So Many Charts, So Little Time

We're holding support and bouncing on a Happy Tuesday. I hope you're ready to buy the dip!

Again, as discussed yesterday, I should have seen this mini-correction coming. As a recognizer of patterns, I should have anticipated that the market action post-QE∞ would resemble the market action post-QE2. I mean, why wouldn't it? The metals are still manipulated by the same scoundrels that were in charge back in late 2010 and they are still being controlled within their "managed ascent".

Recall that gold rallied from 1320 to 1430 in the weeks following QE2. Then, in early January, Cartel capping caused momentum to fail and price began to pull back. Over three excruciating weeks, price was pressed lower, all the way to...wait for it...1320. In fact, at the bottom, it actually touched 1308. From there, it went on a 7-month tear courtesy of sloshing liquidity and a downgrade of the U.S by Standard & Poor's, finally reaching 1920 in late August of 2011. That's a gain of nearly 50%!

Silver performed almost identically. After peaking in early January 2011 at 31.20, it fell over the next three weeks to a low of 26.50. Again, where was silver trading during the week prior to the formal announcement of QE2? Near 26.50. Like gold, once the gains post-QE2 were erased and clawed back, silver went crazy and rose all the way to $49 in just 90 days. That, my friends, is over 80%!

Once this mini-correction runs its course, are the metals set up for similar gains? It's possible, perhaps even likely. Maybe even probable. Many of the same conditions that prevailed in 2011 will exist again in 2013.

  • The Fed, currently executing $40B/month in non-sterilized QE, will almost certainly increase that number toward $85B/month once Operation Twist ends later this year. Remember that QE2 was nearly the same amount at just under $100B/month.
  • The U.S. government again stands at the edge of a fiscal cliff with "Taxmageddon" coming in 1/1/13 and another debate to raise the debt ceiling just around the corner. Could more U.S. debt downgrades be on the way soon, too?
  • And don't ignore the ongoing significance of this chart:

Anyway, at this point, it's reasonable to assume that, once this correction is finished, the metals will surge dramatically higher. Prices will finally eclipse the Cartel-enforced caps at $1800 and $36. I fully expect new alltime highs in gold by early 2013 and, shortly thereafter, a move through the $2000 level. In silver, JPM resistance at $36 will also fail in the days ahead and silver will begin a charge toward $44. Above there, the old alltime highs near $50 await.

(Just for fun, let's say that things get "disorderly" for the Cartels again and prices rise in 2013 at the same clip that they did in 2011. This would put gold near $2500 and silver would approach $60.)

So, given that the long-term picture is extraordinarily bullish, what are you waiting for? Buy the dip!! Of course, if you're like me, you may be trying to wait for the absolute bottom so that you can feel real smart. This is a pretty stupid strategy but I do it for fun and because my ego gets in the way. Regardless, I think that so far today we are seeing some short-covering related to CoT-painting by The Cartels and I expect another run at breaking price lower either tomorrow or Thursday. We may see new lows for the week but we might also not see them. Let's just see. Since I haven't sold any of my December calls, I'm still positioned to participate in the rebound, Right now, I'm just simply looking to add. I may even move out to March, just to give myself more time. I'll keep you posted and update you if and when I decide to move.

For now, here's what I'm looking at. Gold has retraced it's gains post-QE∞ and has found support right where I'd expect near the lows of late September. This is a very good sign. Another good sign is the complete washout of momentum as indicated by the RSI. Note that this index is now at levels not seen since last summer!

Silver, too, has retraced its gains from mid-September and is poised to resume its rally. A source in London has informed me that The Cartel is very reluctant to fill some very large orders for physical that currently reside near $32.50. IF this is the case, it is unlikely that paper silver will fall much below there. (Note that the low yesterday was $32.57.) There is still the possibility, though, that the momo-junkies and smaller commercials will attempt to jam price lower again but significant chart support lies between 32 and 32.50 and well as the 50-day moving average.

