Shake A Stick At This

Here you go. More charts than you can shake a stick at. (Whatever that means.)

Let's start today with crude because I just think it's messed up. Price rallies from late June to mid-September with never once seeing more than 3 days in a row of declines. In fact, it barely did that earlier in September. You could just as easily say that it never had more than two, straight down days. And then, just as QE∞ was announced AND tensions ramped even higher in the MENA, price collapses? And it's now down for 7 of the past 8 days? We'll talk in a minute about how much of this corresponds with the surprise POSX rally over the past week but come on...7 of 8 days down for a cumulative 10+% move?? This seems very fishy, particularly when gasoline was just reaching $4/gallon in the U.S. and the presidential election is just 6 weeks away. Very fishy, indeed.

But getting back to The Pig...The question is: What the heck is going on here? Why on earth would The Pig rally immediately following the announcement of QE∞? I've spent some time thinking about this and this is the best answer I can come up with:

Remember that the POSX is an index against all other, major fiat currency. Even though it is quite clear that unlimited QE will eventually make The Pig relatively worthless versus hard assets, in the short term, the global flow of funds is actually toward the dollar and treasuries as The Bernank has effectively assured perennially-nervous international investors that there will be no default, at least not in non-inflation adjusted dollars. Against this backdrop and in the very short term, QE∞ is judged to be dollar positive. Seriously. I know that sounds crazy...and it is...but that seems to be what has happened over the past two weeks. The good news is that the POSX is finally reaching the end of the raid for this bounce as the area around 80 will once again serve as resistance. I would now expect a few weeks of volatile, sideways action before The Pig resumes its downtrend.

So, in the context of The Pig apparently being the driver of short-term events in the commodities sector (where gold and silver are incorrectly relegated for now), any gyration by The Pig seems to flow immediately into buy or sell orders for the metals. We saw an exaggeration of this earlier today. The POSX began to rally at 5:35 EDT this morning and immediately the metals began to roll over. WOPRs, programmed for profit by actual human beings, began to build up sell orders for the Comex open and....WHAMMO!....the open is ugly and short-term technical damage ensues.

So, now that both metals appear to be in short-term corrective phases, where do they go from here and where might they bottom? Before we go there I want to reiterate again: QE∞ ASSURES THAT METALS ARE GOING MUCH, MUCH HIGHER. THERE WILL ALWAYS BE, HOWEVER, BRIEF PROFIT-TAKING CORRECTIONS WITHIN THE PRIMARY TREND.

The charts below spell it out quite plainly. Let's look at gold first. Tremendous physical demand makes further downward action unlikely but I can't help but think a weak-hand clearing plunge toward $1725 is coming. Note that this type of move would also have a very pleasant impact on the short term RSI.

Silver is clearly in a corrective phase, too. Though it is holding in there quite nicely today  and though it, too, is seeing considerable physical demand, the 12-hour chart sure looks like a brief drop below $33 is in the cards. I'd love to see it as I'm sitting on a little cash that is burning a hole in my pocket as I type.

Just a couple of other items to consider today. First, there's this article I found linked at the GATA site. Nothing earth-shattering, but it's a reasonably competent summary of how things may eventually play out. http://www.internationalman.com/global-perspectives/manipulation-of-the-gold-price

And I have another book recommendation for you. You've likely seen me mention before that "The Big Short" by Michael Lewis is a real eye-opener. Lewis puts the entire "2008 Financial Crisis" in easy-to-understand terms and everyone here should read it.

Lewis' new book is a follow-up called Boomerang. It's not as good as "The Big Short" but very, very interesting nonetheless. Please read it. One of the chapters describes California as Italy or Spain as they relate to The Pig and The Euro, respectively. Along those lines, look at his headline from ZH. http://www.zerohedge.com/news/2012-09-26/california-screaming-4th-muni-bankruptcy-looms-atwater

OK, that's all for now. It has taken me quite a while to type this up and now I see that the metals have rallied smartly during the interim. That's great. Glad to see it. This does not, necessarily, make this post obsolete, however. Stay on guard and look for another dip.

TF

278 Comments

Eric Original's picture

First?

First?

EDIT:  Sweet!

FUBM coming up.  Buy, buy, buy, or cry, cry, cry.....

Daedalus Mugged's picture

Really?

Not much into games, but I have never seen no comments before. 

It was odd...I would have thought is would list '0 comments' but for those who have never seen it, it says, "Add a comment"

Who could really add a comment to the Turd?  Can't comment but can question...

