Nonovercomplication

Sometimes the answers are right in front of your face.

If you've been reading along in the comments of the past few days and/or if you're a subscriber at TTM, you know I've been watching the price of platinum and the growing OI in gold. Both were signs that the lows for the December selloff were in. In hindsight, I just wish I'd moved sooner.

Here's what I mean. If you can, you should print off all six of these charts. Take the hourly PL and hold it up to a light source with the hourly silver. Do the same the hourly gold. Then repeat this exercise with the daily charts. I know it's no longer the holiday season but "do you see what I see"?

Note how closely gold, silver and platinum tracked each other through 2012. However, suddenly on 1/3/13, they began to disconnect. Now, maybe there's some fundamental reason for this that I'm overlooking? Maybe, though, the beatdown at year-end and following the FOMC minutes was a deliberate washout attempt on gold and silver only? I'm going with the latter. And maybe now it's simply time for gold and silver to catch up?

And it's not just platinum, take a look at the broken correlation from the euro and copper, too.

Further confirming this is the change in open interest, particularly in gold.

Gold total OI bottomed on 12/27/12 at 423,459. Price that night closed at $1664. Since then, though price fell as low as $1626 in the wee hours of last Friday morning, total OI has risen. At the close this past Tuesday, price was $1662 but the OI was UP to 441,304. (Remember the adage: "In a bull market, volume precedes price".) So, OI is up 4% while price was flat. Here's another nugget to chew on: The last time OI was this high was on 12/3/12, right after the beatdowns that commenced with Dec12 expirations. Back on 12/3/12, the total OI was 441,062 and what was price that night? $1721. To me, this is a very bullish signal.

So, what can we begin to conclude? Today's action is just another sign that the very nasty selloff that began on 11/28/12 concluded on 1/4/13. Gold fell from 1755 to 1620 (7.7%). Silver fell from 34.50 to 29.25 (2X at 15.2%).

We'll know it's truly over and begin to sound the "all clear" when gold is back above $1705 (currently the 50-day MA is 1700 and the 100-day is 1717) and silver is back above $31.50 (though the Mar13 silver 50-day is near 32.08 and the 100-day is 32.56).

As I close, I see that this morning's rallies are extending. Gold is 1675 and silver is 30.75. Very nice and a very good sign. Let's keep it rolling!

TF

283 Comments

ltcolkilgore's picture

maybe

?

My first and last first.... I promise!

wink

Istack's picture

The Parable of the Three Silver Stackers

            There once were three men who stacked precious metals.  The first man heard about stacking from a friend.  Prices were on the rise so he invested quickly, wanting to get on the bandwagon to quick prosperity.  All of a sudden prices dropped dramatically and he was mad, frustrated and full of fear.  He sold all his PM's and wept until he died.  The second man heard about PM's on the internet.  He studied and researched.  He bought some PM's and waited patiently.  Prices went up fifty percent and he cashed out.  He was proud of himself and bought a new car and went on vacation to Hawaii.  The third man knew about PM's since he was a kid.  His dad was a stacker and taught him all about money.  Whenever he would get paid he would go to his local coin shop and get some gold and silver.  He preferred silver more but liked to have some gold too.  He always made sure he had enough paper money to live with, to pay his bills and do fun stuff occasionally.  He looked at PM prices every once in awhile but didn't worry about it too much.  He figured it was out of his control anyway so he focused more on trying just to enjoy life and be happy.  He has kids now and is teaching them what he learned from his father.  He figures one day he will retire and then maybe cash out some PM's as needed and give the rest to his kids.  Until then he just keeps on stacking.

agNau's picture

He is...

quite literally the glue that holds it all together!

www.youtube.com/watch?v=xm3VMrKqJSA

Four Years, and counting. Squeeze is on John......pleeeeeze come back. We need your help!

lakedweller2's picture

Santelli

He just had a presentation on a proposal to track PM sales and puts the burden on the dealers.  Then he referred to Roosevelt's confiscation order.  The point seemed to be that the government is in trouble so they may eventually go after your stack in the basement.

Things just go downhill.

Grublux's picture

Fifth?!

Been a while since the top ten!

