Surviving Gold Opex

As I tried to warn two days ago, gold has been summarily beaten by The Forces of Darkness as we approach Feb13 option expiration on Monday. Hang in there. It's almost over.

If memory serves correctly, I gave you 1660-1670 as a floor for gold and I'd hoped that 31.60 would hold in silver. Mehhh...we're hanging in there. Though other analysts might have you believe something different and even ZH is getting in on the act ( http://www.zerohedge.com/news/2013-01-25/what-happened-precious-metals), this is nothing but Cartel shenanigans attempting to manage price ahead of option expiration. This chart was posted Wednesday by Turdite "JustAnotherLurker" and it pretty much tells you all you need to know.

One glance at the chart above and you can quickly decipher The Cartel "sweet spot", somewhere between 1665 and 1670. No wonder, then, that today's price action is centered there. Look for that to continue Monday, too.

Silver has, of course, been taken to the woodshed along with gold as JPM et al use any possible weakness to exploit price lower. This has nearly run its course, too, though there still exists the possibility that silver could briefly fall to near its 200-day MA early next week. IF it does, BTFD.

A couple of other, random items of which you should be aware...

LOTS of interesting chatter about Fed/ESF interference in the global bonds markets and how this is affecting current economic relationships. As you know, I fully expect a gold-backed renminbi to soon be offered as an alternative currency to the U.S. dollar. The only issue is when. Developments like this certainly move the ball down the field: http://uk.reuters.com/article/2013/01/24/uk-britain-yuan-idUKBRE90N11520130124. And then you've got this idea being kicked around, too:

When it's all over and the pundits, media and analysts are all shaking their heads at how they could have failed to anticipate and connect the dots, you my dear reader will simply be able to sit back and relax, knowing that you had been forewarned.

I don't know if the current beating has violated any of this fellow's charts, but here's some traditional TA from a guy at Minyanville who think that silver is headed to $77 quite soon. Works for me! http://www.minyanville.com/sectors/precious-metals/articles/How-Far-Up-Could-Silver-Go/1/22/2013/id/47549#ixzz2ItjznLPx?refresh=1. And here's his chart:

And for your weekend reading pleasure, here's the latest from Jim Quinn. He sent it to me Wednesday but I haven't had a chance to publicize it until today. ZH picked it up, too, so you might have already seen it. Regardless, I thought I'd add the link today in case you'd missed it. http://www.theburningplatform.com/?p=47568

And the "Race to Debase" continues in earnest. What's-his-bucket, Yamamoto(?), said the other day that he wanted to see the yen trade all of the way down to parity/par with the dollar. Starting to look like he's going to get his wish. Having failed at 1.11 and slipping through 1.10, could 1.00 be coming??

Finally, just two thoughts on the big ETFs. First, I asked our pal Andrew about the enormous, alleged addition to the SLV last week. He confirmed that it did, indeed, happen. 18,000,000 ounces collected, over time, and deposited into the vaults. The main question now is: Why? Why the rush to repay and reload? And then chew on this: Why the additions to SLV (silver in trust - allegedly - is now up almost 7% YTD) while the GLD is being raided for gold? Yesterday we saw another 2.4 mts of gold get sucked out. This leaves the fund at 1331.71 mts versus a 1/2/13 level of 1349.92 mts. Hmmmm...Over 18mts gone in the last three weeks, all while price has been rangebound between 1630 and 1690. Again, hmmmmmm........

OK, that's it for today. I hope you have a great weekend and please check back later this morning or afternoon for a very important and significant "sticky" post. You'll definitely want to read it.

TF

122 Comments

ancientmoney's picture

@Groaner and tyberious re: KWN . . .

KWN is pretty much still locked into the view of the financial world as we have known it for the last century.  Once in a while, somebody is interviewed who sees a whole new paradigm coming, but mostly they still think inside the fiat-centric world, where everything is based off the dollar, or euro, or yen, or whatever currency you'd like, will be the way it always will be.

They seem to think gold and silver will still be traded as commodities, and simply think in terms of higher fiat prices for gold and silver.  I don't think they have yet come to grips that the whole world will be upside down when fiats fail.  A gold-backed currency somewhere in the world changes things drastically.  As someone said the other day, the daily trip to Wal-mart (as we know it today), will be like a trip to Sak's Fifth Avenue after the reset.  Fiat currencies not backed by gold will be relegated to maybe, if we're lucky, 10% of their current value.