There was a post at silverdoctors, but it really came from Ted Butler with a hint of Jim Sinclair, but the essence of it was that the reason the CFTC has not come down like a ton of bricks of JPM re:silver is that they cannot.  JPM actually has the physical metal they are short in the paper markets.  I have heard this hypothesized before but this was supposedly a leaker.  If you have zero cost money, and own warehouses, you can buy physical and sit on it (cost of cash and storage approximately zero), sell the future paper for higher than spot (normal contango) and make money.  Effectively earn the carry with no actual price risk.  Keep doubling down for fun and profit for decades, and you end up with a huge position.    You can time things to manipulate the hell out of the paper market, and you have the physical if the whole house of cards comes down. 

Turd, any thoughts on this?  Believable?  Preposterous? 

agNau's picture

Agreed @t/a

Retests of b/o's and MA's and S/R levels?

HUI
USD
METALS

The world continues to contract, and the magicians cover the debasement with deflationary indications for the eye. Slowing economies everywhere present fertile ground for the debasement to continue. Oil demand simply has to be lower, making for less difficulty pushing down a major indicator of inflation temporarily. The surge in dollars MUST play into any tangible item eventually, particularly those of limited supply, that are in greater demand. Tamping of prices will continue until the revelation of "no supply".
I am watching the above for cues to next moves higher.
I am increasingly of the controlled ascent school. Throughout the 80's and 90's the descent was controlled by selling of CB stockpiles to check price. Today I believe we have seen the variety of tools used...it now is a matter of predicting the combinations and timing of their use, and the resulting effects. Just as with each additional dosing of QE we note less effectiveness, so too with the effectiveness of suppression of metals.
 

dziprick's picture

Sprott on CNBC

very good interview.

http://video.cnbc.com/gallery/?video=3000117716&play=1

They let him talk, and there was not much he said that could be disputed.

DayStar's picture

Need a break

Now I am reading (SilverDoctors.com) that JPM has the silver and is just using the free Fed money and spreads to make money.  It still does not excuse or explain the waterfall events, though. http://www.silverdoctors.com/is-jp-morgan-shorting-paper-metals-while-acquiring-massive-physical-stockpiles-of-gold-silver/

DayStar

dontezuma's picture

Fibonacci

If you're into that kind of thing, we should all be expecting a normal retracement to 31.70ish or 30.50ish.  (61.8% and 50%)  No cartel action required, just normal retracements. 

Nana's picture

Up Is Down

Right is wrong

Evil is good

The world has been turned upsidedown by the PTB....and the saddest part of it is the people allowed it to happen and continue to allow it to happen.....

Turd Ferguson's picture

The Doc is linking an email

MODERATOR

The Doc is linking an email from Miles Franklin that purports to "explain" how The Cartel does business. It is complete bullshit and I have commissioned a good and extremely-qualified friend of mine to type up a reply. No because I don't like MF or anything. It's just that the source, this Trader David R character, uses the classic form of a disinformation plant and it will be fun to see it refuted.

Response to: Need a break
Green Lantern's picture

scratch that

scratch that. 

murphy's picture

congrats

to a wily veteran to grab the first post position. No substitute for an old timers experience.

dropout's picture

The Only Fundamental Commodity

OIL.

It runs everything.

Its in everything.

And there is a finite supply.

Without oil - literally everything grinds to a halt. Including life for much of humanity.

Not hard to figure what is so special about all the trouble in the mid-east. Control of oil. Period.

Thats the ONLY reason Uncle Sammy is there in force. Who is the aggressor in Iran? Why?

Oil. Uncle Sammy wants control, by installing a puppet regime in Tehran that he can control, and insure that oil continues to trade in US bucks. Uncle Sammy wants to protect the petro buck.

Only this time what he wants and what he gets, will be two completely different things.

No matter the outcome, gold and silver are the only true money. All the others are just currency.   

Mantis's picture

Great work

Great work Turds and Turdites

cheeky

Missiondweller's picture

End of 3rd QTR selling

I have no doubt most all markets are manipulated but I also think its possible the end of the quarter is causing lots of sales as money managers lock in gains for the qtr. Next week should tell us if this was the case. If so, I would expect commodities, including gold and oil to be bought back again.

For now, BTFD.

SilverSurfers's picture

Turdy thinks its fishy?

HOOK UP!!!!

There are no free markets, just interventions. Chris Powell, GATA

Trudy zero-ing in 32.50 Ag, so am I for about a week now, just does not seem to want to retest that level, confirming support. 33.40 the low on this move down, so far. Just may not see 32.50 again .... lets see. Dont go 32.50 before weekend close, may get back on the bull ride for another graceful retreat higher. Remember, the FED want bullion to rise, but in an orderly manner. Go with the flow. Hear Blue Fin should be good off baja just now.

Turd Ferguson's picture

btw, corn sucks

MODERATOR

Looks now like at least a 50% retracement, if not more.

