WARNING

611
154
Wed, Sep 7, 2011 - 9:13am

I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.

We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today. Check out this chart that posted in the overnight comments of the previous thread (thanks, pmahler!):

Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity.

This all wreaks of malicious manipulation. If you are trading, be prepared for anything. If looking to buy, throw all of the charts I gave you yesterday out the window and wait for at least 1725 in gold, maybe even a gap-filling 1650. Since silver is not the object of attack, it shouldn't drop as far but it looks almost certain to drop to the bottom of the channel we've been following, near $40.

Also, it appears likely that we are entering another 4-6 day downshaft in the Continuous Commodity Index. You'll recall we found this pattern last month and it was one of the factors that allowed me to correctly forecast $44 silver by Labor Day. I asked my pal Trader Dan to send me an updated chart and he obliged. Thanks, Dan!

Count the days between moves. Peak early April. Nine day decline. Peak early May. 9 days down. Peak mid-June. 12 days down. Peak early August. 4 days down. Peak early September. Next decline takes it back down to 620-630?

By the way, I just looked at Dan's site. Looks like he agrees with me. I suggest you read this now:

https://traderdannorcini.blogspot.com/2011/09/central-banks-waging-war-on-gold-at.html

So, look, you've been warned. If you're not trading, just sit back and enjoy the free fireworks show. Maybe use the next central bank raid to accumulate some more physical. If you are trading, my advice is to avoid being a hero. Do not try to get cute and "catch the knife". The next few days are going to be extremely volatile. Save your powder for after the dust has settled, when we can all see a bit more clearly.

TF

12:00 noon EDT UPDATE:

Turdite "Zagio" just posted this chart in the comments of this post. It perfectly explains why anyone trying to "catch the knife" should hold off for a while longer.

If you believe as I do that this current beatdown in gold is being engineered by the SNB, then why would you think they would rest before pushing gold all the way back down to the level it was before the devaluation announcement? That level is around 1500 francs/ounce. Additionally, this is a level that would correspond to my potential target buying point of somewhere between 1700 and 1750. It may take till tomorrow or Friday but confidence is high that gold is headed there.

Patience is warranted here. Also, it's now noon EDT which is the hour when follow-through selling usually materializes on the Comex. I for one, am not buying the dip....yet. TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  611 Comments

T
Sep 7, 2011 - 9:47pm

Tocqueville gold fund

yes. well, I discovered the Tocqueville gold fund a few years ago when god was telling me to buy it at 50. and of course, I didnt buy it.

Then it went to 90 or whatever in the last year or two.

and I'm looking at it now and saying ....why the fu^%&$k didnt I buy it at 50.

and now its too expensive to buy.

Alot of miner stocks ,like this, are too expensive at the top to buy right now.

BUT

If the market crashes in the coming months,like say, after the usa bombs iran,something like that, then I promise I will buy

TGLDX at 35

FriedEggs
Sep 7, 2011 - 9:51pm

More from Willie...

PREPARES FOR ASSAULT ON $2000

Put aside the Gold correction news. That is today's news, soon to become yesterday's news. It is merely a healthy consolidation, compressing the ground so that it supports more weight and higher prices. The Powerz said in May that Gold was a dead trade, only three months before yet new highs were established. Tomorrow's news will center on USGovt stimulus, heading off a recession, the transition back to bigger deficit spending, the better understood Global QE, and the inability for the USEconomy to find its footing and generate anything resembling growth. Recall that a 0% economic stall in official calculations represents a MINUS 5% RECESSION, since the lie on inflation adjustment is at least 5% conservatively. The most accepted facts in the financial sector going into the autumn months are:

  • a permanent 0% rate providing unending fuel for the Gold bull market
  • economic recession accepted as the next immediate crisis
  • an exhausted USFed without tools, credibility, or spirit
  • a USGovt debt limit always at the doorstep
  • political strangle and useless fiscal policy
  • debt applied as solution to a system saturated in debt
  • an insolvent system unable to respond to amplified liquidity
  • Western banking system ready for 20 Lehman episodes
  • the ruin of money accelerating among all major currencies
  • the USTreasury Bond bubble almost run its course
  • panic setting in across the society, marked by worry, anger, and despair
  • lost trust of public officials, whose talk about jobs and housing is empty
  • giving up on US housing for a recovery ever
  • the powerful grip of hyper-inflationary recession an imminent reality
  • decline in Oil price as signal of the deep recession and lost demand
  • rise in Gold price as signal of inflation and systemic ruin of money
  • Gold seen as the only asset without debt risk, the only bonafide safe haven
  • a divergence between empty COMEX price and premium paid for physical buyers.

