Turd in Backwardation

Wednesday, May 9, 2012 at 1:08 pm

That just sounds painful, doesn't it? Yikes! However, as the title suggests, I am personally in backwardation today as I feel the best way to summarize our current position is to give you my conclusion first and then work backwards from there.

Conclusion: The days of outright Bullion Bank (Cartel) manipulation and suppression of precious metal prices are drawing to a close. By later this year and perhaps as soon as late this summer, The Cartels (particularly silver) will have flattened their books to the point where the metals will finally be allowed to trade toward a price that truly reflects an equilibrium between investor demand and physical supply.

I believe that what we are currently experiencing are the final stages of this "book-flattening" process. In silver, the process began in April of 2011 when a sudden supply squeeze nearly created a commercial signal failure. Stopping there, you should click this link right now and read the entire post linked below:

http://traderdannorcini.blogspot.com/2011/02/what-is-commercial-signal-failure.html

The one thing the Bankers are NOT is stupid. They KNOW that if they continue down the silver manipulation highway, it is only a matter of time before the situation of Spring 2011 repeats itself. I believe that everything that has happened in silver since 4/29/11 has been for the ultimate purpose of getting out from under this position. Though there have been spikes like last February where the EE short position expanded, these moves were only undertaken to squash and control price until the Silver Cartel is finally ready. To effectively cover and exit the market is a painstaking process that requires time. The good news is: Time is almost up.

The Gold Cartel had a similar, life-altering experience in August of last year after the S&P downgrade of U.S. debt. While the stock market fell, gold soared to all-time highs on the backs of near-frantic short-covering by The Cartel. By Labor Day weekend, the pain was immense and, with news pending that the Swiss were about to devalue the Franc by 10%, dramatic action was demanded. Today's market is still reflecting that 9/5/11 decision.

Just as TARP was a transference of risk from the banks to the general public, the current trend in the metals is allowing the Bullion Banks to transfer their short positions from themselves to the speculators. Seemingly all of the new open interest is coming from new spec short positions being opened and who is on the other (buying) side of those trades, The Cartel of course! Not every trade, mind you, but enough of the trades to make a serious dent in their overall, net short position. Therefore, we must expect this process to continue. Gold may never reach a 1:1 parity of the Cartel net short position but I believe silver will...and soon.

Why, you ask? Because silver is deadly. It truly is the "silver bullet" for the vampires that have suppressed price for decades. Industrial and monetary demand has created a consistent shortfall in availability, as illustrated below by Casey Research:

Looking at this chart, do you see why price has risen from $4 t0 $30? Given that physical demand will only increase as fiat currency is devalued, we can rightly expect price to increase, as well. Throw in the ongoing CFTC investigation, the increased awareness of manipulation, the multiple, price-rigging lawsuits and the impending open of "Ned & Andy's Allocated Silver Exchange" in China and you get an environment that any sensible banker would love to exit...and they are doing just that.

All that said, I would expect lower lows before this is over. Yes, sovereign and central bank physical demand is strong but, in an environment where "the tail continues to wag the dog", price can still head lower. There is considerable headline and liquidity risk here and it will be quite easy for The Silver Cartel to induce more shorting into which they can cover. While it is entirely possible that silver is "compressing the spring" here and will not trade lower than today's lows, I think instead there's a higher probability that the situation in Europe spins out of control. This causes a flight to the dollar and liquidity crush which drives silver to $26 and, if the considerable shorts below $26 can get gunned, maybe even $22-23.

Now, I'm sure that you didn't like reading that any more than I like typing it but it is what it is. If I'm right about JPM et al exiting once and for all their silver short position, it may take a washout of this magnitude to pull it off. HOWEVER, THERE IS VERY GOOD NEWS HERE! If this plays out, you must hold your nose, avert your eyes and buy with both hands. With the manipulation removed, silver will soar. Forty dollars. Fifty dollars, Eighty dollars per ounce. All of those levels will come into view. Those sturdy souls willing to hold AND add to positions here will be richly rewarded in peace of mind AND value.