Think of government pensioners, who will still be getting their, say, $5,000/mo. of (now) cushy payments, when it only buys what $500 does today. 

KWN, because they are thinking linearly, do not seem to realize that the markets are completely held hostage, in order to prevent chaos from occurring immediately.  They still seem to think that markets will ultimately break free of suppression, and then things will be just fine thereafter, just with higher gold and silver prices.  That is what their predictions seem to have been based upon happening "any day now." 

In reality, when a true, goldbacked currency such as Chinese yuan becomes reality, what I see happening is a Sunday night closing of all banks, "until further notice."  It may come out of the blue for no apparent reason, or it may be in response to a crisis, real or manufactured.  Prices of everything will be unknown for a long period of time.  Trading of several commodities will be halted "temporarily," some never to reopen.  Governments will likely announce gold and silver purchase plans, and possibly outlaw PM sales other than to chosen exceptions like certain Federal banks, etc.  Price controls, anti-hoarding laws, likely military law will be announced.  It may take several months, to a couple years, if ever, to get back into a workable, market-driven economy again.

While the PMs will be an important part to starting over somewhere down the road, other preparations will be critical to see people through the dark period, wherein confusion will reign.  A six-month supply of food, water, and other necessities for your household is advisable, as is a means to protect it.  This is what almost nobody on KWN or most other PM sites ever discuss.

Preparing for what is coming reminds me of the old saying, "in the land of the blind, the one-eyed man is king."  A little smart preparing can be a real life saver.  I have rambled enough.

Turd Ferguson's picture

TITS are hanging low, too

MODERATOR
¤'s picture

steve

I accept your sincere explanation but to believe that any of that post regarding Carlin not being directed my way when you kind of went out of your way to include me in it says otherwise.  Let's be honest with that part of it.

My lack of a solid opinion on US shale exploration at this point doesn't mean I'm against your take on it or data on the domestic energy issue. Time will tell if your right. I honestly need more time to assess it where as you are already an expert in it. I'M nowhere close to knowing what you know regarding domestic energy.

A man's got to know his limitations and I know mine. But when pressed or taken to task I'll exceed them until it stops. I think you and I understand each other quite well at this point. A cold beer sounds good right about now.

Many of us on here, including myself,  appreciate what you bring to the discussion on TFMR.

Good luck on your future website. yes  I'm positive that it'll be a big success and I'm looking forward to you posting the link one day because I'll check it out.

Dr Jerome's picture

Silvertowne Report

I just spoke with somebody at Silvertowne. They say they have plenty of silver for sale.

With AG at 31.19, they are buying back...

  • $30.35 for .999 bullion
  • $30.10 for ASEs
  • $21.10 per $1 face 90%  ($1.40 under spot)

Those buyback prices don't suggest a shortage. But their sales people also seem to be out of touch with markets and the big picture. She had been hearing customers talk about a shortage.

Groaner's picture

That's a good one.

I didn't know you measured the bullishness like that.

So low hanging TITS are good, right?

Sheetrocker's picture

@SRSrocco

I completely agree with most of your analysis. I have watched the media hype of oil and gas closely over the last few years. It has grown from being able to produce more of our own supply and reduce imports, to being able to become energy independent, and finally to becoming a major exporter, eclipsing even Saudi Arabia.

This is not just MSM, but much of the alternative media, investment advisors, government officials, etc. Nowhere among all these sources do I hear that ugly little acronym EROEI.

Some of these  are people in the industry, talking their own book to attract investors.Some are politicians hoping to get elected. Some are MSM talking heads saying what their corporate owners tell them to. I think the major force behind this is our government and TPTB. They have to convince we the sheeple, that everything can get back to the normal that we have known all our lives, and that we can go on as before. I am fully convinced this is impossible.

