Revisiting Max Q

Mon, Oct 3, 2011 - 9:24am

Well, this is certainly shaping up to be an interesting week. The banks are still intent upon pressing the metals lower but he fundamentals, particularly the latest CoT report, remain decidedly bullish. Technically, as we head through the week, the trendline off the lows will begin to encounter the area of Max Q. Yes, it's going to be a very interesting week, indeed.

First of all, you should revisit the "Max Q" post from last week as the numbers are still valid.

Now look at the updated charts below.


It's still too early for any major predictions and forecasts but this week will go a long ways toward building some confidence. I am still, of course, extremely excited about the Q4, 2012, 2013, 2014...prospects for the precious metals. I'm not ready to call a bottom here, however. Yet. Let's see how this week plays out. TF

p.s. And if you want to start the week on a happy note <thick sarc ON>, take a few minutes to read this:

Yes, it's going to be a very interesting week...

About the Author

turd [at] tfmetalsreport [dot] com ()


Eric Original
Oct 3, 2011 - 9:29am
Oct 3, 2011 - 9:31am

Thanks TF!

Thanks TF!

Oct 3, 2011 - 9:32am


common turd. you can't leave us hanging like that.. excited for Q4. elloborate please..excited that we get more buying opportunities or excited that we get cell opportunities 

Oct 3, 2011 - 9:33am

Lack of leverage

Yes, the COT numbers are low. Yes, this has been bullish in the past. Yes, the 'Sentiment' in the sector is bearish, yes, this has also been bullish in the past. Don't know what the ratio of the Commercials are wrt shorts to longs. But the game has changed. Leverage has been taken out of the CRIMEX. There are less hedgies willing to play this game, as their resturns are smaller. We need the big players to push the prices higher. So I'm not so optimistic that metals will move a lot higher in the immediate future. Wish I could be.

Oct 3, 2011 - 9:36am

POSX rollover

Calvin and Blythe went up the hill

To fetch a pail........

Oct 3, 2011 - 9:44am


....regarding the lack of leverage.

Within the CoT, what is particularly bullish is the amount of "commercial" shortcovering that has taken place along with the "speculator" selling. This is 100% typical of a coordinated EE beatdown. Proves once and for all that the latest drops are not some "bubble popping". This is complete bullshit. The last two weeks have been a planned event to smash price so that the banks can aggressively cover positions without running gold past 2000 and silver toward 50.

Oct 3, 2011 - 9:47am

Okay back to metals, but first consider the video linked

As things deteriorate confusion will run rampant. Every side of the debate has issues with wallstreet and some are using it to attack capitalism. I believe MSN is going to report these occupying events in a way that suits the EE. Of course they will only be setting the table to serve the EE next dish of predetermined tyranny. The following videos are intended for distribution and i believe, sadly, to be the closest representation of what is in play.

Oct 3, 2011 - 9:48am

Turd, and if you've been reading or

listening to Clif High lately, I know you may have additional reasons for your worry-free outlook above <sarc on too>

Quickly now.... walk don't run.... to the Bunker of Ham!

Oct 3, 2011 - 9:51am

gold and perhaps silver confiscation...must read

Gold Confiscation 
Written by David Schectman

Richard Butler, (former United Nations chief weapons inspector in Iraq) CNN' s Ambassador In Residence and expert on the Middle East, linked the funding of Al Qaeda to secretive gold transactions in the Middle East. On February 17th, Douglas Farah of the Washington Post wrote an article entitled ''Al Qaeda's Road Paved With Gold.'' The ''gold cartel'' has rolled out the heavy artillery. It's not a stretch to infer that the American people are starting to be ''conditioned'' to see gold as evil - a link to terrorism.

In Feb. 2002, Chris Powell, speaking for GATA at the Press Club Luncheon in Washington, said it was certainly possible that our government might confiscate gold. His reasoning was that the government would need all the gold it could get its hands on to keep the bullion banks afloat when the price of gold explodes.

For the last 20 years, I have found the subject of gold confiscation intriguing. I have thought about it, written about it, talked about it and researched it. I am concerned, as the owner of a precious metals firm who has survived a two decade-long bear market in the precious metals industry, that as the price of gold is finally starting to take off, the government may well decide to intervene, and confiscate our ''real money''- gold, the metal of Kings.

