In The Woods

Thu, Sep 8, 2011 - 9:25am

The overnight action is the PMs is certainly encouraging and it would seem as though the half-life of central bank gold intervention is now about as long as central bank currency intervention. We all know, however, that it is still too soon to let our guards down. The quick recovery in price may only serve to embolden our increasingly desperate adversary, so, much caution is still warranted.

That said, I do not want to minimize the importance of the overnight reaction in price. The SNB attack of early yesterday sent the metals markets reeling. The attacks were timed to have a spillover effect onto the Comex and December gold traded as low as $1794 by mid-morning. In the old days, this would have sent gold into a tailspin as weak-handed longs began to race each other for the exits. They knew they were no match for the central banks and The Cartel.

Note, though, how yesterday was different. Once the Comex was closed, things began to improve almost immediately. Baby steps at first but then a full-blown rally overnight in Asia. Our longs are no longer weak-handed. They are resolute. They are buyers of size and they seem to pounce on discounted prices. This must be very discouraging to The Cartel. They are trapped in an untenable short position and they are being forced to cover at increasingly higher prices. HAHAHA!

To that end, I feel I must state this again. Please be sure you are making note of which "analysts" and "traders" are calling a "bubble". One only needs a cursory understanding of the Commitment of Traders data to deduce that there is no such thing as the CoT data since early August has clearly shown that the primary driver of price to this level has been Cartel short-covering. A bubble presumes retail buying. Average, everyday investors rushing in to buy something. The greater fool theory in action. Think dot com. Think Las Vegas real estate. Cartel short-covering does not create a bubble. As stated ad nauseam, the weekly CoT report is a very important, fundamental statistic. Any serious metals analyst knows this. Accordingly, any serious metals analyst knows that gold is not a bubble. The boneheads calling gold a bubble are, therefore, not serious analysts and should be ignored. Do not forget them, though, as they will most assuredly resurface in the future to once again proclaim an end to the gold bull. Remember who they are so that you can ignore them in the future, too.

The next question we need to ask is: Why are the banks so desperate to cover? Ponder that one for a while. I've got my thoughts on the subject. I'd be curious to hear yours.

Here are your charts for this morning. I see they are already becoming outdated as the metals have continued to rally while I type.

Remember today that my warning of yesterday was not to sell, it was not to buy. I stand by that. With the active central bank intervention of earlier this week, it is still too dangerous to be boldly buying with confidence. For now, I am simply holding my positions. The only trades I made yesterday were to re-cover my October gold calls. You may recall, I have been long October calls but, from time to time, I've been selling some calls against them (creating a spread) whenever I felt that risk was high. I've been taking the "short" side off and "opening up" my calls when I feel that risk is minimal. My current trading portfolio is as follows:

Long Oct 1900 gold calls vs short Oct 2000 gold calls

Long Dec 1900 gold calls vs short Dec 2200 gold calls

Long Dec 50 silver calls vs short Dec 60 silver calls

About 25% cash. Patiently waiting.

Lastly, I would be remiss if I didn't print the chart below. Several Turdites have sent it to me looking for my opinion and I feel it deserves your full consideration.

About the quickest way to go broke trading futures is to go around declaring that "this time is different". However, in this case, I feel this time truly is different.

This chart covers the previous 32 years of Keynesian central banker-dominated thinking. We are at the end of the Great Keynesian Experiment. The current system will not be continuing much longer. A new paradigm will soon be emerging. Therefore, while price will still correct from time to time, historical correlations such as this one are of minimal significance.

I've got lasts of 1862 and 42.42. It will be a very interesting day so try to keep an eye on things. More later. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Tom L
Sep 8, 2011 - 11:55am


Technically that break of $9.00 could happen with the 20/50 hourly cross that is coming up. The 10, 20 and 50 are all positive now, moving up. 10/50 cross happened with the 1030 candlestick. It may take until tomorrow.


Ferd TorgersonPining 4 the Fjords
Sep 8, 2011 - 11:57am

@ Pining 4 the Fjords

Perfect!! Many thanks.