I feel our current economic system is a ponzi system, just like our monetary system. It is based on infinite growth, which is impossible. This is about more than oil and PMs. All the resources we need to survive are diminishing in grade and accessibility. In case no one has noticed, there has been a world wide war for resources going on for some time. Think we're putting advisors into all those countries in Africa to benefit the people, think again. Why are we so concerned about the threat from Iran, when North Korea has atomic weapons and is testing missiles capable of reaching the U.S.? Could it have anything to do with oil?

I say economic growth as we have known it in the past is impossible, and our current lifestyle is unsustainable.

Growing population + diminishing resources = ?

If I can work up the ambition, I may make several posts on this subject over the weekend.

Xeno's picture

Strongside

That's the rub isn't it strongside? When buying, selling, or exchanging there is always the spread to consider. I guess that's why "hedging" is and/or should be considered insurance, because there is always a premium to be paid.

Of course, you/we could hedge our bullion in hand with ZSL but that opens a whole other can of beans and bacon.

Dyna mo hum's picture

Groaner low hanging

With me its all in the display. Your mileage may vary.

Xeno's picture

Low TITS

Groaner, a low TITS indicator is definately a contrarian indicator since most will run, not walk, the other way.

¤'s picture

10 yr UST

I'm a bit surprised it 's still hanging around close to 2.00 when the 'norm' lately has been to quickly and efficiently trim it back to approx. 1.80.

Maybe today the difficulty in keeping the UST 10  in check has to do with the 'success' of the EU LTRO MOPE.

Whatever the case might be, Bernanke & Draghi seem to have verbally (if not secretively) soothed their respective markets with some CB hocus (off balance sheet) pocus. The yen has alot to do with this I think and it seems at this point it won't give back  90 easily.

I see all the CB maneuvering as a near perfect monetary symphony at this point with BB playing  the maestro and Draghi playing an important 2nd fiddle.

Is it possible they maneuver their way out of this debt drama they're dealing with? IDK but my gut feeling is that despite the belief they can't raise rates due to interest on their debts that's exactly what they'll do at some point because they seem to have figured out their balancing act under the table and off the books.

All they need to do is keep everyone on the same page . That's a big 'if' in my opinion as some (China) might have the sole intention not to stay on that page and write their own at just the right moment.

Turd Ferguson's picture

The CoT sucks

MODERATOR

Same old bullshit.

In hindsight, The Cartels were simply stacking the deck in their favor and preparing to screw everyone. 

Though undoubtedly several thousand contracts have been covered in the 72 hours since the survey, if there was ever a time to stick it up JPM's arse, it would be now. Gross silver short position once again well over 90,000.

http://news.goldseek.com/COT/1359145956.php

SRSrocco's picture

YES THERE WILL...

Unfortunately... There will always be POOR SLOBS who fall for the LURE of short term gain.  This is in response to your comment... Ancientmoney.  The biggest failure a person can make in life is not understanding Financial 101.  I don't know how many people I know that have gone bankrupt, lost it all and guess what.... They are doing it all over again!!  Just amazing.

Gold Rushes are nice.  All Rushes are nice.  It's like a frenzy.  Everyone around you is doing it, so it seems LEGIT.  However, I have seen the detailed reports how bad the declines are in Shale Oil, but it is just as bad or worse in Shale Gas:

A paper presented to the Society of Petroleum Engineers which researched well data in the Eagle Ford shale of South Texas found that first year decline rates were about 80-93%! Shale gas overall yearly field declines are in excess of 40%. The Haynesville is in excess of 50%. In other words, wells are playing out much quicker than expected.

....Deborah Rogers

---------

Things aren't pretty for the future U.S. Energy Supply.  But, again, this won't stop people from pouring their life savings into CASHING-IN on the BOOM.   My real frustration is at the NITWITS like Porter Stansberry who are herding pigs to slaughter... and they don't even know it.

All we can do is watch it happen, and pick up the pieces when the party is over.

DrkPurpleHaze... I happen to like an ice cold Corona with Lime.... that does sound good.

lostinspace's picture

This made me smile... how ironic!

Cononish1314's picture

Aussie Arabia

...or Alberta?

http://www.independent.co.uk/news/business/news/delight-in-aussie-town-over-trilliondollar-oil-find-8466329.html?origin=internalSearch

"The South Australian town of Coober Pedy, with a largely underground-dwelling population of just 1,695, is about to challenge the mighty Saudi Arabia as the world's oil capital – at least if claims it could be sitting on more than $20trn (£15trn) of black gold are to be believed...