Feels good...

jezfry's picture

The Dollar and Oil

Sandlapper's picture

Trillion dollar coin

Trillion Dollar coin seems to keep coming back

There has been much speculation about the possible impact of the trillion dollar coin on a number of things, including the value and/or supply of platinum. However, if my understanding is correct, the US has been doing this on a smaller scale ay least since 1964. The key is the difference between the way the US creates coins and paper money. Since the Federal Reserve act, the US must sell bonds to raise cash (dollars) to fund operations - the Treasury can NOT print paper money without this mechanism. 

On the other hand, the mint is authorized to coin money with authorization from Congress – which is open ended and can be expanded or contracted to meet the needs of the economy. When gold and silver were the only “lawful money” (has the Constitution been repealed? Well….) there was a limit on this method – since the value of the metal roughly approximated the face value of the coin. The gold “redemption” in 1930’s didn’t really change much (although then there was negative seigniorage!), but the big change came in 1965 when we went to CuNi clad coinage. The key is Seigniorage – definition from Wikipedia. 

“Seigniorage (pron.: /ˈsnjərɪ/, also spelled seignorage or seigneurage) is the difference between the value of money and the cost to produce it. The term can be applied in the following ways:

  • Seigniorage derived from specie—metal coins—is a tax, added to the total price of a coin (metal content and production costs), that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.[1]

Some time prior to 1964, the value of silver in small change exceeded the face value of the dime quarter, half and dollar coin. The change to clad significantly decreased the cost of metal versus the face value – resulting is a substantial “profit” to the mint. The mint books this as “revenue” – which a I understand it goes into the income for the government and is spent. Note that the cent and nickel now have negative seigniorage as the cost exceeds the face value. From Wikipedia:

“Ordinarily seigniorage is only an interest-free loan (for instance of gold) to the issuer of the coin or paper money. When the currency is worn out, the issuer buys it back at face value, thereby balancing exactly the revenue received when it was put into circulation, without any additional amount for the interest value of what the issuer received.”

However, since coins have a circulating life of 25+ years, and in many cases end up in piggy banks or other accumulations, the redemption rate in the US is fairly low. An example of the “profit” from Wikipedia:

“The "50 State" series of quarters (25-cent coins) was launched in the U.S. in 1999. The U.S. government planned on a large number of people collecting each new quarter as it rolled out of the U.S. Mint, thus taking the pieces out of circulation [citation needed]. Each set of quarters is worth $14.00 (a complete set includes quarters for all fifty states, the five U.S. territories, and the District of Columbia). Since it costs the Mint about five cents for each 25-cent piece it produces, the government made a profit whenever someone "bought" a coin and chose not to spend it.[4] The U.S. Treasury estimates that it has earned about US$6.3 billion in seigniorage from the quarters over the course of the entire program.[5]

In some cases, national mints report the amount of seigniorage provided to their respective governments; for example, the Royal Canadian Mint reported that in 2006 it generated $C93 million in seigniorage for the Government of Canada.[6] The US government, the largest beneficiary of seignorage, earned approximately $25 billion annually as of 2000.[7]”

So the trillion dollar coin is not unprecedented in the US monetary system – it is just a (il)logical extension of the lunatic monetary policies currently in place for the paper money. The amount of platinum is irrelevant. The practical impact on platinum price is nonexistent. The government mints a proof “commemorative” one ounce platinum coin with a face value of one trillion, the Federal Reserve “buys “ the coin, and the Government books seigniorage of $1,000,000,000,000 - $1650 (the cost of one ounce of platinum). It appears to be perfectly “legal”, if Congress authorizes the “coin program”. In fact, it may already have since there is legislation for a platinum commemorative coin program. It just has a little more premium than the current torrent of commemorative coin programs that raise funds for someone or other’s favorite cause - the premium just goes to fund the Government.

Do I think this is a good idea – absolutely NOT, But at least the coin id worth $1650, which is a great deal more than the value of the electrons in the billions of dollars in $1000 bonds that the Fed “buys”. The real impact would be on the residual “credibility” the US has in world currency markets. This is such blatant manipulation of values that I can not see it passing even the most superficial laugh test?

