Cartel Copycats

Remember when BTFD was exclusively our mantra? Now it seems that everyone is getting in on the act.

Just what the heck is going on here? From all traditional accounts, the table is set for another, cruel selloff. Cartel short positions are high. Lease rates are low. The dollar has been rallying. However, since Friday, gold is only down $25 or so and silver isn't even down a buck. What gives? A couple of very important things:

  1. Overt QE. Think about it...the 30% silver smashes of 2011 both occurred when QE2 was either ending or had ended. Same with gold. After the Great Cartel Panic of August 2011, gold was driven lower because the only current QE was the "sterilized" Operation Twist. Lack of overt QE had lessened physical demand to the point where paper price could easily be driven lower without significant consequences for The Cartels.
  2. Robust current demand for physical. Every London fix is being attended by "Eastern" central banks, sovereign funds and large investors. Every single one. Even last week when China was "closed", demand continued unabated, regardless of price action. Bids are moved up and bids are moved down but orders are being filled at each Fix.

The has resulted in a very curious and rare dichotomy. Upon seeing the slowing momentum and reading the CoT "tealeaves", the NY-based smaller commercials and the momo-chasing hedgies have been selling paper gold and attempting to start the usual cascades. Doesn't it surprise you that it hasn't been working? Gold dips but recovers. Silver dips even less. What the devil is going on here?

So I rang up my pal, Andy Maguire, earlier and he clued me in. Remember, in his role as 5-star General in the fight against The Cartels, Andy is on the ground, near London, and is very close to the LBMA, physical scene. Here's his take:

{The smaller commercials and the hedgies try to run price but, since unrelenting demand comes at every Fix, the Bullion Banks in London are being forced to buy the dips, just like us! They require physical (the dip earlier today saw HUGE demand as Andy personally knows of 7.5 tonnes of physical gold orders being filled). To meet this demand, instead of jumping aboard and slamming price even lower, The Cartel is working against the smaller comms, buying paper and sliding some of the paper short burden onto them.}

Well, this ain't gonna last very long! Soon, those fresh shorts will realize that they are quite vulnerable to a squeeze and begin to cover. They don't want to fight the bigger Bullion Banks any more than you and I do. What we'll likely soon see is a rally off of today's lows. It will probably begin slowly but accelerate as higher highs are made in the recovery process and technical resistance levels are bested. We'll see. I'm still about the only TA guy who isn't calling for a price smash so, I could be dead wrong but I don't think so. Not this time. wink

Here are hourly charts that show the resilient paper price:

And why is 33.80-34.00 so supportive in silver? Here's a chart from two weeks ago showing why. Note that price is still refusing to break down and retrench to the previous "stair":

I should mention crude here, too, though I was reminded recently by someone that "I suck" at crude. Well, I think that's a little harsh and not entirely accurate. Frankly, in crude, I'm guessing just like everyone else. For my latest "guess", I'm getting increasingly bullish. Take a look at this chart. After being jammed lower in waves of selling, price reversed near $98 and has now made a higher low, followed by a higher high. IF WE CAN GET ONE MORE DIP, back toward $90, I think I'll take a stab at some calls.

And, for your listening pleasure, I present the podcast below. I spoke with Kerry Lutz yesterday about a variety of subjects. You may or may not find it interesting but here it is, anyway:

http://financialsurvivalnetwork.com/2012/10/turd-ferguson-time-to-make-an-economic-emergency-evacuation-plan/

Have a great day. Keep the faith. Follow The Cartel and buy the dip.

TF

p.s. Yesterday, I was contacted by a Turdite who has 60 Krugs he'd like to sell. He's willing to move them at price $30 under the current Apmex bank wire offer, whatever that might be on any particular day. Anyone interested in taking the entire lot should email me at turdistheman at gmail dot com and I'll hook the two of you together.

284 Comments

mapleleaf's picture

First

That is all.

dannyhaha's picture

Hope it works today

First thing I thought of.

GeraldBostock's picture

Second

Second

Three ain't bad.

dannyhaha's picture

.........................

.........................

Mickey's picture

immitation is flattery

or flagellation or something like that

exiledbear's picture

The paper game

Don't pay attention to it. When it's time to sell, the demand and the focus will be on physical. If you're in the paper, your time window had better be measured in hours or minutes.

Expect volatility. All past hyperinflations had it and there were periods when the dying currency would roar back to life for a while before dying even more again.

When they lose control of the paper, you'll know it. Nobody here will have to tell you, except that you and I won't be surprised about it and the rest of the world out there, will.

gearhead_24's picture

first

Yippee

Edit: 7th... Geeze you folks are fast. Did you even read the post? :-)

Turd Ferguson's picture

Potential headwind

MODERATOR
Bollocks's picture

@gearhead_24

"Did you even read the post?"

Ummmmmm.