Just a couple of other things. Yesterday I posted this link ( http://tfmetalsreport.blogspot.com/2011/01/1600-gold-by-june-10-2011.html) It's fun to go back and review this post for a number of reason but I want to highlight something. Read this:

"Speaking of the dollar, lets start there. It looks terrible. What will TPTB come up with this time to rescue it from 78.47 on the March contract? Who knows but it looks more and more like 77-77.50 is coming very soon."

Again, that was typed on 1/21/11 when gold was near $1320. This points out the fallacy and deliberate deception of "The Dollar Index". This index is often cited as a measurement of strength or weakness of the dollar. Again, though, it only measures the dollar against other fiat currency. Over the past 22 months, the index leaves the uninitiated with the impression that the dollar has been stable. We know, however, that it is only "stable" against other, similarly-worthless fiat. Against gold, it has devalued by more than one third!! Do you ever hear that reported on CNBS or in the MSM?? Heck, no! To do so would expose the lies and theft of expansive monetary policy, fractional reserve banking and Keynesianism.

Which leads us to your reading assignment today. Actually, I posted this into the comments of yesterday's thread so, if you've already read it, just move on. Everyone else should take 5-10 minutes to read it. Lew Lehrman has long been a champion of sound money and, in this piece, he lays out a simple and easily-understood rationale for a return to a global, gold-backed monetary system. (Again, my feeling is that this is going to happen and it won't be a voluntary decision for The West.) If you've ever wondered how and why a gold standard could be re-implemented, please take the time to read this article.

http://spectator.org/archives/2012/09/14/a-road-to-prosperity/

OK, that's it for now. I've been working on this for a couple of hours and, as I close, I see that prices have rebounded some but have not yet crossed back above the important levels drawn on the charts above. Therefore, be on the lookout for some more weakness and another attempt to break price lower after the close today and into tomorrow and Thursday. Do not despair, however, my friend. Time and fundamentals are on our side and we shall be victorious and vindicated. Soon.

TF

225 Comments

silver66's picture

First holy crap!!!

First

holy crap!!!

SilverDog66's picture

2nd!!

According to my girlfriend officially a TurdGeek for posting 2nd! 

murphy's picture

I'm back to Thurd

I'm back to Thurd

Istack's picture

Stack the dip

Gonna go grab about $200 worth of junk silver at lunch.  A little here, a little there.

BoarderX's picture

5th

Jesus said, come forth and recieve eternal life. I came in fifth and won a toaster.

achmachat's picture

i liked this part:

"soon"

Turd Ferguson, 10/16/2012

my mothers keeper's picture

the future of the USD

an interesting perspective on the motive of the fed for qe3 just before the election...

http://www.gold-eagle.com/editorials_12/amerman100212.html

The Federal Reserve is indeed using QE3 to attack the problem of unemployment - but not through the method stated.

The cover story is that QE3 will be used to increase the money available for lending and to lower interest rates. It is a credit to Mr. Bernanke that he was able to read this statement with a straight face, for the assertion that the economy is being held down by too high of interest rates and tight money is ludicrous. Interest rates are already at historic lows, and banks are awash in available cash. Moreover, QE3 is likely to have very little effect when it comes to expanding corporate lending, just as QE2 had very little effect - because that was never the intended route to rebooting employment in the United States.

As described in detail in my article "Bullets In The Back: How Boomers & Retirees Will Become Bailout, Stimulus & Currency War Casualties" (linked below) the United States has a structural problem with unemployment that is essentially unsolvable so long as the dollar remains high in value relative to other global currencies. This problem was exacerbated by the rise in the US dollar caused by the Euro crisis - and it is no coincidence that the unemployment crisis in the United States is now getting rapidly worse even as the dollar soared this past spring and summer.

The Federal Reserve is, of course, well aware that the unemployment situation is far, far worse than what is being captured in the official headline unemployment rate of 8.1%. The government knows full well that the true unemployment rate, once workforce participation rate manipulations are netted out, is closer to 19% - and getting worse, as explored in detail in my article linked below, "Making 9 Million Jobless "Vanish": How The Government Manipulates Unemployment Statistics".