Note that the seigniorage on the clad coins did not cause the price of Cu or Ni to rise, therefore, why would it alone cause the price of platinum to rise? The answer of course is CONFIDENCE (game). This could be “the straw that breaks the camels back” in the monetary shell game – there is no pea. And ignore the man behind the FOMC minutes

dumpster's picture

slow witted response to bogus

slow witted response to bogus confiscation noise ..

those with out a clue rush forward to mouth platitudes about what some some said .. lol

that non existence stash in your basement is safe 

but why get your pants in a knot over something that has not happened .

even in the Roosevelt era who turned in gold  but a couple of suckers...

the cry confiscation just gives excuse for not doing anything ..

dumpster's picture

slow witted response to bogus

the cry confiscation just gives excuse for not doing anything ..

Grublux's picture

Will this little pop

Be able to withstand fed comment later in the day?

Or will it be an excuse to smash???

Ferd Torgerson's picture

Only Got Tenth

But if this thread gets 1000 comments, I'll still be in the top one percent.

Edit:  I have to stay optimistic.  That's the only way I can look at my mining shares and continue on with my day.  Sort of like the optimistic kid on Christmas Day.  His parents were trying to break him of his eternal optimism so they left him a bucket of horse leavings under the tree.  He spent the rest of the day looking for his new pony.

Mantis's picture

Head and shoulders in GSR ?

Been watching this for a little while now, this is the Gold Silver Ratio over the last 2 years, is it just me or is that a head and shoulders formation nearly completed ?

Also I think silver is sitting on very solid long term support now (I predicted a bounce yesterday) :o)

Now to read the article.

ps MrFix and AncientMoney sorry couldn't continue the conversation the other night about possible civil war, appreciated your comments. I hope personally that we can beat them by making them irrelevent, stop voting, stop paying tax (if we all did it, what could they do?) and resist everything non-violently. Ghandi shows the way.

SRSrocco's picture

ENERGY = MONEY...

ENERGY = MONEY

jezfry... thanks for bringing up that link.   Amazing... I actually agree with Erik Townsend on this topic...LOL

The one important aspect that the world has not yet grasped... is the decline of NET ENERGY.  In the graph below, we can see the big change coming in NET ENERGY that will be available to the market:

silver_11-image012.gif

I am still quite amazed at folks like PORTER STANSBERRY who keep regurgitated that TECHNOLOGY will save us and will allow more oil to come to market.  While this may be true for a BRIEF FRICKEN PERIOD.... it does not change the fact that this oil will be very energy intensive and expensive to produce.

Thus, there is less available for CAPITAL FORMATION.  As there is less net energy available for the market... there will be less capital for investment and growing economies. 

JUST WAIT TO YOU SEE THE CHARTS I HAVE COMING OUT on this.

Anyhow, the world is in serious trouble because it has designed a STANDARD OF LIVING based on HIGH EROI energy along with a growing energy supply.  One has been heading lower for decades, and the other will be heading south shortly.

ENERGY is what allows the formation or growth of the money supply... whether that be gold & silver or fiat.  Without the growth of energy... you can't grow your money supply and you can't PAY FRICKEN HIGH INTEREST EITHER....LOL

Matter-a-fact, compound interest is only a system that can last for a brief period of time.  It is not natural and it does not conform to finite resources.

EagleDave's picture

Santelli Video

Here's the Santelli video:

http://video.cnbc.com/gallery/?video=3000140465

This bill was proposed in the Illinois Senate, not in the U.S. Congress.

agNau's picture

Either you see, or you are blinded by the matrix of deception...

Everything is now on the table, as the desperation to maintain "Control" is openly displayed. In the final acts even the sheep will pause. Watch as the Debt instruments fail in a much more rapid and open fashion as large holders hurriedly move to capture the remaining value in something "tangible".
I posted almost two years ago here, and several times since, that in a crowded room a deal was struck between the global players......and as things progressed and deteriorated there would come a point where someone would "Bolt" for the door, and ALL would follow.
I believe we are there.....the first sign was the move by Germany to repatriat their Gold holdings. I look next for visible signs of rolling Bonds into tangibles on a much larger scale. There will be no choice at that point. The debt ceiling will be removed (new congress/treasury head/wall of rising debt).....the "End Game" is not off in the unseen distance any longer. The specifics of the deceptions are the only unknowns......although they can (as with strict gun control attempts/realities?)be guessed. The very close default is THE ONLY reason for the gun grab!
Don't believe? Watch as CRACKS in foundation can no longer be kept from view.

