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

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turd [at] tfmetalsreport [dot] com ()

  312 Comments

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FFF
Sep 8, 2011 - 3:18pm

SVM...

After hitting an intraday high of $9.23, SVM has pulled back to the $8.95 area. At what price would you guys feel comfortable in adding to your long stock position? Everytime I try to read a chart, I am WRONG!!

TIA

¤
Sep 8, 2011 - 3:14pm

Turd (edit)

Read that ZH article after my initial Bernank post and my latest one.

I'm left with the same feeling as you after the article. That the Bernank looked and sounded like a man who "knows" exactly what's up and where were headed is troubling to me.

I didn't like the impression the speech left and it wasn't the content. jmho

edit: I can't help but think he may know something about MENA also.

Sep 8, 2011 - 3:14pm

What Will it Be Like Under Eastern Power?

This to me is the area to concern one's self intellectually.

I try to think about opportunities starting at the point when the transition to Eastern power is half-way completed. I don't think it is wise to get too far ahead on this, because I have learned in my career to never underestimate the ruthlessness of a powerful interest that is about to lose power. It is best to be a safe distance away. The winners in all of these fights are not the ones doing battle with the ogres, but the winners are the ones who come in soon after the ogre dies, and restores order. See, the combatants have no interest in ruling, they only have interest in defeating the ogre. This is the warrior mentality. History has shown this time and time again.

So, for long term analysis, and survival, it pays to be the one watching the fight at a safe distance, and being prepared to swoop in at the opportune moment.

For example, here is one idea that I cannot let go of, and it haunts me daily.

China has no general aviation. This is because China'a airspace is under govt control, and there is no ability for small planes/helicopters to fly around, due to govt restrictions on airspace. But, what if China were to open up its low altitude airspace, like here in the US? To me, that would signal a HUGE, once in a lifetime opportunity, to immediately relocate to China and help them develop their general airspace industry. Think about infrastructure, like hard assets such as airports, fuel transportation, storage, navigation radio aids, etc. Think about regulations, development thereof, pilot training, maintenace training. Think about manufacturing of small general aviation aircraft. Think of the demand by the citizens for flight training. The list is just astonishing.

So, at what point do I gear up and launch on over there? Certainly not now, because the power shift transition is really just about 10-20% started.

But, are there similar opportunities here, in the US, for when the power shift moves past 50%? For example, would not the Chinese elites want to own stuff here in the US? Maybe setting up some sort of tourism agency now, to get the groundwork all done, is a good idea? Maybe optioning up a load of raw land, with the view that the Chinese will want to play golf on a massive scale, is a good play right now, since when the time comes, it will be a simple transaction to put in place a nice development deal. I mean, look at what the Chinese did in Idaho?

Anyhow, these are my nascent thoughts on this whole thing. They are truly nascent though, but I am always thinking.

Shill
Sep 8, 2011 - 3:13pm

US Senate Starts Process For

US Senate Starts Process For 2nd Debt Ceiling Boost

$14.23T up to $14.62T and debt to the penny says: $14,717,757,015,045.83 today.

Folks, just buy Gold and STFU lol...

MikeyTesla
Sep 8, 2011 - 3:07pm

@Ca Lawyer, Assuming you are

@Ca Lawyer,

Assuming you are correct, which sounds darn feasible to me, wouldn't the Swiss cratering be right in line with the plan as China is largest dollar holder(besides us). Keep the buck stronger helps them out.

silver foil hatTimber Tim
Sep 8, 2011 - 3:04pm

@scottj... perry / paul pic

It's almost like the unpublished caption ends with "....like Lincoln and JFK"

(here's the pic again, for refresher)

Tesla
Sep 8, 2011 - 3:02pm

Gold OI (-6,162 total contracts)

Daily Settlements for Gold Futures (PRELIMINARY)

