In The Woods

312
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

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

  312 Comments

The Vet
Sep 8, 2011 - 10:49am

SVM - insider buying as well as company buybacks

Silvercorp Metals Inc. (SVM)

As of September 7th, 2011
Filing Date Transaction Date Insider Name Ownership Type Securities Nature of transaction # or value acquired or disposed of Unit Price
Sep 07/11 Sep 06/11 Feng, Rui Direct Ownership

Common Shares without par value

10 - Acquisition in the public market 100,000 $7.870 USD

https://www.canadianinsider.com/coReport/allTransactions.php?ticker=SVM

BillC.
Sep 8, 2011 - 10:49am

SNB Devaluation Events

Since the chart shows a correlation only, not causation, it would be informative to know if during that 30 years, the SNB had devalued its currency as it did recently.

Cynicus
Sep 8, 2011 - 10:52am

British Main Stream Media....

Just some observations of recent news segments on British radio - yesterday there was a discussion on BBC radio 2 that centred around not just the possibility of there being another round of quantative easing, but how best the printed money should be distributed and today there was an interview with the shadow chancellor who was of the opinion that as austerity wasn't working and economic growth was particularly weak the British should lead the way with more QE to help save the world.... Maybe they know something that we know as well - hopefully not to long to wait.

Kricke
Sep 8, 2011 - 10:52am

CHF and GOLD

The question is, why did CHF top out/bounce from that line each of these previous times? Was it because "safe havens" was no longer needed? Look at the dates, was it after a panic top (1980, 1988..) everything returned to "normal" and the safe havens, CHF and gold, sold off? It is reasonable to think that if the safe haven of CHF is not needed, then the safe haven of gold in not needed either.

This time it is different because if CHF bounce from that line now, it is not, contrary to the previous times, because safe haven is not needed now, it is because a take-down from SNB.

Correlation does not imply causality.

Eric Original
Sep 8, 2011 - 10:53am

ModWash

Welcome!

We'll try to be good today. No bloody mary's until lunch. :)

Monedas
Sep 8, 2011 - 10:55am

He and his shadow !

David Axelrod (pronounced Ass'olerod in Ebonics) will strut out his shadow government puppet Obama to address a joint session of Congress tonight ! David is the first man brilliant enough to understand why Socialism has never worked as planned ! We have not pledged enough "Fortune and Sacred Honour" to it's success ! He's got a plan to fix that ! Monedas 2011 "Socialcism".....the cruelest cut of all !

Ferd Torgerson Pining 4 the Fjords
Sep 8, 2011 - 10:55am

@ Pining 4 the Fjords

Excellent. One of my favorite flicks.

Looks like Luke finally got his mind right.

Now, we just need Blythe to get HER mind right and get her dirt out of Boss Turd's silver mine.

YOU'RE GONNA GET YOUR MIND RIGHT
BillAuAg ScottJ
Sep 8, 2011 - 10:56am

Establishment vs Freedom

We all like Ron Paul for his monetary tenacity and deep understanding of how the Feds are pillaging the treasury.

But Ron Paul is a single issue candidate. He sees no risk to our security. Open borders are fine with him. His single issue is the US money supply.

I like Ron Paul too, but as a Secretary of the Treasury or some other cabinet level position but as a Commander in Chief he has not a clue.

T
Sep 8, 2011 - 10:57am

Wait....um.....

FIRST !!?

I'm First. I did it!! Its me today....

....didnt I ? I didnt ??

Miners are doing well today. Looks like a continuation of yesterdays steady movement up after the opening plunge. But resistance is looming. SVM looks like it shall test resistance around 9 dollars.

bvwalker1
Sep 8, 2011 - 11:02am

Asian futures market holiday

I was wondering if we can expect some hijinks while the Shanghei Futures Exchange will be closed for holiday September 10 thru 12th. I'm considering maybe closing out some of my SLV positions on Friday because of possible raiding on those days.