It helps to take the big picture approach and to ignore the narrow immediate viewpoint actively promoted by the US financial press. They never liked or respected Gold over the entire 2000 decade, despite its 300% gains. They will not like or respect Gold in the next few years when it doubles again. They will be scratching both heads when its price surpasses the $2000 mark, the days of ambushes in May and August long forgotten. The recent breakout occurred with heavy volume, a confirmation signal. More consolidation is needed before an assault on the $2000 level is to be achieved. The certainties are of more ruin of money, continued endless bailouts, and much more stimulus, even misdirected initiatives with wasted money. The benefits will be spurious and vaporous.

Fried(e)

johnboatcat
Sep 7, 2011 - 9:52pm

The fund did well for a while and I am glad you did well.

It just does not look like those types of returns are holding up now.

"Since I've bought into this fund in my retirement account last year I have a 41.69% return."

Average Annual Returns as of 06/30/11
3 Month YTD 1YR 3YR 5YR 10YR
Fund* -6.29% -5.53% 26.83% 20.45% 17.47% 26.26%

https://www.tocquevillefunds.com/pdfs/Gold_Fund_FS.pdf

survivalwstyle
Sep 7, 2011 - 9:57pm

old fashion haPPy hour

that is what i am drinkin'. tOOk a few days to shake the labor day wEEkend blues, but i am no quiTTer.

'tastes so gOOd when it hits your lips."

crush 1 cheRRy in the boTTom of a tumbler. add a pinch or two of cane sugar, orange twist, 2 shakes of the biTTers, 3 fingers 'ol man rip van winkle 10 year, enough ice to cOOl it, stir and wahhhla, personal favorite after work trip to the coin shop cocktail...

yep. my thought as i left the house this AM was if the close on Au < 1820, Ag < 41.50 i was going to get some phyZZ, so i did...and i will gladly do it again thursday if i get a chance anywhere below 1800 and 40.40. i do not think we are going there, or i would not have bought today, but isn't that what "we", the long term stack and hold crew, are aLL about??

i do not know how else to say it, like the old fashion, why meSS w/ perfection. BTFD.

¤
Sep 7, 2011 - 10:07pm

Listen to our vice Prez. get serious and say what, about who?

He's referencing the TP

Joe Biden Tells Union 'You Are Only Folks Keeping Barbarians From Gates' www.RightFace.us
margaritatime
Sep 7, 2011 - 10:14pm

exiledbear

that is wrong on so many levels. ;)

¤
Sep 7, 2011 - 10:19pm

Tom

Judge Napolitano would shred Biden like cheese. Biden sickens me. So does Pelosi and Reid. And so do some (ok, a lot) of the Repub.'s

They have nothing but contempt for most of us and are so far removed from the vast majority of people's everyday realities. When will the madness at least abate? These pukes have been around forever and have screwed us and their still here leading the parade.

Tomorrow we get to watch the grand plan that Obama waited 4 weeks to bestow upon us. What a joke! If this plan is so great and we have so many unemployed, why didn't we do it a month ago or 2 1/2 years ago? They have nothing. And were going to hear about a National Infrastructre Bank? wow.

Napolitano would be great against any of these current clowns.

Paul/Napolitano 2012' would be something.

Insight
Sep 7, 2011 - 10:26pm

A good overview of various gold stock indices...and ratios to g

I wanted to find a breakdown of how the various indices are put together. This is an updated version of an earlier discussion by the same author which I saw awhile ago...in this update, the links in the article do work....including the one to the CDNX.

https://www.dailymarkets.com/sk/2011/07/04/which-index-is-the-best-to-...

Which Index Is The Best To Use: The HUI, XAU Or GDX?
By Lorimer Wilson on July 4, 2011 | More Posts By Lorimer Wilson | Author's Website

The number, market cap and currencies of the constituents of the HUI, XAU, GDX, XGD and CDNX indices differ considerably from each other and, as such, each index presents a different picture of what is really happening in the precious metals marketplace. This article analyzes the make-up of each index to reveal the biases of each to arrive at the answer to the question in the title.

