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

turd [at] tfmetalsreport [dot] com ()


Sep 7, 2011 - 1:35pm

Ponzi like it's 1999...

When Fed Doves Cry: Chicago Fed's Evans Urges "Very Significant Amounts" Of Added Accommodation


Sep 7, 2011 - 1:36pm

re: Ted Butler's 'Death of Liquidity' / Tyler and ZH

The Ted Butler article was sent to subscribers first (8/31) but made public this week:


@DPH - 'Tyler' is a collective pseudonym for all of the various contributors. There used to be a 'Marla' version as well (for female contributors), until a (presumed) falling out with one of them -- since late last year/early this yr. there is no more Marla Singer.

Most of this I got from an IRC chat while listening to Radio Zero (one of the Marlas is/was a DJ), some of it is in a (not-so-veiled takedown) piece in NY Magazine:


No matter how many Tylers there are (and you can notice the differences in both style and perspective -- often large breaking news get two or more subsequent, competing analysis pieces from ZH), I have no doubt they drink as much coffee/Red Bull as Robottraders' fabled MOMO traders... At a minimum, they are located in a large span of time zones around the world.

Orange proformatrillionaire
Sep 7, 2011 - 1:38pm


Agreed, get rid of them all, cut gov. to a quarter (all the duplicate needless agencies) make them work within a balanced budget except under extreme circumstances and only vote in regular people, preferable business people and limit their terms in office. Exclude all banksters.

Sep 7, 2011 - 1:38pm

Let's see what happen's next

I think if the PM's keep getting hammered a bit then it's indicative of something a bit longer. Until OBummers speech and then the PM's do a 180 again to end the week??

Just look at crude over the past 48 hours and anything is possible.

If the PM's starts grinding up after this 1:30 NY close we can feel a bit better very short term, but the true measure will be the Asian markets later tonight.

If it happens again and it's a serious effort then we'll know for sure. Besides it will be Thursday already and the mission is accomplished for them. There's a lot of ways to look at this.

One thing I know for sure is that I'm staying up tonight.

The Vet Orange
Sep 7, 2011 - 1:40pm

Stop Losses

I never use them. They are especially dangerous for options of any kind and pretty useless for stocks unless it's for a very small number. I won't use market orders either, but that's just me.. I have used trailing stops to get out of a stock I wanted to sell that's trending up and I couldn't be bothered watching it.

That's just my trading style. It may not suit everyone.

Sep 7, 2011 - 1:44pm

ZH and Tyler

Thanks for the info.

I was under the impression, kind of, that the articles that didn't list a contributor were from one person even though that one person must be some type of super genius.

I guess that would be too much too assume. I really haven't noticed the difference in styles from just Tyler articles. I'm too busy sucking in what info. and thought trains I can.

I'll start trying to notice but I'll just get stuck in the info. exhange there. Love that website. It's like TF stated earlier about it and the people here.

Sep 7, 2011 - 1:44pm

@Tom, What ya think about NG


What ya think about NG Dec 12's @.85?

Sep 7, 2011 - 1:45pm

Bull market in PM ends when:

my brother and brother-in law-who have been laughing at me for buying gold, silver, food, guns and ammo the last 8 years, break down and buy PM.

Just like the last entrants to the nasdaq/.com charade bought at the end as it was going parabolic. But then that was the new economy. What do we have now--the dead economy.

Tom L
Sep 7, 2011 - 1:46pm

Similarly to TheVet

I don't use stops, except trailing stops in the same way (to catch a move up that I want to sell).

I'll use market orders when I think timing is critical and the spreads are tight. But otherwise limits have to be the law in options, spreads and commissions will take half your profit otherwise. If I'm uncomfortable holding a position while I can't be at the computer, then it's a sale candidate. Just that simple. I'd rather some cash now than a loss after I return from my errands.


Sep 7, 2011 - 1:47pm


perhaps she chooses to remain anonymous. never talk about the fight club. ;)

zman Tom L
Sep 7, 2011 - 1:48pm

Hey Tom, I picked up some HL 

Hey Tom, I picked up some HL Dec 9 calls today for .47. HL trading near 7.8. When I compare these calls to other silver stocks, they seem very cheap, I am missing something. HL should be much higher with 40 plus silver.

Tom L
Sep 7, 2011 - 1:53pm

@Mikey: NG

Having just taken a quick look at the chart that there was a nice breakout at $10 last week. It ran to horizontal resistance at $11.60. If that falls then $14 by Dec should be good with strong metal prices. It may drop a bit from here, to the 10 DMA at $10.25?

If I had money and knew the stock well, I might do that or try and wait for slightly better prices. Buy a little here and more if it drops or breaks $11.60 on strong volume.

1/2 now, 1/2 later?


The Vet
Sep 7, 2011 - 1:53pm

PM bulls are getting tougher!

More and more of us can now see these raids on the metals for what they are. Desperate attempts to prop up and pre-empt fiat failures. The paper currencies are failing world wide and they use paper metal to fight the real metal appreciation and expect us to cower in fright.

More of the PM market participants now see these ploys for what they are and welcome these raids as buying opportunities...

Eric Original
Sep 7, 2011 - 1:57pm

Me too on The Vet

I never use stop losses. If you can't be bothered to watch things and keep a mental stop, then you shouldn't be in it in the first place. Why tell them ahead of time where your maximum point of discomfort is? You sure as hell wouldn't do that with a used car dealer, why would you do it with evil market makers? You might as well put a post-it note on your forehead that says "Easy Meat".