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
7/16 8:30 ET Retail Sales and Import Price Index
7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
7/18 8:30 ET Philly Fed
7/19 10:00 ET Consumer Sentiment

Key Economic Events Week of 7/8

7/9 8:45 ET Fed Stress Conference, three Goon speeches
7/10 8:30 ET CGP Hump-Hawk prepared remarks
7/10 10:00 ET CGP Hump-Hawk House
7/10 10:00 ET Wholesale Inventories
7/10 2:00 ET June FOMC minutes
7/11 8:30 ET CPI
7/11 10:00 ET CGP Hump-Hawk Senate
7/11 12:30 ET Goon Williams
7/12 8:30 ET PPI

Key Economic Events Week of 7/1

7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 10:00 ET Construction Spending
7/2 6:35 ET Goon Williams
7/3 8:15 ET ADP June employment
7/3 8:30 ET Trade Deficit
7/3 9:45 ET Markit Services PMI
7/3 10:00 ET ISM Services PMI
7/3 10:00 ET Factory Orders
7/4 US Market Holiday
7/5 8:30 ET BLSBS

Key Economic Events Week of 6/24

6/25 10:00 ET New Home Sales
6/25 1:00 pm ET Chief Goon Powell
6/25 5:30 pm ET Goon Bullard
6/26 8:30 ET Durable Goods
6/27 8:30 ET Q1 GDP final guess
6/28 8:30 ET Personal Income and Consumer Spending
6/28 8:30 ET Core Inflation
6/28 9:45 ET Chicago PMI

Key Economic Events Week of 6/17

6/18 8:30 ET Housing Starts and Building Permits
6/19 2:00 ET FOMC Fedlines
6/19 2:30 ET CGP presser
6/20 8:30 ET Philly Fed
6/21 9:45 ET Markit flash June PMIs

Key Economic Events Week of 6/10

6/11 8:30 ET Producer Price Index
6/12 8:30 ET Consumer Price Index
6/13 8:30 ET Import Price Index
6/14 8:30 ET Retail Sales
6/14 9:15 ET Cap Ute and Ind Prod
6/14 10:00 ET Business Inventories

Key Economic Events Week of 6/3

6/4 All day Fed conference in Chicago
6/4 10:00 ET Factory Order
6/5 9:45 ET Markit Services PMI
6/5 10:00 ET ISM Services PMI
6/6 8:30 ET US Trace Deficit
6/7 8:30 ET BLSBS
6/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 5/28

5/28 10:00 ET Consumer Confidence
5/30 8:30 ET Q1 GDP 2nd guess
5/31 8:30 ET Personal Income and Consumer Spending
5/31 8:30 ET Core Inflation
5/31 9:45 ET Chicago PMI

Key Economic Events Week of 5/20

5/20 7:00 pm ET CGP speech
5/21 10:00 ET Existing Home Sales
5/22 2:00 ET FOMC minutes
5/23 9:45 ET Markit PMIs
5/24 8:30 ET Durable Goods

Key Economic Events Week of 5/13

TWELVE Goon speeches through the week
5/14 8:30 ET Import Price Index
5/15 8:30 ET Retail Sales and Empire State Manu. Idx.
5/15 9:15 ET Cap. Ute. and Ind. Prod.
5/15 10:00 ET Business Inventories
5/16 10:00 ET Housing Starts and Philly Fed
5/17 10:00 ET Consumer Sentiment

Recent Comments

by J Siefert, 46 min 42 sec ago
by lakedweller2, Jul 20, 2019 - 11:35pm
by SteveW, Jul 20, 2019 - 6:01pm

Forum Discussion

by zman, Jul 20, 2019 - 2:35pm
by Solsson, Jul 20, 2019 - 11:38am
by AGXIIK, Jul 20, 2019 - 10:39am
by Green Lantern, Jul 20, 2019 - 9:54am
by Green Lantern, Jul 20, 2019 - 9:49am
randomness