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 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

mrgneiss
Aug 25, 2011 - 11:40am

@Scott - Great point on

@Scott - Great point on copper! I have been watching it, I think this market is too big to manipulate, and is a great indicator of global and especially developing nations economic health, as well as being a leading indicator for PM's, and it is certainly not showing any signs of stress, and in fact looking to break out.

AlienEyes
Aug 25, 2011 - 11:40am

More vote buying.....QE 2.5 ?

Woe is me. Is the Obama regime planning to buy the 2012 vote with more candy? By "candy", I really mean another "happy meal" program where our "friends" (?), the feds, will buy down existing, under water mortgages to a lower interest rate, thereby solving another problem by spending our tax money and/or further debasing our currency. This would buy votes and also serve as a stealth QE program, leaving all of the participants with a big smile on their face and indebted (literally) to the socialists. Ain't bloated government just grand?

This would leave the feds owning a ton of private real estate, the to big to fail banks, the American car companies (except Ford), the medical insurance business and the Free Food Corporation (formerly known as food stamps).

Lets see now, our homes, cars, health insurance and a large chunk of our food are fed owned. How can Santa Obama possibly lose? We are in deep poup and many of us can't even smell the foul odor. It seems to me that this will be their way of buying votes, QE 2.5 and doubling down on our national debt. I sincerely hope I am wrong.

Mudsharkbytes
Aug 25, 2011 - 11:44am

Quasi-Porn??? $18 silver???

Other than a 30 minute video of shaking booty posted a couple of days ago, I have never seen anything here I thought even remotely fit the category of 'quasi-porn'.

And the booty was fun - not really porn anyway (how much 'porn', even quasi, gets posted to youtube these days?)

I have seen images of implied violence - mostly directed at BM, but that is to be expected.

I have also read 'strong' words here. My philosophy runs along the lines of George Carlin & Frank Zappa on that - the reason strong words exist is because they make their points faster and with more emphasis.

I can't imagine anybody here is trying to be offensive. I would hate to see censorship, especially of the relatively harmless things posted mostly in fun.

Putting forward the notion that silver could slip to $18 via chart analysis does not make anybody an asshole (more strong words again). It did made me think though. What it made me think was that every drop in silver is being greeted by more and more people buying and it SEEMS unlikely silver could achieve such a low price without available inventories becoming depleted well before $18 is reached. I, for one, would throw every available asset I could muster and maybe even (going against my wife's better judgment) max out a 0% credit card accumulating as much silver as I could get my hands on, and I wouldn't be the only person thinking along those lines.

Nothing wrong with posting opinions that don't jibe with mainstream ones - it SHOULD make people think about their own positions.

My 2¢ - which ain't worth much these days unless it's in pre-1983 pennies.

ewc58
Aug 25, 2011 - 11:44am

Tom, the bottom looks like it's pretty close

if not already in. Could not agree with you more about scaling in at a time like this.

I'm pretty psyched as I picked up a nice handful bunch of GG 1.21.12 $65 calls. Early today they hit my bid of .74. Last trade is .83.

Hoping to get filled today or tomorrow on:

MFN 11/19 $18

EGO 1/21 $25

SIL 1/21 $31

Harald
Aug 25, 2011 - 11:49am

Copper

And JPM controls a large part of the copper market as well. Maybe, I better start hoarding old pennies.

margaritatime
Aug 25, 2011 - 11:52am

quasi-porn

Maybe it was my bacon-bikini that offended. Or, perhaps the BM silver rocket [personally I thought that was funny). I agree with mudsharks, I haven't seen anything but relatively harmless stuff.

Tom L
Aug 25, 2011 - 11:52am

Mexico and Silver

The Peso has been my Canary in a coal mine on the USD for a while. I think it's a good buy at 12.5 and is going back down to 11.50. The Narco/Oil Kleptocracy in Mexico is in trouble as well as the war-zone on the AZ/TX/NM border. I don't expect them to re-monetize silver yet, but once the US really starts to implode there will be a de-coupling of the Mexico/US governmental interests and Mr. Salinas-Price could get his wish. But, I don't think they'll lead the charge here, I think someone else will re-monetize a metal first, a larger player, and then Mexico will follow up soon after that.

It sounds like there's real political stirrings for a Silver Peso out there, though. It gives me hope.

Ta,

Shill
Aug 25, 2011 - 11:53am

GDX

GDX just busted out, seems to be making a move here.

CreditCrumbs
Aug 25, 2011 - 11:56am

A Post at ZeroHedge

Found this post by "AldousHuxley" at ZH. I thought I should share with you since the info on EE is quite revealing.

Quote: "

Know your history before they censor Internet.

