The Significance of 1665

I was recording this week's podcast yesterday when it finally dawned on me. Frankly, I'm disappointed in myself that I didn't figure it out sooner. Take your eye off the ball and get a little distracted and this is what you get. No matter, at least now we know.

First, some history. Without a doubt, the $250 run in gold over five weeks in August and September was almost entirely caused by Cartel short-covering and we spent a considerable amount of time discussing this last fall. In summary, the gold CoT numbers told the tale. The CoT from Tuesday evening, August 2 was:

Spec long = 292,000

Cartel long = 155,000

Cartel short = 443,000 (Cartel net short almost 3:1)

Gold price = $1650

By Tuesday evening, September 6, the picture had changed rather dramatically:

Spec long = 248,000 down 15%

Cartel long = 174,000 up 12%

Cartel short = 402,000 down 9% (Cartel net short almost 2.5:1)

Gold price = $1900 up 15%

Again, this is why the reporting of a gold "bubble" was such utter nonsense and any reporter/blogger espousing that idea is to be permanently avoided because that person is either stupid or deliberately misleading you. Gold went up 15% in five weeks because The Cartel panicked and began to rapidly decrease their net short position. As you can see in the data above, the speculative (supposedly dumb) money was selling into the strength, undoubtedly locking in gains along the way.

So, now, put on your thinking cap. Try to recall what happened shortly after August 2, 2011. Anyone? Anyone?

After the close on Friday, August 5, S&P announced that they were downgrading the credit rating of the U.S. from AAA to AA+. I believe this singular event was the "final straw" for the banks that have been willfully manipulating gold and silver for decades. All of the market action since has been a reaction to the S&Ps move. The massive and deliberate takedown of gold and silver in late September was orchestrated to drive price lower so that The Cartel and The EE could continue covering their massive short positions but at a much more profitable, lower price. This effort continues to this day. Look at the latest CoT numbers:

Spec long = 166,000 (down 43% from early August)

Cartel long = 160,000 (flat from early August)

Cartel short = 327,000 (down 26% from early August) (Cartel net short now 2:1)

Anyway, the point of going through all of this again is to demonstrate that The Bullion Bank Cartel clearly got spooked and changed their modus operandi post the S&P downgrade announcement of 8/5/11. Getting back to current day, how does this affect current price and technical action. Well, my brothers and sisters, $1665 is exactly the opening level of gold on Sunday evening, August 7, when the metals resumed trading on the Globex. For the next several weeks, we speculated upon whether or not gold would ultimately fall back and "fill the gap". Nature abhors a vacuum and charts abhor gaps. Always have and always will.

It didn't take too long, unfortunately, for us to have our answer. Here's a reprint of a chart from September 23 where we were watching the 1665 level very closely:

paper_9-23pmgold_1.jpg

Clearly, by reviewing the action of this week, a line has been drawn by The Cartel. They do not want to see gold move back above 1665...at least not yet. They may soon get overwhelmed and lose the battle but, as we've seen on the charts and in the daily growth of open interest, The Cartel would like very much to keep gold under wraps for a little while longer. Do they want to get their gold net short position to 1:1., similar to the progress the EE has made in silver? Maybe, but the fundamentals in gold are so overwhelmingly strong that I don't think that they are going to have the time to pull this off. (It's taken The EE almost 9 months to move from the same 3:1 net short position to the current 1.5:1. It will be nearly impossible to hold gold in its current range for another 6 months.)

Anyway, now we know why 1665 is so important to The Cartel. Hopefully, near-term pressure will force gold higher and through that level. The Pig and DrC are helping its cause. However, next week is option expiry for Feb12 and first day notice, too. You've got to expect that The Cartel will try to keep gold down for a while longer.

paper_1-20amgold.jpgpaper_1-20amsilv.jpg

paper_1-20amcop.jpgpaper_1-20ampig.jpg

By the way, you can bet your batooty that the next, major resistance for gold will be 1705. Longtime turdites will undoubtedly recall the significance of that level, too.

Lastly, here are three items that you need to check out, either today or over the weekend. First, another KWN interview of Santa. (I've tried to get Santa to do a podcast but he won't commit. I'll keep trying.)

