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:


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.


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

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Sep 7, 2011 - 10:21am


You can't go wrong stacking. That's for sure. The more the better. Honestly, I wish I would have just taken every penny I had at one point and bought physical instead of some paper but that's the way it goes. I did it with 50% of what I had instead. Happy I did so.

But not going "longer" might be a mistake. Like I said, it's your money.

But when your further out in time you can sleep and not worry as much. Maybe hold a small position further out as TF suggested, or further. Time provides protection and gives you potential and like I said, sleeping better/less worry can't be overestimated.

The miners are going to react one of these days violently upwards. How could they not? This can't go on forever.

Sep 7, 2011 - 10:22am


Nice day to add EXK SSRI PSLV heheheh thanx EE...... Turd appreciate your warning...but I'm going to accumulate carefully here. This is only the volatility that is to be expected and I'll get more nervous after they reach 2400 on gold. for now....take the change and run

appreciate the troll alerts too....not enough time to check their credentials...

agree with atlee you have to be buying here. If you are loaded .........relax.......its only a game.......btw if they take gold to 1650 here........I will buy the chit out of it......hehhehe

Sep 7, 2011 - 10:23am

Bounce off of $1800

I hope that's what we just saw.

Two weeks ago or so we bounced off $1700 before it rebounded. Interesting stuff.

Sep 7, 2011 - 10:24am

EE Playing into China's Hands

Based on the Wikileaks article about the US/EU PM price manipulation scheme, everytime there's a big EE raid the Chinese BTFD to eventually make the Renmenbi the world's reserve currency. The US is shooting itself in the foot (with a chinese-made weapon).

Sep 7, 2011 - 10:25am

For all those fools who say

For all those fools who say Silver is an industrial metal please note Copper ( manipulated by JPM) is up along with crude.

I do hope Silver survives the drop today and reverts shortly to a 32:1 with gold as earlier.

The silver shortage should help to do that. They cant keep selling something where the market size is much smaller.

Sep 7, 2011 - 10:25am

stop losses in paper contracts

Someone here posted that WynterBenton had reposted on JPM Yahoo!board. So, I go there and here's the message:

Do not put stop losses on your futures position 7-Sep-11 12:44 am

If you do The Morgue will take your contracts from you no matter how low you set them. They are desperate and will drop the price $1.20 in a minute or even $5 dollars over 5 minutes just to take your contracts. If you must set a stop limits then we strongly suggest you but physical silver. Because in the futures pit, they will collude to take these (eventual)winning contracts away from you.

Interesting isn't it?
Those flash crashes over the last two nights were the bankers eating the stop losses and preventing profitability for short term specs in the options and futures contracts.

Sep 7, 2011 - 10:26am

Starbucks - remain calm?

I was thinking a [double] bloody mary.. Sadly I would probably get the goat-eye for ordering such a thing at 8am.

This is for you Shill [I unlinked the preview to the vid, as so not to annoy], you need a chuckle holding this storm.

Sep 7, 2011 - 10:28am


I guess youre right, however I feel more secure buying calls instead.

Perhaps I should be buying some more right now in gold... or not?

Sep 7, 2011 - 10:32am

Zerohedge on Drudge FTW!

Btw, did anyone else notice this morning that Drudge posted a link from zerohedge?! It was this story beneath:


Sure glad Matt noticed a good thing, and jumped on board(albeit late, as always). We were zerohedge, before zerohedge was cool! Congrats to Tyler!

Sep 7, 2011 - 10:33am

C'mon silveeer,

C'mon silveeer, goooold!!

Where's my "Dead cat bounce"?

Sep 7, 2011 - 10:35am

Gold down, Happy Chinese!

So the Chinese knew in advance of the SNB plans! Makes perfect sense why they would announce margin hikes then. The gold-hoarding nations must be loving this right now. Why not get the most gold they can for our T-bills. Our European and American bankers probably think they are clever and powerful with all this manipulation. But I think they are messing with the tail of a gold dragon. I do not foresee a happy ending for them.

Sep 7, 2011 - 10:35am


Interesting, Buffett invested $5 billion in GS right before they busted in 2008.

