Because I Said So

Mon, Aug 8, 2011 - 3:34pm

Just when world markets were seeking assurance, our esteemed and supremely qualified leader uttered this:

"Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we have always been and always will be a triple-A country," Obama said.

Nothing quite like living in FantasyLand. I hear it's particularly beautiful at this time of year.

How are you feeling about your gold and silver today? Let's see...Dow is down 506. The S&P is down 66. Crude's at $80. Copper and the grains have been pummeled. I know that silver is pissing you off but, considering the absolute demolition of everything that isn't gold, you should actually feel pretty good about it.

Speaking of silver, here's a 2-hour chart. When the selling of everything finally relents, silver will rally sharply. It will carry through 40.40 and it will move rapidly toward the highs of last week near $42.

However, gold is your clear, hands-down winner on the day. I have a last of $1714, up an amazing $62. There's more to come, too. First up, here's your 2-hour chart. It shows another "stair" higher.

More significantly, I've tried to recreate Trader Dan's weekly chart. Notice the clear breakout of the three-year channel. If it can hold in this area and extend gains...and it's hard to see why it wouldn't...a breakout of this magnitude is extraordinarily bullish. I can see why JPM came out with their "$2500 gold by year end" prediction today.

Three years is an awful long time so we must be careful. Gold could easily fall back into the channel and give us a "false breakout". However, the fundos are so strong at present that it may very well stay up and begin a rapidly accelerating extension higher. Watch this very closely as we may be about to be given a once-in-a-decade opportunity to make big fiat, real fast.

Lastly, I did switch a few things around today in order to take maximum advantage of what I see coming. In silver, I eliminated my Sep spreads and am now simply long the $42 calls. In gold, I dumped my October 1700 vs 1800 spreads and went long just the straight 1800 calls. I'm still long my December 1700 vs 1800 spreads, though.

Thanks to all who entered the new contest. If you haven't entered yet, you must pick the Comex closing price for this coming Friday in the September11 gold contract. Use the previous thread to post your guess. No entries submitted later than 5:00 EDT today will be accepted. Btw, if someone has a few extra minutes, would you please help The Turd by compiling all of the entries onto a spreadsheet? Thanks in advance to anyone who can help.

That's it for now. Keep the faith! TF

5:10 pm EDT UPDATE:

As the Globex closes, gold is back to $1722. I can't imagine that it won't make new highs overnight, particularly when Asia is in full swing at around midnight to 2:00 am EDT. For your comic relief, I present below something I just received from a friend. It's the opening paragraph of a "SPECIAL BULLETIN", just released by MSSB. What absolute fools these people are. They can't even spell "committee" correctly! If you are currently working with a traditionally-trained "financial advisor"....well, you know what they say about a fool and his money.

Latest Report from the Global Investment Policy Comittee: Downgrade .

GIC Special Bulletin: Impact of US Credit Downgrade on Markets

Applegate, Jeffrey – Morgan Stanley Smith Barney

August 8, 2011 6:37 PM GMT

The downgrade of US long-term debt by Standard and Poor’s, which is notable politically and historically, is having a prompt and negative short term effect on global financial markets. However, the next stop is not a recession—nor is it a drop in corporate profits. This a split decision on ratings, as the other two major ratings agencies, Moody’s and Fitch, have maintained their respective top-drawer ratings for US debt. As this latest sell-off abates, expect the markets to refocus on the fundamentals: an intact global business-cycle expansion that in our view, should deliver double-digit profit-growth into 2012. Our base case remains that a US economic rebound will occur in the second half of this year and that European policymakers will eventually be forced to take more decisive action to stabilize their debt markets and the euro.

11:25 pm EDT UPDATE:

These late nights are wiping me out. Holy cow, gold is up another $42 as I type at $1755! The S&P is down 28. Crude is down another $4. The grains and copper are getting smoked. At least silver is hanging in there at 39.12.

Two things. Watch gold overnight. Santa's number of the final frontier is 1764. For whatever reason, his numbers usually pan out and he's maintained for weeks that 1764 would be defended by The Cartel. In silver, watch this triangle play out. Silver could collapse through 38.50 and head toward 37 but I doubt it. I expect silver to instead charge through the down-sloping line overnight and begin heading higher. We'll see. Anything can happen. Have a great overnight. See you in the a.m. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 8, 2011 - 8:30pm

@Shill Yeah I guess I hadn't

@Shill Yeah I guess I hadn't thought that far ahead. That works. Just keep it together. You want to remember so that you can tell your grandkids someday!

