History In The Making

I know that it's hard to watch your fiat-conversion price fluctuate so wildly but it's clear that we are on the verge of something major. There are two ways that this could go and, regardless of which outcome materializes, you're going to be glad you have physical metal in hand (or under water).

SCENARIO #1

This is what I've been warning was possible for about the past six weeks. Since the banks were seemingly caught flat-footed at the initiation of QE∞, the entire move from October to today has been contrived to extricate the banks from their naked short positions. Having succeeded in flipping the specs from long to short (The LargeSpecShorts in silver recently leapt from 6,500 contracts to 30,000 contracts in eight weeks!), why would The Cartels stop and let the metals bottom at the low end of their 18-month ranges? Why stop there when it was obvious to everyone that a plethora/cornucopia/boatload of sell-stops could easily be triggered if price could be hammered through. On Friday we saw this event take place and it was neatly chronicled by Ross Norman here: http://news.sharpspixley.com/article/ross-norman-gold-crushed-by-400-tonnes-or-usd20-billion-of-selling-on-comex/159239/

My expectations were this to happen was that we would likely see a very sharp, 2-4 day, 10% or so selloff. And where are we this instant? $1370 and $23.23.

$1525 - 10% = $1372.50

$26 -10% = $23.30

These numbers are not and cannot be absolutes. They are a guideline. We could, of course, go lower but this is what I thought was possible IF support was broken.

There's a lot of talk about $22 in silver and you may be wondering why. This chart shows you why:

But, I've got to tell you, I look at this chart and think: It's meaningless. Seriously. Do you really think price will bottom at the peak of price from back in March of 2008? Seriously? Look, if prices don't reverse in the next day or two, silver is more likely to fall to $18 than it is $22. I hope you're ready for that. (Regardless, if Scenario #2 is playing out, paper price is about to be insignificant anyway. More on that in a moment.)

Gold could fall farther, too. Maybe $1300-1310. (Did I really just type that? Whoa!). But, be on the lookout for a very sharp reversal.

And you know that, for quite some time, I've been telling you how awful the miners look. In the darkest recesses of my Turd-brain, I'd been thinking that maybe-just-maybe the HUI could fall to 250-300. And maybe-just-maybe, if it did, the miners would finally bottom. Well, here you go. FWIW...

So, anyway, as we wrap up Scenario #1...IF this scenario is correct, then you have an historic opportunity in both physical AND paper metal. In gold as of this moment, The Cartel is far less net short than they have ever been. Ever. And in silver, also as of this moment, the Specs are net short to an almost inconceivable level and The Commercials are likely net LONG. Nearly all of the risk of being short in the face of unlimited and infinite quantitative easing has now been transferred from the banks to the specs. Sort of like the end result of The Great Finanical Crisis of 2008, the risk willingly taken on by the banks has now been transferred to the public. As agents of the central banks and Western governments, why should this come as a surprise?

SCENARIO #2

This is the end of the fractional reserve bullion banking system. Consider this extraordinary decline, not from the perspective of technicals , quantitative easing or fundamentals. Consider these factors, instead:

  • Extraordinary physical deliveries, not just through London but also every other major global center including Shanghai.
  • The record Q1 depletion of Comex gold reserves.
  • The nearly 200 metric tonnes removed YTD from the GLD.
  • The record pace of demand for metal from the U.S. Mint.
  • The record premiums for bullion, even "junk" silver.
  • The "official' reported Chinese importation of 90 metric tonnes in February alone.
  • The destruction of the Kennecott mine in Utah, which in 2012, produced 25% of the U.S.'s copper, 5,000,000 ounces of silver and 500,000 ounces of gold.
  • And perhaps most significantly for this discussion: The DEFAULT of ABN Amro two weeks ago.

I call the ABN Amro move a DEFAULT  because that's what it was, regardless of the SPIN. When a bullion bank declares that they cannot and will not deliver metal to clients who thought they held it in the bank's vaults, this is a DEFAULT. This is exactly what ABN did.

So given all of the physical fundamentals listed above AND the recent DEFAULT of a bullion bank, are we seeing the end of the fractional reserve bullion banking system? (And here I want to credit Bill Holter of MilesFranklin for connecting the dots in an email I received earlier today.) I have long suspected that the end of the silver manipulation would come as a Comex default, similar to the "Maine Potato Default" of the late 1970s. To avoid physical settlement (because there isn't any), the Comex simply halts paper metal trading and cash settles at some arbitary, closing price. To that end and to "save" as much money as possible, the days leading up to a default might actually be sharp DOWN days, as price is jammed lower, regardless of the fundamentals. Having achieved an "affordable" paper price, the markets are then closed and cash-settled.