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/1/19_Jim_Sinclair_-_There_Will_Be_a_Run_on_Gold_Stored_in_the_US.html

Someone sent me this article that discusses the PAGE. The author claims that the exchange won't be open until June. Nuts. I've sent a few emails trying to confirm this. I'll let you know if I hear anything.

http://www.marketoracle.co.uk/Article32678.html

And, lest your heart despair with CNBS et al fawning over the "earnings" report of Bank of America, Dave in Denver knocks it out of the park with this analysis. Be sure to read:

http://truthingold.blogspot.com/2012/01/bank-of-america-earnings-comedy.html

That's all for now. Please check back later this afternoon as I will be posting TFMR podcast #11. As I mentioned above, I recorded it yesterday and it's a pretty good one. Thanks again for all of your support!  TF

12:20 pm EST UPDATE:

Very, very nice FUBM rallies this morning, particularly in silver where the price is now $31.50, well clear of $31 and headed toward stout resistance near $33. (Do you recall the significance of that level, too?)

That said, we must watch things very closely here. The charts below are self-explanatory.

paper_1-20amgold4.jpgpaper_1-20amgold2.jpg

paper_1-20amgoldh.jpg

Stay vigilant. TF

275 Comments

Charles S. Hamlin's picture

First?

First??!  Happy FUBM...and on a Friday no less...

Thanks for the reminder of the significance of the $1665 level...that number rang a bell, but I just couldn't remember why; I guess too many adult beverages since August...

survivalwstyle's picture

lets roLL

gOOd to know. thx bro

Verdsins's picture

Second

Woohoo

Dr G's picture

Turd, you da man! Thanks for

Turd, you da man! Thanks for the analysis. Will everybody donate a little bit by feeding the Turd today? Even $5 is better than nothing, but consider an oz of silver ($31!).

lairdwd's picture

silver and gold catching a bid today

Nice $5 candles on gold. Nice $.12 candles on silver. Could the tide have turned? Rotation into gold and silver??

TitanAe's picture

Good news TURD !!!

Read at zerohedge  http://www.zerohedge.com/news/sopa-shelved .........

Who says good guys can't win one !!!!

¤'s picture

Thanks Big T

Just posted the post below over at the Speak about getting back in the market....

Here's your Daily DPHaze while I'm at it....       

http://www.tfmetalsreport.com/forum/3172/daily-dphaze-news-machine

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Back in the market

Not myself, my dad. I was finally shredded in the Jan. 11' options I held. Oh well, no tears here.

I gave my dad the signal yesterday to dip his toe's in and I think he dove in head first and didn't scale in. Yikes!

Lots of GDX and GDXJ , AUY and UXG happened around early afternoon. Hecla was bought last week as well.  Were talking thousands (yikes!) of shares all the way around. Needless to say, I'm holding my stomach a bit and I have no illusions about things going straight up. The dip that happened yesterday was too tempting.

I have no real skin in the paper game myself right now. Just the phyz right now. cool

Be Prepared's picture

GSR looking nice...

Dr G's picture

@Be prepared, it will look

@Be prepared, it will look nice when it's in the 30 range :)

MonkeySmoke's picture

Thanks TF...

I believe $1664 is one of Santa's Angels or is it $1764. Either way, the analysis is great and much appreciated. It makes sense that the EE and Cartel are trying to get the gold shorts under control. I will be glad when they are washed away by the actual market. It will be a great day.

Mariposa de Oro's picture

yet another pathetic hit piece on gold

Obivous sheeple food.    For sheeple, by sheeple.

http://www.rawstory.com/rs/2012/01/18/economists-pan-idea-of-new-us-gold-standard/

Pathetic......

lairdwd's picture

Let's see if those power upticks continue

Wow - $5 upticks on gold, .12 upticks on silver. This is NOT the usual upside action. Sector rotation into gold and silver by the spec money? 

Be Prepared's picture

@Dr G - GSR to 1:1

Now.... THAT would be nice..... won't see it in my lifetime, but it's not hard to believe eventually.  :-}

Xty's picture

High Ho Silver

31!

Charles S. Hamlin's picture

@MonkeySmoke: Santa's Angels

Santa's Angels are as follows:

1521, 1600, 1681, 1764, 1849, 1936, 2025, ....and he threw in 1650 for good measure...

¤'s picture

Echoing Dr. G

Great thought Dr. G on getting some newbies in the fold or others who have been meaning to but haven't gotten around to it.

As an example.......$15 a month is $.50 a day. That's nothing. 

Just do the auto-pay feature and it's painless.  Or do as much as you can or want to, but $.50 a day seems pretty cheap to hang here and read TF's analysis and all the other relevant and up-to-date content that's on here plus all the links and breaking news that Turdites post as they come across it.

What's $.50 a day/ $15 (or more) a month?   Just do it. You won't regret it.

As a way of disclosure, I do $25 a month on auto pay. Less then a buck a day and I fully get my money's worth and then some.  It's peanuts.  Please consider it.

Thanks for the opportunity TF!  

Turd Ferguson's picture

I give you this...

MODERATOR
Be Prepared's picture

Santa's Angels...

