Re: Tonight. I Have No Idea.

492
122
Sun, Aug 7, 2011 - 1:26pm

It's Sunday in the U.S., a little after 1:00 EDT. The Globex opens in about five hours. There seem to be quite a few people who are interested in my opinion regarding how the metals will trade tonight and tomorrow. Frankly, I have no idea.

First of all, I've been on the record saying that I didn't think a ratings downgrade was coming. Oops. Shows you what I know. I am still stunned that it happened. Of course it needed to happen and AA+ is still too generous. A or A- would seem to be more fitting. However, since there is no principal risk in U.S. government debt (the Fed can print all the money they need to pay off bondholders), AA+ is OK, I guess. Now on the other hand, if S&P started taking inflation risk into consideration and began to factor in that you're really only getting 50c on the dollar back in principal purchasing power...well, lets just say that U.S. debt would be relegated to junk status. Regardless, U.S. debt is now rated AA+ and the effects of this will be far-reaching. We'll go into this in greater detail later this week when I have more time and can think more clearly. (For now, I'm a little hung over and I need a nap.)

As it pertains to the PMs...There is NO WAY that this news is not bullish. Extremely bullish. In the intermediate and long term. What you don't know about is tonight and tomorrow. As we saw last week, when everything else is being sold, the PM "baby" often gets thrown out with the bathwater. Gold should open UP at least $50. It should trade UP $100 tomorrow. Will it? Again, who knows? Gold may open higher and then get instantly battered lower in a global rush for liquidity.

Just watch. U.S. debt gets downgraded but the POSX and the long bond will both probably trade higher in a flight to safety. Oh well, it doesn't really matter. Like I said, gold may be down tomorrow. Who knows? But what I do know is this: Gold will be higher a month from now. It will be higher six months from now and it will be higher still a year from now. In that context, what happens tonight is of no consequence.

I'll try to have an update this evening, after things have been trading for a while. Until then sit back, relax and enjoy the fireworks. TF

11:55 pm EDT UPDATE:

Too tired to type but I wanted to give you this update with these levels to watch overnight and into Monday.

Turd nite nite now.

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  492 Comments

Eric Original
Aug 7, 2011 - 6:04pm

Double Bogey

Welcome aboard the Golden Girl buddy!

wait, maybe that didn't come out right.....

TheBaker stoneeh
Aug 7, 2011 - 6:05pm

$1690!

Argh!!! I didn't make it... IGMarkets didn't let me in

Eric Original
Aug 7, 2011 - 6:06pm

kenklave

Is your concern about the size of the coin? In that it might be harder to sell it privately? If not that, then is it about any and all gold coins?

ewc58
Aug 7, 2011 - 6:08pm

1666.30

Wow, 1666 was the year of the great London fire...

Au Burnin' Down The House

mrgneiss
Aug 7, 2011 - 6:08pm

I love the smell of shorts

I love the smell of shorts exploding in the morning!

Eric Original
Aug 7, 2011 - 6:08pm
¤
Aug 7, 2011 - 6:14pm

Silver pretty subdued/gold is just lovely

Wonder whats up with silver? It's still really early but it didn't budge much.

A vertical line is always a great thing as long as it's not down. $1700 should happen with ease. My guess was $1720 at some point tonight as a high.

Tomorrow should be unreal. In what direction I don't know.

Probably up and down like the market on Friday.

silver foil hat
Aug 7, 2011 - 6:15pm

Gap closed on Silver?

wait for gold now....

ginger
Aug 7, 2011 - 6:15pm

Doc J, I think you and your

Doc J, I think you and your wife did the right thing on the going 'all in'. (Please tell her that I will email back tonight.. ..been a hectic weekend and I'm collecting my thoughts)

Eric O, I am just so glad that you still have a wife, son, daughter & mother-in-law tonight! .......Half the people in your family are apparently crazy.. and the other half are more 'grounded' :D (kidding.....glad everyone is back safe & sound)

Markus, "I hope a lot of people will soon find themselves under bridges, starving." ......I hope you don't really mean that and I'm nobody to reprimand anybody.. but that's not a right or healthy attitude. SOME of us may have been blind to what was going on for longer than you were blind to it... but that doesn't make us evil people who didn't care about any of this stuff. We are many good people who love each other and want what is right for our families, neighbors, country and world. I am still very unprepared as to compared to many of you in the physical/material sense. I am probably more prepared in a spiritual sense than I am physically. Does that mean that I and those like me should starve under bridges because we were late to the realization of what all is going on in this world? You seem to be filled with hate for others and I am sorry for you if that's the case for I would rather be without any of gold or silver and yes..living under a bridge starving but have my spiritual well-being intact than to have all the g&s and no love in me. .......But I'm not hating on you with this post..don't misunderstand. ...I want you to find the peace that you need. ...I have struggles with it too at times. ...All the very best to you. Any of us here would extend a hand to you at any time and I mean that.

