This Ain't Horseshoes

272
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 $44 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

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turd [at] tfmetalsreport [dot] com ()

  272 Comments

murphy
Aug 25, 2011 - 10:32am

Goldmoney.com

This is probably common knowledge and I apologize if it is, but I have never seen a post about it.

I have recently started using goldmoney.com MUCH more often for AG. In the past I just put in an amount and bought.

Now I am taking my time. When you click on buy, it locks in the metal price for 5 MINUTES! I watch for the dip and click.

I wait for a further dip to happen and if so, click cancel and rebuy to start the process over again. Unless you are investing over $10K at a time there is really no downside to buy in smaller increments as far as the premium goes. Here's the premiums below. Of course you have to pay a storage fee as well, but the benefits far out weigh it for me.

Happy clicking!

Silver Buy Rates
Current Spot Rate
$39.6800/oz
Ounces Rates
$1 - 9,999 $41.2632 3.99%
$10,000 - 99,999 $41.1441 3.69%
$100,000 - 499,999 $40.6680 2.49%
$500,000 - 999,999 $40.5489 2.19%
$1,000,000+ $40.4696 1.99%
Justin silvergoldsilver
Aug 25, 2011 - 10:33am

You're Right SGS

Nothing about today's economy or markets even closely resembles 2008 or are a product of it. What was I thinking?

We only have the Dollar looking to test 2008 lows with a fresh print under 74 today.

The housing market is still as phucked as it was in 2008.

Unemployment is still as phucked as it was in 2008.

Not only are financials still as phucked as they were in 2008, but we have entire Euro states on the verge of eating their own shit sandwiches as well, and their financial institutions are phucked still.

The S&P just touched levels last week not seen since March of 2009 which was it's bottom after the crash in 2008.

Gold and silver are repeating the exact same cycle so far that they did in 2008. If we get our QE 3 to save the markets, why would silver and gold not sell-off again as they did temporarily during the last money printing installments? They'll most certainly go back up once the sheep realize more liquidity in the markets is bad, but they'll sell the shit out of their paper pm's before they come to that realization. Either that or the CME will assist them in their decision with more margin hikes to give them that gentle nudge. We saw how long it took silver to get it's feet back after the May Massacre, and just in time to ride gold's margin hike rumor/news down from $44 to $39 in two days.

Like I said, I'm not a Super Bear or a top caller, but to pretend that the similarities between now and 2008 don't exist is to err on the said of naivety. Everyone wants to bash the EE and cry foul due to the manipulation performed on their behalf, but if you connect the dots and signs point to the potential for a substantial decline in metal prices then you're just a shill or an asshole... or both. I know for a fact I'm an asshole, plenty of ex-girlfriends will vouch for me on that. I don't think I'm a shill though, but then again, what do I know? I'm an asshole.

mouser
Aug 25, 2011 - 10:36am

The miners

While the precious metals prices drop, there is that chance that we may see some of that capital that was playing gold and silver futures or ETFS now go into the miners. Peeps know these companies are making record profits and cashflow, the demand is NOT going away for those products , despite the misinformation provided by the lapdog media.

Silver and gold prices , physical metal spot prices, are still well above the average for the last Q, and fuel prices have dropped , so margins/profits will be even greater. Some like SVM are trading near 52 week lows, despite having the best cash costs amongst their peers, huge growth planned , pays a divvy has no debt with a big lump of cash in the bank.

OGC another i like , but dont own as yet, but see great gains in the future for that play as they bring the DIDIPIO elephant online in the next year, which has cash costs for gold at -45$ an oz of gold after copper credits. And the more i hear about copper's fundamentals going forward, the more i like that play. OGC already trading at discount to their peers at under 10 P/E and will produce over 260,000 ozs this year from their New Zealand operations at cash costs around 650$ US.

Silver didnt hold 40$ as i had suggested, but i think the fallout on gold maybe dragging silver down a bit more than i expected.

Gold very close to that 1700$ level which would be over a 10% pullback from the top of over 1910 USD, and i dont believe the margin hikes will have as much of an affect as many believe, as some of the countries hoping to up their gold reserves may take this opportunity to load the boats some more, I think China will be buying here.