In fact, 62% would take it down toward $6.60, which would fill the final gap on the chart from the summer rally.

I know that farmers are selling the new crop forward in order to lock in price but SHEESH, crop down at least 25% versus last year and 50-55% poor to very poor nationally should NOT lead to a 62% correction.

opticsguy's picture

Corn

Quite a down day in the grains, led by corn.  Russia announcing that they will not import anymore GMO corn (read US corn) may be behind this.  More poison for us to feed our livestock, make into sweetener, or brew in our beer.

Edit:  added link http://www.greenmedinfo.com/blog/tide-turns-monsantos-gm-corn-suspended-russia

Pining 4 the Fjords's picture

Way to go, E O !

Enjoy your dip in the bacon-off pools! 

And for newer visitors to the site, probably wondering why being "First" is pursued with such zeal around here... well, perhaps a refresher course from 'the olden times' is in order:

indosil's picture

Nov Election

Turd,

  We all know that the fall in Oil & who knows Gold & Silver is being orchestrated to hold the shit just long enough for the elections to be over before it hits the fan.Just wanna know about your perspective about the short term effect on price of gold & silver.October has traditionally been a weak month for Gold.

Missiondweller's picture

gold painted triple top?

Looking at the 1 yr it looks like the EE could be trying to paint a triple top.

It will be interesting to see if we "break out" in the start of the 4th Qtr.

Edward G's picture

Well written post from TF

Not surprising really that at this stage of things QE is not going to inspire so much exuberance.... having been done in the face of things looking more and more crappy, and so it is likely to continue to be... I would imagine the printers will be alarmed at the low impact of the latest rounds, what with Spain's bonds tumbling again, a worse outcome than too much euphoria really. Either they have got the can-kick just about right, or otherwise they will be thinking " sheesh we're gonna need a bigger boat"... I mean the numbers referred to by the German Court and then BB are kind of tentative even though they are of course humungous, but to continue the path they are set on, it looks likely that some serious doubling down is going to be required if they (BB) really wants to achieve what he claims to.

Mr. Fix's picture

On charts..........

Hi folks,
although I do enjoy looking at a good chart,
I do not believe they are of any value whatsoever when it comes to predicting what will happen next.

I had a self described chartist watching over my leveraged silver account on May 1, 2011, and I can tell you firsthand, he never saw that one coming.

I'm not going down that road anymore.
All I do now, is stack.
With a strategy like that,
the charts are meaningless.

In what is clearly a highly manipulated marketplace,
what ever happens, will be exactly what the central planners want to happen.

I have for the past couple of years come to the conclusion that the insiders can predict the price down to the penny,
because they are the ones setting it.

Air Garcia's picture

Look, i'm just as confused as the charts...

But it looks to me, as we ALL KNOW, all hell is about to break loose.  In all markets - paper and commodities.  Oil, Metals, Indexes.  

The commodities are going to go UP UP UP
The indexes are going to go DOWN DOWN DOWN

So TPTB are jacking with all of them as well as jacking with us.  They are taking the markets in the exact opposites they are going to go when all hell does break loose so the impending moves are less exaggerated and noticeable. 

Silver to go up $5.00 instantly, well, let's beat it down so it's not such a shock
S&P to go down 400 - well, let's jack it by 200 so it's not such a shock.  

Their values will be in familiar territory, in other words - not unchartered territory. 

Then we can count on the MSM to flake and not report the truth and the sheeple will think all is well in the USA. 

My options were up to 34k last week - down to 22k today - pissed, but not worried. wished i were smart enough to have sold then and added more now, but you know how it goes. . .I was encouraged by the hot and explosive moves and got complacent. Now i'm on my heels - patiently waiting for the next push. I will win in the end. 

SRSrocco's picture

AND THE NEWS GETS EVEN WORSE....

THE DATA COMING FROM THE SHALE GAS & OIL INDUSTRY IS MUCH WORSE THAN I REALIZED

This week I have been spending a great deal of time researching the data coming from the shale oil & gas industry.  I also have family visiting, so I have not been able to write much in the way of posts or an article on this new data.

But... let me tell you, THINGS ARE MUCH WORSE IN THE SHALE GAS & OIL INDUSTRY than I originally thought.  It is even worse than the information presented in my last guest post.

I plan on writing a long post-article on this subject.  Here are a few tidbits:

1) over $8 billion in impairment charges 1H 2012 to large companies like BHP Billiton & BP due to downgrades in shale reserves

2) shale players like CHK- Chesapeake are running deep losses due to the low price of natgas and the expensive rapid drilling costs to maintain production.