HeNateMe's picture

Reading Material

Just started reading The Big Short by Michael Lewis last night.  Couldn't put it down!  Great book and thank you Turd for making me aware of it.

I want to be the next Scion Capital.

HeNateMe

Turd Ferguson's picture

Another good look at crude

MODERATOR

Bollocks's picture

Reading Material 2

I recently got a copy of Gregory Mannarino's book "The Politics of Money" and just finished reading it. It's a MUST-read, I highly recommend it, it's full of truths about the markets, gold and silver, the worldwide economic condition, the population explosion, the history of Money and Fiat and plenty more. He joins all the dots in a brilliant way.

I absolutely guarantee all Turdites will gain a lot from it, even if you already know a ton about what's going on (as I do) I'm sure you'll still see things you've not seen or heard before. It's the way he makes the connections that's so brilliant.

It's also well up-to-date, I think up to August this year..?

Grab yourself some great reading! cheeky

Nana's picture

Lindsey's Latest

clueless one's picture

@Bollocks...

thanks...been on the fence with that guy.  Will shell the coin to check it out.

Groaner's picture

A tuff battle for the metals when the dow is going down.

What is strange is that the USD is not making much gains here.

The bums cant have the metals doing well when their Ponzi markets are not, now can they?

ivars's picture

Netdania volumes made some

Netdania volumes made some puzzling moves today-changing units? Do not understand how to read them now.

jamato31's picture

let me guess...50 mins of

let me guess...50 mins of "let me tell you something my friends"..."i was told many things by unnamed people", and then 3 mins of "o yea, the sky is falling. right now."

don't get me wrong, i love infowars, but lindsey williams seems to disappoint me every time. sounds like a televangelist that cant deliver. 

tyberious's picture

A Constitutional Dollar

http://mises.org/daily/4149

Long article but good!

"The United States has a legal and constitutional silver standard, although we would not know it today, since the government has illegally and unconstitutionally removed silver as currency and replaced it with the Federal Reserve notes that we know as dollar bills. The term "dollar bills" obscures the actual and tangible meaning of "dollar" as a specific weight of silver.

The United States has historically minted gold coins as well as silver coins, as the constitution instructed. It regulated their "value," the weight of gold they contained, in order to bring the meaning of a gold dollar into conformity with the silver standard coin, which contains 371.25 grains of pure silver. This too was constitutionally mandated. The government did the same for foreign coins up until 1857.

The United States never was or could be constitutionally on a dual standard or a gold standard. It circulated silver and gold coins as media of exchange by adjusting the content of the gold dollar to a silver-standard dollar. For example, the Coinage Act of 1792 authorizes "Eagles — each to be of the value of ten dollars or units [i.e., of ten silver dollars], and to contain two hundred and forty-seven grains, and four eighths of a grain of pure … gold." Since the dollar contained 371.25 grains of silver, this brought into legal equivalence 3712.5 grains of silver and 247.5 grains of gold. The ratio was 1:15.

In the Coinage Act of 1834, Congress adjusted the gold eagle: "Each eagle shall contain two-hundred and thirty-two grains of pure gold." This brought into legal equivalence 3712.5 grains of silver and 232 grains of gold. The ratio was 1:16. The reason for the change was that gold had appreciated in market value relative to silver.

"If a dollar is made to be 1 oz of gold and also 16 oz of silver, what is a dollar when those metals no longer exchange at that ratio?"

Old coins could be brought in and reminted for free (after waiting 40 days.) If old coins were not reminted, they were to be accepted as payments "at the rate of ninety-four and eight-tenths of a cent per pennyweight." The weights of the earlier and later eagles were influenced by a change in the standard gold alloy. The rate of 94.8 cents per pennyweight took that change as well as the alteration in the pure gold content into account, so that payments made in either the old or the new coins became very nearly equivalent in terms of the amounts of pure gold being paid.

With this as an introduction, let us go on to an explanation of Gresham's law and the reason why Congress was constitutionally mandated to make such adjustments in the weight of gold in the gold-dollar coin.

Suppose that the dollar is defined as a unit that contains 371.25 grains of silver, and suppose that the unit is physically identified with a specific silver coin that contains that mass of silver. Since grains are unfamiliar units, let us use ounces. Let us note that There are 480 grains in one troy ounce. Hence, 371.25 grains weighs 0.7734375 oz. That is to say that if a silver-dollar standard is officially and constitutionally instituted, with each dollar having the mass of 371.25 grains of silver, this means that the dollar is defined as containing 0.7734375 troy ounces of silver."

bim jeam's picture

Netdania Volumes

Looks as though gold volume is being shown on the sliver chart.

Turd Ferguson's picture

Further comparison

MODERATOR

Since Monday, I've been comparing the action this week to the action of the week of 9/24. That week started with a selloff on Sunday night that continued into Monday and didn't relent until mid-day on Wednesday after making a fresh low for the week. A bounce ensued at which point The Bad Guys gave up and began to cover.