Good luck prec metals bugs, hang in there , the best is yet to come, but JMHO

margaritatime
Aug 25, 2011 - 10:39am

@mouser

I agree Asia will be buying the dips.. Unless that is, that this is somehow orchestrated..

https://www.hturning.com/index.php?action=topic&id=113

Shill
Aug 25, 2011 - 10:40am

Gold and silver are repeating

Gold and silver are repeating the exact same cycle so far that they did in 2008. I don't think I'm a shill though, but then again, what do I know? I'm an asshole.

Your correct, I am :) Never mind the calling tops, bottoms, sideways take it as it comes.

Less stress that way. Be well

¤
Aug 25, 2011 - 10:43am

BlackHawk

Point well taken and I agree with you. I'm not advocating the conditions or the desperation, just recognizing the opportunity that will happen whether it's right or wrong.

They are going to go forward with this housing program in a election year. (gag!)

What I believe is going to happen is that credit is going to be widely available with looser lending standards just like before. The same reasons that put the housing market valuation upside down in the first place is going to be encouraged again because the housing market is the key thing that's messed up (besides Govt. debt) and it has to be fixed at any and all costs. They will drive the prices and values of houses down so that they can go up once again in another cycle when inflation takes hold.

I don't agree with the irresponsibility of their thinking so I agree with you that this is all very wrong if compared to how things used to be (responsible borrowing/lending?). The way I look at it, if this comes to be, is that if someone had a $1000 dollar house payment and it was allowed to become a $500 or less house payment would that person care as much if they didn't get a raise? They essentially would have $500 extra a month or whatever going forward that they didn't have the previous months. The person with absolutely no money or collateral would probably qualify for whatever rental assistance programs they are going to roll out.

The bottom line is that we live in a Bizarro World (hat tip to The Good Doctor ) and they want us in debt at our own taxpayer expense, even if it's irresponsible and even if it will lead a much greater problem again down the road. It sucks, but it is the truth.

That's what you call desperation. That's where we're it.

Tesla
Aug 25, 2011 - 10:43am

Thanks MrGneiss

Very well said, my thoughts EXACTLY!

LaMachinna
Aug 25, 2011 - 10:44am
MonkeySmoke Justin
Aug 25, 2011 - 10:47am

@ Justin

do you really think/believe that silver will ever be exchanged in the $20's much less the teens? I believe that if silver were to sniff the low $30's that people, world wide--think India and China in particular--, would be standing in line to exchange whatever fiat they have for real money. I may be wrong in making that statement, but I for one, have enough dry powder to make a substantial exchange in the low $30's. I have even more if the exchange rate drops into the $20's or teens. I would love to see silver exchange in the low $30's and into the $20's but I just can't see it happening; too much demand for physical.

Justin mrgneiss
Aug 25, 2011 - 10:47am

Emotions are running high lately

Sub-$18 silver by the end of the year isn't my prediction, claim or personal view. It's merely what I observed will happen if silver continues to mimic the EXACT cycle it did in 2008. So far it has completed the first 5 stages EXACTLY as before. Someone shared a chart yesterday and I thought it was lacking "bling" so I made my own, spruced it up and showed a comparison of 2008 silver to 2011 silver since the similarity in action is eerily similar, thought some others might be interested in checking it out.

I thought us Turdites were beyond being all bullish all the time? Since when does pointing out bearish indicators, bearish cycles or bearish patterns render a poster as the enemy and worthy of being tar and feathered? I guess going against the herd is bad ju-ju, especially after yesterdays smack down. I'd love to be bullish as all hell, but May taught me a valuable lesson: sometimes it's ok to ditch the herd and play both sides of the bear/bull fence depeding on the situation. Keeping an open mind would have saved many of us from losses in early May, but the bull prevailed then due to greed and rising wealth, just as it will again.

RevoltingLemming
Aug 25, 2011 - 10:48am

Horseshoes and Handgrenades

I believe you call that a Leaner. Or in handgrenades a leg taker offer. Looks like the miners are showing some strength which is finally a sign we may having a BIG TURN on our hands. Thanks Turd RevoltingLemming

¤
Aug 25, 2011 - 10:48am

I would add....

