Turd Tips His Hat

313
135
Wed, Aug 24, 2011 - 2:10pm

As you know, we moved from blogspot to this dedicated site for many reasons. The primary reason, however, was to capitalize on the collective knowledge and wisdom of Turdtown. I, The Turd, can only take you so far. I knew we needed a platform through which we could more efficiently share information. To see the effectiveness, all you have to do is look below.

Let me just state this clearly and for the record. If you are coming this site only to read what The Great and Powerful Turd has to say, you are doing yourself a tremendous disservice. The information copied and pasted below proves the point. These three comments were all posted to the "So, What's Next?" column from Monday night, when gold was still between $1890 and $1910. If you'd taken the time to read through the comments, you'd have found this. Perhaps you would have taken action. Note the time stamp:

Shanghai Gold Exchange Raises Gold Trading Margin To 12%

Submitted by DogStar76 on August 22, 2011 - 8:59pm.

SHANGHAI, Aug 23 (Reuters) - The Shanghai Gold Exchange (SGE) will raise trading margins on three of its gold spot deferred contracts to 12 percent from 11 percent starting from Aug. 26 to limit trading risk, it said in a statement on Tuesday.

The next morning, another Turdite even provided a translation of the text:

Yes, here is the link - https://gold.hexun.com/2011-08-23/1327314

Submitted by Thefreeman on August 23, 2011 - 7:48am.

从8月25日(星期四)日终清算时起,上海黄金交易所将调整黄金Au(T+D)、Au(T+N1)和Au(T+N2)合约的保证金比例至12%;

下一交易日起黄金Au(T+D)、Au(T+N1)和Au(T+N2)合约涨跌停幅度调整为9%。

It syas that Sahnghai Exchange will increase the margin for 3 type of paper gold contract (Au(T+D)、Au(T+N1)和Au(T+N2)to 12%. and will stop the gain and loss to 9% during the same day trading.

The Exchange also warns the investors to be prepared for the vulnerability of international Gold and silver market. Some investors had huge loss last time when silver price dropped 25% within a week.

This event is now being heralded by some as the seminal cause of this latest $150 correction in gold. The links and translation were posted here well before ZH or any other PM site.

Another warning of the impending disaster was provided by a different Turdite:

re: Gold smackdown coming...

Submitted by silver foil hat on August 23, 2011 - 5:43am.

look at the options activity on GLD...

$4,040,919 puts at 175 bought yesterday

$1,019,046 puts at 170 bought yesterday

$1,221,472 puts at 165 bought yesterday

Even a trend down to any of these numbers, for those unfamiliar, will likely make these options double, triple, or more. GLD doesn't have to get to 165 to make the trade at 165 worth the purchase.

Can the EE make money shorting "Gold" on the crimex? Don't forget, in bringing down Gold, Silver will follow, along with its options, as well as miners (and, of course, their options). So once you knock over the first domino, the rest will fall.

They may take a loss on shorting Gold this time, as the physical demand will be overwhelming on the way down AND back up (they won't cover all their Gold contracts at a gain... it will likely be a net loss) BUT they will more than make up any possible losses with covering the miner stocks sold short while they are down, closing the put positions, etc.

There is still a gap in the 1500 - 1600 range, isn't there? (Seems like last week... but LOOOOOONNNNNGGGGG ago price wise). I don't know if that gap will be filled.... (It may be a 'flash crash' that only WOPR can fill orders for the EE in that range.. taking out trader stops only).

Here's the relevant data (https://finance.yahoo.com/q/op?s=GLD&m=2011-09)

Again, my point is not to rub salt in the wound. My point is simple and clear:IF YOU'RE NOT TAKING THE TIME TO UTILIZE THIS ENTIRE SITE, YOU ARE SERIOUSLY MISSING OUT AND IT IS COSTING YOU MONEY. The Turd tips his hat to "Dogstar76", "The Freeman" and "silver foil hat". Very nice job. Thank you for your help.

OK, back to the disaster at hand. Everyone wants to blame today's collapse on the Chinese margins. OK. The volatility makes C/C/C margin hikes a fait accompli so everyone and their brother is rushing for the exits. In the end, I suspect that the actual margin hikes can be used as a "sell the rumor, buy the news" event. We'll see. Lets' just hope the volatility settles down next week, thereby denying the criminals the justification to raise 3 more times like they did in silver. Again, we'll see.

I suspect that the story below didn't help matters, either. Anyone with a brain and chimpanzee-level logic can deduce that the report is absolute nonsense. However, that matters little when the WOPRs are busy trying to front-run each other out the door.

https://www.zerohedge.com/news/cbo-cuts-forecast-cumulative-2012-2021-deficit-50-admits-it-probably-dead-wrong

I could print some new charts for you but they wouldn't look much different from the ones I posted this morning so I'm giving you some re-prints. Gold now looks certain to test the 1725-1740 area. This would represent a nearly exact 10% correction so, anyone such as I that is interested in" catching the knife" might take a stab there. No pun intended. Silver is the same. I just betcha you get a look at 38.50-75 pretty soon. If you're going to nibble, that'd be the place to do it.