Eric Original
Aug 7, 2011 - 6:16pm

I can't believe

I can't believe at least ONE person didn't reply with "Oh, sorry about the mother-in-law, bro"

LOL, I thought it was a natural punchline, even though she is actually a wonderful woman.

kenklave Eric Original
Aug 7, 2011 - 6:16pm

No not really. I think there

No not really. I think there will be buyers at all prices ( but the top). I just think that if the POG gets to a Turk or Sinclair level, that any transaction may not be confidential. You may have to fill out paperwork at the sale. Originally I was buying 100 oz bars of silver and 1 oz gold because the premiums are lower, but when I consider the other side of the transaction, that I will sell some day, I would much prefer to have smaller denominations. I only fractionals and 1 oz silver now. The premiums are higher, but one has to consider the eventual sale as well. The premium may not mean as much then.

senseiam
Aug 7, 2011 - 6:18pm

Up Up and away!

Gold up almost $30! Go Go Go!


Aug 7, 2011 - 6:18pm

Gap has filled

Perhaps there is lots more speculating going on in silver by folks like us (who can afford to trade contracts--not me) and they simply took profits. I noticed that the priced hovered around 39.13 for a couple of minutes before it finally rolled over. Don't the good traders say that 90% of gaps fill before a security continues its trend? I like what I see tonight. I think I prefer an orderly march upwards.

@Ginger. I'll tell her and we are already happy about the purchase.

ginger
Aug 7, 2011 - 6:20pm

Ha!.... I thought about your

Ha!.... I thought about your MIL, Eric.. ......but I was thinking YOU missed a good opportunity to make that joke!!

Ok......then.. in keeping with 'tradition' ..this one:

Q: What is the ideal weight for a MIL?

A: About 2.3lbs ...including the urn.

(heeheeee)

FriedEggs
Aug 7, 2011 - 6:20pm

Sunday Freak Show

Hey Turdites...

Hope everyone had a great weekend thus far.

I like what Turd said towards the end, 'Gold will be higher a month from now. It will be higher six months from now and it will be higher still a year from now.In that context, what happens tonight is of no consequence.'

IMO i agree exactly - that in the end is what really matters. Every-single-day- its getting worse...

And yes, no matter what -tonight and this week will be really interesting. It seemed only a few weeks ago we had a really interesting week and they all see to be trumping one and other as time goes on...and more to come... guaranteed.

Anyway - I'm twisting one up right now...after i smoke one...

Fried(e)

Eric Original
Aug 7, 2011 - 6:21pm

Ginger

Great reply to Markus.

¤
Aug 7, 2011 - 6:21pm

ECB to actively implement bond-buying program

By Polya Lesova

LONDON (MarketWatch) -- The European Central Bank said late Sunday it "will actively implement" its bond-buying program, known as the Securities Markets Program. "This programme has been designed to help restoring a better transmission of our monetary policy decisions - taking account of dysfunctional market segments - and therefore to ensure price stability in the euro area," the ECB said in a statement released around 10 p.m. London time on Sunday. The statement is an indication that the ECB will likely buy Spanish and Italian government bonds in an effort to stem the spread of the euro-zone debt crisis. The ECB also urged Spain and Italy to swiftly implement new measures and reforms in the areas of fiscal and structural policies "in order to substantially enhance the competitiveness and flexibility of their economies, and to rapidly reduce public deficits." European markets have been shaken in recent days by growing fears that the euro-zone debt crisis that started in Greece will spread to bigger economies such as Spain and Italy.

ginger
Aug 7, 2011 - 6:24pm

PS...EricO  .....don't show

PS...EricO .....don't show my joke to your MIL. :D

Throwing Sliver Hammers
Aug 7, 2011 - 6:24pm

Dow Down -300

Dow Down -300

cpnscarlet
Aug 7, 2011 - 6:24pm

Starting Now

EE trying to defend 1690.

