Courage and Conviction

Longtime Turdites will recall the forecast that set Turd on this path. Issued at a time when nearly everyone thought the PM bull market was dead, "Turd's Bottom" in early 2011 proved to be an important turning point. We are once again at such a crossroads.

First, a history lesson for those new to Turdville....

QE2 had been launched in November of 2010 and the metals subsequently rallied until January 2011, at which point they stalled and corrected. The Bears were out in force. It was over. The metals were dead. Not so, said I. So confident was I that price would turn and head higher that I issued an ultimatum. Either gold would reverse and charge nearly 20% higher over the next four months or I would shut down the blogspot site and disappear back into the ether. You can read all about it here:

http://tfmetalsreport.blogspot.com/2011/01/1600-gold-by-june-10-2011.html

Of course, some of the same trolls that plague me to this day claimed that, since gold only rose 19% to a high of $1577 in mid-May, I was a disingenuous liar for not shutting down the site. Two things:

  • They could/can all go pound sand. Price rallied $257 instead of $280.
  • Regardless...I did stick to my word. I closed the blogspot site on 6/14/11 and opened this one. <At this point, Turd sticks out tongue and blows "raspberry" at ankle-biting critics.>

Anyway, we have reached a similar checkpoint in our journey. Sentiment is terrible, the charts look like garbage and the entire investment chattering class is spewing nonsense against us. Though it's obviously not good for business to put one's neck on the line in such a manner, I think it's important that you fully understand and appreciate the absolute certainty I have in my conviction.

  • The Precious Metals Bull Market is not dead.
  • The June 2013 lows will hold in the days ahead and be looked back upon as a double bottom with the current prices.
  • Prices will rally this month and into January.
  • Though there will be setbacks and bouts of resistance, the bull market will resume in 2014. 

How can I say this with such certainty?

  • Contrary to popular opinion, QE will not be tapered to zero in 2014. Quite the opposite will happen as U.S. government funding needs accelerate in a weakening economy.
  • Because of this increased QE, interest rates will not rise as nearly everyone currently forecasts. Instead, the 10-year note will trend back under 2.50% and head toward 2.0%.
  • Realization of QE∞ will eventually stem the tide of Spec money into the short side of the metals, reversing the flow of funds and causing a massive unwind and short squeeze.
  • Rapid global fiat currency devaluation will lead to an even greater level of physical demand.
  • The LAW of supply and demand will re-assert itself after being suspended in 2013.

Finally and most importantly, JPM is NET LONG Comex gold futures to the point of having cornered the paper gold market. Since, for now, paper Comex trading continues to determine global price, nothing could be more important.

As we've documented here since last July, in 2013 JPM has successfully converted what had been a massive NET SHORT Comex gold position into an equally massive NET LONG Comex gold position. This position is likely near 75,000 contracts as you read this. As a percentage of open interest, that is nearly 20% and a clear and undeniable "corner" on the LONG side. Though they have rolled and extended the majority of this position into 2014, they are standing for as many as 7,000-8,000 deliveries in December. Thus far, through just the first four delivery days, the JPM House Account has accounted for (stopped) 1,011 of the total 1,086 deliveries made. That's 93.1%. So, please follow along with me here:

  • Comex paper trading sets global price
  • JPM is the Big Kahuna in Comex metals trading
  • JPM is NET LONG to the point of cornering gold futures
  • JPM is taking delivery of 93% of the December contracts
  • Unlike the past, it now clearly benefits and profits JPM to see price rise
  • And you seriously think gold is headed lower from here?

Therefore, remain patient and diligent. Watch for a turn in price off of the June lows. A December move back above $1250 in gold and $21 in silver will begin the process of Spec unwind and short squeeze, setting up a continued rally in January. By holding physical precious metal, you are protecting and insulating yourself against the certain global economic madness of 2014 and beyond.

TF
 

120 Comments

2feathers's picture

First

Had to do it once.

ag1969's picture

oneth. oops twoth

Howard Roark's picture

Thanks Turd

All the best for You and the community.

Keep strong.

HR

Bollocks's picture

forfth

smiley

achmachat's picture

you are absolutely right Turd!

Just imagine how many shorts amassed during this last year still need to be unwound!

I think that when you look up "short squeeze" on wikipedia, it gives you as "the" example the famous volkswagen case.

The way things look now, that entry will be changed to what is going to happen to the precious metals!