That's all for now. I hope you're hanging in there OK. If not, step away from your computer for a while and take a few deep breaths. Maybe go for a relaxing walk. None of this changes the fact the fiat money is headed down the drain and that the end of the Great Keynesian Experiment is upon us. Gold and silver will be higher again soon. You are doing the right thing by protecting yourself and your family. TF

5:45 EDT UPDATE:

​In a stunning development that has caught everyone by surprise, the criminal C/C/C (CME/Comex/Cartel) just raised margins on gold by about 27%. In case you missed it, it's a development that was predicted here two days ago:

https://www.tfmetalsreport.com/blog/2155/so-whats-next

My mistake was that I thought that gold was going to be allowed higher in order to create the disorder that the C/C/C needed to justify their actions. I thought that they would want to suck in a few more latecomers before they put the hammer down. (But, as Ted Buter correctly points out, the last $300 or so of the gold rally was almost entirely all Cartel short-covering, so, there were no latecoming specs to add to the fold. If I'd remembered this on Monday night, the crash on Tuesday would have been more predictable.) In the end, it didn't really matter as the PMs were crushed on Tuesday before any of you could try to attempt to cash in on the last remaining upticks.

We need to dissect this, though, because there is a lot to be learned...and remembered...for next time. The primary rationale for raising margins (containing price) is volatility. However, by Monday night, gold was just $90 above the level where the C/C/C had raised margins on 8/11. Yes, it had rallied from a hike-induced bottom of 1725 but it had done so in an orderly manner and not in a way that made another margin hike necessary. But the CME desperately wanted to raise margins in an attempt to rescue their evil Cartel buddies who were trapped short in a market that looked to be headed to $2000 very soon. Hmmmm. What to do?

You start by letting word out to some select friends that margin hikes are on the horizon. You then catch a break as the Shanghai exchange raises margins, too. At about noon yesterday, just when it looked like the metals were recovering, you confirm to some EE and hedgie friends that a margin hike is coming. By the end of the day, gold is already down almost 5% and you're building a case for "volatility-managing" hikes. Uh-oh. Gold recovers overnight. It actually makes it back up to 1860 or so. Therefore, before the Comex open today, you sprinkle word around that margins are definitely being raised after the close. The selling begins at 8:30 and is relentless all the way through the session. Gold falls another 6% and...prestowhammo...you've got yourself all the volatility and justification needed to hike margins.

Next up, The Bernank will "disappoint" over the weekend which may further add to the selling pressure in the PMs. I'm not sure how much worse it can get as gold is already down almost 10% since Monday and 10% or so is the typical decline post a margin hike. As stated in the comments of this thread, I'm looking for a bottom in gold somewhere between 1700 and 1725. At this rate, though, I wouldn't be surprised if gold traded all the way down to fill the gap on the chart from two weeks ago when the U.S. downgrade announcement was made. A move that low would take gold all the way back to 1650 or so. The globex session finished at 1754 and we'll likely see some carryover selling in Asia and in Europe. Tomorrow will be interesting.

Lastly, don't forget that gold margin hikes are an indirect positive for silver. The C/C/C is unwittingly "leveling the leverage playing field" in the PMs. Much of the disparity in the relative performance of gold vs silver these past few weeks has been due to silver's much higher margin requirements. Higher gold margins flatten out this difference and make silver look more attractive than it did earlier this week. Combine this with the extraordinarily strong OI and CoT numbers for silver and you can clearly see where $50 silver is still a target before the end of the year.

Have a fun evening. TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  313 Comments

TruBlu11
Aug 24, 2011 - 5:08pm

@ silver foil hat

Silver already started rising steeply into the close today. Now that the stealth CME hike that we suspected has been confirmed, it looks like both gold and silver are going to resume their run but you are right that silver looks to be the bigger beneficiary.

Aeoniossilver foil hat
Aug 24, 2011 - 5:09pm

silver foil hat on silver:

Well, hate to be the bearer of bad news, but as far as I've seen silver is coupled as strongly to gold as the BRICs are to the ponzi. One reason the crimex is calling on gold is because they get a 2-birds-1-stone deal. For now.

Silver is money
Aug 24, 2011 - 5:09pm

Great call on the margin hike Turd!

There is a reason why we all keep coming back here.

Bstone
Aug 24, 2011 - 5:10pm

Good Article and my 2 cents

One thing that always keeps me going after a day like today is the fact that "nothing has changed" and yet all seem to "jump off the bridge, just like everyone else" when something as small as today occurs. Sure there was a massive sell off some ground was lost but this does not change anything. We have been through this before and for some reason it comes back stronger each time.

Look back at the charts from 2006 to present. This is no different than a few months back and several other times before that. It happens on a regular basis and a lot of us were kicking ourselves in the ass for not buying when we hit a good support level.

We may not have hit exact bottom but I think we are pretty close, even if Gold goes to 1700 which I think is very unlikely, I believe the upside is far better. NOTHING HAS CHANGED......and by October maybe even as early as mid September I believe we will see 2000 price for Gold. My target area for the last few weeks has been 2200 by December and I feel within a week or so that move will begin slow and then take back off in October like a rocket.

