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

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  611 Comments

Bay of Pigs
Sep 7, 2011 - 2:52pm

@Mikeyk23

Nice crew over there at the the BlowHorn. What a bunch of useless tools.

They understand virtually nothing about the gold or silver markets. They are a bunch of clowns, IMO.

They remind me of Abbey Joesph Cohen during the dot.com bubble. Oblivious to reality.

Eric Original
Sep 7, 2011 - 2:53pm

Yay Cream Minerals!!

Maybe I'll break even on that turkey someday.

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Sep 7, 2011 - 2:54pm

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BagOfGold
Sep 7, 2011 - 2:55pm

Another penny on the move...

New Dimension Resources...is up over 15% today on this news!!!...

https://www.marketwire.com/press-release/new-dimension-options-copper-go...

It's a good sign...when you see the penny miners making moves on a down day!!!...

Bag Of Gold

ScottJ
Sep 7, 2011 - 2:55pm

A Different Type of Warning....

Life goes by quick, and before you know it, it changes just like that.

The 7,000,000,000th human being will be born in 2011, each on his/her own individual cycle of life, with our own unique circumstances in which manifests our reality. For there is no inherit difference between any single human being on this planet, no matter how such an argument else-wise may be justified. Statistically there is no root difference between any man, woman, or child of any heritage, as each of us are a culmination of circumstances in which we cannot consciously decide. While we may differ in skin colors, languages, ethics, habits, beliefs, cultures, countries of origin, sufferings, injustices, struggles, luxuries, and overall environment, we all as individuals share a root common ancestry in which ties the human race together, better known as history.

Children of the world are taught by those who are older and have more experience under the pretext that age brings wisdom. In this paradigm, the elders are the trustworthy holders of the future. Yet the reality of the situation is far from this fading illusion. For age and experience can be deceiving, as all individuals are all susceptible to being young or foolish to the greater perspective of history.

One does not have to venture far to see the massive suffering upon the world, but one may wonder why it exists in such a state, and how it can be changed? Surely if the world was living in a grand lie, the people would speak up, but will anybody listen?

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the moral enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.

Joseph Goebbels, Hitler’s Minister of Propaganda

Who will look out for the interests of the children of the world? Who is lobbying for the souls of tomorrow who must deal with the consequences of today? Is anybody out there? Is there any fire left under humanity, or are the children doomed to a world of hell?

-

Scott J

https://thehardrightedge.com/thesame/

The Vet Eric Original
Sep 7, 2011 - 2:57pm

Eric - synthetics & time value

If you think it would be useful then by all means copy it over...

Speaking of time value decay, just look at those SVM Sep $6 strike puts. I sold them for 55 cents last Friday and today they are bid at 15 cents.. They will be 5 cents within a couple of days and zero at expiry on Friday 16th unless SVM does some sort of massive swoon.

This is why I was beating the drum about those premiums last week. There were special circumstances with the BS letter but the risk reward in those puts was huge for the time involved. It might only be pennies but they were paying 55 cents for as many contracts as you were prepared to offer and apart from a small margin commitment there was no outlay required. All cash in your account up front!

Shill
Sep 7, 2011 - 2:58pm
agauinvest
Sep 7, 2011 - 3:00pm

Pathetic Stimulus Gold/Silver Positive?

I'm not nearly as much an Obama hater as some here, but that stimulus proposal is big enough to worsen the deficit and yet not nearly big enough to jolt consumption or hiring. Worst of both worlds, best of none. That said, I think it will be gold positive over time by increasing debt and not staving off the need for QE. Thoughts?

Eric Original
Sep 7, 2011 - 3:04pm

time for a tune

The Black Eyed Peas - I Gotta Feeling
Economical Disaster
Sep 7, 2011 - 3:06pm

Teetering On The BRINK

Make no mistake about it, the Swis Franc, widely considered to be the “safest” currency on earth, was devalued today. If you had $10 million saved in Swiss Francs yesterday, you would have lost nearly $1 million today. This is not a safe haven, this is not shelter, this in not diversification. This is the “race to the bottom” Jim Sinclair has been warning about.