First they canned Eliot Spitzer, NY governor at the time. sure call girls. but he was the guy with state power who could have sued the banksters into oblivion. corrupt institutions pointing finguers at personal morality? then they put a legally blind guy as a figure head while TARP passes by.

Then they canned Dylan Ratiganto shut him up about TARP and Fed's scams.

"The FED is a Ponzi Scheme run by Banks"—Eliot Spitzer, Dylan Ratigan brilliant expose 2008 bubble

https://www.youtube.com/watch?v=5x7o0sNrulg&feature=relmfu

They are all liars on wall st's house of ponzi, but small fries are sacrificed to keep the big boys in play. But there are many small fries now on the internet spilling the beans. Just look at Bank of America personally attackingHenry Blodget from Business Insider of having been banned from securities when Bank of America got TARP I and II and more. Max Keiser too probably got caught or lost money from front running that didn't pan out, but now he is out there telling everyone that the whole system is corrupt albeit through RT (Russia Today).

Then they booted Dominique Strass-Kahn out of IMF with US picked Christine Lagarde around the time IMF was warning about the debt ceiling.

Then they booted S&P's CEODevon Sharma who downgraded US debt and replaced with Shittybank COO.

Today they arrested protesters at one of the most liberal cities in US, San Francisco.

You can't call this "free" market. You can't call this democracy or constitutional republic. This is people in power covering shit up."


Aug 25, 2011 - 11:56am

I can't wait!

I am looking forward to the Bernanke's speech tomorrow.

I believe it could be one of the most important speeches in world economic history. Given what we know about TPTB, obviously Bernanke's intent is to advance their agenda. He wants to achieve a message that encourages stocks to rise and commodities to fall and "persuade" America that everything will be OK, that banks can start lending again, and that Americans should borrow and spend. He may not get what he wants, but if he does, I believe that the success will be short lived. Until some fundamental shifts occur in our money system and the federal budget, I cannot foresee any sustained economic improvement, no matter what Bernanke says. America don't need to borrow no more money. We need sensible action from our elected leaders, not appointed sycophants.

As for me and my house, we already serve the Lord, so we will keep stacking and prepping!

Tom L
Aug 25, 2011 - 12:04pm

@EWC

I think the action in NGD this morning is stupidly bullish. It is the only one on my Short list now trading above it's 10/20/50 hour MA's and there hasn't been a 10/50 cross. The 20 hasn't crossed the 50 on the downside. It looks primed to kiss off that and move back through $13. It just needs an excuse at this point.

I see some tasty premiums out there in NOV.

$15 $0.45/$0.55

Ta,

p.s. just bought 10 @ $0.50 ... I couldn't help myself.

Shill
Aug 25, 2011 - 12:09pm

Nice move Tom!

Nice move Tom!

bullwhip29
Aug 25, 2011 - 12:09pm

@ Scisco

Re: Something to Consider

I don't want to sound like a desperate pumper here, but I also noticed the following after viewing your charts:

- the move in Ag from earlier in the year to end of Apr was "parabolic" in nature as it basically doubled for all intents and purposes; therefore, not sure the 144d SMA is all that useful

- roughly half of this move up in Ag was retraced (using smoothed out, average prices over a period of weeks following the crash); price did not retreat all the way back to pre-ramp up level of $27

- although the $400 run up in Au from early July to its most recent peak looks similar, the actual % move (25% or so) pales in comparison; the late Jan to mid Mar runup in Ag is a better comparison IMHO

- if $1700 holds, roughly half of this most recent gap up in price will have been retraced

- I would say we have not seen the parabolic rise in Au price yet. That being said, we could be stuck in a trading range ($1675 - 1850 ???) for some time and it could take weeks or months before prices really break out to the upside again as was the case with Ag

- Au and Ag are two different beasts, so who really knows?

Dr G
Aug 25, 2011 - 12:10pm

Not quasi-porn. Just straight

Not quasi-porn. Just straight gold and silver porn:

Aronnax
Aug 25, 2011 - 12:10pm

Consumer awareness (or more conditioning from Mass Media?)

Since I have been forced to join the rat race of commuting into a large urban center from the outskirts, I have discovered a pleasant surprise -- the 'free' publication Metro distributed on mass transit (www.metro.us) contains some refreshingly subversive nuggets. This is NOT the type of information I would expect good, trustworthy MSM outlets to convey. Either their lower-cost, simpler advertising base is far enough outside the larger corporate infrastructure, or time has come to acclimate the broader population to these potential aspects of reality:

“In the late ‘80s … I became aware that the government was just not going to be prepared for social security because they were spending the money that we were paying in,” he says. “Of course, anybody who can do the math understands that the baby boomer [generation] is a large group of people … [today] you’re going to have less people paying into the system and then you’re going to have all these baby boomers that are expecting to get their retirement money from social security. I think it’s criminally negligent that our politicians did not foresee this thing coming.”