....that if housing costs were way down (even artificially) that people who are looking for $20 per hour (or whatever) jobs would be willing to take lower paying jobs because their expenses might be lower. Lower unemployment and increased job search participation for lower paying jobs is what they are after by any means possible.

I can see what the Fed. is thinking here but it leads to a lot of additional taxpayer responsibility and the banks will make out again and again and..... Friggin' banks!

Tesla
Aug 25, 2011 - 10:48am

Hi LaMachinna =]

# of the bank ? You want that on your forehead or your hand ??

Adam Smith ndmaster
Aug 25, 2011 - 10:49am

@ndmaster Re: I am not a Large Trader ....

Neil:

I think the responses on this board are based on a couple of things: (1) many "Turdites" saw this coming. The way this downturn came about may have been a little unusual or unexpected; (2) Turdites are very protective of Mr. Ferguson (and rightfully so); (3) long time readers and Turdites tend to focus on the longer term ramifications of "The end of the Great Keynesian Experiment" as well as shorter term trading.

Your opinion is welcome here. Earn a few Hat Tips by contributing value to the community and you will find this site very rewarding and responsive to you.

Tesla
Aug 25, 2011 - 10:50am

JComiskey Rocks!

Video unavailable
JamboMamboBill
Aug 25, 2011 - 10:51am

Time has changed, "there is no trust in paper money no more"!

Folks are too pessimistic ! Like I said earlier, we are on the making of a bottom and IMO there are signs of PMs recovery already, if you think the amount of investors World wide that were waiting for this pull back, you can conclude that the money rushing in to "buy the deep" is BIG! There is no more weeks, months long pull backs, folks gona jump in when ties are in favor. There is no trust in paper no more! Next week rise or consolidation is what I expect.

MaryP
Aug 25, 2011 - 10:54am

Dear Mr. Ferguson: A modest request

Dear Mr. Ferguson and the TF community,

May I please make a modest request? Might there be a way to discourage quasi-pornographic images in the comments section? Moreover, would it be possible to use a bit more modest language without sexually explicit references. We can be against Blythe without the crude references, right?

We often speak of the evil empire, but if we want to be on the side of the angels and honest money, we should seek to conduct ourselves as gentlemen and ladies.

I enjoy this site, but I wish that I didn't have to see and read some of the things that I do here.

Again, just a modest request. I wish that discussions about PMs would not necessitate locker-room talk.

Thank you for the consideration.

Cordially,
Mary

mrgneiss
Aug 25, 2011 - 10:54am

Wynter - silver a reserve asset soon?

Wynter predicts silver to be a reserve asset of some central bank soon. Take it for what its worth, an anonymous poster who claims to represent a group whose predictions have been uncannily accurate in the past. I wouldn't base any investment decisions one this claim alone, but it doesn't hurt to factor it into your calculations.

https://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stoc...

tmosley
Aug 25, 2011 - 10:54am

Close counts very much when

Close counts very much when you buy physical.

Buy yesterday, buy today, buy tomorrow. Who cares? In a year it'll be up 100% anyways.

ohiometalman
Aug 25, 2011 - 10:55am

Marketwatch Gold ticker

Click on Marketwatch website and look at how they are representing the gold price today. This shit never ceases to amaze me! No wonder the sheep can't see past the trees!

tyberious
Aug 25, 2011 - 10:55am

You're Right SGS

@ Justin,

I had seen the same charts on another blog, https://www.etf-corner.com/markets/slv/ and see this https://www.etf-corner.com/markets/gld/.

Now that's all on TA and charts, but what about that fact the ppl are long G&S, G&S being in strong hands and the Asian and Indians buying. Besides EE, who will be selling?

Dark Matter
Aug 25, 2011 - 10:56am

Hoping for gap close

I still hope the gap at 1650 will be closed. No long position until that moment.

¤
Aug 25, 2011 - 10:58am

German markets

Is it possible that certain markets/countries are getting hit sporadically out of the blue in a excessive way at times? Definitely imo.