As mentioned above, The Gold Cartel is going through a similar transition. The difference for them, though, is that I highly doubt they will ever be net long. The Fed, the ECB and the BoE will continue to demand that gold's ascent be managed. That said, rapidly increasing monetary demand makes the net short positions to which we've all become accustomed suicidal. And, as we know from 2008, the TBTF banks must be preserved at all costs. Therefore, gold must be allowed higher but The Cartel must still attempt to control it without catastrophic collapse. The only alternative is for The Gold Cartel top remain in the gold market but a much less visible level. Last week's CoT showed a net short ratio of 2.16:1. This is down from 2.68:1 in late February and 2.86:1 last July. Again, I don't expect that we'll ever see 1:1 but I do think that the ratio is headed well below 2:1. What type of paper price action would bring about this change in the net short ratio? How about a drop to 1525? Maybe the gold sell stops get gunned, too, during a global liquidity crisis and gold falls all the way to 1450? That ought to do it.

(By the way, note that I didn't write my thought onto the charts today. Two reasons: 1) To avoid influencing your opinion outside of the lines drawn and 2) to highlight the risk disclaimer RJO places on every page.)

Anyway, I've been at this all morning so I'm going to stop here. But, first, a couple of things:

I see that price bounced and rebounded as expected off of 1580. It made it all the way back to near 1600 before getting beaten back. Silver rallied off of 28.60 to near 29.40 before being hammered back. I would advise you against chasing here. Once the trend changes...and it will, eventually...there will be plenty of time to get long. For now, unless you are part of Turd's Army, stay out of the way.
Please don't go off from here and cite this post without providing context. I hope I don't read somewhere that "the hypocrite Turd Ferguson now says gold is going to 1450". I'm doing my best to keep you informed and a part of that effort is a willingness to accept the situation for what it is. IF we see gold plummet to $1450 and silver at $22, it will only be for a brief moment in time and it will signal your opportunity of a lifetime to get (and stay) long.
The miners probably aren't done going down, either. As you might imagine, in a renewed global liquidity crisis, all equities will be declining along with the miners. At a 350 HUI, though, even I'll be tempted to finally jump back into the pool.

So, please, hang in there. The next, few weeks and months are likely going to be painfully challenging and the atmosphere in Turdville my become downright toxic. Don't let it get you down. I'm convinced that we are in the final stages of this ruthless, Cartel-position-shifting "correction". Once this is completed, the rallies from the lows will be breathtaking. Keep the faith. Use the continued weakness to add to your stacks. Live your life with joy and be happy.

Login or register to post comments
17032 reads
Print
Email

Thank you for supporting TF Metals Report. Your voluntary subscriptions and donations help keep this site alive!
DONATE TODAY!

Comments

I love this post. Turd

Submitted by Dr G on May 9, 2012 - 2:05pm.

I love this post. Turd precisely nails all of the feelings I've been having recently. The charts say to me that both metals are going down quite a bit further. A weak Euro will aid that cause. I cannot wait for cheaper metals. I will take out a 2nd mortgage to buy cheaper metals.

Having said that, I'll throw another comment out there: stackers would be WISE to avoid KWN or any other metal pumpers at this point in the game. It will only serve to make you further depressed. You need to have a basis in reality, and James Turk et al aren't it. There is such a thing as bullish and realistic and that is what you need at this moment in time.

That doesn't mean anything has changed in the fundamentals. It just means I can buy more now than I could last year.

@Jasound: should have sold at

Submitted by Dr G on May 9, 2012 - 2:09pm.

@Jasound: should have sold at 2.09 today and taken the 1k profit. Miners are the worst kind of gambling. They are located in the casino AND heavily manipulated.

BTFD!!

Submitted by mendolover on May 9, 2012 - 2:10pm.

Now that is a dip I will look forward to with great anticipation!!

Our Fav

Submitted by Xeno on May 9, 2012 - 2:18pm.

It's already over.

That's nothing!

Submitted by recaptureamerica on May 9, 2012 - 2:19pm.