Here are the charts I posted on Friday morning, the 28th. See any similarities? Can you draw any conclusions regarding what Thursday and Friday may hold?

Save_America1st's picture

question about PM's volatility

Turd,

Just curious if you or anyone else has a theory about when might be the time or what might be the situation (if at all) that would cause the kind of wild swings of 100 to 300 up or down days in gold that Jim Sinclair has predicted would eventually happen as we continue towards 3000/oz???

Do you agree?  If after gold breaks 2000 solidly and that eventually becomes a bottom support line do you also see times where instead of these 5 to 50 dollar days up or down we start seeing the massively volatile roller coaster days that will make the weak stomachs puke up their cheerios? 

Wouldn't the EE's fraudulent paper scam be totally busted by then, thus not having the power to manipulate the prices by such large amounts?  Or do you think the EE will still have the power to do such things even as we continue marching towards 3000 and beyond? 

How could they continue pull that off and at such large amounts???

Then what happens???  What will silver be doing at that point?  Will it also have wild swings of 5 to 15 or more dollars up and down? 

Will it be nearly impossible to get phyzz of any size at that point???

And will that be the point when Blythe and Ruprect flee the country to Venezuela for mass quantities of hookers and blow?  haha wink

Thank you sir!  Great interview on Financial Survival Network also.  I listened to yours and Ned's last night.   

Turd Ferguson's picture

Well, for one thing, price

MODERATOR

Well, for one thing, price moves will be larger in dollar terms as price advances. A 2% move when we are near $4000/ounce is $80!

However, the conditions present to send gold to $4000 and beyond will, clearly, exacerbate volatility. Lack of allocated gold and growing investment demand are just two of the factors that will lead to higher prices. More demand, coupled with less supply, makes for a volatile brew.

SteveW's picture

How much is 7.5 tonnes?

"Andy personally knows of 7.5 tonnes of physical gold orders being filled"

Well in August 2012 the average daily LBMA clearing was  17.8 million oz or 550 tonnes http://www.lbma.org.uk/pages/index.cfm?page_id=50&title=clearing_-_statistical_table

Since annual world production is around 2500 tonnes, then the daily cleared amount (around 20% of yearly production) cannot be shipped out of the door.

But 7.5 tonnes is only 1.4% of clearings and Andy doesn't state whether this was shipped out of the door. This statement alone without any basis for comparison holds no meaning for me other than 7.5 tonnes is a lot if delivered to my door. :-)

dropout's picture

Indecision Reigns Supreme

Undecided, frozen in the cold, hard glare of 'headlights' and unable to decide on a direction.

This is the way I would describe major global markets at this period in time. So, its little wonder that there is constant demand for the ownership of physical gold and silver. Fear. Fear of the unknown, leading to indecision, then to gold and silver as the ultimate safe haven asset.

Something, this way comes. What could it be? What from will this "Black Swan" take? Everyone is in agreement that the worlds geopolitical and financial systems are VERY fragile at the moment. Any small spark could have the potential to ignite a maelstrom, resulting in a conflagration that would consume all. The waiting game continues. What is that? 

Turd Ferguson's picture

This WILL be shipped out

MODERATOR

The 7.5 tonnes is NOT simply a paper shuffle or a forklift ride from one side of the vault to the other. This is real demand that will be shipped to destinations east.

kingboo's picture

dickhead Dimon

Is on. BLOOMBERG RIGHT NOW

Turd Ferguson's picture

Corn is killing me

MODERATOR

60c up move two weeks ago with a lock-limit day. All on the report that stocks are 11% below last year at this time. And still price declines! Now a full 50% retracement of the move. NUTS!

Praying for a good report tomorrow!

Kuchek's picture

LW

Yeah I can't sit through 54 minutes of LW anymore. *whistle* Pay attention. "Derivatives" *whistle*

RIP Mongo

The Watchman's picture

PHYSICAL SILVER=An ACCIDENT Waiting To Happen

From Jesse:

"The physical silver market is an accident waiting to happen, and the CFTC stands firmly in the center of responsibility which they will attempt to avert through the usual CEO style defenses of plausible deniability.

At least they will not be able to easily admit that they were merely following orders, although they probably are. The question is, whose? So hard to tell the rank and responsibility without the uniforms."
 

trinity+of+manipulation.jpg
The Three 'Stooges'
Katie Rose's picture

An Apology

I just want to apologize to all of you who have PM'ed me and are awaiting a response. I am overwhelmed with all the farm work and promise to reply when I am not in overwhelm. sad

It is harvest time. What more can I say?

Yesterday - We canned tomato soup.

Today - 70+ pounds of plums to can.

Tomorrow - 75 pounds of pears to can.

Then apples. Apple butter. Apple sauce. Frozen apples for pies.

It goes on and on......

GO SILVER!!!!!!!!!!!!!!!!! smiley  smiley  smiley

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