The HUI Index

The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of 16 large-cap (80%) and medium-cap (19.5%) gold mining companies that do not hedge their gold beyond 1.5 years. The 3 largest companies make up 41% of the index by weight with the remaining 13 companies, at 4% – 5% each, making up the balance. Go here for current information.

The XAU Index

The Philadelphia Gold and Silver Sector Index (XAU) contain 16 large (83%) and medium (15%) capitalization weighted companies engaged in the mining of gold, silver and copper. The same 3 largest companies as in the HUI account for 51% of the index by weight. As such, the XAU has a large-cap bias. Go here for current information.

The SPTGD (XGD) Index

The S&P/TSX Global Gold Index (SPTGD) consists of 64 modified market capitalization-weighted companies (78% large-cap; 19% medium-cap) involved in precious metals (primarily gold) mining. The 3 largest cap companies dominate the index with 42% by weight. A proxy for the index is the XGD which trades in Canadian dollars on the Toronto Stock Exchange. As such, the XGD has a currency bias which is explained below. Go here and here for current information.

The GDM (GDX) Index

The NYSE Arca Gold Miners Index (GDM), as represented by the GDX etf (GDX) (see here for details), is a modified market capitalization weighted index of 30 companies (72% large cap; 22% medium cap) involved primarily in the mining of gold and silver. The 3 largest cap companies again dominate the index (at 30% by index weight) but to a much lesser extent than in the HUI (41%), the XAU (51%) or the XGD (42%). As such, the GDM/GDX has a medium-cap bias. Go here for current information.

The CDNX Index

The S&P/TSX Venture Composition Index (CDNX) consists of 558 micro cap companies of which 44% are involved in the early stages of the exploring, developing and/or mining and 18% in oil and gas exploration. This is the only index that gives insight into the price trends of micro-cap companies almost exclusively (99.4%). The CDNX is valued in Canadian dollars and, as such, has a currency bias like the XGD. Go here for current information.

How Best to Apply the Various Gold:Gold Stock Ratios

The Gold/HUI, Gold/XAU and Gold/GDX Ratios

The Gold/HUI, Gold/XAU and Gold/GDX ratios divide the daily close of the price of gold by the daily close of the value of the particular index and, when charted over time, provide an excellent running representation of relative strength and weakness between the two variables. That being said there are significant differences between these indices, as follows:

a) the Gold/XAU ratio emphasizes what is happening primarily in relation to the large-cap producers;
b) the Gold/HUI ratio emphasizes what is happening in relation to the large/medium-cap producers;
c) the Gold/GDX ratio emphasizes what is happening primarily in relation to the medium-cap producers

The Gold/XGD and Gold/CDNX Ratios

The Gold/XGD and Gold/CDNX ratios, on the other hand, compare gold denominated in U.S. dollars with stocks denominated in Canadian dollars. This has the potential of skewing the results depending on the strength of the two currencies relative to each other and, as such, should not be used when evaluating the trends of their constituent stocks with that of gold bullion.

(To develop your own G/GS ratio chart go to www.stockcharts.com and type in $GOLD:$HUI, $GOLD:$XAU, etc. for the time frame you wish to examine.)

The CDNX/XGD Ratio

To identify developing macro trends between large/medium cap producers and micro/nano precious metal explorers (the juniors) the ratio to follow closely is that of the CDNX/XGD which, in addition to highlighting the two different ends of the spectrum, are both valued in Canadian dollars.

As mentioned above, the XGD index follows the performance of 64 large, medium and small-cap companies and the CDNX that of 558 micro-cap companies. Comparing the divergence of each index to the other is an ideal way to determine if a developing trend is equally affecting all mining shares in general, just the large/medium/small-cap sector or just the micro-cap venture capital sector.
The CDNX to XGD comparison works better than that of the CDNX to any one of the other mining sector indices in that both the CDNX and the XGD are traded on the Toronto Stock Exchange in Canadian dollars whereas the HUI, XAU and GDX indexes are denominated in U.S. dollars and, as such, are susceptible to the influence of exchange rate variances when comparing any one of them with the CDNX.