McNamara Claims Record For Biggest Wave Ever Surfed
http://losangeles.cbslocal.com/2012/05/08/mcnamara-claims-record-for-big...

We ride bigger waves here in Turdispackingsilverandgoldstan daily.

From last thread...repost

Submitted by bbacq on May 9, 2012 - 2:19pm.

I had interjected into '47 and IRB and other's chats as they were using "right" and "left" to characterize their positions. I feel I must do it again.

Right/left is another falsehood, like false money, it is a false dichotomy that in accepting we march towards enslavement. It is to be rejected.

The real dichotomy is between freedom and coercion. Between liberty/free will, and control. I will relate a story to illustrate. Please read slowly and carefully. Multiple times. Let my words sink in, please, folks, this matters.

Today my dog, who likes to chase squirrels, as her DNA has her programmed to do, caught one. She was "playing with it" and it would soon have been dead had I not intervened. I was walking and talking with a highly intelligent and extremely well-informed philosopher I had met at the park at the time. He had earlier stooped to move a snail on the path out of harm's way.

I called in the stern, deep, voice-of-authority at my dog: "[dogname], NO!" several times. She soon heard me, stopped tossing the squirrel about, and it limped over to the tree, climbed up to lick its wounds, as my dog returned to my side.

But in the meantime, my philosopher-friend was shouting to me: "Why don't you run over and grab her???" clearly distressed at the scene he himself was running towards.

I would like to answer my friend's question here, because it is directly relevant to the discussion. I hope after reading my answer, you all understand why, and how it relates to the right/left discussion.

0) Dogs are pre-programmed to kill squirrels, but they also have free will. In a natural environment, this is a very natural interaction. Because we were not in a natural environment, but in a city in a park, and the dog did not need the squirrel-meat to survive, I chose to intervene.

1) There was a very good chance that had I focused on running to coercively stop the dog, and distracted my mind from what I knew was the right thing to do, I would have been too late to save the squirrel. I chose to stand my ground and clearly communicate a message to her mind.

2) My dog used her free will to make a decision. She heard me, she weighed the options, and her conscious mind chose to listen, and stop beating up the little squirrel.

3) As a result of having been forced to make a conscious choice, the synaptic weightings and neural interconnections in her brain were tweaked just slightly, in a way that will make it ever-so-slightly more probable that she will not kill the next squirrel, and be more responsive to my command in the next similar situation.

4) Had I used coercion, by running up and physically grabbing her collar, she would not have had to make a decision. Without decision, higher learning can't happen. Dogs, unlike people, are unable to philosophize, and so decisions, for them, must always occur in the here and now. Abstraction does not exist in the dog's mind. If I use coercion, I must always use coercion, and the dog does not learn. I see examples of these type of coercive owners and their ill-behaved and unhappy pets daily.

I have never hit my dog. My dog enjoys more freedom than any other city dog I know. I take her daily, off-leash, while I ride my bicycle with her at my side. I ask her to lie and wait for me if I need to shop. She is there when I return, despite being at liberty to leave if she so chose. She waits for me to cross streets. Although she is at liberty to cross without me, she chooses my company. Every day I get comments about how well behaved she is, how beautiful and well-mannered.

This state of affairs did not spontaneously come to be. I learned from Cesar Milan how to "get into the now", which is where my dog's psyche spends its time, and how to interact with her in a way she would understand. For example, if she gets too far ahead while walking, I stop and wait until she rejoins me.

She has learned that if we are to advance, we must do so together.

On my way back through the park after bidding my philosopher-friend farewell, I noticed a snail on the path.

I stooped, and moved it out of harm's way.

I am not sure if I agree

Submitted by balz on May 9, 2012 - 2:22pm.

Turd : You seem to think that the Cartel wants to get out of their short because they can make more money on the upside.
My opinion is different.
I think the Cartel does NOT want to end its shorts because its goal is NOT to make any profit on the metals, but rather to make money on everything else by continuing to suppress the metals.

IMO they will continue to short all the way up to Ag 1000$/oz. until the whole system collapses.

MArtin Armstrong

Submitted by davidof8 on May 9, 2012 - 2:23pm.