In truth, while it is theoretically possible that the licence holder, Linc Energy, will be able to recover every single one of those 233 billion barrels, it will probably only be commercially viable to extract a small fraction. Even the report admits this, conservatively estimating that the Arckaringa Basin holds 3.5 billion barrels of recoverable reserves. Saudi Arabia's 263 billion barrels, however, refer to recoverable, rather than total, reserves."

Go long on Chinese aircraft carriers?

One for SRSrocco.

Urban Roman's picture

Go long Chinese aircraft carriers?

Nah. Long buggy whips. 

And bicycles. 

zman's picture

When I look at many of the

When I look at many of the shale oil and gas companies, I see stocks that have been killed in share price, many down -50% to -80%, why is this?   I know the nat gas price is too low, but I guess the expenses are also too high.

The next time someone suggests how great the shale oil and gas boom is doing, ask them what stocks to own, they are all dogs.

Bollocks's picture

"Go Back To Britain You Slimey Limey"

If there's ever news that he's on his way back here, his aircraft will develop a, umm, "fault", shall we say ... wink.

babaganoush2307's picture

Talk about inefficiency...

I live in NW Indiana about 40 minutes south of Chicago.  I ordered something and tracked the package online today, package was processed through Chicago sort facility (40 min away), processed through Indianapolis sort facility (2 hours away), processed through Gary sort facility (30 mins away), and is currently in route to my actual post office.  And then USPS wonders why they are going bankrupt.  Shit, had they just kept the package at the Chicago sort facility I would have just picked the damn thing up myself!  Why would you ship my package all over the state when my town is just a hop, skip and a jump away...?  Not a SINGLE person at USPS EVER in their whole history questioned this and maybe thought there was a better way to get packages to where they needed to go without spending god knows how much on gas and labor shipping packages in the opposite direction...?  Leave it to the government to fuck up once again.... no

Bollocks's picture

Didn't see this crop up anywhere.

From about 3 months ago. A damn good interview. I think he makes some very good points - especially about education.

Doug Casey: There Will Be A Panic Into Gold

Bugzy's picture

Barbar

I have a better one: Product bought and shipped from Seattle to Vancouver. (about 2 hours North). Went first to New York and then crossed into Canada in Montreal or something. Then came all the way back to the west coast.

Who is John Galt?

This happened 3 times (took about 10 days) before I paid a chunk more cash and had it 24 hours.

Bugzy

murphy's picture

Bollocks

You don't want to ask me about Daniela's index. Oops, I guess that's more of a post for the Speak. Anyone? Time for a cocktail. 

Sheetrocker's picture

@zman

Virtually all the ones I used to own are dogs. I made good money on a lot of them, selling when they popped, only to stupidly buy back in at a lower price. They just resumed their downtrend.

Most of these companies, including large ones, vastly overpaid for new assets as lease prices skyrocketed. Now many are in severe trouble and have sold out all or part of their companies to foreign operations.

The same is true of some large gold miners. They overpaid for new assets, at least at current gold prices, and now are hurting. All these large companies are trying desperately to replace their reserves. Not easy to do with declining grades and increased production costs.

AlexCojones's picture

If something is "Free" is it any good?

While driving over to the grocery store here in southern California, listening to 94.7, "the Wave," I heard a public service announcement for free flu shots. If something in $outhern Cal is free, is it any good? You decide.  Me, I'll take vitamin C.

h1n1splash.jpg

Hammer's picture

http://www.amazon.com/Maisto-

http://www.amazon.com/Maisto-Fresh-Metal-Tailwinds-Endurance/dp/B004JFMOGK?tag=hydfbook0e-20&ascsubtag=US-SAGE-1356439768287-DYULU

Awesome ! Someone has spoofed Amazon and posted this

The comments are funny too

5.0 out of 5 stars It's like i'm sitting right there in the White House! January 4, 2013

Durability: 5.0 out of 5 stars    Educational: 5.0 out of 5 stars    Fun: 5.0 out of 5 stars   
This is the best toy ever. Finally, I can pretend that I'm a winner of the Nobel Peace Prize!
It's like I'm sitting right there in the White House with my very own kill list!
---------
1,922 of 1,998 people found the following review helpful
 