The next day, physical trading resumes at a multiples-higher price level. Those with paper metal are left holding the bag and some paper money. Those who have been acquiring physical metal will finally see the value of that metal approach a measure of fair, supply/demand valuation.

This will happen eventually. It's ultimately what I've been expecting in some form as we end the Great Keynesian Experiment. What is important today, though, is that you comprehend the very real possibility that this is happening right now, in real time.

As I go to close, I see that gold is off almost exactly $100 at $1377. Silver is hanging in there, if you can say that, at $23.50. We are living through history. You should be proud and happy that you are at least alert and aware as this is happening. You have a ringside seat with an excellent view of The Fight. Have fun and enjoy. Most of all, do not be concerned about the short-term fluctuation of your fiat-conversion price. As I see it, only one of the two scenarios laid out in this post are possible and both scenarios point to a massive, history-making price appreciation in the days and weeks ahead.

Stay calm and be at peace. And, please, try to be a part of the solution, not part of the problem.

TF

804 Comments

Igiveup2's picture

First

The only thing going my way today.   Blood coming out my ears. What a process.  Wish I could say something profound.  Words fail me.  This is past the point of capitulation.

That_1_Guy's picture

Second...By a Hair.

Morning Turd and Co,

Well Anyone else up late watching this crap, probably has had about as much sleep as me.

In my opinion they are rolling over, selling paper to buy physical. I posted a note that there was no liquidity in the mini contracts market on Friday. May was super thin on Friday.

On this revolution, I have bought at 27.02, 25 and this morning 23.45, if it goes down further I am still a buyer. At 60/1, the GSR is a bit tipsy way up here. Fundamentals don't work, so I am trying to keep remembering that only they know what they are doing tomorrow, not me. I'm not stressed one bit. I was up late last night and was really concerned I might miss an after hours buying opportunity in the thin market, not that silver was going down and my savings was going down with it as many "investors" would be. I have already done my homework and placed my bet on the table. I have conviction and am looking to press it!

So bring it on, you paper tools. I got my eye on some gold ..finally.

I really hope that by the time they look to roll over to physical ..theres none left. There has to be some kind of Karma Here!!! I will trust .... the world works in weird ways.

With everything spinning faster and faster, I find myself reminding the community of stackers I have linked up with to keep your eyes on the prize. When the media, war drums, controlled opposition and  paper pushers are spinning your mind really fast, the malice intention is to rob you while you are dizzy. To me they look like an idiot spinning in circles on  the freeway in the middle of the night.

TEOTGKE is upon us....focus on a point ...that way you wont get dizzy.

Guys girl may be waiting on that new car..... I have a feeling metals are a better investment. :0

Every time we are ready for a leg up....there's a washout. This is just one of them.

Suck it up, Buy, Focus and Believe.

Be safe!

GUY

Chevy...Just think if all that energy used for something positive. Division doesn't help anything really.

Im gonna buy some more ...and go to sleep.

Road_Scholar's picture

What would Ian Astbury do?

This "market" is pure BS and anyone who is on this site knows it; we're all part of "THE CULT".  Sit tight or buy more when you can before it's ALL gone...

ian-astbury.jpg

achmachat's picture

ha!

we really need vindication or we will all sleep in the car... or the couch if the spouse feels sorry for us...

Turd,

you have to admit that scenario 2 would mean the end of much more for those in control... they'd rather divert to scenario 1 with all their might than let scenario 2 happen.

dgstage's picture

Internet

It is very slow today, anyone else have this issue?

Turd Ferguson's picture

Traders should watch this

MODERATOR
luv2stak's picture

6

perhaps, on a Historic (negative) day...