Loud Noises's picture

Thanks for the summary

I could tell that there was some good stuff going on with the Vault posts and appreciate the public summary for the rest of us.  Maybe its time to roll that Bitcoin position into some good old Eagles...

dgstage's picture

VAPORIZED: Detroit Obliterates Retirement

VAPORIZED: Detroit Obliterates Retirement Funds: 80% Cuts to Pensioners: “This Is Going to Affect Everyone”

Physical_only's picture

New U.S. home sales leap 25.4% in October

Dec. 4, 2013, 10:02 a.m. EST

New U.S. home sales leap 25.4% in October

http://www.marketwatch.com/story/new-us-home-sales-leap-254-in-october-2013-12-04

OR MORE ACCURATELY...........Although the above is a great headline for general consumption.

Screen+Shot+2013-12-04+at+9.34.12+AM.png

http://viableopposition.blogspot.ca/2013/12/a-different-perspective-on-sales-of-new.html

Talk about in your face manipulation of facts.  I would bet a lot of people "not people at this site" that pay any attention read the top headline and just say to themselves; "Wow, things are really turning around" 

dgstage's picture

"Good News" Spikes USD & Bond Yields (But Bullion Bid?)

dgstage's picture

Illinois OKs pension cuts in landmark reform

Turd Ferguson's picture

This is just excellent

MODERATOR

Please support our friend and ally, Steve, by visiting his terrific site and reading this excellent report:

http://srsroccoreport.com/5-charts-the-real-story-behind-silver/5-charts-the-real-story-behind-silver/

ag1969's picture

Alasdair Macleod: Gold and interest rates

A common misconception in markets about the price of gold is that rising interest rates for a currency will always drive the price of gold down against it. I shall come to market relationships in a moment, but first we must look at the economic relationship between gold and currency.

The primary driver is changes between the relative quantities of gold and currency, with an overlay of changes in confidence for the currency itself. This quantity relationship is simple to understand and needs little elaboration; but it does not mean that a doubling in the quantity of paper money automatically leads to a doubling of the price of gold. The reason is the purchasing power of a currency can and does vary independently from changes in its quantity. Gold, however, is seen by the majority of the world's population as a better store of value than local currency, so its appeal is global instead of being tied to a single currency's jurisdiction.

http://www.goldmoney.com/research/research-archive/gold-and-interest-rates?gmrefcode=gata

Daedalus Mugged's picture

Prediction

Turd, I appreciate your logic and conviction.  Question, do you think prices bounce back higher in a V bottom, or just don't go lower? 

Presumably JPM has been acting on behalf of The Powers That Be to earn their regulatory immunity.  Do you think they just stop pushing it lower, or actively push it higher...which could rather discomfort their friends and associates on Liberty Street.  I think there are big near term price differentials between JPM stopping manipulating, and manipulating the other direction.  Do you think  JPM now at war with the Fed, or just refusing to do their dirty work?   

Or is my understanding of your understanding....just flawed. 

Patrancus's picture

Courage and Conviction

"Here Comes the Judge"

will provide an overdue process for righting the wrongs of the benefit bloated and unfair to tax payers government pension system. This action paves the way American cities and states that are operating on the edge of a financial abyss another avenue in digging their way out of their own financial insolvency. 

On Tuesday, Judge Steven Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan ruled Detroit was eligible for Chapter 9 protection. The decision moves forward Detroit's July bankruptcy petition and undercuts efforts by the city's pension and retirement system to keep it out of Chapter 9 protection.

"The real takeaway from Judge Rhodes' ruling, we believe, is that pensions can no longer count on getting 100 cents on the dollar in every municipal bankruptcy due to their recognized super-senior status as they have in the past," Palmer wrote.

"Now, they may be subject to cuts or to being treated as unsecured creditors in the same claim pool as the bond insurers. This new state of affairs could translate into significantly improved recoveries for MBI, AGO and AMBC going forward," he added.

Detroit's pension funds sued the city moments after its July 17 bankruptcy petition, arguing the filing would violate Michigan's constitution if it aimed to impair pension payments. Detroit's emergency manager Kevyn D. Orr and Michigan Governor Rick Snyder maintained their case Chapter 9 case a day later.

"It was the first time ever that a federal judge had ruled that state pension obligations are equivalent to other debt even if they are explicitly protected by a state constitution," Palmer wrote.

On Tuesday, Detroit's pensions said they would challenge Judge Rhodes' confirmation of the city's bankruptcy petition.

 
 
SIlverbee's picture

Will not happen

Why? If the price is pushed down to release the GLD physical from the `flywheel' then when the price goes back up the GLD will need to be replenished with physical. At that point GLD becomes a buyer and it will not be possible to cash settle GLD on the COMEX. They will need to compete in the market and thus the price will spiral up. This cannot be allowed to happen since GLD is the only sizable source for metal and it needs to be `taped' and that can only be done at LOWER prices.

Therefore the price will go down whenever the PTB see a demand on their `inventories' that exceeds their buffer stock. 