3) these large shale players greatly inflated their reserves, sold these garbage assets to companies such as BHP Billiton to keep alive the SHALE GAS SCAM

4) BHP Billiton's original $4.75 billion dollar shale gas investments purchased from shale gas players in 2011, was written down $2.84 billion on Aug 3, 2012.  Ain't that nice.

5) Huge additional impairment charges are coming from many more energy companies by year end 2012 due to the further downgrades of shale gas reserves.

6) European countries such as Poland asked the USGS to look at their supposed shale gas reserves and figure what a realistic reserve would be.  Poland's supposed shale gas reserves were downgraded 90%....LOLOLOL

7)  I could go on and on... but that will be for the details in the article

FOLKS... that means PEAK GOLD & SILVER ARE HERE MUCH SOONER THAN LATER...

H - original's picture

Pining

perfect!! Love the attention to detail!! Made my day!

Bollocks's picture

Ok, I HAVE to re-post this here ...

Max Keiser and Chunky Mark. Warning: profanity!

If you're new to Chunky Mark, get ready...

"I'm going to try and do this without swearing or shouting"

Fulgurite's picture

War scenario

I tend to agree with Turd's war scenario that he posted yesterday.

It all seems as if a lot of commodities, especially crude, is being pushed down in order to create some kind of lower starting point from which it can spike higher once the faeces start hitting the ventilator.

Big Buffalo's picture

Wow

what just happened?

treefrog's picture

fubm

ding! ding!  $34 silver!

tyberious's picture

Trader Rog

"Over the past several weeks we have been warning in Trader Tracks, and in various other news outlets that September 23-26 could see a drop in the markets. Our forecast was right on the button as gold this morning of 9-26-12 has fallen another -$15.60 on the December futures along with a milder dip on December silver futures. We warned on ideas and dates for shares recommendations and now those trades are performing as we did predict. We also predicted the stock markets selling and it indeed began with vigor on Monday after peaking on sunday evening in Asia.

On our real time most active futures screen this morning at 6:30am PST, only the US Dollar and 30-year bonds are in the green as "go to" safe haven trades. Oil is a key driver of the CRB trading basket and is now at $90.40. The new and lower crude oil trading range is $88.50 to $92.50. Grains have been falling as well but we expect them to settle lower in this normal selling cycle and then rebound from lower fall harvest numbers.  November soybean futures are now under $16.00 former support at $15.93.  After the selling stops and newer buying resumes, we expect beans at $18.00 for a fall high price with corn back up at $8.00.  I am working on new trades for our futures traders and stock traders in the grains.  The forthcoming long set-up appears to be a good one.

As we have previously reported, Spain is the key to Europe's messes for now and they are large enough to affect not only European markets but the United States and all of Asia and South America as well.  Spain has the 3rd or 4th largest GDP (normally) in all of Europe. Their economics minister honestly made the statement they could only borrow about 20% of what they need on bond credit and that there is not enough capital in all of Europe to bail them out.  What we found very interesting last evening on the latest news, was that coalitions of protesters in the Spanish streets have had enough of the central banker rip-offs and intend to renounce their own government and install massive reforms.  By reforms we think they mean to stiff the central bankers and other external credit providers and not pay them back anything or very little on their massive fiat loans.  THIS IS A NEW PUSHBACK AND ONE WE WERE EXPECTING.  FURTHER, IN THIS INTERNET COPYCAT WORLD, OTHER NATIONS WATCHING THIS REACTION ARE GOING TO FOLLOW SUIT. THIS IS GETTING VERY INTERESTING TO SAY THE LEAST.  THIS IS THE STUFF OF REVOLUTIONS.

As we have recommended, predicted and reviewed many times; we knew this was coming and this is indeed a game-changer. Spain is not Greece and they are no backwater miniscule country.    If this continues and we think that it does, it will spread into other countries of Europe and all over the world.  Economically, of course this means precious metals will rise ever faster and the related shares in very good PM companies should rise, too.  However, keep in mind, we have a standard and normal markets correction first.  It is underway today.  We do not envision a crash but if a Black Swan event in Spain or something similar happens, all bets are off.  The IMF's Christine Lagarde is meeting with Mrs. Merkle and Mario Draghi on the Spain problems today in Europe. The meeting has been touted as being routine, but I view it as a flat-out emergency under the current conditions. They are discussing: Debt downgrade potentials, bank audits and failure testing, the 2013 Spanish budget and alleged reform ideas that probably include having the IMF step in to help.  All of these European nations and players are in a world of hurt and in full panic mode. This is normally when larger mistakes are made.  Expect more of the same, kicking the can down the road while straining to hang-on until after the fall elections in the United States."

indosil's picture

Now that's what i call.....FFFFUUUUUBBBBMMMMMM

Now that's what i call.....FFFFUUUUUBBBBMMMMMM

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