For The Record: gold down 100.10 to 1376.80

Silver down 2.41 to 23.44

painful

Argent's picture

laid bare

Is this how desperate they are,

5p ET Friday, April 12, 2013
Dear Friend of GATA and Gold:
Former Assistant Treasury Secretary Paul Craig Roberts tells King World News today that the smashing of gold and silver prices is a Federal Reserve campaign to defend the U.S. dollar against a hyperinflationary scenario.
"The exchange value of the dollar is threatened," Roberts says, "and if that collapses the Fed loses control over interest rates. Then the bond market blows up, the stock market blows up, and the banks that are too big to fail, fail. So it's an act of desperation because they've got to establish in people's minds that the dollar is the only safe place, it is the only safe haven, not gold, not silver, and not other currencies."
An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Just A Regular Guy's picture

Great write-up Turd

Kudos!

*cough* BTFD!

The Hat Tip's picture

Buy and forget about it

This is the time to buy gold and/or silver and forget about it.

Just put some more to your stack and come back later in two, three years time.

billhilly's picture

Dear Bart,

Sorry to bother you at work again but Jamie just dropped by with another envelope for you...boy, this one sure is thick. Anyway, I'll just put it in the desk drawer of your old room and you can get it when you come for your next visit. He sure is a sweet boy, and he really seemed happy today, even gave me a kiss on the cheek.

Ok, Love you, MOM

ps. Don't forget to get that haircut you promised me.

Turd Ferguson's picture

Or maybe just 2-3 weeks or even 2-3 days

MODERATOR

But your point is well taken.

sinatra_911's picture

Keep your paper

I'll keep my silver/gold.... :)

silverwood's picture

Bought some Silver American

Bought some Silver American Eagles for $26.70 per coin from Liberty coin/Scottsdale silver. So I figure the worst that could happen is I could lose $25.70 per coin if silver becomes worthless. AHHAHAHAHA!

I was so depressed looking at my mining share portfolio that I had to buy some AUY and caught it at $11.88 WTF gold will go to $35, solid support there technically... mister FDR told me so!

ScottJ's picture

Knowledge and Health are True Wealth (Repost)

Repost from last night:

While there may be a lot of physical stress resulting from the perception of uncertainty of where the "price" of silver and gold are heading in the short term (and the losses incurred in related investments), understand that this feeling will be much more violent to the unkowning masses when the financial stability of the western world financial system openly fails... who will be hit unexpectedly in terms of severity and lifestyle/paradigm changes. It may hurt your psyche now but life is all a journey, and you are at least searching for sanity within the waves of noise.

The knowledge that you have subjected yourself to may not be the easiest path to journey, and the decisions we make may not always be the best ones.. but we are all apart of one of the most influential and interesting time periods to be alive. Never before has society been so interconnected, instantaneous, overtly corrupt, and yet available for deciphering.

Nobody knows for certain what the future holds, but the skills and insight the majority of this community have been learning about/subjecting themselves to will undoubtedly ripple throughout the actions of the future.

And always remember... each of our individual lives is a product of chance. There are many human beings that have come before us and will come after us that never have the chance to become truly educated and have a free mind. Many are trapped within the life they were born into, and are not aware or afforded the luxory to critically analyze the world around them. My thoughts are with those who are in trapped in the hell they were born within... specifically those that feel the brunt of western world policies or eastern world outward oppression of free thought.

S Roche's picture

fwiw...

Ouch! Back at it...

Strongsidejedi's picture

Wholesaler follow-up

Continuing from the other thread.

The shortage in US American Silver Eagles is real.

I called a major wholesaler about 30 minutes ago.  They've now put their phones into voice mail override and are not answering.

I asked about purchases of US American Silver Eagles.  They do not have supply and are not taking orders.

I heard the manager shouting to his staff in the background, "do not take orders!  do not take any orders of any kind".

The guy put me on hold and never came back.

Dark Matter's picture

Conspiracy

Just curious:

Why do people always cry "conspiracy" when the market takes an unexpected turn? A price decline is always fast. No exception here. If you could predict the market with certainty, all of us would be billionaires.

It will take a few years for Gold to recover, but absolutely no one should expect gold to rise to $ 2000 in 3 months or so. It took two years to fall from 1900 down to the level we have now. And if unemployment rates drop, Gold will even take longer to recover.

(BTW, Krugman must be very satisfied, after he posted his disapproval of Gold at Zerohedge.com and got beaten down for it.)

worldend666's picture

If only scenario 2 was true

I have been nagging on about this since I read it on Fofoa a couple years ago. I find it hard to believe it could be happening right now, but I also found it hard to believe my account at Laiki bank in Cyprus was the first in the world not to be bailed out. I also found it hard to believe the lightning speed it happened at.