I'm not exactly sure why Germany's market are selling off heavily but all we've been hearing lately is how Germany appears to be the strongest of the EU group and then whamo!....chopped off at the market knee's and displaying weakness at the moment.

If we only knew exactly what was taking place in the markets behind the scene's and what levers were pulled on such a massive scale. Could it just be all the currency hiccups and liquidity in the system just moving around in large inconsistent spurts?

Something seems a bit different in our PM/miners this a.m. that wouldn't seem to fit the recent sell off and O/E and the Bernank tomorrow and what we expected. What better time then to shift gears if your the EE sitting at a trading desk.

TF mentioned it and some of you have picked up on it. Things are reacting a bit more positively contrary to what the gold sell off and overall market is doing. H'mmm.

Tom L
Aug 25, 2011 - 10:59am

@Ferd

The HUI:GOLD ratio has turned up.

https://stockcharts.com/h-sc/ui?s=$HUI:$GOLD&p=W&yr=3&mn=0&dy=0&id=p83528779699

It's still a mess though, but it could be the bottom is in. You'll know by looking at the RSI of the individual stocks on pullbacks and doing a ratio of the stock to gold. Running a ratio of the Stock to the HUI will give you an idea of who the standouts are within the sector.

Ta,

¤
Aug 25, 2011 - 11:00am

Oil...

...seems to be selling off while the selling pressure on the PM's seems to be lighter.

I haven't checked the currencies lately but it's probably the London market closing as far as the momentum change.

FriedEggs
Aug 25, 2011 - 11:00am

I was right!

Today is worse then yesterday (and its only 11am EST)... Nothing has changed.

MENA region - cluster f**k? - check

World Currency's still crap - no comment needed - check

No new McJobs? - check

etc...etc...etc...

I am going to really go out on a limb and say tomorrow - will be worse then today...

HOWEVER - You just make sure you have a good day boys & girls!

Fried(e)

MonkeySmoke mrgneiss
Aug 25, 2011 - 11:01am

@ mrgneiss

Back in May when silver did not hit the $20's--it landed at $32--I told my wife that the $20's were done; we will never see silver in the $20's again. I still hold to that call.

Can it go back into the $20's? Absolutely, however, there is just too much demand for physical. $18 silver!!!! What a welcomed sight that would be!!!! Not gonna happen.

¤
Aug 25, 2011 - 11:04am

mrgneiss

I think it's going to be China and it's going to rock the world. Sooner then later.

I can envision them publicly saying they are partially backing the Yuan with silver at this point. Even if the resources are still in the ground. Same with gold at some point or at the same time.

China and nationalization of their PM's are eventual.

97guns SilverSurfer21
Aug 25, 2011 - 11:04am

http://messages.finance.yahoo.com/Business_%26_Finance/Investmen

silver will be a reserve asset for a sovereign central bank

Justin
Aug 25, 2011 - 11:05am

@ Monkey Smoke

I have no idea what silver/gold will be doing in the future, but I know that Turd is phenomenal at predicting short-term movements(and long term when margin hikes aren't thrown at us).

An unpredictable Federal Reserve and an even more unpredictable CME make all TA pretty much useless during times like this. When silver was trading near $50 I'm sure everyone would have said the same thing, "If silver drops to $32.50 I'll be buying with both hands."

Silver got margin-hiked to that level, people started snatching it up and then wham, they were caught in a bull trap that ended at $39.50 with more margin hikes. If silver took a hit into the $20's right now, why would anyone be in a rush to hop back in with the fear of more margin hikes freshly plastered into their minds?

China could care less about spot price, they get all of their metal straight from their mines, bypassing our COMEX, the LBMA and the newly installed Shanghai Gold Exchange-which supposedly everyone was touting as our end-all be-all to paper manipulation as if it wouldn't be an extension of the EE's reach. How many threads were started prior to the SGE opening with people super-bullish and anticipating a huge spike up in Gold that night? The SGE opening had 0 effect on spot price and everyone waiting for it was let down. Now that the SGE is playing margin hike games, all of a sudden they're just a part of the problem when just a short time ago they were going to be our savior.

Oh the joys of having their cake and eating it to, must be nice.

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