Does this sound a bit extreme? Well, consider that ownership of gold in the is a privilege, not a right. Yes, the law is still ''on the books'' granting the government the right to recall privately owned gold. Let's take a look at the background.

It was in April 1933 and in his first ''official'' act in office; President Roosevelt declared a banking ''holiday'' and issued the order to confiscate gold. Executive order: By virtue of the authority vested in me by Section 5(B) of The Act of Oct. 6, 1917, as amended by section 2 of the Act of March 9, 1933, in which Congress declared that a serious emergency exists, I as President, do declare that the national emergency still exists; That the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people. ''Therefore, pursuant to the above authority, I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possessions of gold and silver be tendered within fourteen days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government. All safe deposit boxes in banks or financial institutions have been sealed, pending action in the due course of the law. All sales or purchases or movements of such gold and silver within the borders of the and its territories, and all foreign exchange transactions or movements of such metals across the border are hereby prohibited. ''Your possession of these proscribed metals and/or your maintenance of a safedeposit box to store them is known to the government from bank and insurance records. Therefore, be advised that your vault box must remain sealed, and may only be opened in the presence of an agent of the Internal Revenue Service. ''By lawful Order given this day, the President of the .''

In this act of theft, the citizens of the were compensated at the ''official'' price of $20.67 an ounce. That was the ''official'' price of gold for 97 years. Following the confiscation, the dollar was devalued by 40% - and the price of gold was revalued upwards to $35 an ounce.

Under the authority of the Emergency Banking Relief Act, President Roosevelt issued Executive Order No. 6102, which allowed the government to confiscate all privately owned gold in the . The owners would be repaid in paper dollars whether they liked it or not.

Dentists, jewelers and coin collectors were exempt from this Executive Order, and were allowed to own gold. (In terms of coins, the actual terminology used was ''gold coins having a recognized special value to collectors of rare and unusual coins.'')

In the mid-eighties, Representative Ron Paul (still fighting the gold battle for us, God bless him) served on the Gold Commission in the House of Representatives. Paul wrote: ''If it gets bad enough, they'll declare a national economic emergency. They'll take over the banks, all business and industry. They may even try to confiscate our gold. I served on the Gold Commission for eight or nine months while I was in Congress along with fifteen other members. I brought up the subject of confiscation. The power to confiscate gold is still on the books as the law of the land. I urged the full Commission to recommend Congress repeal the power to confiscate gold in an economic emergency. We pushed it to a vote and I was the only one that voted to recommend to Congress that we never again contemplate taking the gold of the American people. The fifteen other members voted it down. The power is still there on the books, and they can do it any time they wish.''

Unfortunately, our current Administration has turned a deaf ear to the gold manipulation problems uncovered by GATA and Bill Murphy. The Treasury and the Fed still have a free rein to do whatever necessary to hold back the price of gold. No doubt, those advising President Bush believe it is a matter of National Security to continue this outrageous practice. I really do believe that there is a high probability that the Bush Administration will eventually resort to confiscation. They have the legal justification to do it, and it would allow them to continue their active suppression of the price of gold.

The (large amount of) confiscated gold would give the government a much needed new source of supply they could use to provide to the bullion banks to help them get off-the-hook. This would help them repay their gold ''loans'' to their friends at the central banks. Or the government may use it to ''re-stock'' Fort Knox (assuming our gold reserves have been sold out from beneath us).

In the late 1980s, Dr. Franz Pick (a highly respected economist and currency expert) wrote a well received book The Triumph of Gold. Pick wrote: ''I am afraid that one day the government will indeed call gold in. Gold bullion will be subject to confiscation. This is the one big advantage of numismatic gold, such as Double Eagles. It's an idiosyncrasy of governments that although they may prohibit ownership of gold in any form, they are reluctant to touch collections of numismatic gold coins.''

''Today there are some 49 countries which forbid ownership of gold by their citizens, but do allow holding gold coins for numismatic purposes. Even the Soviet Union and Eastern countries legally tolerate the acquisition of numismatic gold coins. For these are the only gold holdings that could be kept in your safe deposit box without any fear of confiscation.''

