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 ()


Aug 25, 2011 - 10:02am


GDX....Holy Smokes! That is almost vertical!

I should go check my positions.

Aug 25, 2011 - 10:03am

I already bought some 2

I already bought some 2 months silver $44 calls.

Aug 25, 2011 - 10:03am


Gee, you don't suppose that is what Obummer and Uncle Warren talked about?

This is getting "Godfather" like.

Did they seal it with a kiss and a little Italian just for effect?

Aug 25, 2011 - 10:04am

4 the record

i have purchased both metals on saturday, monday, tuesday and wednesday and today i have exactly what i purchased.

Measure you wealth in OZ not POSX.

i think timing monthly metal buys w/ option expirations is a great way to BTFD. today is again that day, so i may be back on the buy. i do not think the EE wiLL let Ag croSS back above 40 before expiration.

then friday of course we get the pleasure of hearing this forecast.....

August 26 Speech--Chairman Ben S. Bernanke
Near- and Long-Term Prospects for the U.S. Economy
At the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming
10 a.m. ET

anyhow i spent over 2 hrs this am reading through the posts from the last 3 blogs. so much quality information mixed in w/ humor and music videos was just what i nEEded to load the chamber with another silver buLLet today. i am about 80% in now. if we break below 38.75 i am a buyer again. if we get 1oo oz bars under 4k again that would be my purchase today, if Au is under 17oo a 50 peso is in my future.

i have read this is the kitchen, the furnace, the wOOdshed. i oFFer you the house of pain. it takes some shiny metal gOOd friends and a shEEt eating grin to roLL through wEEks like this. thx 2 aLL for helping me sEE this for what it is. a tremendous buying oPPortunity.

Video unavailable

and now oFF to the pacific for some personal perspective. stay wet, stay ready to act, stay right.

Ferd Torgerson
Aug 25, 2011 - 10:05am

Mining Shares

Is it just me or does it appear that the shares are now outperforming the metals? Only a few weeks ago, I could count on my shares getting hammered whether the metals were up or down.

Toward the close yesterday, I noted that, even as the metals continued to sink, my mining shares dug in their heels and refused to fall further. In fact, a couple rallied a little from their lows toward the end.

This morning, with the metals further down from yesterday’s close, my two gold miners (AUY and CGR) are in the green and the three silvers (EXK, GPL and USSIF) are either flat or slightly green.

Maybe I'm reading too much into this too early but maybe the the miners are finally finding their legs.

Aug 25, 2011 - 10:11am

So, buy. . .

gold, silver, miners?

Aug 25, 2011 - 10:13am

Itchy trigger finger

Well, this might just be the day to go all in using some cash I've been saving for the occasion! Looks like a really great sale opportunity. I'm mulling the J Hoe event tomorrow and maybe waiting. Decisions decisions!... argh. Thinking about it, no matter what Bernank says, its good for gold.... Also, it seems like frequently when he opens his pie hole, gold goes up... today might be the day!

Aug 25, 2011 - 10:14am

Real-Time Silver Charts? AGQ options charts?

Anyone have a good tip for viewing the LIVE silver price on a graph? needs to be refreshed manually (and seems to be delayed by a few minutes) is great but I can only view SLV and GLD as proxies for Silver and Gold (OR DID I MISS SOMETHING???) NetDania is a bit clunky with its Java interface Also... any ideas how I can view the prices for options in a chart? Want to check the history of AGQ and compare it to the Silver price but cannot find anything to graph the options prices.

Aug 25, 2011 - 10:15am

I have a theory...

...perhaps the recent beat-down is in preparation for a large surge higher on the horizon on the heels of some dramatic news, i.e. Jackson-Hole, BAC, you name it...

If the surge had occurred without this pull-back, then the jig would truly be up for the Banksters, and Gold/Silver would go astronomical...

But with the pull-back, the surge may put it back to the recent highs, and thus mask to the general public how dire things really are, and thereby keep the charade going just a little bit longer...

As a side note - thanks to all who post here - this is truly an informative & enjoyable community...

In the mean-time...

Aug 25, 2011 - 10:17am

Re: Bernanke and Precious Metals

Many here are thinking that the Bernanke is the cause for this beat-down, and there may very well be some truth to that, but there are many facets at play here. It is interesting to note that Comex Contract Expiration days change days of the week (Thursday this time), almost as if the macro agenda has been carefully mapped with respect to "set in stone" date to advance to the next phase. In knowing what the directional movement of certain assets/equity markets are, one can control the perception of the market (which corresponds to psychological moods of "investors/the market/the public").

For those paranoid that the Bernanke is going to say something that just knocks gold down to oblivion, I would stop worrying... as there is no policy/words he can say that are medium/long term bearish for gold, especially considering this is a WORLDWIDE currency devaluation race, and Bernanke has been a champion of currency devaluation in his tenure. As noted in a previous article, gold has hit a high recently against The Dollar, The Euro, The Aussie Dollar, The Canadian Dollar, the Great Britain Pound, and even the Swiss Franc. And, last time I checked, this world financial system was interconnected.... as it is the same gold price for each currency, with respect to current currency valuations.

This knocking down of gold (and silver) in dramatic fashion occurred in TWO-THREE days, giving way for all the propaganda and non-believers in gold that it is "too-volatile," and "not in my risk appetite." (I even had one family member tell me how the US Economy was recovering b/c gold was down 90$).

How quickly we are to forget the last month and a half of straight gains.... Doesn't it make you feel good that the only way that your investment goes down if there is artificial selling (forced in some cases) of paper contracts, when you are eventually betting that the physical will be king? I look at trends, and the trend is buy buy buy, with occasional beatdowns which usually can be foreseen through technical "inflection points" and ritualistic attacks (before comex expiration, before unemployment numbers, before london close, before comex close).

As for what the Bernanke says... I am with Turd, as I have been spouting I think the next move looks to be something even more radical and keynesian, to the likes of the Article Turd keeps putting out there.


When in doubt, think bigger picture. This is a very large scale operation going on, and PM's are not the only object of desire to keep in control. The most important thing they are after is your psyche, as if we ever were to understand, reject the corruption, and work together....

Who knows what the world could be like...

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

Recent Comments

by boomer sooner, 14 min 46 sec ago
by boomer sooner, 45 min 24 sec ago
by Texas Sandman, 2 hours 28 min ago
by lakedweller2, 3 hours 45 min ago
by lakedweller2, 3 hours 47 min ago

Forum Discussion