NW VIEW's picture

DETROIT?? NO PROBLEM

There seems to be many easy solutions to these messes that have been created.  The "real" fixes will not happen.  So here is a short list that some will see as a great solution:

Allow Michigan to print their own fiat currency. (something with a union label)

No federal taxes to be collected in the state until full employment.

Free health care for anyone in Detroit and  paid for by a fee (fine/tax) on green house gasses.

Federal tax credits for all union workers in Detroit.

Free college for Detroit youth.

Issue of "War Ration Books" again like the ones from WWll.  (I have one in my hand).

Yes this is a "rant' list but there are many who will hope for it to become law. If this nation does not find its way, the effects of Detroit will be moving into your neighborhood.    jmo

ancientmoney's picture

@petrancus re: Detroit pension bail-in . . .

"The real takeaway from Judge Rhodes' ruling, we believe, is that pensions can no longer count on getting 100 cents on the dollar in every municipal bankruptcy due to their recognized super-senior status as they have in the past," Palmer wrote.

"Now, they may be subject to cuts or to being treated as unsecured creditors in the same claim pool as the bond insurers."

---------------------------------------------------------------------------------

Yes sir, this is the legal interpretation that allows public pension bail-ins.  If it can be done for public pensions, it will certainly be applied to private pensions. 

GOTS if you can.  In many cases, public pensions allow the individual to take the portion they paid for (half) as a lump-sum.  They forego the other half, put in by the employer.  50% if better than 20%. 

Yikes, the financial system is devolving in an ugly, though not unexpected way.

benny_bomb_boom's picture

all you want

is a top 20 showing to start....ag below that gives me the willies. impossible is possible and nothing but the weight of a stack can comfort that.

it seems to me we have jumped the gun my friends. for months on end. be sure you are living your life to the fullest each day. as a new father it gives me great comfort to have the shinny packed away and nothing yet has gotten in the way. i know it is hard to say but when you can continue to stack phyzz, try and relax. i wish my wife would listen to that.  she still gives me crap about the paper price and i just smile. say babe its true but we have time on our side. the tide will rise. sure 200 ag would be swell, but i have a feeling it means life as we know it now does not remain. i stand firm with my charge. as each new swell rolls through, stay vigilant turds. 

silver66's picture

ancientmoney- corporation nation

57goldtop  suggested I read Corporation nation

here is a documentary by that name

and here is a link to amazon for the book

http://www.amazon.ca/Corporation-Nation-Corporations-Taking-Lives/dp/031225461X

The mold has been cast

Silver66

Mr. Fix's picture

An interesting take on “pod people”:

A Dogmatic Slumber

There’s no question here about identifying the oppressors and the oppressed. There’s no conflict between the internal exercise of your freedom to think for yourself and your external behavior. There’s no omnipresent social media, no cacophony of commercial voices, no GPS chips, no algorithms that can predict your likes and dislikes better than you can yourself. It’s just faceless soldiers with AK-47’s trying to impose their will on Patrick Swayze’s external behavior. It’s a movie that would have made as much sense (more?) in 1784 as it did when released in 1984. Our world isn’t “Red Dawn,” it’s “Invasion of the Body Snatchers.” Control over our behaviors isn’t as much physical as it is mental, not so much externally imposed as it is internally embraced. If you’re reading this note, the problem is not that you are in a dogmatic slumber and need to be woken up. The problem is that you know it’s in your best economic interest to act as if you’re still asleep. In a world overrun by pod people, the big losers are the people who can’t fake their pod-ness and ultimately get outed by Donald Sutherland.

 
ancientmoney's picture

Turd, excellent essay . . .

The big tell, I agree, is the 180 degree turnabout by JPM in comex gold to the long side. 

I have said for awhile that I do not expect gold prices to be set free until paper trading is kaput.  I still believe that to be true.

If I am right, how does this square with JPM being hugely long in the paper markets?

A few guesses:

1.  JPM=Fed.  JPM exercises its right to take physical delivery.  However, we know that shorts can settle in cash.  So, how does JPM force the issue to obtain phyzz?

It could pull more MFingGlobal tricks--JPM can call in loans at any time from its clients, just as it did to MFG, forcing it into bankruptcy. 

The courts have already changed the law, which used to provide remaining assets first to the bankrupt entity's customers.  The law now says that the first in line is the bank that lent money to the bankrupt entity.  MFG was the test case.

So, JPM can call in loans they made to all the shorts, if they refuse to deliver phyzz, force bankruptcy, and claim the gold that way.

In any event, the gold price will not rise until after JPM has made its way deep into phyzz deliveries.  We could see a whole lot of frantic shorts in comex gold, real soon.

unwired's picture

Stewart Thompson

Couple points from today's update. I don't even know what to say.