Buffett invested $5 billion in BAC in 2011. Hmmmm

Sep 7, 2011 - 10:36am

WTI Crude Oil

If you pull up 1H/4H charts on thinkorswim of WTI Crude Oil and ES..you'll see that WTI has been tracking ES almost 1:1 for the past few months...basically WTI is no longer trading on any oil fundamentals and is essentially just trading with ES (if ES goes up/down so does WTI - the correlation is obvious when you pull up the charts)..so for those out there trading WTI, just some food for thought

Sep 7, 2011 - 10:36am

If the Central banks in the

If the Central banks in the West wish to sell their gold- why not just call up China and have a straight sale. After all China would like to have a gold based RMB and make it a reserve currency

Governments run by crooks , along with crooked banksters don't do that because they need to manipulated prices.

These guys are Gordon Brown reincarnated.

Silver is money
Sep 7, 2011 - 10:37am


Bounce off of $1800

Submitted by DarkPurpleHaze on September 7, 2011 - 10:23am. Hat Tip! 0

I hope that's what we just saw.

Two weeks ago or so we bounced off $1700 before it rebounded. Interesting stuff.

I don't see $1800 holding. We should also see a small waterfall below it down to $1780-$1785 or so immediately before we rest. Just my 2c.

Sep 7, 2011 - 10:37am


I just twisted one up boys (and girls)






SilverSax SilverSax
Sep 7, 2011 - 10:38am

Thanks for all your hard work

Thanks for all your hard work Turd, longtime lurker, first time poster, just wanted to reach out and give you some well deserved props!

Eric Original
Sep 7, 2011 - 10:40am


nibbled on some miners, just to bring a few up to par in my accounts.

nibbled on some GTU at around 1800. Waiting for cheaper to buy more. I'll nibble some more at 1775, 1750, 1725. I'm still skeptical that we'll see those prices.

This is all long term hold stuff, not short term trades. Not doing anything with calls, etc. Yet.......

Sep 7, 2011 - 10:42am
The Vet Tom L
Sep 7, 2011 - 10:42am

Tom L - On SVM

For some reason some SVM puts still have good premiums. They just gave me $0.95 for Oct $6 strike. The stock has to close under $5.05 on 21st Oct for the buyer of that put to crack even, let alone make a profit.

Sep 7, 2011 - 10:44am

If its any indication

I own the Dec 50 vs 60 spread.

Tom L
Sep 7, 2011 - 10:46am

@TheVet: SVM

There are some crazy people out there. I would love to be selling puts into this as you've suggested (and now that I understand) but that behaviours is a no-no at Scottrade. Christ, what losers.


Tom L
Sep 7, 2011 - 10:49am

@Silver is Money: OIL

I'm seeing a potential Inverted H&S on the hourly chart with a neckline in the current price range of $88.50 or so. If that fails then that would portend a $5.5 move up. Regardless of my artistic proclivities, moving into the price bacnd above $88.50 would be very bullish for oil.


Sep 7, 2011 - 10:49am
Tom L
Sep 7, 2011 - 10:51am

@Eric: Nibbles

I just added to my Oct $15 NGD position. Couldn't resist either. Maybe I'm an Id10t. We'll see.


Sep 7, 2011 - 10:52am


Today is precisely why short term support and resistance on short term charts does not work well. The market is news and crisis driven and is criminally manipulated. Need always a reference to a long term daily chart to provide perspective imo.

Sep 7, 2011 - 10:55am

a pattern not seen

A pattern I mentioned yesterday is basic but relevant imo. Every 4 months we get major selling in metals. January, April and now September. The rally happened a month early this year in August when it was supposed to happen in September normally. So I'm looking for consolidation now the entire month of September and downside and then blastoff in October.

Sep 7, 2011 - 10:57am

Down 120$ in 36 hours. That's

Down 120$ in 36 hours. That's volatility for ya (more like manipulation actually).

Double top painting as predicted. Can the EE get more obvious? But hey, many smackdowns ago I realized that the EE will always have the upper hand in the paper game and they can smack down prices any time they want. If prices rise it's because they let prices rise, as described as "managed retreat" by GATA. Never get the illusion "we" have any sort of control here, your arrogance will kill you (or rather your trading account).

Tyler Monkeybewy
Sep 7, 2011 - 10:57am


so simple

Sep 7, 2011 - 11:01am

In my dictionary /thesaurus

In my dictionary /thesaurus the word bankers is the same as desktop criminals.

They have taken over the Governments and are destroying the world . I don't think there is any way we get over all this without chaos and revolutions.

Those whom we elected have been slitting our throats.


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