5.0 out of 5 stars Helped me teach my son about the Imperial forces December 17, 2012
Durability: 5.0 out of 5 stars    Educational: 4.0 out of 5 stars    Fun: 5.0 out of 5 stars   
My son is very interested in joining the Imperial forces when he grows up. He says he's not sure if he wants to help police the homeland or if he wants to invade foreign countries. So I thought a new Predator drone toy would be a nice gift for him. These drones are used both domestically and internationally, to spy on people and assassinate them at the Emperor's discretion. He just loves flying his drone around our house, dropping Hellfire missiles on Scruffy, our dog. He kept saying that Scruffy was a terror suspect and needed to be taken out. I asked him if Scruffy should get a trial first, and he quoted Lindsay Graham, Imperial Senator: "Shut up Scruffy, you don't get a trial!" I was so proud. I think I'll buy him some video games that promote martial law for Christmas.
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252 of 266 people found the following review helpful
3.0 out of 5 stars Educational and fun!
I really wanted to show my toddler that it's okay to murder people and still come out a "hero" as long as you're in an air conditioned trailer remotely operating a Predator Drone 10,000 miles away in Pakistan.

I mean, if the government sanctions murder, it must be ok, right?

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2 of 2 people found the following review helpful
3.0 out of 5 stars Wow, my dream come true!, January 25, 2013
By 
mcdopper "mcdopper" (Upstate South Carolina) - See all my reviews
 
= Durability:3.0 out of 5 stars  = Fun:4.0 out of 5 stars  = Educational:5.0 out of 5 stars 
This review is from: Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator with Display Stand (Dimension: 6" x 3-1/2" x 1") (Toy)

Like all good Americans (and to a lesser extent, Canadians, Brits, Aussies, Kiwis, and others) I have been waiting for a way to show my patriotism with a wonderfully detailed flying death machine, and here it is. Now, it's not like a regular military aircraft toy, oh no, this wonderful drone is multifunctional, it kills taliban and people we think might be taliban but we're not really sure but they had on weird hats so let's get em), but it has the added bonus of being able to fly and spy on those horrible other "americans" who, you know, pay for things with cash, or have a little extra food in a pantry, or have listened to talk radio. Why, my neighbor the other day, a retired navy fellow, said something unpleasant about the TSA, so I called the tip line, and, well problem solved.

Oh, my only problem with the toy is that the domestic spy package costs extra, but, so worth it.

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3 of 3 people found the following review helpful
5.0 out of 5 stars Perfect for Weddings, January 25, 2013
 
= Durability:5.0 out of 5 stars  = Fun:5.0 out of 5 stars  = Educational:5.0 out of 5 stars 
This review is from: Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator with Display Stand (Dimension: 6" x 3-1/2" x 1") (Toy)

Loads of fun! Set up a pretend wedding with your other toys, and then bomb the joyous occasion into ruin! Next, set up a pretend funeral for the imaginary victims and bomb the funeral too! Collect a Nobel Peace Prize after the body parts have finished raining down from the sky and show your friends!

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242 of 247 people found the following review helpful
 
Durability: 3.0 out of 5 stars    Educational: 5.0 out of 5 stars    Fun: 5.0 out of 5 stars   
You've had a busy play day - You've wiretapped Mom's cell phone and e-mail without a warrant, you've indefinitely detained your little brother Timmy in the linen closet without trial, and you've confiscated all the Super-Soakers from the neighborhood children (after all, why does any kid - besides you, of course - even NEED a Super-Soaker for self-defense? A regular water pistol should be enough). What do you do for an encore?

That's where the US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator from Maisto comes in. Let's say that Dad has been labeled a terrorist in secret through your disposition matrix. Rather than just arrest him and go through the hassle of trying and convicting him in a court of law, and having to fool with all those terrorist-loving Constitutional protections, you can just use one of these flying death robots to assassinate him! Remember, due process and oversight are for sissies. Plus, you get the added bonus of taking out potential terrorists before they've even done anything - estimates have determined that you can kill up to 49 potential future terrorists of any age for every confirmed terrorist you kill, and with the innovative 'double-tap' option, you can even kill a few terrorist first responders, preventing them from committing terrorist acts like helping the wounded and rescuing survivors trapped in the rubble. Don't let Dad get away with anti-American activities! Show him who's boss, whether he's at a wedding, a funeral, or just having his morning coffee. Sow fear and carnage in your wake! Win a Nobel Peace Prize and be declared Time Magazine's Person of the Year - Twice!