Coincidentally I was in Luxembourg today taking delivery of more gold, so it would be a first for me to do something at the right time :)

buzlightening's picture

I think the crimex and Liarbma criminals

will take the paper gold & silver price to zero. You will never get it in your hands; off the street for that price but it can go there.  Likely after the firestorm, regardless of paper crimex price, silver eagles will remain 30 plus for small purchases and perhaps some under 30 for large big money purchases.  While they last anyway.  Won't take long now for it all to dry up.  I only know silver, so will not comment on gold in physical hand prices.  No doubt premiums go through the roof here also.  Dealers would be smart to put on hefty premiums here or shut down sales completely.  Gotta be getting killed.  Those heavy in debt; margined out and out of business. 

stormtx's picture

going long before the smackdown

Why would the commercials go long before the smackdown unless the goal was to cover then shoot up?

achmachat's picture

worldend666

delivery from whom? bank?

you should have dropped in and say hello!

who else is here from Luxembourg?

Nana's picture

"These are the times that try men's souls." Thomas Paine

Just be grateful you have had time to prepare.

buzlightening's picture

Strongsidejedi

You have me rolling with your wholesaler update.  I think both gold and silver pulled a Houdini in the streets today and just disappeared. 

Mr. Fix's picture

Scenario three:

The worldwide supply of precious metals is rapidly being depleted, in preparation for a global currency collapse. In other words, they are closing all the exits, and there will be nowhere to run, and nowhere to hide. Once the banking elite feel that they have stolen all the gold and silver, they can simply make their sale and possession illegal.

These guys will need to be defeated at some point, just waiting them out will not work, they just keep rewriting the rules to their favor, and they have already proven themselves to be completely and totally lawless, and lacking in any moral code whatsoever.

Evil never just closes up shop and goes home, they take what they can get until there is nothing left.

This will not end well.

John Galt's picture

Hopi Prophecy Rock

Yesterday I posted my story about a dream I had in the 1990s which triggered a chain of events which inevitably brought me out to the Hopi Reservation in Arizona. There I had the good fortune of meeting the eldest elder of the Hopi; one of the Grandfathers.

I received many positive replies because of that post, both on the board and in private messages, and I wish to thank everyone who made the effort to reply. To me it is a reaffirmation of what a wonderful community Turd has helped build here.

The following is a link to something written about Hopi Prophecy Rock. Although it is written by someone I do not know I consider it to be one of the better explanations of the traditional Hopi world view, including a perspective on what is unfolding in the world right now.

http://thenewhumanity.blogspot.ca/2008/01/hopi-life-plan-aka-prophecy-rock.html

When you look at the image of the Prophecy Rock, I believe we are at the last juncture of the 2 paths - and each of us is now presented with the choice of which path to follow.

Strongsidejedi's picture

@buzlightening

"Won't take long now for it all to dry up."

Have you been reading my messages over the past 3 days?

There is no fricking US ASE's in Los Angeles for sale other than through small LCS stores at high premium.

The supply chain is stopped.

The wholesaler doesn't even know when its going to pick up.  The guy answering the phone says a few days and then offers Eurozone Silver or bars.

There's no association between the price action in the last 18 hours and street price in Los Angeles or Shanghai.

The Shanghai Daily already covered that action in China for earlier today.  The Local gold exchanges there are out.

People in China had to liquidate extra housing investments because the tax write offs for additional housing were shifting.  CCTV showed the real estate brokerage in a major city with hundreds of people trying to trade their apartments before the tax day.  If someone sold real estate in China, they're buying gold or silver at reduced prices today.

Strongsidejedi's picture

@MrFix - margin on commodities = liquidate stocks?

@Mr Fix -

Was that you who offered the idea that margin calls on commodities will force liquidation of stock positions?

Care to offer a suggestion on stock action and commodity market behavior tonight?

I'm guessing you are correct with significant selling tonight on the stock markets globally.

thesandbox's picture

The Antelopes just ran away....

I have been refreshing my cart at Provident the last couple of hours this morning as I am out of town and would have to do a CC purchase or wire transfer since I can't readily get to a bank and PO and my Antelopes have just run away....... :(

Twillinger's picture

Trying to buy --- Good Luck

Apmex isn't even loading properly right now. Provident is overloaded, as well.

Just keep trying to refresh until things take.

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