During WWI Congress passed The 1917 Trading With the Enemy Act. This act is still in place. Its article 5(b) states: ''That the President may investigate, regulate or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreign exchange for the export, hoarding, melting, or earmarking of gold or silver coins or bullion or currency.''

There you have it. With this awesome power, the President of the may do what he pleases with our money or with gold if he deems our monetary system to be in jeopardy. If you've been following the articles in LeMetropole cafe it is very obvious that our financial system is in grave danger, and a rising gold price is all it will take to create the crisis.

Roosevelt used section 5(b) in 1933 to confiscate gold. President Carter used it to freeze Iranian assets during the hostage crisis. Will President Bush also use it when we take our money out of the banks (like they are starting to do now in ) and rush to buy gold or wire money offshore? Do not bet against it!

Historically, governments have banned the ownership of gold when their citizens lose confidence in government issued paper money. Why will it be different here this time? It has already happened before. All that is required (because of the Trading With The Enemy Act of 1917) is for President Bush to issue a decree.

1933, 1934, 1954, 1984 and tomorrow: Roosevelt justified his executive authority because of the national emergency. He empowered the Treasury to maintain complete control over all transactions in gold, silver and foreign exchange. His executive order demanded COMPLETE SURRENDER OF GOLD COINS, GOLD BULLION AND GOLD CERTIFICATES still in the possession of individuals. The owners had 25 days to turn their gold into a Federal Reserve Bank. FAILURE TO COMPLY WAS PUNISHABLE BY A FINE OF $10,000 OR 10 YEARS IN PRISON OR BOTH.

Silver also suffered the fate of gold. On August 9, 1934 a Presidential Proclamation ordered all silver bullion surrendered to the Treasury within 90 days and a 50 percent tax was levied on any profits from the sale of silver. The sellers were paid 50.1 cents per ounce.

In 1984 the IRS proposed new legislation that distinguished between bullion and numismatic gold and silver. This could be used in the future as a standard to define what is exempt from confiscation. They said that gold or silver coins or bars must be worth at least 15% more than their metal value on sell back to qualify as a collectable rather than as bullion. Why would they possibly make such a distinction unless they planned, at some future date, to recall the bullion?

Our best defense against confiscation is the Eminent Domain Clause of the Fifth Amendment. The clause states, in part…''nor shall private property be taken by the government for public use, without just compensation.'' In 1933 the government paid the ''official'' price of $20.67 for an ounce of gold. Why did Roosevelt exempt gold coins ''having a recognized special value to collectors of rare and unusual coins''? His Executive Order did, after all, call for the confiscation of ''all gold coins.'' What is a ''just'' price for a ''numismatic'' gold coin? It would have been a monumental task to administrate the grading and pricing of each individual gold coin. Note the wording here - exempted from the surrender requirement were not the ''owners'' of rare gold coins, nor the ''holders'' of them, nor persons who ''possessed'' them, nor even ''investors.'' On the contrary, the order specifically focused on an individual's motives for having rare gold coins, exempting just one classification: ''Collectors.''

A clear distinction was made between the ''collector'' and the ''investor.'' A collector's primary interest in rare coins is enjoyment for historical, aesthetic or cultural reasons. An investor's interest in rare coins is financial, to make a profit. Roosevelt clearly intended to exclude only the collector. As a result of FDR's decree, most of the gold was now in the hands of the government, which increased their holding from $4 billion to $7 billion and foisted ''paper money'' on the citizens in return.

This was a sad day for freedom in . Whatever happened to the laws laid down by our founding fathers? As they stated in the Constitution of The United States of America, Art. 1 Sec. 8 and 10: ''The Congress shall have the power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures…no state shall make anything but gold and silver coin as a tender in payment of debts.

Finally, a brief history of the performance of Double Eagles vs. bullion gold since 1980. Each Double Eagle contains just under an ounce of pure gold. Using the industry standard, the CDN Monthly Supplement, the Greysheet bid prices we find that the common date Double Eagles (the cheapest and most common dates) in circulated condition (xf/au) peaked at $800 each in March 1984. The lowest price for these coins was $300 in September 2001. At any point in between, they always were bid above their gold value. In uncirculated MS/60 (lowest grade of uncirculated) the prices were $885 and $310 and in MS/63 (higher grade uncirculated) they were bid at $1250 and $365. As you can see, the value of these coins can be as much as hundreds of dollars above their gold value or as little as 10% above their gold value.