I'm not a martin armstrong fan (or non-fan) but it sures does seem like he has been correct on his Gold call.

You got to give the guy his due. Hey,even Gartman was right to get out huh?

Nenner was bullish and pretty recently said silver bottomed but he has changed his mine - the TA guys and cycle guys can be nimble - nothing wrong in that.

Double bummer

Submitted by Shnozberries on May 9, 2012 - 2:26pm.

I added 50 more ounces of silver last week for the total price (premium and shipping) of exactly 1 ounce of gold today. Had I been patient I probably could have finally purchased my first gold coin today. Oh well. I love the feeling of a butt-load of coins compared to a few so I would probably have stayed silver heavy anyway were it not for last evening's unfortunate event.

Apparently word got out that I was stacking silver and I came home to find my house in disarray and my whole stash cleaned out.

I never even got to go on that fishing trip...

@Schnoz

Submitted by Driven81 on May 9, 2012 - 2:32pm.

You're going to want to go silver anyway because when we get out of this slump, silver will be out performing gold, and just as in the rise of April 2011, the Gold to Silver ratio will be closing in. That will be the best time to sell some silver to buy some gold. Its like a free upgrade.

Excellent Post Mr Turd.

Submitted by ReachWest on May 9, 2012 - 2:33pm.

That was an excellent post that very nicely summarizes where we are and where we may be heading. [OMG: Turd in backwardation - that was pretty funny].

I think those of us that have been in this game for a protracted period of time always knew that when the end-game came into view the market reactions would be violent and dramatic (in both directions). Looks like that's where we find ourselves now and going forward.

I have always been of the opinion that when the final "11:59 moment" arrives, it will be breathtaking and there will not be an opportunity to get in to the physical metals without chasing price to significantly higher levels for fewer ounces. For that reason, I do not believe in selling metals on declines to attempt to buy back in lower, later. The risk of being "locked-out" is too high. Consistent stacking on dips is simply the only sensible alternative.

The Corner Market . . .

Submitted by A1Topgun on May 9, 2012 - 2:35pm.

This is a very smart lady. She layed it all out over two years ago and the scenerio seems to be working out as planed. I guess this will work for silver too as the Morgue is bigger than the Hunt Bros..

Janet Tavakoli
President, Tavakoli Structured Finance
Posted: April 13, 2010

How to Corner the Gold Market (Extra Edition)

http://tinyurl.com/y5mraex

Thanks Turd!

Submitted by proformatrillionaire on May 9, 2012 - 2:39pm.

I feel for the fellow turdites that are feeling the squeeze of the current downtrend. However, I learned the lesson of "leverage" years ago. You guys know all the usually language such as the market can stay solvent longer than you can stay liquid and all that. Why buy on margin in the first place? There are no guarantees in life. Nothing goes straight up. Hell, there is no guarantee that PMs will go up long term, although I cannot see how they will not. Get over it and get rid of your margin. You cannot possibly be "long and strong" if you own anything on margin. Buy everything for cash and take delivery. Sit back, sit tight, enjoy the scenery, sleep well at night and BTFD!!!!

Rick, Richard, Proformatrillionaire

Commodities Sold Amid Greece-Fueled Risk Aversion

Submitted by BUDDHA PRINCESS on May 9, 2012 - 2:43pm.

S&P 500 – Prices put in a pair of Hammer candlesticks above support at 1363.50, the 76.4% Fibonacci expansion, hinting a bounce may be ahead. Initial resistance lines up at 1392.10. Alternatively, a push through support exposes the 1339.40-1347.40 area, marked by the 100% Fib expansion as well as the 38.2% retracement of the rally from the December 19 2011 swing low.

US_Dollar_Strength_Returns_But_SP_500_Still_Noncommittal_body_Picture_5.png, US Dollar Strength Returns But S&P 500 Still Noncommittal

Daily Chart - Created Using FXCM Marketscope 2.0

Commodities are under fire once again in early European trade as Eurozone crisis fears continue to drive risk aversion, weighing on growth-geared crude oil and copper prices. The dour mood is also stoking safe-haven flows into the US Dollar, thereby applying de-facto selling pressure on gold and silver. S&P 500 stock index futures are pointing firmly lower ahead of the opening bell on Wall Street, hinting more of the same is up ahead.