Have to save that one to my hard drive.


Sep 8, 2011 - 11:58am

The bottom is gradually being left behind - The action in the precious metals raises speculations of interest to Gold Stock Trades subscribers especially in the labyrinth created by a fear driven market. Gold at this time is participating in a runaway move past resistance. Although gold has reached new record highs it may begin stalling in its attempt to continue moving parabolic, while the undervalued miners play catch up. What may this hesitation signal and shrinking of the divergence between miners and bullion mean to my readers?

Technically, it may be informing us that the bull move so many analysts are expecting is somewhat mature in gold bullion but miners are just beginning to breakout. Much like a sprinter who first moves backwards in his running block in order to propel his thrust forward, gold may initially have to come down from its technical heights in order to amass the energy required for a more pronounced forward move. The bull headed minotaur of bullion may have to take a time out to rest, while the miners play catch up as they look poised to break out of the running blocks.

Sep 8, 2011 - 12:00pm

Something that wouldn't surprise me

Is if a poo-bomb got dropped after hours tomorrow. Nothing ever happens during trading hours anymore. All the interesting stuff happens over the weekends now.

Sep 8, 2011 - 12:02pm

POP Ziiinnnnnggggggggg!!!!!!!

I've been waiting patiently for about 9 years now while stacking silver.

I owned and ran a company distributing quality food products to many high end food establishments (hotels, caterers, clubs, etc.). My company was running strong from 1993 to 2001. About 1999 I began to realize that things were not as they were on the surface 5 to 10 years earlier. I had to shut the company down the beginning of 2002. In and out of jobs since / not easy. This whole financial debacle that we are witnessing in front of us now has gotten here in stages.

( Move back to the 70's for a second ) Our family had the good fortune of knowing a friend who was an executive in electronic engineering. Back in the 70's he instructed us to buy physical silver. I kicked this bit of advice in around 2003 and onward the best that I could.

At this point I am in a good way with what I've accumulated in physical. My dilemma is that I am not cash strong present day and am looking at a real estate tax due soon.

I figure that I will let the date go by and my name will go in the paper under a tax lien ( don't you just love our govrnmnt.) Then ride this thing out for about 5 months , around Feb. 2012 and make the payment then , hopefully based on silver going up.

Now I know it's a crap shoot - but I'm willing to bet on the come on this one.

Idea's ? comments ? Thanks all.

P.S. in the Philippines after you pay your house and or real estate off there is NO property tax!

Sep 8, 2011 - 12:04pm

Solid advice!

"The boneheads calling gold a bubble are, therefore, not serious analysts and should be ignored. Do not forget them, though, as they will most assuredly resurface in the future to once again proclaim an end to the gold bull. Remember who they are so that you can ignore them in the future, too."

Really solid advice IMO

Sep 8, 2011 - 12:05pm

Long Live the King!

The Swiss Franc Abdicates The Crown: Gold And Especially Silver Are Now King

...Lest there be any confusion there is now one king – gold. So I say “Long Live the King.”

Dr G
Sep 8, 2011 - 12:05pm

@exiledbear, it's all planned

@exiledbear, it's all planned that way. I'm convinced that very few things are coincidence anymore.

Nice to see that the POSX has a boner today, as well. Back up to 76. WTF?

@1dae. sounds like a plan. What's the penalty for late payment? Where I am you can be up to 6 months late and still pay in full and be fine. They don't actually put a lien on the property until 18 months later, or something like that. Even if you pay a year late the penalty is 3% or some silly number. I wouldn't worry about your name in the paper. Nobody reads that rubbish anymore anyway.

stained white shirtWatcher
Sep 8, 2011 - 12:09pm
Sep 8, 2011 - 12:09pm

Feds search bankrupt solar

Feds search bankrupt solar firm Solyndra: report

This firm received $500 million dollars of Our money. Bama promoted this company the first time around as Job growth. Sound more like a money laundering gig to me. IE back door money for the Bankers. But of course I jest.

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