This building crisis of a strengthening dollar and rising unemployment called for emergency action, and that is exactly what Bernanke is doing. He is effectively calling in a B-52 strike on the US dollar, monetizing for the world to see, and pledging to monetize for as long as it takes - until the US dollar is driven down to a level where American workers can once again be globally competitive.

hammerman's picture

bobby buy da dip

my brother bobby wakey up and buy da dip... great job turd

Silverman's picture

This gap will be filled soon.

jamato31's picture

are we there yet?

i lost a bunch of october money holding through this, but im figuring (hoping) my contracts through the rest of the winter will hold up and make up forthe losses. every pm related index just touched the bottom of the price channel extending back to the beginning of this move in midsummer, so at this point, either the correction is over, or were screwed and heading significantly lower. i dont think the market will allow a hard move to the downside (pretty oversold on some short-term indicators now).

i just picked up some gdxj feb 23 today. we'll see how that one rides out over the next few weeks. im shooting for 29 by the end of december.

Hoping to learn's picture

Are you ready to buy ?

I'm heading to the LCS, so get ready for a drop in price later today or tomorrow.

Good luck to all.

I've been watching that new show "Revolution" and I can't stop thinking that it might actually get to that point in the not to distant future. The great thing about it , is that it gave me  chance to explain the barter system and the importance of silver etc. to my 15 yr. old.

We even covered china's hoarding of physical and mines and my prediction of a gold back currency soon from them to replace the failing US dollar.

HTL

Bugzy's picture

Growing

Much more self aware and grounded these days. Keep up the good work TF.

Bugzy

SRSrocco's picture

HOW LONG CAN THE U.S. SUFFER GOLD EXPORT DEFICITS??

The U.S. Suffers Huge Gold Deficit as Record Amounts are Exported to Switzerland, London & Hong Kong

In a stunning development over the first seven months of the year, the United States has run up a huge gold deficit as it has exported a record 424 metric tonnes of gold. This is indeed a significant amount when we find that the U.S. exported a total of 488 metric tonnes for the entire year in 2011.

According to the USGS July Gold Mineral Industry Survey, the U.S . only imported 188 metric tonnes of gold between Jan-Jul, but exported 424 metric tonnes leaving a huge shortfall. Some of this deficit was made up by the U.S. domestic gold mine supply.

However, if we add up all the domestic gold mine supply plus the gold imports in the first seven months of 2012, the United States still ran a large 102 metric tonne gold account deficit.

The U.S. produced 134 metric tonnes of gold between January & July of 2012:

NOTE: the figures are shown in kg. or kilograms. We convert them to metric tonnes (MT) by dividing by 1,000.

As we can see from the table above (source USGS), of the total 134 metric tonnes of gold produced in the country, Nevada supplied 102 metric tonnes or 76% of the overall amount. Alaska was second by producing 14.8 metric tonnes or 11% of the U.S. production.

If we add all the U.S. gold mine supply between Jan-Jul (134 MT), plus all the gold imports (188 MT) we get total of 322 metric tonnes. However, the United States exported 424 metric tonnes of gold during the same period leaving a huge 102 metric tonne deficit:

To get an idea of where the United States imports its King precious metal, I put together a graph showing the top 4 countries who supply the country of the majority of its gold. When the U.S. imports gold, it predominantly acquires it in the form of dore & precipitates, but exports it in a larger extent as refined bullion.

Here we can see that the U.S. imports the majority of its gold from its closest southern neighbor, Mexico (72.2 MT), followed by Columbia (32.7 MT), Canada (26.8 MT) and lastly Peru (16 MT). These four countries accounted for nearly 148 metric tonnes of the total 188 metric tonnes imported into the U.S. in the first seven months of the year. Other countries who exported smaller amounts of gold to the U.S. (but are the top suppliers of the remaining bunch), are Bolivia, Curacao, Guatemala, and Guyana.