Greece remains at the forefront following reports that Syriza party chief Alexis Tsipras – the second-largest vote-getter at the weekend’s election – said would-be coalition partners must renounce the EU austerity program to form a government with his support. Traders fear that Greece is increasingly likely renege on its obligations under the EU/IMF bailout program. This may see it ejected from the Eurozone and possibly the EU altogether, an unprecedented move that falls largely outside the realm of the forecast-able in terms of its practical implications for financial markets.

On the economic data front, another lackluster offering is on tap in the US with weekly MBA Mortgage Applications as well as the March Wholesale Inventories report on tap. The official DOE set of weekly crude inventory figures is likewise due to cross the wires.

WTI Crude Oil (NY Close): $97.01 // -0.93 // -0.95%

A selloff triggered after the appearance of a Harami candlestick pattern identified last week found interim support in the 95.78-96.56 area marked by a horizontal barrier in play since early November 2011 as well as the 100% Fibonacci expansion. A pair of Hammer candlesticks hints that a bounce may be ahead. Initial resistance lines up at 98.89, the 76.4% expansion, with a break above that exposing the 61.8% level at 100.33. Alternatively, a push through support targets 92.51.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1605.47 // -33.08 // -2.02%

Prices completed the Triangle chart formation carved out since late March – a setup indicative of bearish continuation – and took out support at 1661.75 marked by the 38.2% Fibonacci expansion. Sellers now aim to challenge the 50% Fib at 1591.00. Longer term, the Triangle pattern implies a measured downside objective at 1548.21. The 38.2% level has been recast as immediate resistance.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $29.44 // -0.62 // -2.05%

Prices are testing the bottom of a falling channel established since early March (now at 28.96), a hurdle reinforced by a horizontal barrier at 28.70. Breaking the latter level on a daily closing basis would expose 27.06. Near-term resistance is now at 29.71.

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.678 // -0.096 // -2.54%

Prices took out support in the 3.696-3.713 area marked by the October 28 closing high and the 38.2% Fibonacci retracement level, with sellers now challenging a rising trend line set from the October 3 bottom now at 3.636. A break through here exposes the 50% Fib at 3.606. The 3.696-3.713 area has been recast as near-term resistance.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

SOMETHING FISHY THIS WAY BLOWS...

Submitted by SRSrocco on May 9, 2012 - 2:43pm.

ACCUMULATION/DIST DIVERGENCE CONTINUES IN THE SLV

Yesterday, I posted the 18 month charts of GOLD & SILVER as it pertained to the ACCUM/DIST line. Today this is a 6 month chart and we can plainly see that there is a HUGE DIVERGENCE in the ACCUM/DIST line and the price.

I received an email to attend the New York Hard Asset Conference by Sprott's organization. I told them that I would not be able to attend. However, I did attach those two charts from yesterday and asked if they could forward them to Eric Sprott.

Again, this is a very interesting trend to see such a divergence in the price of the SLV and the Accumulation/Distribution line. I think we are going to see some interesting action soon in the precious metals markets.

FOR SAKE OF COMPARISON...here's that 18 month SILVER CHART AGAIN:

Dollar, Yen Aiming Higher as Euro Crisis Fears Dent Risk Appetit

Submitted by BUDDHA PRINCESS on May 9, 2012 - 2:46pm.

Another quiet day on the European economic data front puts the focus on scheduled remarks from EFSF chiefKlaus Regling and Bundesbank PresidentJens Weidmann as Eurozone crisis fears remain in the spotlight. With Greece failing to cobble together a ruling coalition able to push along its commitments under the terms of the EU/IMF bailout (at least so far), traders will be keen to see how much room the country’s creditors are prepared to give it.