This goes well with the Maisto Extraordinary Rendition playset, by the way - which gives you all the tools you need to kidnap the family pet and take him for interrogation at a neighbor's house, where the rules of the Geneva Convention may not apply. Loads of fun!

devil

AlexCojones's picture

ZH links & How many read ZH here?

Dear Turd,

 One thing I've often wondered is, How many people who read TFMR also read ZH daily? Do you ever do polls? Seems we get a lot of links from Zerohedge and while I enjoy some that I might have missed, I find redundant the ones that I've already read. Not that I mind. As a new member of TFMR (not signed up at ZH), this is all new and refreshing to me, a former daily reader of the Kitco Silver forums, which I rarely peruse anymore. 

Also, I never read anyone here say "Gold! Bitchez! like they do over at Zerohedge.  But I must confess - and maybe it is the cheerful cynical side of me - that I do enjoy Million Dollar Bonus over at ZH and his finely tuned sarcasm. An art form, as this example below demonstrates, that is rarely if ever found here. I wonder if MDB is a member of TFMR? 

MillionDollarBonus_'s picture
 

"Good news – this morning I managed to sign up two more people on to the Herbalife distributor program. At this rate, my Herbalife status will be elevated and maybe I’ll even qualify for a sweet holiday package! Also one of the ladies I signed onto the program bought a meal replacement shake – my first sale! You’ll never believe it though – three of the random people I approached also turned out to be Herbalife distributors. What a coincidence! Beats me ... Anyway, if anyone wants to buy the products,please PM me. My garage is loaded with stock and I’m always looking for new customers and distributors."

As I said, MDB always comes up with a classic at ZH

Exogen200's picture

Golds going down folks

Says Ira Epstein 

 
 
Dr. Fix's picture

@ AlexCojones Reply on the flu shot:

Around about Christmas time, both my wife and daughter had a nasty case of the flu, and it was starting to creep up on me also.

Around that time we had a discussion here about colloidal silver. So I made a batch using a set of silver eagles.

It cured both my wife and my daughter, within a matter of days, and I never got it myself.

We've been using small doses of it ever since, about a dropper filled under your tongue once a day,

and everybody is now perfectly healthy.

In the meantime, many of my daughter's classmates are still sick with the flu,

many of my own customers are sick in bed, and the vast majority of my wife's friends are sick.

Seems almost like an epidemic all around us,

I must say, there is something to that colloidal silver,

and once you have a couple of silver coins, it really doesn't cost anything to make it in abundance.

AlexCojones's picture

The Drone Downside

Dear Hammer,

I had read those spoof 5 star recommendations at Amazon and thought immediately of Million Dollar Bonus (see above). The only downside to the "cast iron" drones, is they cannot fly. When someone makes one that can fly, for public consumption--WATCH OUT!

As a USAF veteran, I suspect that when the TSA puts the real ones in air space here in large numbers, and one of them accidentally collides with a commercial passenger jet, the fun stops and the debate begins. Also, I suspect that lots of nerds who read WIRED will feel challenged to "Commandeer" one of the drones, much like the Iranian defense force. I mean, if Iranians can do it, our techie nerds can do it too!

Hammer On!

kn33bar's picture

Answer to Turds question

1) 18 million oz of physical silver added to SLV

2) HSBC buys $870 million of physical silver from Poland

3) Physical shortages / rationing at Mint

Maybe the banks need the Silver to actually cover some shorts and thats why they are driving the price down so they can cover at a lower price.

AlexCojones's picture

Mr Fix's Colloidal Walk-In Clinic

I wonder if you couldn't offer something like this --and keep stats - as a holistic healer.  Maybe make some business cards. 

               Mr. Fix

          Holistic Healer

Silver Specialist Extraordinaire 

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