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 ()


Sep 8, 2011 - 3:29pm


Really? Perhaps I missed something... Your argument is that public lands [monarchy] = no gold reserves? This is a false premise.

Analogous to saying that because CA is a monarchy that is has no gold? So.... all patented and unpatented claims in the US do not produce any gold reserves either, because most of those reside on [leased public] lands with oversight governed by the BLM. Likewise, China does not have gold reserves based on the fact those mines reside on government lands? So your parable is that is that if a gold reserves resides on public lands, there are no gold reserves? Sorry, but this is logic 101. This is an inconclusive argument based on a false premise.

But hey, if you want to believe that - go right ahead. If you are trying to lead me with a Red Herring down the conspiracy theory road - you are going to have to do better that.

Economical Disaster
Sep 8, 2011 - 3:29pm


CANADA HAS NO GOLD RESERVES I don't quite understand how you don't get it. If CANADA doesn't own the land how can they have any reserves? Where is the conspiracy? DO YOUR OWN RESEARCH..SCARY!

end of discussion.

Sep 8, 2011 - 3:26pm
Sep 8, 2011 - 3:25pm

In response to Scottj's very interesting post.

Scottj said;

"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."

Since philosophy has always been such an intense part of my intellectual interests and pursuits, I am compelled, therefore, to respond to your interesting post.

Fundamentally we all as human beings share this one primary attribute which separates us from all other living organisms on this planet, i.e the capacity to think are reason using concepts, ideas, symbols, or word. It is this faculty which gives us immense freedom and free will, potentially. We are also essentially beings with a soul and are spirits incarnate. Each of us is totally unique and there is no other person exactly the same as anyone of us, in all of the present and past humans that have existed in all of history. There are literally thousands of factors contributing to this uniqueness, some of which you mention above. We are not, nor need we be, victims of our circumstances. We can and frequently do rise above these powerful influences. It is these things that you mention that tie us together as groups of individuals. But, the real things that tie us together, are our belief systems, as expressed in our morals, religions, philosophies, and political persuasions.

Scott, with all due respect, you appear to be a fatalist/relativists, subjectivist. I think there are fundamental principles and axioms, or laws if you will, that determine how successful we will be as human beings. It is the power of these laws that that we accept or refuse to understand and obey that will determine whether we will be essentially right or wrong in our thinking and in the life we lead. Mankind is the sum total of all the history proceeding us. We are in our present state and condition, as a consequence. However, the future is determined not by our common past but by what we decide to do about the present situation, and what we think is possible to us as a specie and as individuals. Hopefully, we will identify our errors and mistakes and take steps to mitigate the consequences of the past, by doing the right thing in the future. Proper identification requires reason, logic, and critical thinking skills. Without these skills we are hopeless and helpless to overcome adversity and to make the necessary changes to secure a healthy prosperous future. It is not a matter of relativity therefore, but of actuality, rationality, and objectivity, regardless of how all things may be related.

I sincerely hope that this helps you and others to see more clearly our possibilities and choices as human beings. If I have misunderstood you in any way, I stand corrected and relish your response. Peace.

Sep 8, 2011 - 3:24pm


That is exactly what I was thinking. Short term, the Chinese do not want to lose everything by their possession of dollars. Allowing CHF to be a safe haven flow, would have allowed the CHF to compete against the dollar for sure.

Look too at the AUD/USD cross, basically a double top at 1.09 on the daily chart. On the monthly chart, the peak seems to be in as the MACD is showing way overbought. I got in and shorted a little too early on Aug. 22,, 2011. But, I am very confident that the AUD craters as the world undergoes a slowing. My thinking goes like this: the Chinese are managing their own slowdown, and the risk-off commodity trade like the AUD, NZD, etc., will slow as well. This will drive the AUD down, so the Chinese do not want to tie their currency reserves up in falling currencies. In a risk-on scenario, like now, with the US tanking and all hell breaking loose in europe, the Chinese wanted to keep the dollar from falling faster than everything else. So, the Swiss are "encouraged" to devalue the CHF, and voila, there you have it.

I am going to ride the short AUD/USD to around parity, then bail, and then buy more physical. I hope I am right!

AronnaxEconomical Disaster
Sep 8, 2011 - 3:23pm

Canadian land ownership

See, this is yet another example of why coming to this site is worth it. Had no friggin' idea.

Would be interesting to know how many OTHER countries are set up with similar, deeply embedded restrictions? Much like the property taxes in the US, this makes land ownership at the will and whim of the British Crown?

How are the 10-11% of privately owned lands 'private'? Are they any more 'private' than the Crown Grants?

Economical Disaster
Sep 8, 2011 - 3:23pm

@margaritatime YOU better do some research

Can't be any clearer then that LINK!

All physical land in Canada is the property of the Crown, Queen Elisabeth 11. There is no provision in the Canada Act, or in the Constitution Act 1982 which amends it, for any Canadian to own any physical land in Canada. All that Canadians may hold, in conformity with medieval and feudal law, is “an interest in an estate in land in fee simple”. Land defined as ‘Crown land’ in Canada, and administered by the Federal Government and the Provinces, is merely land not ‘dedicated’ or assigned in freehold tenure. Freehold is tenure, not ownership. Freehold land is ‘held’ not ‘owned’.

Queen Elizabeth owns 2,467 million acres in Canada, 1,900 million acres in Australia, 114 million acres in Papua New Guinea, and 66 million acres in New Zealand.

The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty

Sep 8, 2011 - 3:21pm

Lawmakers seek 'conforming'

Lawmakers seek 'conforming' loan limit extension - MarketWatch

Butting heads with the Obama administration, a group of 37 lawmakers on Thursday called for a short-term extension of regulations that would allow the maximum size of loans that can be guaranteed by government controlled mortgage giants Fannie Mae and Freddie Mac remain at the current level of $729,750.

Cocaine is a helluva drug. We have reached peek screwed ness.

Sep 8, 2011 - 3:20pm
Las Vegas Dave
Sep 8, 2011 - 3:18pm

was the 7000 contract dump a fools errand?

a relic of the days when a drop like that into a thin market would have spooked the market for days/weeks?

And if it were a miscalculation, why wasnt it followed up with an increasingly larger short?

could the seller have possibly folded his hand and walked away?

A very mysterious and maybe futile gesture?

By far the most interesting trade of the last 30 days

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