On one hand, a hard line may force Greece out of the Euro area and possibly the EU altogether, an unprecedented move that falls largely outside the realm of the forecast-able in terms of its practical implications for financial markets. On the other, giving Athens too much room will encourage other bailout recipients to flout their obligations, putting into question the structural integrity of the EU’s crisis response framework in its entirety.

S&P 500 stock index futures are pointing sharply lower ahead of the opening bell in Europe, hinting risk aversion will continue to drive the safe-haven US Dollar and Japanese Yen higher against their leading counterparts. The two currencies added as much as 0.3 percent each against the majors overnight as Asian stocks slumped, with traders unnerved amid Eurozone-linked uncertainty. The sentiment-geared Australian Dollar led the way lower, down as much as 0.7 percent against its US namesake.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:01	GBP	BRC Sales Like-For-Like (YoY) (APR)	-3.3%	0.6%	1.3%
23:50	JPY	Official Reserve Assets ($) (APR)	1289.5B	-	1288.7B
5:00	JPY	Coincident Index (MAR P)	96.5	96.2	95.2 (R+)
5:00	JPY	Leading Index (MAR P)	96.6	96.9	96.0 (R-)

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:00	EUR	German Current Account (€) (MAR)	18.0B	11.1B	Low
6:00	EUR	German Trade Balance (€) (MAR)	14.3B	14.7B	Low
6:00	EUR	German Exports s.a. (MoM) (MAR)	-0.50%	1.60%	Low
6:00	EUR	German Imports s.a. (MoM) (MAR)	1.00%	3.90%	Low
6:00	EUR	French Trade Balance (€) (MAR)	-6000M	-6398M	Low
9:30	EUR	Germany to Sell €5bn in 5-Year Bonds	-	-	Medium
11:00	EUR	EFSF’s Regling Speaks at Hearing on Euro Crisis	-	-	Medium
12:15	EUR	Bundesbank’s Weidmann Speaks on Euro Crisis	-	-	Medium

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2935	1.3053
GBPUSD	1.6087	1.6196

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Submitted by BUDDHA PRINCESS on May 9, 2012 - 2:50pm.

Major Currencies vs. US Dollar (% change)

30 Apr 2012 – 04 May 2012

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_5.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Most of the major currency pairs continue to show significant correlations with the MSCI World Stock Index, suggesting that broad-based risk appetite trends remain dominant as drivers of price action. This puts thematic macro-level concerns – specifically, the durability of the US recovery and its ability to offset headwinds from Europe and China facing global growth – squarely at the forefront. The US economic calendar is relatively quiet, with headline event risk clustered at the end of the week as PPI and UofM Consumer Confidencereadings cross the wires on Friday. This puts the onus on evaluating the extent of downward pressure.

The week is off to a rocky start after weekend elections in France and Greece propelled candidates opposed to the status quo of austerity-focused EU debt crisis management into positions of power. The installation of Socialist candidate Francois Hollande into the French presidency has been well-telegraphed in opinion polls leading into the election and so seems unlikely to be a meaningful driver of price action. Meanwhile in Athens, the mainstream New Democracy (ND) and Pasok parties that support the sharp fiscal consolidation Greece agreed to as part of the EU/IMF bailout program failed to win enough votes to form a ruling coalition without at least one anti-austerity partner.

Not surprisingly, this is weighing heavily on sentiment across financial markets and pushing the safe-havenUS Dollar (ticker: USDollar) higher as traders fret about the increasing possibility that Greece will renege on its obligations. In the worst case scenario, this may see it ejected from the Eurozone and possibly the EU altogether, an unprecedented development that falls largely outside the realm of the forecast-able in terms of its practical implications for financial markets.

Dismal economic data from the Eurozone periphery may provide risk aversion with additional fuel amid signs the recession in the world’s second-largest economy (when taken collectively) is deepening. Spanish GDP figures are in focus, with expectations suggesting the annual growth rate slowed to the weakest since mid-2010 in the first quarter. The May edition of the ECB Monthly Report and updated set of European Commission growth forecasts will likewise inform the markets’ outlook for the depth of the slump plaguing the region well as the likelihood that that the central bank central bank will act to help backstop sliding output.