Tom L
Sep 7, 2011 - 1:57pm

@zman: HL

HL should be higher, but it's been beaten to death over the payout for environmental damage that is sapping it's bottom line profit. Personally, it's hard to argue with any of the silver companies at these prices (I have Dec $12.50 calls I bought for almost nothing). I like the $9's at $0.47 better. More chance of getting a profit on a short-covering rally which HL is overdue for.

It's still in sell-the-rally mode, though, so be willing to sell when you have money staring at you.


When the Blue downtrend line goes, the stock will begin basing and moving higher.


Sep 7, 2011 - 1:57pm


Me thinks Margarita know's something. So I'll just assume you are "she". Only kidding.

Ya' gotta' love some of the slightly mysterious aspects of what goes on in this PM sector and our perspectives on it and some of the other stuff we come across.

Between people named Turd Ferguson and Tyler Durden and characters showing up like a Wynter Benton etc. Can it get much better except for Au and Ag just skyrocketing at some point in the future?

Seriously, is this fun or what? I'm having fun and learning a great deal.

jaw777 The Vet
Sep 7, 2011 - 1:57pm


Tom: I want to learn to use synthetics when I trade. Can you recommend a book or some resource? Would really like to get to the point of trading exclusively. Jaw

Aronnax margaritatime
Sep 7, 2011 - 1:59pm

re: Marla

True, I'm trying to stick to info already in the public domain. But then, who would ever show up for Fight Club, if no one ever talked...?

I miss Radio Zero, but can (perhaps wishful thinking) sometimes still imagine some of 'her' writing shining through even in the current crop of articles.

Tom L
Sep 7, 2011 - 2:05pm


I don't know anything about that stuff that TheVet hasn't covered. I don't do that kind of trading, so I'm just as much a novice as anyone else here.

For the record, I hold long calls and shares. I try to sell into strength and buy weakness. If the price action is extreme I will put on a couple of small shorts with an eye to cover nearly immediately. Mostly I'll roll the profit forward in time re-buying after a correction where there are bargains to be found.


The Vet jaw777
Sep 7, 2011 - 2:06pm

jaw777 - I did a short piece on synthetics here...


There is more on option strategies on that forum that might assist you.

Sep 7, 2011 - 2:06pm

1:59p Philadelphia region

  1. 1:59p

    Philadelphia region 'slightly weaker': Beige Book

  2. 1:59p

    'Modest' pace to U.S. economic growth: Beige Book

  3. 1:59p

    Beige Book based on info collected before Aug. 27

  4. 1:59p

    5 of 12 districts saw modest growth: Beige Book

Sep 7, 2011 - 2:06pm

Thanks Tom, Saw that 10 dma

Thanks Tom,

Saw that 10 dma bounce earlier.

Sep 7, 2011 - 2:07pm


This is what I remember an old trader telling me, years ago, when I was still in the stock market.

1. Limit in. Market out.

2. Always have some idea at what price level you know you're wrong. Some people use stop loss orders for that. Keep in mind the floor traders have a pretty good idea where the stops are and they do like to take them out when they can. It's sort of their duty, to run the stops.

And here's what I would add. The shorter the time window, the more power the floor traders have. And they can see more and act faster than you can. Not to say you can't beat them at their own game, but the odds aren't good.

Sep 7, 2011 - 2:08pm



WASHINGTON (MarketWatch) - The U.S. economy is expanding at a "modest pace," according to a report Wednesday summarizing information from the contacts the Federal Reserve uses to help measure the strength of the economy. The characterization, laid out in the "Beige Book" of anecdotal evidence the central bank collects before each interest-rate decision, won't come as a huge shock after data showing zero nonfarm jobs created in August and faint activity in the manufacturing and service sectors. The report, based on information collected on or before Aug. 26, shows that market volatility and economic uncertainty has led many to either downgrade their assessments or become more cautious. The views by the 12 Fed districts ranged from "modest or slight expansion" from five Fed banks to "somewhat weaker" in the Philadelphia region.

Sep 7, 2011 - 2:10pm
Sep 7, 2011 - 2:11pm

Not enough volatility/uncertainty in markets yet


UN Security Council Finds Iran Is Violating The Nuclear Weapons Program Ban

Is it just me, or is anyone else experiencing a slight sense of deja vu?

Sep 7, 2011 - 2:13pm


What are they smoking?

They probably have this big Bernanke bong or something going around. What MOPE that is.

Sep 7, 2011 - 2:14pm

Raising hand

Deja vu here. It's clear where this is headed.

We've all heard this horn sound before and know the drill. I feel sorry for Iran kind of (not).

Sep 7, 2011 - 2:16pm


p.s. FIRST!

That's insider firsting, Turd!

Eric Original The Vet
Sep 7, 2011 - 2:20pm

@ The Vet

I'm curious about your comment about closing out the short puts early, but letting the calls run to the end. I'm just a newb at all this, and trying to soak it all in, but I was just assuming (ya, I know, ASS out of U and ME) that just the opposite would be prudent. Why not close out the calls before that tail ending time decay gets just hellacious against you, but keep the puts to the end and let time decay keep working for you. Why let those OTM put holding bag holders off the hook right near the finish line? They need to sell those puts to stay alive but I'd rather just walk away and let them twist in the wind.

Please explain to my poor addled brain....


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