was innocently checking the ticker. It was a moment to remember, unfortunately. Not surprisingly he’s just another Alan Simpson-lite it seems. Hey, if you can’t win an election to rule the people from on high in Washington, may as well win a seat at the bankster table to control the people’s money.

WASHINGTON (Reuters) - Former Minnesota governor Tim Pawlenty quit his position in the campaign of Republican presidential candidate Mitt Romney on Thursday to become a leading Washington lobbyist for Wall Street banks. He said he continued to support Romney... Pawlenty will be the head of the Financial Services Roundtable, a U.S. lobbying group that represents JP Morgan Chase & Co and Wells Fargo & Co, among other financial companies.

More (or less)…

http://www.chicagotribune.com/news/sns-rt-us-financial-regulation-pawlentybre88j0ll-20120920,0,2490314.story

The Reuters article lays out the who’s and where’s, but for a better physical sense of how he came off in the interview, see the following:

worldend666's picture

Sell off

It might be a bit premature to be calling for new highs now.  We have formed a nice cup going back to last March and in order to form the handle we need several weeks of drifting downward before the next upleg. My bets are currently being placed short for the interim and I will be looking to buy again at 1725.

spotgoldprice's picture

Sir Turd - Please post newest comments first....

......So that the sorry losers that infect this board with their childish firsts!  will be at the bottom of the page where nobody will bother looking at them :)

Thanks.

atadheavy's picture

A Second Question to Turdville

Last week I posted my 1st question to Turdville regarding potential future forgiveness of T-bill debt by the  Federal Reserve. Thank you Turd and Turdville for the responses to that question. I have one other question that troubles me and I would appreciate any input the community may have regarding this issue.

First, we are all familiar with Turd's analysis (which I completely agree with) regarding the manipulation of the silver futures market. There is no reason to list all of the evidence that this manipulation exists.

My question began to formulate after watching the Wicked Witch's televised interview regarding JPM's conduct in the silver futures market. But, before I ask my question I need to lay out the following "unrelated" data points:

DATA POINTS:

a. Master's explanation was that JPM was merely placing hedges for clients of the bank.

b. We are all familiar with the US Gov's PPT and it's  involvement in supporting the equity markets.

c. We are all familiar with GATA's analysis and evidence of CB involvement/manipulation in the physical gold market.

INITIAL OBSERVATIONS:

* There seems to be an assumption that JPM's activities in the silver futures markets are all based upon traditional corporate profit motive. In other words, JPM is a large enough player to place very large naked short positions, induce a waterfall sell-off by triggering third party stop losses, then cover at significantly lower prices. Easy profits.

* The recently identified flaw in this strategy is that JPM is now finally swimming against overwhelmingly strong fundamentals moving in the opposite direction. That this will then result in a  massive short squeeze and cause significant losses for JPM.

* I think it is fair to assume that the Wicked Witch's monkeys are a fairly intelligent bunch. Certainly they have been aware of tightening supplies in the physical market. Certainly they are aware that ultimately these tight physical supplies will impact the future market. Certainly they have noticed the more frequent FUBM movements after their attempts to smash price.

Well, if all of this is true – it has me wondering: could it be that JPM's motives in the silver futures market are not all purely profit driven?? In other words isn't it reasonable to draw the following interim conclusions:

POSSIBLE THEORIES/CONCLUSIONS:

1. JPM/ Witch's "client" is some division of the PPT/FED

2. JPM's "client" doesn't care about short-term profit - The FED is much more concerned about managing perceptions of inflation and PMs are one of the few barometers of inflation that CNBS will actually talk about.

3. If #1 and #2 are true it wouldn't it mean that JPM is not all that concerned about swimming against silver market fundamentals because its "client" (the FED)  is covering all potential losses and that "client" has unlimited funds -  literally.

Now my question (thanks for hanging with me):

THE QUESTION:

What silver futures market pressure could ever be brought against JPM that would be able to force JPM to cover its growing short positions if the Fed is willing to backstop such positions and potential losses until the final collapse of the great Keynesian experiment? Said another way, isn't it possible that expecting "private" market forces to curtail JPM's market manipulation fails to appreciate the possibility that the Fed is really calling the shots and we all know the Fed has unlimited tolerance for financial exposure (Just take a look at its balance sheet over the last four years). As such, couldn't this market suppression go on longer than any of us currently want?

Thanks for your thoughts/input:

tyberious's picture

Hey

No need for name calling! I case you don't know "FIRST" is a tradition around here and if you don't like it, don't look !

Now have a nice day :)

Edward G's picture

Bart

He's got silver in his hair, has he got iron down below...

How about a summary of what these 'Position Limits' from Oct 12th mean if someone who knows would be so kind ..

Does it mean they can only now screw me in certain positions?