Gold sector analysts and commentators always assume that the large-cap dominated indices, either alone or in relation to gold, indicate the true current trend of the entire precious metals mining sector but that is simply not the case. In doing so they ignore the health and, as such, the price performance of the micro-cap gold and silver exploring/developing/mining companies which represents in excess of 80% of the total number of companies in the precious metals sector. A comparison of the CDNX with the XGD reveals a much more accurate picture of what is truly happening in the gold mining sector.

Conclusion

So there you have it. You now know the strengths and weaknesses of the more popular gold stock indexes, which ones to use when determining their relationship with gold bullion based on their market cap and how to compare the performance of the large/medium cap sector with the micro/nano-cap sector.

Never again put any credence in any analysis you read that has not made the distinctions discussed above. All gold stock indexes are not the same. Each has its own bias. Each tells its own – and different – story.

¤
Sep 7, 2011 - 10:29pm

Weird News>This guy has some explaining to do...

TV Weatherman Brett Cummins Wakes In Hot Tub With Naked Dead Man

First Posted: 9/7/11 02:47 PM ETUpdated: 9/7/11 02:47 PM ET

https://www.huffingtonpost.com/2011/09/07/tv-weatherman-brett-cummi_n_95...

¤
Sep 7, 2011 - 10:33pm

Romney joins anti-Bernanke club

Romney joins anti-Bernanke club

September 7, 2011, 10:01 PM

Mitt Romney joined the anti-Ben Bernanke club of Republican presidential candidates Wednesday night, saying he’d be looking for somebody new to run the Federal Reserve if he were president.

Texas Gov. Rick Perry made a splash recently by saying residents of his state would treat the Fed chairman “pretty ugly” if he printed more money before the election. And on Wednesday night, former House Speaker Newt Gingrich said he’d fire Bernanke “tomorrow.”

But Gingrich is floundering in polls while Romney and Perry duke it out for the lead. Romney said the Fed’s quantitative easing policy under Bernanke “did not work, it did not get Americans back to work, it did not get the economy going again.”

All three Republican hopefuls will participate in two more debates this month alone.

– Robert Schroeder

Number 47
Sep 7, 2011 - 10:33pm

Perks in Ireland!

https://www.rte.ie/news/2011/0907/consultants.html

I'm going to run a series of these. Let's name and shame the grifters of the world!

ewc58
Sep 7, 2011 - 10:34pm

DPH, Murphy, Shill

Hey y'all thanks for the welcome home. DPH I'm about to get hazed myself...

I'd say hey, how 'bout the G word heading back north but don't want to jinx it.

Pictures don't count :-)

Silver has really hung tough under a brutal assault this week, huge story there. This is big trouble for the cartel.

¤
Sep 7, 2011 - 10:36pm

Here's what they see from across the pond/They're right

If America can't even reform its post office we're all in trouble

Doomsday clocks. Don't you just love them? It's hard to remember life without them because they've become so ubiquitous since the financial crisis. You can't fault their versatility: they can count both up and down while always managing to point firmly in the direction of economic armageddon.

https://www.telegraph.co.uk/finance/comment/8748094/If-America-cant-even...

Number 47
Sep 7, 2011 - 10:39pm

Pic change.

My old pic was due to a comment on here about europeans bad teeth. It is not a picture of me.

My new pic is the angry sheep. sorry for any confusion.

beemer
Sep 7, 2011 - 10:43pm

best picture award

Would definitely be mine!!!

¤
Sep 7, 2011 - 10:49pm

Silver looks great

Your right ewc58. (Nice to see you back. A bit concerned the hurricane had effected you over the past week or so.)

In spite of the relentless pounding it's taken were right at $41.63 as I type. It was about 3 weeks ago I think when we were stuck at $38-ish. Now it's sub $42 and were consolidating around it for the most part. I like it.

My dad just called me and asked about buying more SVM after I got him fully up to date from last Friday to todays close. I think he might.

https://www.fool.com/investing/general/2011/09/07/is-silvercorp-metals-t...

I don't have to preach to the choir on here but if anyone has any doubts about how much silver or what quality the silver deposits are that are held by SVM then go here and check this out...

https://silvercorpmetals.com/projects/slideshow/

I guarantee you'll say "omg" at some point. Look closely at the color of the ground and it's silver in some places.