Next Target:  $1681

¤'s picture

GSR getting silly? / Historical chart shows just how much

Groaner's picture

Awesome Turd

We love short covering

Just don't tell the Cartel that if they raised the margins it would also put a kabosh on their rise.

Groaner's picture

Silver up .47

My silver stock EXK is up a whopping .01!

beardeus's picture

This time around when the GSR

This time around when the GSR hits around 30 I will be switching all the silver to gold. I'm not missing out on that trade this time.

Be Prepared's picture

@DPH - Gold to Silver Mining Ratio

Converting all mine production to ounces, gold mine production was over 100 million ounces in 2010 while silver mine production was a mere 735 million ounces. Thus we have the miners producing only approximately 7 times as much silver as gold in 2010, while investors are exhibiting a 40:1 preference in buying silver versus gold. Meanwhile the gold/silver price ratio is an utterly insane 55:1 at the present time.

​So Let's recap:

​In the Earth's Crust (Silver to Gold) =        16-15 to 1

​Mining Production 2010 (Silver to Gold) =     7.35 to 1

​Paper Contracts 2012 (Silver to Gold) =          54 to 1

​Now, there's clarity!

​Thanks, DPH, for the Article Link....

balz's picture

GSR ratio will go much lower

GSR ratio will go much lower than 30. If you switch from silver to gold at 30, you will miss the run to 20 and the run to 15, 14, 13...
 

beardeus's picture

@ balz

I agree but think it will go from 25 - 30 back to 50 a few more times before it hits 20 and below.

lairdwd's picture

WE GOT THOSE COCKROACHES ON THE RUN!!

Short covering, fresh spec longs on heavy volume. General Markets powering higher on "good" earnings. Dr. Copper higher, PIG lower, All Central Banks in either overt or covert easy money mode. China forcing investors into equities, which supports commodities. Reflating madness. All systems ready for liftoff. 

lairdwd's picture

WE GOT THOSE COCKROACHES ON THE RUN!!

Short covering, fresh spec longs on heavy volume. General Markets powering higher on "good" earnings. Dr. Copper higher, PIG lower, All Central Banks in either overt or covert easy money mode. China forcing investors into equities, which supports commodities. Reflating madness. All systems ready for liftoff. 

We got those cockroaches on the run!! Cartel will be moving to higher ground shortly.

DayStar's picture

Were the Elites Spooked by USA Debt Downgrade

TF wrote: "Anyway, the point of going through all of this again is to demonstrate that The Bullion Bank Cartel clearly got spooked and changed their modus operandi post the S&P downgrade announcement of 8/5/11."

I will agree that the modus operandi of the EE has changed since 8/5/11.  We have witnessed almost unending egregious raids on the commodities and fantasy pricing of the banks and the Dow.  As a result of the market distortions coming from the manipulated prices, we have and are witnessing shortages of PMs in quantity.  However, my take on the suppression of the PMs is that the downgrade of the US debt marked the beginning of the end game for the dollar.  Because they are going to print the dollar into worthlessness in 2012, they have been reallocating their assets from paper into PMs in their possession.  They are doing this because all paper assets will go to worthlessness.  Because of the reallocation of the EEs assets from paper into PMs, they have driven the price of the PMs so they can buy them cheap.  They are keeping them down till they complete the bulk of their asset transfers.  The BRICs, for example, are making good use of this time to transmute paper into gold.  

I argue that what we are witnessing is the end game, because the effects of their actions will be to destroy the means by which they control the markets, that is, the banks, COMEX, and the LBMA.  Their illegal manipulations are plain now for all to see.  They would not kill the goose that lays golden eggs unless they had already extracted from it what they wanted, and were turning to bigger game, like obtaining the whole world.  This is where I part company with people that say the EE is stupid.  To say the EE is stupid is to ignore their obvious control over the world, and they didn't get that by being stupid.  To say they are stupid and afraid is to grossly underestimate our enemy.  By taking down the PMs they can convert fiat to dollars cheap.  Then the fiat dies, the world plunges into chaos, and "out of chaos comes order", the New World Order, and that, my friends, is the objective.  It is the planned result, not a fearful, stupid reaction by the elites.

DayStar

Turd Ferguson's picture

Please be sure to listen to Santa

MODERATOR

Click the KWN link and listen. It's only about 15 minutes and well worth the time.

Primarily, pay very close attention to what Santa says about Global QE in 2012.

Dr G's picture

 = very nice but...  = a sign

fut_image.ashx?si.png&rev=63462657510890 = very nice but...

fut_image.ashx?hg.png&rev=63462657526734 = a sign of things to come?

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