Think that sounds extreme? Consider the reasons why you’re reading this article right now, or why a show called “Livin’ for the Apocalypse” was made in the first place.

https://www.metro.us/boston/entertainment/article/950636--east-coast-earthquake-how-will-you-survive-the-apocalypse

Anyhow, I don't know whether to be encouraged, or scared. (The bolded part is the comment from the journalist.) Then I see articles like this one:

https://www.bloomberg.com/news/2011-08-25/irene-may-require-evacuations-of-some-new-york-city-areas-bloomberg-says.html

... and think I need to pinch myself, 'cuz this reality is just getting to be a bit too surreal...

The good doctor's website (perhaps already noted elsewhere, but seems loaded with info & resources):

https://www.thenewsurvivalist.com/

olderman Tom L
Aug 25, 2011 - 12:10pm

TomL - what if sovereigns nationalize silver

have always wondered about this - especially Mexico and China

silver bullion goes up and equities down?

or bullion and equities up?

I'm too old to figure this out.

olderman

Tesla
Aug 25, 2011 - 12:11pm

@CreditCrumbs and @Dr Jerome

Your Post Above Rocked! YES!!! EXACTLY!!!!

stoneeh
Aug 25, 2011 - 12:11pm

"May I please make a modest

"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?"

Fuck that.

Mikey Justin
Aug 25, 2011 - 12:12pm

@ Justin, Went thru Andrew as

@ Justin,

Went thru Andrew as well. Along with many others plus a dead hit from 150 mph Wilma in 2005. Good luck buddy. be safe.

Mikey

Economical Disaster
Aug 25, 2011 - 12:14pm

Today's Laugh Line:

Today's Laugh Line: "President Obama is on a bus tour to talk about jobs, and it turns out the bus was made in Canada. If he were a real American that bus would have been made in China. USA! USA!" -- Conan O'Brien

Torpedo Fish Justin
Aug 25, 2011 - 12:14pm

sub-$18.00 silver by December

It's unlikely, but it could happen easily with "paper silver". I lived in the good old USSR where official prices for goods were pretty low. However there was a problem - nothing was available. Physical silver is never going back to 18$.

Tom L
Aug 25, 2011 - 12:16pm

@olderman

They have to nationalize it and set the price to something close to the market value of the currency and that is determined by the supply and the credit-worthiness. Restricted supply = higher equilibrium price.

The mining companies are a crapshoot. Watch Rickards interview with James Turk where he describes what's going on withe Chinese domestic gold production. Mexico ain't going to do anything for a while. You'll have plenty of time to move out of Mexican miners if/when something drastic happens.

It's a big question and I can't answer it fully right now. Too many BO's occuring!

Ta,

TitanAe ScottJ
Aug 25, 2011 - 12:17pm

I'm watching copper

I just bought into a QUX at 11.97 seem's to me that copper is just flying under this crazy market !!

Regards

ginger
Aug 25, 2011 - 12:17pm

OT ..But IRENE..

..You sure are causing trouble over here on the east coast. ........Behave Yourself!!

:D

Shill
Aug 25, 2011 - 12:20pm

Just a phenomenal move in the

Just a phenomenal move in the GDX...I mean awesome.

Dr G Torpedo Fish
Aug 25, 2011 - 12:21pm

​It's unlikely, but it could

​It's unlikely, but it could happen easily with "paper silver". I lived in the good old USSR where official prices for goods were pretty low. However there was a problem - nothing was available. Physical silver is never going back to 18$.

My father-in-law also lived in Russia for a while--he owned a cruise line there-- and he said the same thing. Low prices, but nothing available. He also said UNLESS you had precious metals. He could buy anything with precious metals on the black market. And, the black market isn't what many of us envision. There were no dark rooms in back alleys. It was done over the counter in the store, and with metals you could get the goods you wanted. That was in the 80s, and that got him started stacking.

mrgneiss
Aug 25, 2011 - 12:21pm

For those who want to see the

For those who want to see the almost real-time POS:

https://www.24hgold.com/english/home.aspx

Dr G ginger
Aug 25, 2011 - 12:22pm

Ginger, Irene isn't really

Ginger, Irene isn't really off topic. That will certainly affect our economy one way or the other (I think we know which), which will affect commodities in general. It's mostly all on-topic these days.

Vincent
Aug 25, 2011 - 12:22pm

SLV

Shill
Aug 25, 2011 - 12:24pm

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