"10...9...8...7...6...We've gone for main engine start......"

Sanchez
Aug 7, 2011 - 6:25pm

@ treefrog

Awesome find.

The dollar has been updated to a 1oz American silver eagle. I believe it says in the Coinage Act of 1986, but I'm not sure. I am gonna look it up.

ewc58
Aug 7, 2011 - 6:27pm
Be Prepared
Aug 7, 2011 - 6:27pm

Craziness Abounds

I can imagine most of us expected upward movement in the PMs at the Asian open and it did not disappoint, but it is fair to say that craziness will continue with more ferocity as the underpinnings of the financial system start collapsing under the weight of its hubris and greed. I also used some dry powder before the opening, but I'm always in it for the long haul.

I purchased some fractional gold coins because I'm always thinking about the sell side of the story..... regardless of when..... realizing that the more I can keep under the radar the better off I will be. Of course, if it wasn't for my past boating accidents I'd be a lot better off now than I am...... silly me..... can't seem to keep my boats from sinking.

Strongsidejedi
Aug 7, 2011 - 6:27pm

Silver price at a 43+ ratio to gold

Looks like the Gold/Silver ratio is up to 43+

I want to point to this on this board, because not alot of other people would appreciate this.

I've done a retrospective analysis on this. When this level is hit, the silver price moves up.

Silver will move up soon.

There's little volume on the silver side of the Netdania chart. I have to assume that the early morning traders in Asia are the junior guys at the consoles. The senior guys forgot to tell the junior staffers to hit and hold silver. So, some of those banks may be fighting for gold at 1680-1685 when the silver position will have more upside potential in the next 24-48 hours.

¤
Aug 7, 2011 - 6:30pm

Warren Buffet : "U.S. a Quadruple A rating" (yeah, he's senile)

U.S. stock futures declined, following the biggest weekly drop in the Standard & Poor’s 500 Index since 2008, amid concern that a downgrade of the nation’s credit rating by S&P may worsen an economic slowdown.

S&P 500 futures expiring in September declined 2.1 percent to 1,172.3 at 7:03 a.m. in Tokyo. Dow Jones Industrial Average futures lost 253 points, or 2.2 percent, to 11,149.

The downgrade threatens to extend a rout in U.S. stocks that wiped out $1.94 trillion in market value and erased the S&P 500’s gain for the year. S&P lowered the U.S. long-term rating one level to AA+ after markets closed on Aug. 5 while keeping the outlook at “negative” as the ratings company becomes less confident Congress will end Bush-era tax cuts or tackle entitlements.

Stocks have slumped for two straight weeks as manufacturing and consumer spending data showed the world’s largest economy is slowing. The S&P 500 rose as much as 1.5 percent in the first five minutes of trading on Aug. 5 as the Labor Department said American employers added more jobs than forecast in July and theunemployment rate fell for the first time in four months. The index turned lower amid growing speculation that S&P was preparing to strip the U.S. of its AAA rating for the first time.

‘New Fiscal Pressures’

S&P also said the U.S. rating may be reduced to AA within two years if spending reductions are lower than agreed to,interest rates rise or “new fiscal pressures” result in higher general government debt.

The U.S. Treasury Department said there is “no justifiable rationale” for S&P’s move as global finance ministry officials prepared responses to the historic announcement. S&P’s officials stood by their decision and laid blame on a political system that failed to adequately address deficit reduction in the compromise law that President Barack Obama signed Aug. 2 to avert a U.S. default.

“The once-unthinkable loss of the AAA rating will constitute a further hit to already fragile business and consumer confidence,” Mohamed A. El-Erian, chief executive officer and co-chief investment officer at Pacific Investment Management Co., wrote in an e-mail Aug. 6. His firm is the world’s biggest manager of bond funds. “Americans will face higher credit costs over time.”

Higher Borrowing Costs

JPMorgan Chase & Co. estimated that a downgrade would raise the nation’s borrowing costs by $100 billion a year. A U.S. credit-rating cut would likely increase Treasury yields by 60 basis points to 70 basis points over the “medium term,”JPMorgan’s Terry Belton said on a July 26 conference call hosted by the Securities Industry and Financial Markets Association.