17.             Gold is oozing lower in price now because there are not that many people left to sell, literally.  Western investors don’t hold that much gold, and those that do hold it are generally institutions that have a mandate to hold, say, 1% of their assets in gold.  They aren’t going to sell if the price falls, and in fact they might buy a bit if it does, to top up their percentage allotment.

18.            What about the 14 tons of gold in comex vaults? The comex reserves are dropping because there’s little interest in gold from Western traders.  Most gold dealers in North America can’t pay people to buy gold, let alone large silver bars.  It’s a gold dealer wasteland out there.

19.            If interest in gold increases, the comex will add reserves.  Also, comex can deliver GLD-nyse certs to those who stand for delivery.  If there really was a shortage of gold at the comex, and there isn’t, the banksters would crank margins to 100%, (or more), and the funds would be panic-sellers, not stand-for-delivery prize winners. 

Turd Ferguson's picture

This is interesting

MODERATOR

http://silverinvestingnews.com/20548/silver-price-manipulation-germany-cftc-united-states.html

Especially this final paragraph:

"In the meantime, fans of the white metal might consider keeping an eye on the CFTC. Rumor has it that although its inquiry is now closed, it may yet be opened up once again."

TFMR's picture

a tough war...

The “RIGHT” VS. “How it is being played out”; and the war between the “MARKET MAKER” (U.S.) vs. the “WEAK”
 
////////////////////////////////////////////////////////////////////////////////////////////////
“Secretary Kissinger: Why are we so eager to get gold out of the system?
 
Mr. Enders: We were eager to get it out of the system-get started-because it's a typical balancing of either forward or back. If this proposal goes back, it will go back into the centerpiece system.
 
Secretary Kissinger: But why is it against our interests? I understand the argument that it's against our interest that the Europeans take a unilateral decision contrary to our policy. Why is it against our interest to have gold in the system?
 
Mr. Enders: It's against our interest to have gold in the system because for it to remain there it would result in it being evaluated periodically. Although we have still some substantial gold holdings-about 11 billion-a larger part of the official gold in the world is concentrated in Western Europe. This gives them the dominant position in world reserves and the dominant means of creating reserves. We've been trying to get away from that into a system in which we can control-
 
Secretary Kissinger: But that's a balance of payments problem.
 
Mr. Enders: Yes, but it's a question of who has the most leverage internationally. If they have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time we had a position relative to theirs of considerable power because we could change gold almost at will. This is no longer possible-no longer acceptable. Therefore, we have gone to special drawing rights, which is also equitable and could take account of some of the LDC interests and which spreads the power away from Europe. And it's more rational in-
 
Secretary Kissinger: "More rational" being defined as being more in our interests or what?”
////////////////////////////////////////////////////////////////////////////////////////////////
 
dgstage's picture

nice pop

[Most Recent Quotes from www.kitco.com][Most Recent Quotes from www.kitco.com][Most Recent Quotes from www.kitco.com]

Turd Ferguson's picture

Because I still get asked from time to time

MODERATOR

And because it's always funny to revisit...

 

ancientmoney's picture

@silver66 re: corporation nation . . .

Thanks for that.

Turd Ferguson's picture

And while we're at it

MODERATOR

It is a Ferguson family tradition to watch Christmas Vacation on every Thanksgiving night. Every year, something new strikes me as funnier than the year previous.

This year, it was this scene. Though the "rev up the microwave and piss my pants" line is a classic, the put-down from Clark is timeless. "Do you really think it matters, Eddie?"

 

Mr. Fix's picture

New Eric Sprott:

ERIC SPROTT: THE WEST WILL REGRET ALL ITS FINANCIAL POLICIES SOMEDAY SOON!

Alex Wong/Getty Images

Alex Wong/Getty Images

Eric Sprott recently joined Matterhorn Asset Management’s Lars Schall to discuss the metals, QE, and how the great Keynesian fiat experiment is likely to end for Western governments. 
Sprott claims that the West will one day soon regret all of its financial policies including QE, ZIRP, and gold suppression, and that the major governments carrying out these policies are now insolvent!
When asked by Lars what would be the signal to exit the gold and silver markets and what he views as the top in gold Sprott replied: For me to see a top in gold you would need to see 1 of 3 things: A maniacal blow-off.  2. The Central Planners become financially responsible (not likely).  3. If they finally capitulated and made their currencies gold-backed (which I don’t suspect we will see).  I think we have a long way to go before we see any of those elements manifest themselves. 
[Read more...]

ancientmoney's picture

Turd . . . GATA picked up this article of yours . . .

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