The Death Ceiling's picture

Happy New Year

Happy New Year to Turd and the community.

I saw a positive story on BBC business news yesterday about precious metals investment.

To my great surprise they included Silver too, suggesting it might outperform Gold. They normally only mention the metals when new highs are hit, or after big sell-offs, so this was indeed quite unusual. They of course mentioned the down-side risk of QE ending, but that is to be expected from a lazy and ill informed business team.

ag1969's picture

"Nonovercomplication"

You and Gerge W. Bush should go bowling.  You can explain how the markets are "mismaladjusted"  LMAO

Turd Ferguson's picture

I just needed a new

MODERATOR

I just needed a new strategery smiley

exiledbear's picture

And don't forget BTC

It gained the 14 handle back again today. I wouldn't be too worried about the paper prices of these commodities, and remember, you're not going to trade these things back into dollars, you're going to be using them for barter and direct payment.

Turd Ferguson's picture

Reminder

MODERATOR

Mentioned this on Tuesday: Buy beans on Valentine's Day and sell them on Mother's Day.

http://cnsnews.com/news/article/how-dry-we-are-current-drought-reminiscent-dust-bowl-days

Operator 14's picture

ag1969

what kind of bowling?

Kcap's picture

@ag1969

My favorite Bushism was "strategery"...

God he was classic.

Kcap

edit:  too funny, Turd beat me to it!

Grublux's picture

@exiledbear

What have you found to be the best way to get BTC.  I was going to try bitinstant but it seemed such a pain.

porkydawky's picture

Gold & silver through 200DMA

This is a strong bullish technical move imho. Especially if they can hold the gains, well at least until 3.00am that is when 20,000 contracts are due to be dumped onto the market. Perhaps someone should warn the CFTC????

fertzeltwist's picture

Cracks-

The cracks are growing to ENORMOUS pre portions, agNAu. Everyone should go to sgtreport and read the sandy hook report on intel hub.

lakedweller2's picture

Dumpster

Slaying the messenger?  Who did you want me to tell...Geithner?

FleetFeet's picture

Bugger the Bankers / Farm Wars

I'm down in South America, and a lawyer-friend in Ecuador sent me this link. . . .  Just goes to show how world-wide our problems (and solutions?) happen to be.  [Katie Rose, you might want to read the full bio of Barbara Peterson (ABOUT menu item), and the links re: Monsanto & GMO's.]  

But first, watch the video:  

Bugger The Bankers – They Don’t Give An Arse!

Barbara H. Peterson is retired from the California Department of Corrections, where she worked as a Correctional Officer at Folsom Prison. 

Barbara lives on a small ranch in Oregon where she raises geese, chickens, goats and horses. This rural lifestyle is under attack at the most basic level. Federal regulations and the corporate takeover of our food supply with Monsanto’s invasive GMO technology is designed to make it next to impossible to raise animals and organic food.

http://farmwars.info/?p=9910 

Bollocks's picture

Here it is...

That BBC News vid on silver. "silver could rise by as much as 500%..."

Interesting that these kinds of reports are suddenly appearing. It was gold over Xmas/New Year, now it's silver's turn.

===========

Silver gains popularity among investors amid economy fears

Worries about the challenge of reviving the sluggish US economy and dealing with the Eurozone debt crisis have prompted nervous investors to find safe havens to put their money.

Gold has been long considered a safe-haven asset, but investors are now being attracted to silver.

The BBC's Leisha Chi has been finding out why some bullion experts believe silver will outperform over the next few years.

2min video here: http://www.bbc.co.uk/news/business-20954417

Bollocks's picture

Him again.

Piers Morgan: No regrets over calling US gun lobby stupid

More than 100,000 people have signed a petition calling for the British TV host Piers Morgan to be deported after he criticised America's gun laws.

After December's Newtown school shooting President Obama opened up the emotionally charged debate over stricter gun control, which CNN host Morgan is strongly in favour of.

The White House has issued a statement defending Mr Morgan's right to free speech.

2 1/2 min interview on BBC Newsnight last night:
http://www.bbc.co.uk/news/world-us-canada-20967687

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