I for one will not only be stacking even more right now but playing this market to the bitter end. Timing is everything in GLD and SLV and as long as you don't get greedy you can come out looking like a champ. I have made tremendous profit through all of this in GLD and two days ago everything was pointing towards the "Jackson Hole" Bernanke speech and how he plans to save the world. The only thing taking place right now is everyone trying to get in place for QE3 or some other stupid Bernanke plan that creates more issues than it solves. The stock owners want to be in place for a miracle just like last time and reap all the benefits for doing so.

Bernanke will give his dumb dumb speech Friday and Gold will still be 100% safer bet than anything he does.....no doubt!!

I for one will be buying, buying, buying in this big dip.....and saying thank GOD I did about 2 months from now.

https://www.marketwatch.com/story/chinas-gilded-gold-market-2011-08-23

Bay of Pigs
Aug 24, 2011 - 5:10pm

RE: Timing of margin hikes

You wonder how much money the bullion banks made shorting off this news as they obviously had prior warning they were coming (evidence in the smashdown leading up to this "official" release).

Does anyone else find this continual criminal act in progress as disturbing as I do? Is is blatant, coordinated and out in the open for everyone to see, yet everyone acts like this is a normal "correction" because the market was "overbought".

I call bullshit on all of it. WTF kind of country is this? Professional grifters all around us, stealing money, and nobody questions a thing. Sad and pathetic.

Tesla
Aug 24, 2011 - 5:10pm

Mr Gartman You Are a JACKASS!

Go suck a bag of.... or #2

TechTrade
Aug 24, 2011 - 5:12pm

BTFD

You can't find the absolute bottom. When gold was dropping through the 1500s a few weeks back, there was a lot of talk about how it could drop to 1410, or even 1390. Well guess what - the low was 1475 or so. What you do is look at the support levels and start scaling in. MGCs (10 oz contracts), in Dec 2011 or farther out (hell, I just bought July and Dec 2014 YI silver contracts today, at a $1 discount to the front month, due to the backwardation!) I was prepared to buy MGC contracts every $25 or so, or at support levels down to 1390, and build up a 20-30 lot position. Since we only got to 1475, my last buy of 6 contracts was at 1480, and my averaged down basis for my position was $1503, with 14 lots total. Sure, would have loved to had more, but that's what the market gave me. Had I waited for 1410, I'd have had nada. I rode that up into the 1700s and 1800s and scaled out of most of them. Then started the same process on the pullback to the low 1700s. Doing the same thing now, sold some in the 1850s, and 1838s. Bought at 1777, will buy a lot more at 1731 and 1695.

No price moves straight up or straight down. If you buy at support levels, generally (except for silver in the first week of May), you will get bounces off those supports. Now, you can either scale some sells out into those bounces and take some profits, and be prepared to buy more on the next dip and keep lowering your average. Or, you can decide to hold on and keep buying on the next dip - EVEN if it happens to be higher than where you bought the last time. Taking the moves up and down to rebalance your position will be how you keep your basis as low as possible, and be prepared to sell into strength.

The daily Stochastics appear to have some ways to go to get oversold, so I would commit all yet. But if you go back over the past 2 years, and look at every time the daily and 4-hour stochastics hit oversold, it's hard to find a point that the price there would not have been profitable within a short period of time.

I am loving the idea of having 2000 ozs of July / Dec 2014 silver parked out there, just waiting - like physicals, no rollovers. In 3 years, when they're front month, who knows where silver will be. Gonna be a fun ride.

DefiniteMaybe
Aug 24, 2011 - 5:15pm

Calling the Top: High Five to Margaritatime

Hey Margaritatime,

My ego is getting the better of me, so we have to give ourselves a high five for calling a top in AU on Monday morning (refer to comment Going out on a Limb). By watching the comments on this board and the technicals (Adam Hamilton's Relativity indicator), something was telling me that AU was topping. I got out of my GLD Puts after a tidy profit around 2pm EDT today when I saw that gold was about to bounce off of $1750. Since I am risk taker (a calculated risk taker) I might enter this trade again tomorrow if I see a good setup.

Some thoughts to those just starting off in PM's and are purchasing physical: If the recent pattern in gold is anything like the correction in silver that we had on May 1, I would wait at least a few days before making any purchases. Probably even wait at least until after Bennie's Jackson Hole announcement to see how the market shakes out.

As always, these are just my thoughts, take them for what they are worth.

DM

prudentinvstr
Aug 24, 2011 - 5:18pm

Gartman

He says , The gold bubble has popped, All the hedgies have sold, Its over. And then the classic: You can't eat gold. ( What a Dipshit.)

Hmmm I guess the crisis is over. Go back to sleep sheeple.

Dr GBay of Pigs
Aug 24, 2011 - 5:19pm

@Bay of Pigs Fully agree.

@Bay of Pigs

Fully agree. "overbought" my ass. Nothing was overbought. But what can we do?

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