Katie Rose's picture

I'm in trouble

We have two apple trees in the front yard. They must be 80+ years old. We are not particularly fond of said apples (sour!!!!!) so don't care if they fall to the ground.

A starving deer has found the trees and been eating any apples that fall off of it. She is so skinny that I can see her rib cage. Usually I would have chased her off, but my sympathy got the better of me.

This morning we went outside and my Sister's gorgeous hanging flower baskets and flower barrels had been demolished by the starving deer.

The volume coming out of my Sister's mouth was astounding. It was directed at me.

I am in trouble. Big trouble.

I offered her an SAE. Two SAE's?

Nothing is working.

Moral of the story? There are things that PM's can't replace. There are times that PM's will have no value.

When that happens, it is time to duck and run.

indosil's picture

Just Wondering

Turd,

    QE to infinity is here.

800 S&P!!!!!!!!!!!!!!!!!!!!!!! Is a flash crash in the Stock Market possible in the near future even after QE?http://www.zerohedge.com/news/2012-09-24/janjuah-stopped-out

What if Greece Defaults?http://www.zerohedge.com/news/2012-09-23/greece-caught-underreporting-its-budget-deficit-nearly-50

Just Wondering how the PM market will react to it?

This blatant price rigging is freakin people out & wearing thin our patience.Even though I hold Physical ;trading is resembling like treading on thin ice!!!

Just A Regular Guy's picture

@atadheavy

Your thoughts on the situation are very close to what I think. It also makes sense RE:end of unbacked fiat money.

The buyers are governments and JPMorgan are doing the deeds of whoever to get their hands on cheap metals (and other things, who knows where else they're doing the bidding of their masters) before the music stops and the money game is reset.

@ Turd - nice post lead-in to the thread. I cannot remember where or how, but I have always had some link to Bart-C with Hulk Hogan and or some cool surfie dude. I'm sure that the investigation will wind up around the same time the SHTF RE:market manipulations, how that plays out is anyone's guess. Bart is probably waiting for the nod from TPTB to go ahead and spill the beans.

Fiat coming some time later this week for my thanks for your and everyone's participation here.

Peace.

atadheavy's picture

@Just A Regular Guy

If you agree with the possible conclusions that the FED is JPM's "client" then will the CFTC ever come out and condemn what is ostensibly a federal government operation to "stabilize" the market. This same fact would explain Hulk Hogan's (:-) unreasonable delay in enforcing position limits by the CFTC.

tread_w_care's picture

@Katie Rose

Ask your sister which she'd rather eat: a sour apple fattened deer, or her beautiful flower baskets and barrels? 

achmachat's picture

Katie...

I take that it is part of your duties to chase away deer?

how else could your sister's complaints be directed towards you and not said deer...

tyberious's picture

@Katie Rose

Your on the Eastside of Cascades? It will be snowing soon, I would shoot the deer, because it will not make it through the winter, seeing that its not fat already. Can you field dress it? Then give your sister steaks.

pforth's picture

Not sure I understand...

The one missing piece in my logic chain that gives me a bit of worry is that I'm not sure I understand exactly how physical buying limits the cartel's ability to put on naked shorts and create waterfalls.  From an evidence based point of view, it doesn't appear to. In spite of large physical demand since QE3 they've still been able to increase their COT shorts to record levels and to initiate several waterfalls with huge volumes of selling.

I can see that if too much physical is taken out of the COMEX (or I suppose the LBMA) then eventually when someone takes physical out they will have to publicly declare a default..at which point the game is up.  But until that default occurs, limited physical availability doesn't seem to be dampening their paper games at all.  Now perhaps when the price goes down it increases the speed that bullion is being removed from their vaults and therefore decreases the time to default... but at this point, do the price swings we are seeing really affect the physical offtake very much at all?  If they don't, then why not hold the price down and make paper profits with all their usual games... it doesn't affect the timeline of the eventual default and has no negative side effects for them in the meanwhile.

If I'm wrong in this, I'd appreciate someone filling in what I'm missing.

BagOfGold's picture

Katie Rose...

I would have fed the deer too!...But...with no apology to anyone...& definitely no "peace offering" of 2 SAEs!...Some things are priceless...& that moment...was a priceless one!!!...

Bag Of Gold

usk's picture

Bashing time approaching

Some silver stocks are taking a beating right now. I am expecting a serious beating in silver in the coming hours now.

atadheavy's picture

@pforth

You are expressing my concerns from a different perspective (see "A Second Question for Turdville" above).  The existing shortage of physical supply will have to make it into the investing public's conscience (read CNBS) before any real de-coupling occurs between the futures market and the physical market price. AND for that to happen there needs to be enough movement in price to the upside to force CNBS's hand - and a silver price spike makes the "News".  Hence, the need to suppress the existing price discovery mechanism that is the current futures market. No newsworthy sustained price spikes = no CNBC = delayed de-coupling.

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