This Ain't Horseshoes

Thu, Aug 25, 2011 - 9:04am

They say close only counts in horseshoes and hand grenades. That certainly applies here. Monday evening, I projected that a margin hike was coming this week in gold. I thought (hoped?) that gold would be allowed to run a little bit farther before the smashdown began. I was looking for the margin hike to be tonight, not last night. If it had been, we'd have had Tuesday as a peak, not Monday, and many of us would have been able to lock in gains before the fireworks began. Alas, I was off by a day. Nuts. Close. But close doesn't count.

The pain for The Cartel had become too great by Monday evening. Their paper shorts were getting slaughtered and, with the technical picture so rosy in both metals, they were looking to really take it up the bahooty on Tuesday. When the Forces of Darkness saw the OI in gold rise by an incredible 10,000+ contracts on Monday, they knew it was time to strike. First, coincidence or no, the C/C/C sees their friends(?) in Shanghai raise their gold margins by 9%. This is enough to stop the runaway train at 1918 and bring it back below 1900. Then, before the Comex opens and momentum starts anew, the criminal C/C/C gets the ball rolling on their diabolical plan. They let word out to a few of their friends (traders, hedgies and algos) that "there might be some headlines that will interest you after the close on Wednesday". Down goes gold. Gold begins to recover mid-morning and it looks like there might be hope. At about noon, you drop the hammer by telling a few more "friends". Gold seriously drops and, when it's all said and done, it finishes the day down about 5% from the overnight highs of the previous day.

I wrote Tuesday afternoon that I would be "flabbergasted" if a margin hike wasn't announced that evening. I felt this way because the C/C/C had already created the necessary volatility to justify one. Ahh...but they weren't done. Why hike margins Tuesday when you can use the fear of the hike to scalp another $100 from gold on Wednesday? And that's exactly what they did.

So, where do we go from here? I may end up looking foolish but I think they're done. I don't expect 3 more hikes over the next 5 days like we saw in silver in May. Why, you ask? Purpose and mission.

In late April, speculators were the primary drivers of price and had squeezed The Evil Empire into a corner. The specs had to be driven out and taught a lesson. The EE also needed time to regroup. This led to the 5 hikes in 9 days and a 35% drop in silver from which it is still recovering. This last run in gold was entirely different. As pointed out here and by others much smarter than I, the OI and CoT numbers for gold over the past three weeks have shown that the primary driver of the last $250+ in gold has been short-covering by The Cartel, not specs. As stated last week, this is why all of the "bubble" talk in gold is nonsense and those spouting it should be permanently ignored. Bubbles form in excess speculation, not short covering, and the data clearly showed that this was a short-covering rally. Given that gold rallied $250+ on the backs of Cartel short-covering and given that The Cartel is a primary member of the C/C/C and given that this entire episode was designed and implemented to relieve the short-covering pressure on The Cartel, it is logical to assume that the target of this attack is to get gold back down to where all the pain began.

Where is that? Well, you can clearly see it on the charts. Three weeks ago tomorrow, S&P announced they were downgrading U.S. debt to AA+. Recall that this even caught The Turd by surprise. On Sunday night, the 7th, gold gapped open higher and never looked back. (Except for the period around the first, damage-control margin hike on the 11th.) The banks know the true significance of the ratings downgrade and they began to furiously cover their long-held short positions in gold. However, it got away from them and, by late last week, the technical picture in both gold and silver had begun to look so swell that hedgie and WOPR money was beginning to rapidly stream into the pits. It had all the markings of a serious short squeeze and the C/C/C was forced to act. Unfortunately, they acted one day too soon.

So, where do we go from here? After reaching down to 1705 a few hours ago, gold has since recovered to about 1730. That could be it. This could easily be a "sell the rumor, buy the news" type of event. Seriously, which fundamentals have changed? The debt? The deficit? Europe? The key number to watch looks to be 1750. A move above there would give me some measure of confidence that the storm has passed. Do not be surprised, however, if gold makes a run down to fill that gap on the chart from Sunday, the 7th.

In silver, I do think the worst is over. It reached down last night and touched the bottom end of the channel we drew for you yesterday. That overnight drop to 38.76 ought to do it. IF gold drops again and tries to fill that gap, I do not expect silver to make new lows. Again, I am very excited about silver here. The C/C/C have evened to great degree the "leverage balance" between silver and gold. This will serve to drive some interest back into silver in the coming days and weeks. I expect we'll see silver eclipse again sometime soon. Not ready to go into full prediction mode yet, though. Let's be 100% certain that this "event" is over before we go there.

That's all for now. More later this afternoon. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


argent rampantthedukes
Aug 25, 2011 - 3:12pm

Interesting post...

I have very few shares of anything at the moment, but I do have intentions of accumulating as many mining shares as I can over the next year or two, with the intention of holding, not trading. How does one go about getting something "on paper" when buying shares through an online trading platform. Is it even possible?

Aug 25, 2011 - 3:08pm

Greed v Fear; Lonely AT The Top?


Peace Oh Noble Leader; don't let yapping little dogs distract from sharing your vision. My eyes are open but what you see adds so much to the picture!!!

Muchas Gracias

Aug 25, 2011 - 3:04pm


Generally speaking this site has a very good helpful vibe.

Many come here from to find a safe haven from the brutality of their recent awakening.

Folks have different ways of expressing themselves. Some think it ok - others do not.

However - that said - regardless of how you choose to express your opinions about metals and nasty Blythe (I personally care not) - please please do not attack the people who are looking to this site for a safe place to come and would like it to be uber clean. That is not clever or fair.