The Asian piece of the puzzle emerges in the form of a hefty Chinese economic data set to be released Thursday and Friday, with median forecasts pointing to mixed results. April’s Trade Balance report is expected to see export growth slow to the weakest in three months, an outcome likely reflecting a slump in demand from Europe, while CPI figures show the inflation rate eased over the same period. While such outcomes may prove broadly supportive for sentiment in that they would hint at the likelihood of additional PBOC stimulus, a firmer Industrial Production reading may offer a countervailing force.

The Australian Dollar has scope to underperform amid an already difficult environment for risk-linked currencies after April’s Employment Report comes across the wires. Expectations call for the economy to shed 5,000 jobs but survey data suggests hiring contracted at the fastest pace since December, when headline figures showed the economy lost 36,600 jobs, so the threat of a downside surprise that stokes RBA cut bets for June appears significant.

The British Pound stands apart from its major counterparts, with rate expectations seemingly taking a leading role over risk trends as the primary driver of price action. This argues for the centrality of the Bank of England rate decision this week, where Mervyn King and company appear unlikely maintain the policy mix as-is. The bank’s penchant for staying mum when no changes are implemented may make for a non-event however, with traders waiting for next week’s inflation report to inform their outlook in earnest.

EURO

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_6.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Source: Bloomberg

BRITISH POUND

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_7.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Source: Bloomberg

JAPANESE YEN

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_8.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Source: Bloomberg

CANADIAN DOLLAR

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_9.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Source: Bloomberg

AUSTRALIAN DOLLAR

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_10.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Source: Bloomberg

NEW ZEALAND DOLLAR

US_Dollar_Rally_May_Find_Added_Fuel_in_Global_Slowdown_Fears_body_Picture_11.png, US Dollar Rally May Find Added Fuel in Global Slowdown Fears

Source: Bloomberg

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

Nigel Fires BOTH Barrells!

Submitted by OutLookingIn on May 9, 2012 - 2:53pm.

http://www.zerohedge.com/news/nigel-farage-eu-titanic-has-now-hit-iceberg

BV update Beware!

Submitted by historiography on May 9, 2012 - 2:58pm.

This just arrived from Bullion vault as per my conversation with them regarding account, BV 's fees are a joke if you need to take delivery and showing up at the viamat will not work:

"Your right to withdrawal can only be effected through BullionVault (and not from the vault
operator or its facilities directly) because only BullionVault has the means and responsibility
for identifying you reliably."

Also, for Gold under 400 oz. 7.5% fee, otherwise 2.5%. Silver under 1000 oz. 10% fee, otherwise 2.5%.

Shipping fees to be added, plus UK tax of 20%. LOL.

China silver change

Submitted by philconn01 on May 9, 2012 - 2:59pm.

The new China Shanghia exchange opens tomorrow, any thoughts on how this could /will effect demand and price?

http://www.theaustralian.com.au/business/opinion/shanghai-futures-exchan...

SRS- could you flesh this out just a bit?

Submitted by Pining 4 the Fjords on May 9, 2012 - 3:01pm.

I am not familiar with what the Accumulation / Distribution metric measures or what it means for SLV... not to take up too much of your time, but could you give us a 1 sentence summary so we (or at least, so I) can appreciate what you are trying to convey in your chart? Are you basically saying the "vaults" are running dry? Gracias amigo!

Oscammer needs all the votes he can get..

Submitted by Groaner on May 9, 2012 - 3:01pm.

just out, he supports same sex marriage..

Maybe the miners aren't all

Submitted by Eric Original on May 9, 2012 - 3:12pm.

Maybe the miners aren't all going to zero. That's a relief!

Re:BV update Beware!

Submitted by Despekke on May 9, 2012 - 3:12pm.

Plus on wikipedia it says: BullionVault is the sole operating business of Galmarley Ltd, company number 4943684 registered in England.^[8] Amongst others, Galmarley Ltd is partly owned by Lord Rothschild, of the Rothschild family.

Storing gold with them seems like letting your cat babysit your pet hamster.