As was stated in the headline of this article, the United States is exporting a record amount of gold and the majority of it is being sent to Switzerland, London and Hong Kong. I would imagine these large U.S. gold exports are being used to try and fill the insatiable demand by the Eastern buyers (mostly Asian)… claimed by Jim Willie in many of his recent interviews.

Switzerland received the lion’s share of the gold importing 137.3 MT of gold from the U.S., while the U.K. came in second at 84.3 MT, followed by Hong Kong at 74.5 MT. These three countries imported 296 MT of gold between Jan-Jul of this year. This was 70% of all the gold (424 MT) exported from the United States during this time. Some of the countries who imported the larger share of the remaining 30% of gold from the United States were Australia, Canada, India and Thailand.

Just to make sure I don’t cause any confusion, these figures are based on the USGS statistics of gold import-exports of the following categories:

1) ores & concentrates

2) dore & precipitates

3) refined bullion

I did not include any of the fabricated gold statistics that include waste & scrap, metal powder, and gold compounds. Even though there is additional gold in these fabricated categories, the more notable and important movement of gold is found in both refined bullion and dore & precipitates.

I would also like to clarify that gold recycling and gold scrap was not factored into the 102 metric tonne gold deficit…. which stands at nearly 3.3 million ounces. The amount of metal coming into the U.S. market from these two sources could be significant.

Furthermore, these are only "OFFICIAL FIGURES".  We have no idea of the TRUE AMOUNT of gold leaving the country from allocated accounts as stated by Jim Willie's source in Europe.

That being said, as more gold leaves the shores of the U.S. than is either imported or supplied from its domestic mines, the deficit will continue to grow.

Colonel Angus's picture

Hoping to learn

I just bought a Gorham sterling silverware set. I got it cheaper than melt value on the .925 (and yes, I factored in the stainless blades of the knives...make sure to look out for that one) so we use it every day. The kids have actually made notice of this and say they like it better. The forks sound like tuning forks instead of the clunk that the stainless stuff made. My kids are 8,6,4,2 with another one on the way. And the older three noticed. Why can't the rest of America wake up? (I highly recommend this for everyone due to the properties silver has. Our ancestors may have known a thing or two. Wait it out, as some prices are ridiculous. But if you can get the set near melt, stack and enjoy good health and fine living.)

Keep stacking. We'll all be glad that we have done so. And thanks to Turd for all he does.

Roger Godberd's picture

So Many Charts, So Little Time

So that's prob $85,000,000,000 per month unsterilized.

Yowza!

1 Million secs = 11 days

1Bn secs = approx 32 years

1Trn secs = approx 32,000 years

Loss of Confidence in USD ? = to be determined but start growing veg now!

Mariposa de Oro's picture

Lost in the Flood

"This building crisis of a strengthening dollar and rising unemployment called for emergency action, and that is exactly what Bernanke is doing. He is effectively calling in a B-52 strike on the US dollar, monetizing for the world to see, and pledging to monetize for as long as it takes - until the US dollar is driven down to a level where American workers can once again be globally competitive."

He left something out.  He should have added "with third world slaves."

atadheavy's picture

the future of the USD

lostintheflood's post presents a thought that bares repeating: the only possibly "legitimate" goal the FED could have with QEternity is to devalue the dollar so severely that the US workforce can finally compete globally again on a cost effective basis. The FED just can't say it that way. All the other proffered reasons are just window dressing and simply not fact based. i.e. helping small business obtain affordable loans, etc. etc. Of course, the ultimately disastrous impact of all this QEternity on savers, retirees, normal people is well understood by us all.

tread_w_care's picture

Anybody got any coupon codes for APMEX?

Great deal on Generic Buffalo rounds, $.99 over spot any quantity.

Would love to not pay shipping . . .

El Gordo's picture

Time to buy?