The move to peg the once ‘good as gold’ Swiss Franc to the awful Euro, was another shot across the bow of the people around the world who still have their wealth saved in paper currencies and paper assets.

I found this at forex online learning while digging for news about the Swiss Franc devaluation today:
https://www.forexonlinelearning.com/f...acked-by-gold/

The US Dollar was once backed entirely by gold, thus earning the term “greenback.” The Swiss Franc (CHF) was once 40% backed by both gold and silver, but in 2006 the Swiss had to sell its gold and silver reserves to join the IMF. Today, not a single solitary currency on the face of the world is backed even 1% by gold or silver, as all nations have inflated their currencies to unprecedented levels in the past 50 years.

In hindsight, the link created to gold by Bretton Woods may have been best left alone. But in the 1970s, with the United States going through an inflationary cycle, the dollar’s connection to gold was eliminated. As such, global currency investors sold off the dollar as it was no longer one of the few currencies backed by gold.

Make special note of the line above: “The Swiss Franc was once 40% backed by both gold and silver, but in 2006 the Swiss had to sell its gold and silver reserves to join the IMF.”
https://sgtreport.com/2011/09/teetering-on-the-brink/#more-13187

silverbleve
Sep 7, 2011 - 3:06pm

@scottj

also, the 7,000,000,000th ounce of Gold will be mined this year, coincidence? Every person on earth could have one ounce of Gold if it were distributed evenly. another testament to Gold's use as money. If you tried to do the same thing with Silver though, everyone only gets 1/10th of an ounce (depending on who you ask, maybe 1/12th an ounce)

I keep wondering how long it will take main street outside our Turdtown boarders to realize there is less aboveground available Silver than Gold. Its coming, soon. I give it 5 years tops. /silver rant off

rotbrador
Sep 7, 2011 - 3:08pm

EU central bank president called for a global coordinated effort

Saw on DW news interview with EU central bank president where she called for a globally coordinated central bank efforts to deal with the debt crisis, hours later, Swiss central cut its currency off gold. Cannot find the link to the video, but this is the news site:

https://www.dw-world.de/dw/0,,1431,00.html

Orange
Sep 7, 2011 - 3:10pm

PAGE

Can anybody put some insight as to why silver is traded on the Comex and London. I don't mean the history, I am wondering if PAGE can be set up, why wouldn't Silver Wheaton (SLW) gang up with a few other larger silver producers and create an exchange in the Cayman or other suitable location.

We see our UK and Irish Turdites paying VAT (coming to the US soon) at over 20% to buy silver.

Silver producers would benefit, the overly taxed consumers / investors, could leave it in the Cayman, and take a vaction once in a while.

Plus, it would be virgin metal, anybody know Richard Branson. Let him know he can start the Virgin Metal Exchange. By the way, I think he owns a island in the area. Perhaps that would be suitable.

linux2216
Sep 7, 2011 - 3:11pm

Thank you!

Thank you! I have been wanting to buy some gold and was about to pull the trigger today thinking a $100 pullback was the opportunity I sought. I would never do anything without first consulting your blog and I'm glad I did. As the diaper clad spokesman for eTrade says, "You saved me a pantload!"

Thanks a million for all you do!

Eric Original
Sep 7, 2011 - 3:13pm

OOps!! I meant to post that over on BOG's thread!!

Sorry Guys!! Too many screens open at once.

jlee2027
Sep 7, 2011 - 3:13pm

re:Teetering On The BRINK

The US Dollar was once backed entirely by gold, thus earning the term “greenback.”

No...

Greenback means it was backed by green paper, not Gold. Sheesh! Lincoln issued Greenbacks to pay for the Civil War first use of fiat currency since the Revolution. We are on the greenback system today.

BagOfGold Eric Original
Sep 7, 2011 - 3:14pm

Eric O...