Investors seeking a haven amid concern about the economic recovery have bought Treasuries in recent weeks. Yields on benchmark 10-year notes closed at 2.56 percent Aug. 5, before S&P announced its decision, down from 3.12 percent a month ago.

The U.S downgrade will “reinforce this really uncertain financial market climate that we are confronting right now,”David Rosenberg, the chief economist for Gluskin Sheff & Associates Inc., in Toronto, said in a telephone interview Aug. 6. “You’re probably going to see investors becoming more defensive. That means that they are moving to Treasuries or to cash or to gold.”

‘Quadruple A’

Billionaire Warren Buffett said S&P erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid its second recession in three years. The U.S. merits a “quadruple A” rating, Buffett, 80, said Aug. 6 in an interview with Betty Liu at Bloomberg Television.

pailin kenklave
Aug 7, 2011 - 6:31pm

@kenklave

At the top, or anywhere in that general direction I don't see selling large metal as any different than buying/selling diamonds, cars, houses. As long as the transaction isn't illegal, you do what you need to accomplish the swap and that's that. Taxes, reporting, whatever. Big deal. No different than buying Microsoft at the IPO in the 80s or AAPL five years ago. You bought at one "price" and sold at another (much higher).

Strongsidejedi
Aug 7, 2011 - 6:31pm

question for ginger- what happened to the community garden?

Ginger,
I remember you posting back on the old board about how your church was starting a community garden.
How did the project turn out?

Eric Original
Aug 7, 2011 - 6:31pm

kenklave

Yup, I hear ya.

I think everybody should have a short stack of the big ones, Double Eagles and/or 50 Pesos, just for the sheer joy of it, the heft appeal of it. But beyond that the smaller sizes make a lot of sense. The British Sovereign is one of my top favorites at just under a quarter ounce. In fact, more than half my stash is made up of coins that are Sovereign size or smaller.

Strongsidejedi
Aug 7, 2011 - 6:32pm

Crude Oil WTI vs. Brent spread

The Brent crude is at 109.95

WTI is at 87.32

Is that 22 point spread bigger than usual?

LipstickOnAPig
Aug 7, 2011 - 6:34pm

About this US downgrade and

About this US downgrade and the loss of our triple A credit rating. This is something that would have been UNTHINKABLE just 4 years ago, and in probably less time than that will be the same "shocker" that the dollar has not only lost it's status as the global reserve currency, but has in fact collapsed into a hyper-inflationary mound of confetti. I am anticipating a "Black Monday" type of event in the markets tomorrow. Another pattern that is prevalent in markets is the "drop hard (we had 8, 9?, consecutive down days which hadn't happened since 1978), head fake mild bounce up (or dead cat bounce), then the REAL drop. Additionally, knowing the Fed WANTS the markets to drop currently to scare the populace/congress/trading partners into begging for QEIII, we have a perfect opportunity to not only have a real fear inducing market crash, but an actual SCAPEGOAT in the S&P Ratings agency to blame it on. My instincts tell me this is to perfect to not be a manufactured event by the powers that be, but a downgrade of the US is SO big, and carries SO much residual effects, I say to myself "they wouldn't try something THIS risky would they?". One way I'll have an answer to this question that's been eating at me all weekend is if the PPT (Plunge Protection Team) is out propping up the markets and absorbing all of the selling come Monday trading/market openings globally (and there will be a LOT of it). Then it would seem to make sense that they didn't know the downgrade was coming, and therefore it wasn't "part of the plan". This would suggest they ARE in fact losing control. I have problems believing this isn't just another part of the plan however, as all 3 of the primary ratings agencies, Moody's, Fitch, and S&P, were all complicit and corrupt to the gills in the housing crisis and their credit grading of MBS, CDS, CDO, and any other of the alphabet soup exotic trading vehicles and derivatives. Why is S&P suddenly "finding God" as the saying goes? Something bad going on here, either scenario. They orchestrated this downgrade, which suggests things are FAR worse at this stage then I imagined, as the risk of this move is HUGE. Or, they didn't have control of S&P "any more" after years of complicit behavior, and S&P went rogue on the administration. See how the second option doesn't roll through the thought process cleanly? Why would S&P use such dramatically poor timing to announce this, right after a 500+ point drop on the DOW? It just makes no sense to me at this point. Let's see if Fitch and Moody's follow suit for further evidence, but for me this dog don't hunt.

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