Hard Rain
Sep 7, 2011 - 10:53pm

What's with the hand wringing?

For the month of August:

Gold up 12.3%

Silver up 4.1%

And in spite of all the manipulation, gold is only down about 4.2% from IT"S ALL TIME HIGH.

What's the big deal?

Keep stacking, for it sure makes no difference! We are sleeping well.

Rain

cpnscarlet exiledbear
Sep 7, 2011 - 11:07pm

McNuggetini - Blecchhh!

About 4 years ago, I decided to upscale our domesticity and the wife and I entered the world of the "cocktail culture". We purchased a Mexican territorial sideboard that became our dry bar and stocked it well with all the "A No.1 hooch" we could find. And don't forget the all bar accouterments that had to be purchased - again first class stuff.

The "McNugettini" video ALMOST made take the whole shootin' match and throw it in a dumpster. After my stomach stopped flipping, I resolved to have a double K1 Bloody Mary first thing Saturday morning after my "no alcohol/no artificial sweetener" regimen is over.

Darn you exiledbear!

PS - Yes the redhead is hot, but not after that drink.

ewc58
Sep 7, 2011 - 11:13pm

New way to Haze

My bro in law just visited from Denver with a bunch of these. You gotta love having cool family in a medical marijuana state.

cpnscarlet
Sep 7, 2011 - 11:14pm

Repube Debate

I found it as nauseating as the McNugeetini video. All of them. Is it just me, or did Ron Paul even seem to be off the mark tonight and a little scattered??

kingboo
Sep 7, 2011 - 11:25pm

Hey DPH is Jake gone yet?

Because i need me some DPH rock n frickin rolla videos! And i cant turn my speakers back on until Jake and his music videos are gone! (in his defense....they probably sounded better on the 45 turntable.....) and dont think the Alice in Chains (Rooster) was lost on me...........it was great. PS: i have absolutely nothing of value to add tonight. Just checkin in..... Oh! I got something!..........how much did it cost the pirate to get his ears pierced? a buccaneer! Peace

Save_America1st
Sep 7, 2011 - 11:31pm
Turdle GG
Sep 7, 2011 - 11:34pm

It was at about this time

yesterday that Turd came on asking if anyone thought it was strange that gold had been flatlining for hours. 25 minutes later, boom!

Yesterday we were steady at 1,880 at this time.

Today we are less flat and steady, and sit at 1,830.

Do they try again at midnight NY time?

Eric Original
Sep 7, 2011 - 11:35pm

I apologize in advance

Couldn't stop myself from going the extra mile. Basically I'll do anything that redhead tells me to do...

Alie & Georgia Present: Ham Daiquiri
Save_America1st
Sep 7, 2011 - 11:38pm

Ronald Reagan: "A Time For Choosing"

via Zero Hedge (of course), but still one of my favorite Reagan speeches.

https://www.zerohedge.com/news/time-choosing

"A Time for Choosing" by Ronald Reagan
exiledbear
Sep 7, 2011 - 11:40pm

Yeah, I think at least 15% of the denver economy

Is now based around MMJ. If it wasn't for those little "smoke shops", the commercial RE market would be really screwed, as those shops (and some health food stores) are about the only new small businesses anyone cares to open these days. Anything else and it's either barely treading water or sinking.

Even the liquor stores have problems - I saw one close up not too long ago, and that's about as no-brainer a small business as you can run in a crappy economy like this one.

exiledbear
Sep 7, 2011 - 11:41pm

@margarita

A White Russian on Angel Dust? How can you not like that?

Turdle GG Eric Original
Sep 7, 2011 - 11:43pm

EricOriginal

The other presenter's name is Georgia Hardstark. When I first saw her name my brain registered "Hardstack". So, she's obviously into physical metals, in addition to ham... .

exiledbear
Sep 7, 2011 - 11:44pm

@margarita

If you want wrong, I'll show you wrong:

Breakfast of Booze - Epic Meal Time
margaritatime
Sep 7, 2011 - 11:46pm

gawd..

ham daiquiri... just wrong.. sigh

and. and what is it with you guys and that red head [Alie] anyways? I mean.. It can't be the dress. red hair? curious minds want to know.

..exhiledbear.. oh you know. lol

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