Trade Date: 09/08/2011

Month

Open

High

Low

Last

Change

Settle

Estimated

Volume

Prior Day

Open Interest

SEP 11

1839.3

1860.7

1835.0

-

+40.2

1854.4

70

549

OCT 11

1814.9

1866.0

1814.0

-

+40.3

1855.2

8,765

34,487

NOV 11

1838.4

1863.1

1829.8

-

+40.1

1856.3

98

65

DEC 11

1819.5

1868.7

1816.2

1857.2

+39.9

1857.5

187,553

345,479

FEB 12

1819.2

1870.0

1819.2

-

+39.9

1859.2

903

31,673

APR 12

1821.4

1867.3

1819.8

-

+39.9

1860.9

370

8,400

JUN 12

1843.8

1864.1

1837.5

-

+40.0

1862.9

280

17,040

AUG 12

1844.4

1867.1

1842.1

-

+40.0

1864.8

90

6,358

OCT 12

1855.0

1869.0

1842.2

-

+40.0

1866.7

39

4,305

DEC 12

1856.4

1877.3

1845.7

-

+40.1

1868.7

173

13,886

FEB 13

-

-

-

-

+40.1

1870.9

9

3,121

APR 13

-

-

-

-

+40.1

1873.0

-

333

JUN 13

-

-

-

-

+40.1

1875.4

155

12,273

DEC 13

-

-

-

-

+40.2

1886.1

188

12,831

JUN 14

-

-

-

-

+40.3

1898.6

25

4,801

DEC 14

-

-

-

-

+40.7

1913.1

-

10,381

JUN 15

-

-

-

-

+40.7

1932.1

5

5,207

DEC 15

-

-

-

-

+40.7

1953.3

285

4,667

JUN 16

-

-

-

-

+40.3

1975.7

-

26

DEC 16

1995.0

1995.0

1995.0

-

+39.9

2001.7

26

1,240

JUN 17

2029.0

2029.0

2029.0

-

+39.9

2033.0

1

10

Total

199,035

517,132

Last Updated 09/08/2011 01:32 PM

graphs compliments: https://www.dailymarkets.com/commitment-of-traders/

margaritatime
Sep 8, 2011 - 3:02pm

right

EcoD; Again, I disagree. No hard feelings, but you might need to research that further friend.

Tesla
Sep 8, 2011 - 3:02pm

Silver OI (-1,312 total contracts)

Daily Settlements for Silver Futures (PRELIMINARY)

Trade Date: 09/08/2011

Month

Open

High

Low

Last

Change

Settle

Estimated

Volume

Prior Day

Open Interest

SEP 11

41.520

42.620

41.520

-

+.907

42.479

232

873

OCT 11

41.450

42.635

41.450

-

+.899

42.491

288

362

NOV 11

42.060

42.475

42.060

-

+.900

42.512

21

15

DEC 11

41.655

42.725

41.285

-

+.899

42.530

29,771

76,866

JAN 12

41.765

42.485

41.765

-

+.904

42.553

40

188

MAR 12

41.605

42.530

41.605

-

+.904

42.558

1,184

7,943

MAY 12

-

-

-

-

+.910

42.564

27

2,498

JLY 12

-

42.260B

-

-

+.911

42.553

11

1,955

SEP 12

41.845

41.845

41.845

-

+.913

42.528

9

538

DEC 12

41.740

42.480

41.530

-

+.920

42.462

1,012

9,042

JAN 13

-

-

-

-

+.922

42.424

-

1

MAR 13

-

-

-

-

+.928

42.352

265

460

MAY 13

-

-

-

-

+.920

42.293

-

40

JLY 13

-

-

-

-

+.919

42.231

20

2,204

DEC 13

-

-

-

-

+.918

42.109

295

7,015

JLY 14

-

-

-

-

+.918

41.858

-

232

DEC 14

-

-

-

-

+.903

41.714

1

1,202

JLY 15

-

-

-

-

+.903

41.448

-

156

DEC 15

-

-

-

-

+.903

41.233

-

536

JLY 16

-

-

-

-

+.903

41.008

-

11

Total

33,176

112,137

Last Updated 09/08/2011 01:32 PM

graphs compliments: https://www.dailymarkets.com/commitment-of-traders/

Economical Disaster
Sep 8, 2011 - 3:01pm

@margaritatime The Queen is the sole legal owner of all the land

You're completely wrong on that one. the Queen and the MONARCH own Canada and its land. Only 9.7% is privately owned. CANADA has NO gold, does not own any and mines it for foreign interests. I have studied CANADIAN mining for 30 yrs.

https://www.whoownstheworld.com/canada/

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