Aug 8, 2011 - 8:32pm

CME Silver & Gold Margins:

CME Silver & Gold Margins:

I’m actually really worried right now about the CME’s current margins on gold. I was hurt in the May silver massacre and would really like to avoid repeating that trauma with gold. I stack as well as trade options. I trade options with the goal of raising extra cash to purchase additional necessities to support my family when TSHTF. I want to purchase gold (physical and trades), but I’m strongly apprehensive due to what the CME did to Silver in May. I prepared the following chart to clearly illustrate my concern.

Silver’s history with CME’s margins:

DATE Initial Maintenance Total Spot Silver Value of Initial Cost of

Cost Margin Required from previous Contract contract compared

day’s close to value of contract in %

25 March 2011 $11,745 $8,700 $20,445 $37.17 $185,850 6.3%

26 April 2011 $12,825 $9,500 $22,325 $46.98 $234,900 5.46%

29 April 2011 $14,513 $10,750 $25,263 $48.48 $242,400 5.99%

03 May 2011 $16,200 $12,000 $28,200 $43.93 $219,650 7.38%

05 May 2011 $18,900 $14,000 $32,900 $39.39 $196,950 9.6%

09 May 2011 $21,600 $16,000 $37,600 $35.62 $178,100 12.13%

Gold’s current CME contract:

08 August 2011 $6,075 $4,500 $10,575 $1,650 $165,000 3.68%

So as you can see, right before silver had the shit kicked out of it in May, you could control 5000 ounces of Silver for $12,825 on April 26. The end of day spot value for Silver on April 25 was $46.98. The contract value was $234,900 (46.98 x 5000). Hence, you were paying 5.46% of the contract’s value ($12,825 / $234,900) to control 100% of the contract’s value.

After the May margin slaughter, you would then have to pay 12.13% of the contract’s value to control the same 5000 ounces.

They went from a 5.46% initial cost in silver to 12.13%.

This is what I find so incredibly worrisome with gold. You can currently control 100 ounces of gold on the CME for a mere 3.68% of the contract’s value. Why is the CME keeping the margin this low? I worry that the CME may be luring us all in for a slaughter similar to the May massacre in Silver.

I hope that my concern is not warranted. I am very apprehensive though. Are they allowing speculator’s to run gold up really high so that they can then destroy gold investors with margin hikes. Would this not cause gold to plummet in the same way that Silver did? Why would they want to do this?

What if investor’s lost 30% of their wealth from their gold purchase in one week, the same way that April 30 silver buyers did? Could this be the CME’s way of colluding with the powers that be, and trying to turn people off of gold? Could this be part of a well contrived plan to try and convince people that gold is not a safe investment? Lure in every long that you can, and then, SMASH!!!

As I’ve said, I hope that this is not going to happen, but this really seems like we’re being set up. There is every reason in the world to own gold in this current socioeconomic climate. I want to invest more fully into it. Quantitative easing, lack of fiscal responsibility, etc etc. Timing is important though, I learned that in May.

How high will they let gold go before they choose to smash it with margins?

If anyone can help to deepen my perspective and alleviate my concerns, I would really appreciate it. I have written this for me, and for this community. I have learned a great deal through this forum and am immensely appreciative for the education that I have received. Turd, you’re awesome, and I thank you deeply!!!!

p.s. I’m also aware that the CME partially uses volatility as a reason for margin hikes, and that gold has mostly been going straight up. However, April was not a volatile month for Silver as it was moving up in a fairly consistent manner.



Fiend's Brave Victim
Aug 8, 2011 - 8:39pm


Hey there SilverOx. Take this as you will, as there are many much smarter people on this board than I, but I'd say be very careful on any QEIII announcement. I got hit hard hours after QEII was announced: gold, if I remember correctly, was way overbought beforehand, but people were hovering on the announcement, then went nuts buying gold for a few hours on the back of it (I made a LOT of money for moment there), then it blew off big time, possibly a huge raid, possibly just due to being massively overbought (I damn near wiped myself out there). I appreciate that it is a different situation today, but I'm very wary of gold's similarly overbought conditions and am staying out of trading it for now, perhaps foolishly hanging around hoping for silver to go. DYODD, but that experience scarred me so i thought I'd best share it! Best wishes.