Turd: Those who sulk and call you names when things go south are merely attempting to "transfer" their pain onto something else. Some folk take responsibility for their lives and look to themselves for answers or how to improve their lot. Others are unable to take responsibility for themselves. and believe that everybody else is responsible for their problems. Everybody else is doing it to them, it's not fair.....etc. This attitude will permeate their lives and not just this forum. TF: choosing to take on board their dysfunction and pain will do neither you nor the immature child any good at all. (There is nothing you can do with these folk - it is never their fault you see).

However - basking in the Kudos of getting it right will inevitably mean you will feel the pain when it goes pear shaped, par for the course. Emotional sleeve wearing is one of the things that makes you so good. Your outpouring of care and responsibility is apparent.

On a last not - a site ran by a turd and packed full of turdites is amazingly benign in content. I have a last of 1768 Maybe the "correction" is over?

argent rampant
Aug 25, 2011 - 3:01pm

censorship and civility

I agree that even the coarsest posts I have seen here are really quite mild. Ultimately, it is Turd who establishes the rules for discourse here and I think we all get that. He DOES have the right of censorship. Whatever anyone else says is simply their opinion.

To those who have felt it necessary to push back so vigorously against what they perceive as an assault on their rights, good for you! You could have just let it pass. You could have taken the requests of others under consideration. You could have made some sort of conciliatory reply. But no, you threw it right back in their faces! ATTABOY!!

Fart in the elevator if you want to. If others don't like it, tell 'em to stop inhaling!

Aug 25, 2011 - 2:56pm

Who is the DTCC of Canada

With the downgrade by S & P of the US also came the downgrade of the depository trust clearing corporation. The monopoly clearing house for US securities is now a greater risk. Jim Sinclair several years ago recommended taking possession of your shares or become a book entry at the transfer agent of the company you own shares. He has always been careful about limiting your risk due to an unforeseen possibility of the US clearing house being affected by a financial event.

I have several Canadian precious metals companies that were originally purchased in the US through Scottrade over the last 5 years under Canadian symbols that in the last year were all converted into Nasdaq equivalent symbols. I had no choice. Take it or leave it. I originally planned on protecting myself when I purchased those shares by purchasing Canadian shares at the time rather than US. I thought by doing this I could trade them either in the US or Canada. Well now the only option I have is the US and the DTCC clearing house.

If I were to go to another brokerage house that trades those securities under either the Vancouver or Toronto exchanges is the clearing house in Canada any better than the DTCC here in the states? Comments

By the way most of my core positions are either in book entry form or certificate form. My brokerage firms have informed me that I no longer can receive certificates. Hence time to do some due diligence.

cpnscarletEric Original
Aug 25, 2011 - 2:55pm


If JPM takes over BAC in less than 2 weeks, then we know the government was complicit and the SEC has become a political tool. OKAY OKAY, we KNOW that here, but it's something that needs to be shouted out on the streets. I mean, what about "monopolistic practices" and all that? With a bunch of libs in the administration, why isn't any quick knee-jerk response coming? I'll be amazed at what Krugman will have to say about this.

PS - @The Vet...I got it. You weren't born in the 60s - you are a boomer in my book, no doubt. I, personally, hate being referred to as a boomer since I was born before '64.

PPS - PORN, PROFANITY, etc. I'm not a fan of porn, but a big fan of erotica. The difference? Darned if I know. During my quasi-retirement I decided to decorate the master bedroom with "tasteful erotica" as long as the wife approved. We ended up with a reclining nude by Renior, two Mercury and Venus pieces by Veronese and Ruebens, a photo-shopped pencil sketch of 60s model Diane Webber, and a print of a 1911 photo of the entrance to Dreamland at Coney Island. Tasteful? Erotic? Acceptable? Darned if I know, I just like 'em and the wife approved. Please Google some of these and see what you think.

Censorship and prohibition is not an aspect of liberty. Decorum is a worthy goal. Profanity is sometimes needed to cut through the verbal clutter.

Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

proformatrillionaireDr G
Aug 25, 2011 - 2:46pm

Dr G: margin hikes

I would like it if they moved it to 100%/no leverage. However, that would be cutting to the chase aka the end game.

Eric Original
Aug 25, 2011 - 2:40pm

quasi porn

I must have missed the really good stuff. Haven't seen anything that went over the line lately (OK, maybe except for Justin's "I don't have a vagina" post).

The most risque thing I've put up lately was near the end of the old thread where I went on about making love to my gold coins. If that was what offended, then I apol.....wait! No. I don't!

Aug 25, 2011 - 2:39pm

alright folks

there's some major over-reacting going on here, and I'm stepping back from a shouting match now.

I like what pourty posted, and think you'd all do well to read that post above. as to "censorship" & "taking away your right to stand up for yourself" yadda yadda - that was NOT what is being pointed out, if you'll stop the knee-jerk defense you'll see.

as to "You control the language, you control the mind." - a little reflection on what you believe to be your unique thoughts / voice might be in order.

who does control the language? and therefore, the thoughts?

The Vet
Aug 25, 2011 - 2:38pm

cpnscarlet - Clarification

I think I said that I started trading in the 1960's not born in the 60's... I was born 20 years earlier than that....

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Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

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Key Economic Events Week of 7/13

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7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
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Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
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7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
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6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
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7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
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Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
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6/23 9:45 ET Markit flash PMIs for June
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6/25 8:30 ET Q1 GDP final guess
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6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
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Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
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6/10 8:30 ET CPI for May
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6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
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