REPLY......ACCUM/DIST

Submitted by SRSrocco on May 9, 2012 - 3:19pm.

Accumulation Distribution

Accumulation Distribution tracks the relationship between price and volume and acts as a leading indicator of price movements. It provides a measure of the commitment of bulls and bears to the market and is used to detect divergences between volume and price action - signs that a trend is weakening.

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

Pining 4 the fjords... that Technical Analysis line does not represent actual metal, but the war between the volume and price movements. As the definition states above, it shows the COMMITMENT between the bull and bears. I tried to find some examples of a Divergence in the ACCUM/DIST chart, but I only found one that really gives the investor an idea of this trend change.

In the NUMBER 1 example we see the ACCUM/DIST line head higher, but the price of Microsoft heads lower. This is a DIVERGENCE that plays out in an upward move in the price a few days-weeks later.

In both charts I posted above it really shows just how SEVERE this DIVERGENCE has become. I could not find any example that was this extreme.

SRS- thank you

Submitted by Pining 4 the Fjords on May 9, 2012 - 3:32pm.

Complete with graphs and all- much appreciated, I learned something new today. Thank you for taking the time to explain that!

But you said just yesterday..

Submitted by tpbeta on May 9, 2012 - 3:33pm.

...that Silver wouldn't go below blah blah troll bullshit.

Just kidding. Good analysis. Thanks TF.

$22? Really?

SHFE

Submitted by Torpedo Fish on May 9, 2012 - 3:40pm.

I am not an expert but I just don't see a 23$ silver. If it drops that low, Shanghai Futures Exchange is gonna go empty and that is a worst case scenario for cartel IMHO.

Turd, What about the Fed

Submitted by Hrunner on May 9, 2012 - 3:41pm.

Turd,

Appreciate as always your post. And it makes sense. You lay out the thesis for primarily EE to continue to manipulate the market, and I assume the sole motivation is profit (is there a 2nd derivative motive such as driving retail investors back into the loving arms of equities and muppetville?). But you neglected to mention the Fed.

If you recall, in your recent Chris Martenson interview (and I'm paraphrasing here), Chris said the Fed manipulates interest rates, money supply/ inflation, tries to manipulate aggregate demand, tries to manipulate employment, they would be derelict in their duty if they did not manipulate PM price. Volcker said the Fed did not do enough to control the price. Gold price is the reporter on the health of the currency, or rather could be if were unmanipulated. So until the Fed does not exist or is radically reformed, can we not assume that PM price will be suppressed (I'm assuming the direction will continue to be suppressed due to unending money-printing).

This concept brings up two questions which I open to Turdville to ask if anyone has considered this Fed manipulation thesis:

1) Mechanically, how does the Fed do this? Do they 'loan' money to a proxy manipulator il.e. BB with marching orders, price directives etc? I don't recall ever reading that the Fed buys and sells gold.

2) What is the manipulated price target? Gold to go up lock step with "headline inflation" (sarcastic quotes intentional)? If that is their target, they have not done very well the past few years. Or are they clever enough to allow a rise above inflation (like healthcare and college tuition) but not 'too much'?

Peace to all,

OI confirming trend?

Submitted by Turd Ferguson on May 9, 2012 - 3:46pm.

MODERATOR

In the price smash of yesterday, gold price fell $35 but total OI surged by 4,000 (+1%), most of it coming in the August12 contract. Without question, these are new shorts being added. In large numbers, too, as the 4,000 net total is inclusive or what was definitely some liquidation due to the technical breakdown.

Silver total OI rose, as well, by 1,400 contracts (also +1%), mainly in the front-month July12.

Who are these fresh shorts? I doubt they're Cartel shorts. More likely spec/mgd money following momentum and trend near the bottoms just as they do at the tops. Remember, for each seller there is a buyer and who might that buyer be? Most likely a Gold Cartel member.

This week's CoT should help clear this up. For the week, gold fell by $58 yet total OI expanded by nearly 6000 contracts. In silver, price fell by almost $1.50 and total OI expanded by 2700.