Aug 8, 2011 - 8:39pm

Everyone just wants to make some dough

Safe to say WackyLand could be D.C. or inside a Pol.'s head?

Video unavailable
Aug 8, 2011 - 8:39pm

Re: Margins

"You can currently control 100 ounces of gold on the CME for a mere 3.68% of the contract’s value. Why is the CME keeping the margin this low? I worry that the CME may be luring us all in for a slaughter similar to the May massacre in Silver."

Exactly right, they are. And trust me, they will be successful too.

- Markus

Aug 8, 2011 - 8:44pm

Re: Margins

Oh, and they have been ripping people off with high leverage for at least a hundred years now. I remember hearing an anecdote how Livermore got rich at 15 years old off of these small betting shops that were basically offering over the counter derivatives on stock or other prices. People got ripped off by the high leverage and Livermore beat the system and subsequently was banned from all of them and had to move from town to town to find new ones that he wasn't banned from yet :D

- Markus

kenklave ¤
Aug 8, 2011 - 8:51pm

USG could use that do do.

USG could use that do do.

Aug 8, 2011 - 8:53pm

Why 2011 Is Not '2008'


Written by Jeff Nielson

By any “fundamental” basis, the price of silver should already be in excess of $100/oz today. Yet in May the anti-bullion cabal was able to manage a ruthless and significant take-down of the silver market – despite the fact that inventories are exhausted, “market sentiment” has never been more bullish, and silver was still grossly under-priced at $50/oz. How was this possible? Via leverage. In the case of the silver market, the “excessive leverage” had to be “manufactured” (artificially) through the five, rapid-fire increases in “margin requirements” by the CME Group. Even though this leverage was totally artificial, the banksters were able to take-down the market of the world’s most undervalued commodity by over 30% in a matter of days.

In the summer of 2011, leverage in commodities markets is much, much lower than in the summer of 2008. For this we can thank the propaganda-machine and the banksters themselves. Ever since commodities began their inevitable bounce-back, beginning in 2009 we have had a farcical (and very public) “debate” about literally “inflation versus deflation”.

Upon bouncing-back from the orchestrated take-downs of commodities, gold and silver have emerged unequivocally as the, two superior asset-classes. Relentless buying of gold and silver has re-emerged around the world – everywhere except in the world of Western bankers, and their “insulated” (i.e. brainwashed”) populations.

Despite this decade-long bull market, gold and silver collectively account for little more than 2% of global financial assets – far below previous, historic levels. While frightened sheep ran away from gold and silver in the Crash of ’08, they would obviously be running toward those glittering metals in any future market-collapse.

With not enough metal to “wedge” many more investors into the gold and silver sectors, I have argued strenuously the gold and silver miners (racking-up “record profits” quarter after quarter) will soon de-couple from all other classes of equities – as those who cannot get their hands on bullion will be forced to settle for the-next-best-thing.

Aug 8, 2011 - 8:59pm

Denver Dave on Gartman: "the ultimate contrarian indicator!"

In my own experience I've found I can rely on the following talents of the Big Three pretty much equally:

-Jeff Christian's ability to compile silver supply stats

-Nitwit Nadler's ability to predict where the price of gold is going

-Dennis Gartman's ability to time gold trades

Yes Denny got short lots and lots of gold on Friday, and has been getting longer Foot in Mouth ever since. Here's Dave:

Wow! It Does Get Funnier...

I just found out that the widely followed and highly-visible-on-CNBC Dennis Gartman cut his gold holdings in half on Friday! Those of us in the precious metals investing arena have been saying for years that Dennis Gartman is the ultimate contrarian indicator! Reminds me of when he dumped his gold holdings at $550 in the summer of 2005 and missed the entire run up to $735! Another 34% run without Gartman on board will take us to $2250 (based on Friday's close)!!!

Aug 8, 2011 - 9:01pm

O'Bottom "coordinated action in Syria needed"

just saw that scroll across bloomberg, anybody hear more? Curious timing to say the least. Might be another successful "kinetic" engagement just like....hell at this point take your pick.

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