I always sit and wait, sit and wait, etc. waiting to catch the bottom and then go all in and watch for the moon shot.  Or at least it seems that way at times.  What I really do is set up my buy plan for everything I want/need, load the cannon, and then sit and watch the price as it goes up and down a few cents at a time.  Then, when I feel right about the buy time, and know for absolute certain that it can go no way but up, I cut back on my order by about 2/3's and pull the trigger, holding the rest of the fiat back for the next time I get that stupid notion that the price has hit bottom and now is the last chance I'll ever have to buy at this price again.  At least I lose my ass a little slower this way rather than all at once.

The Watchman's picture

True

clip_image004

Road_Scholar's picture

Funny distraction from manipulated markets

Model's offer to make a sex tape (clean- no nudity):

http://www.funnyordie.com/videos/70f7ef3d34/bar-refaeli-s-sex-tape-kickstarter

We all need a little extra fiat! wink

tread_w_care's picture

I'm in on BTFD. Sub 33 is fine with me.

Set it at the bottom of the lake and forget it . . . generic rounds and pre-65 Junk, come to Papa!

Byzantium's picture

has HEH been shelved?

less talk of it now on this site, and I've seen nothing new from Bill Murphy about the supposed JPM scandal either.

Back to the usual routine then everybody; invest with caution, peril abounds.

Speaking of which, based on the third chart in Turd's piece above, silver might have a few dollars more to fall; best keep some dry powder set aside.

Urban Roman's picture

@Turd, we can all thank

... thank the manipulators.

Because when a market is really "free", it is a fractal -- it has patterns but they tend to be very unpredictable. You never really know if the next move will be up or down.

When you can set your watch by the interventions, that's tradeable information as good as any HFT algorithm has at its disposal.

Bollocks's picture

No surprises here then ...

Starbucks 'paid just £8.6m UK tax in 14 years'

Cup of Starbucks coffee

US coffee giant Starbucks reportedly paid just £8.6m in corporation tax in the UK over 14 years.

The four-month investigation by news agency Reuters also found the firm had paid nothing in the last three years.

It found Starbucks had generated over £3bn in UK sales since 1998 but had paid less than 1% in corporation tax.

"We have paid and will continue to pay our fair share of taxes in full compliance with all UK tax laws, as we always have," Starbucks said.

"There has been no suggestion by any authority that we are anything but compliant and good tax payers.

"We do this in a way that is consistent with the values that have guided us since we were founded more than 40 years ago: balancing our need to operate a profitable business with a social conscience."

But campaigner Richard Murphy from Tax Research UK, who was consulted by the Reuters team as part of its investigation, said: "Starbucks are playing the game here. This is tax avoidance, they're doing nothing illegal. That doesn't mean to say it's right, in my opinion," he told BBC Radio 5 live.

He said it showed that the current rules on tax did not work and it was up to politicians to put it right.

"When we have a tax system that lets very large companies like Starbucks be on our High Street and pay no tax and are competing with small locally owned businesses who are paying tax on all their profits, then there's something very clearly wrong with our tax system."

Asked about Starbucks' tax bills, the prime minister's spokeswoman said the government would not comment on any specific case.

http://www.bbc.co.uk/news/business-19967397

pbreed's picture

LCS

I participated in the non-paper market this morning based on past results we should get a precipitous drop in 3.2.1....

anarchitect's picture

The Gold Cartel as the East's Bitch

Originally submitted to LeMetropoleCafe in April 2007.

We can rail against the Gold Cartel ceaselessly, but for a while now I've been wondering if they're pawns in all of this.

My conjecture—surely I can't be the first one to lay this out, though I haven't seen it before—is that the East (Asia and OPEC) are dictating the game to the West (the US and Europe). Here's the gist of it, which goes well beyond the view that the East are merely astute buyers of the gold that the West is dishoarding.

In the late 1990s, the East noticed how they were accumulating US dollars, the world's reserve currency—but only a mountain of paper, a proxy for nothing. The East realized there was a great moral hazard to which the US would continually succumb. The Fed's printing presses would run hot to finance endless wars and entitlements. Much the same in Europe, except for fewer wars and more entitlements.