You are supposed to buy low...& sell high!...I hope you didn't buy Cream at 48 cents!...However...Thanksgiving is just around the corner...& in the meantime...

Turkey Talk

Bag Of Gold

tankerfirstofficer agauinvest
Sep 7, 2011 - 3:14pm

@agauinvest

We already HAVE QE... keeping interest rates at zero (buying the debt, thereby propping it up) is simply another way to provide this "stimulus" without actually SAYING the words, "We're doing QE3, 4, 5, etc." It's more fashionable not to make statements like those, after getting pilloried over the "QE2" Newspeak.

Just an opinion.

ScottJ
Sep 7, 2011 - 3:15pm

@Silverbleve

I give the silver realization of lack of physical supply 12 months top.. but more likely in the 2-9 month vicinity. The wheels are coming off the over-leveraged unallocated silver/gold western world financial vehicles (SLV/GLD/COMEX/LBMA). Between the PAGE making way, the dollar crisis, rampid inflation, the lower price than gold, and over a hundred years of bastardization of silver as money coming to an end in front of our eyes.... there is not much time left at all (as my first post in the thread mentions... a year tops on this keynesian experiment (and thus the world as we know it)).

Interesting fact about the 7,000,000,000th oz of gold being mined. Gold sits in central banks, silver has no such abundance....

Forget gold, silver where the real increase of purchasing power is at....

Mikey ScottJ
Sep 7, 2011 - 3:15pm
SteveB
Sep 7, 2011 - 3:16pm

Miners

Ha gang, long time follower, first post. The trade a week or so ago was long PM's short miners. Is it just me or does it look to be the totally opposite now. Any ideas on how long this may last?

Great site, proud to be a turdie. Thanks Turd!

BUDDHA PRINCESS
Sep 7, 2011 - 3:16pm
jlee2027
Sep 7, 2011 - 3:16pm

The reaction will be interesting

The Central Banks are going to have to join together to "save" Europe, once again (for a few months).

The reaction to all that from Congress, the Tea Party, Rick "Bankster in disguise" Perry, Ron Paul, and the American people will be very interesting. Maybe Congress will grow some balls and stop it.

Hmmm...

Nah.

Eric Original
Sep 7, 2011 - 3:16pm
Eric Original
Sep 7, 2011 - 3:17pm

BOG

Buy low, sell high?? Oh, shit.....

NW VIEW
Sep 7, 2011 - 3:18pm

Mr. B.O.'s Works Program Problems

On the way to our real estate office this morning, I noticed a man in his 40's parked along a busy road and a big home made sign. "I NEED WORK". Well, I thought " We have two companies and we have zero employees. If I hire that man to do anything, I will be filling out forms for a week. Payroll taxes, employment security, L&I taxes, Social Security, State Industrial, and sometimes B&O taxes." If I hire him to do anything and he gets hurt or even says he is hurt, he owns me. The man will get some work from someone in time but it will be fiat under the table and zero taxes paid by all. The government does not understand that the businesses who make real money by hard work cannot pay all these fees any longer. I think I hear the printing presses warming up again.

jlee2027
Sep 7, 2011 - 3:18pm

re: The Death of Liquidity By: Theodore Butler

Yeah, that's like the 4th time it's been posted. Thanks

agauinvest
Sep 7, 2011 - 3:22pm

@tankerfirstofficer

I wasn't saying we don't have QE (well, I will sort of say that, but that wasn't what I said or meant earlier). What I meant to put forward was that if there was, for example B-I-G fiscal stimulus, there might be more of an anti- (or no perceived need for) QE sentiment, which would be (I think) gold negative or less gold positive over time than the ineffectual fiscal stim which will still leave a greater degree of expansion of QE on the table.

Zirp is not stimulative unless it actually gets $$ out there and changes the quantity of money. That's part of the quandary they're stuck in right now, too - money sits - velocity of money is nonexistent compared to several years ago.

Patrick
Sep 7, 2011 - 3:25pm
Shill
Sep 7, 2011 - 3:28pm

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