The US trade deficit was also growing without bound: tangibles in, paper out. Under a gold standard, a trade deficit is no big deal.  You might as well fixate on the trade deficit of Texas or your own extended family. If someone's running a trade deficit, it's self-correcting because gold payments flow out, capping consumption in relatively short order. But if a fiat currency is flowing, what's to cap it?  The trade deficit can persist as long as the suppliers of tangibles are foolish enough to take paper in return.

It didn't take the East long to figure all this out. And so they told the West, hey, you control the major reserve currencies: the dollar, the euro, the pound. We've accumulated a pile of your paper. Great economic upheaval would occur if we dumped it. But in the long run, we know that it won't retain much of its value anyway. Eventually we must all return to some form of gold standard, which has proven to be the only way to enforce fiscal and monetary discipline.

However, you in the West have much higher gold reserves than we do in the East. This imbalance must be rectified if we're going to re-launch a gold standard from a level playing field.

So here's the plan. You will divest enough gold to level the playing field. Your central banks can sell it outright, or they can lease it—knowing that it will never return. You are masters of creative accounting and financing, so we leave the details to you. In return for your acquiescence in creating equitable gold reserves, we will keep the transition orderly. We will build our reserves at a modest pace and not even declare most of our purchases. The gold price will therefore also rise at a modest pace, which will keep most of the sheep's eyes averted. As for the minority of sheep who notice what's going on, many can be fooled into buying paper gold. We should therefore be able to obtain most of the physical gold on offer. Of course it will be a long process, one that will probably take a decade to complete, given that we're looking to acquire about 20K tonnes.

If you don't adhere to our plan, we will use your paper to enter the physical gold market aggressively. This will create the upheaval that no one wants, but we're much better equipped to handle it than you. In exchange for gold, we have real goods to offer, whereas you have mostly services. The transition can be orderly or disorderly. It's up to you.

And so the western central banks caved.

Fr. Bill's picture

OOOOOOOOOOOtay ... $1045/kg it is

If $32.50/ozt is supposed to be near the bottom, I'll go with that.

Just put in an order for a big chunk of shiney at BV at $1,045/kilogram (same same as $32.50/ozt).

Now, I can sleep soundly tonight, knowing that if price drops that low in the wee hours, I'll find that TF (the Tooth Fairy) has left me something pretty while I was dreaming silvery dreams.

Actually, I may not have to wait till the morning.  As I type this, the best offer at BV is $1,064/kg.  The price would only eed to drop $19/kg (eq. to 59¢ per ozt) to make mine the best offer. 

<crossing fingers ....>

Frankenstein Government's picture

Saying Thanks and Pimping My Blog...Please Forgive Me Turd

Back in the ZH and Watchtower days, I began to follow this blog with a number of others. I have to tell you that I've made a fair amount of money because of it.

The biggest problem we all have is timing and patience. It is absolutely impossible to tell when the whole ponzi collapses. The elites will use every weapon in their arsenal to keep the markets inflated. They are a worthy foe. Unfortunately,  it will collapse despite their efforts.

I finally caved in and opened a new account. Here's my plan and thanks once again Turd for providing a place of support that I can go to when I think I have lost my sanity. It's good to know all of you nutters are here with me and that I am not alone. http://thecivillibertarian.blogspot.com/2012/10/gold-silver-and-last-battleground.html

Istack's picture

Another interesting email from Bix

Last week I sent out an alert to all Private Road Members that Citibank was the NEW SILVER RIGGER on the block. Here was the analysis on how I figured it out (for Private Road Members)...
 
ALERT: Silver Short Hot Potato Being Passed Again!
 
Today comes the shocking news that the CEO and COO of Citibank have ABRUPTLY RESIGNED!
 
Shocker at Citigroup as CEO Vikram Pandit Abruptly Resigns
 
It will be impossible for JPM and Citigroup to unwind their silver rigging positions so be ready for the silver take off!
 
We are in the last moments of the MAJOR BATTLE for our freedom.
 
Buckle up for a WILD end of the year! Stay tuned on the Road to Roota for all the action :-)
 
May the Road you choose be the Right Road.
 
Bix Weir
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