As the price of gold rises, the premium increases dramatically on the Double Eagles as they are scooped up off the market. Supply/demand - when in demand these coins are wonderful performing investments. If the good folks at LeMetropole cafe are right and gold hits $600 an ounce, depending on the grade of coin, the Double Eagles should command a wholesale price well north of $1,000 each. At today's prices (which are just off the bottom - the lowest on record), with gold starting to make its move, the time is perfect for accumulation of this kind of gold coin. The reason I recommend the Double Eagle coin is because it is the cheapest way to own the most gold in a numismatic coin. These are bullion substitutes with a difference. The difference being if you accumulate a variety of them in different dates and mint marks and become a “collector'' the laws governing confiscation that are now on the books will allow you to keep them. This insulates you as best as one possibly can from government recalls. This is a BIG advantage to you. Beyond profit! And should these coins also be ''recalled,'' at least you will realize a premium above that allowed for you bullion coins. At today's prices there is virtually no risk, just benefit in the ownership of Double Eagle gold coins.

Oct 3, 2011 - 9:52am

Strong Signals in the $HUI?

$HUI behaving as one would hope if forming it were to be forming a bottom. Slow stochastics showing cross-over and in the process of creating a buy signal, but still need to get above the 20mark (it may bounce around down here until it can gain its footing). The MACd (exponential moving averages) is extremely low and has a tremendous amount of power if it were to swing to the upside....

This implies but does not guarantee gold/silver possible bottom. These miners are deeply oversold and undervalued. Especially in the "now" when crude oil is falling (cost of production), and gold and silver are hovering at all time highs (relative to where the index was a year ago and compared to today).

Oct 3, 2011 - 9:52am


Don't you worry. If you've been busy the past few decades looking for signs of general deflation, you can continue your quest. The Deflation Ghost won't come out of the closet to disturb your search this time either. Ghostbuster Ben has loaded his proton gun and is ready to fire if the monstrous deflation so much as sticks its chin out. And he's got his partners right behind him. Mervyn King and Jean-Claude Trichet have passed the tests and are now officially members of the squad. Together they'll march the streets and sweep them clean from any signs of deflation. source

Oct 3, 2011 - 9:55am

17 Scary Numbers From the

17 Scary Numbers From the Third Quarter

  • 9.1%: The unemployment rate in August.
  • 42.9%: The percentage of unemployed workers who have been out of work for more than 27 weeks.
  • 14.8%: Unemployment rate among 20-24 year olds.
  • 14.67%: The return of the Morningstar Long-Term U.S. Government Bond index in the third quarter. Want to see what a flight to safety looks like?
  • 571,000: Seasonally adjusted annualized rate of housing starts in August.
  • 4.1%: The year-over-year decline in home prices in July according to the S&P/Case-Shiller Index.
  • 12: Members of the congressional supercommittee tasked with finding a solution to the United States' fiscal problems.
  • 187: Ratio of U.S. debt held by the public to gross domestic product in 2035 if Congress keeps spending at current levels and keeps current tax levels and other polices
  • 10.6%: Percentage of annual GDP the federal government is expected to spend on health care in 2035, up from 5.6% today.
  • 142: Estimated Greek sovereign debt/GDP ratio.
  • 440 billion: Size (in euros) of potential loan guarantees from the European Financial Stability Facility.
  • 17: Number of countries in the eurozone.
  • 1.3%: International Monetary Fund projection of German GDP growth in 2012.
  • 32%: The decline in Hewlett-Packard's (HPQ) stock price during the last three months.
  • 56%: Decline in 2010 revenue reported in Groupon's S-1 IPO filing, after the SEC asked the firm to conform to more traditional accounting practices.
  • 2: Number of companies into which Netflix (NFLX) is splitting.
  • 0: Likely the number of Netflix customers who are excited about this idea.
Oct 3, 2011 - 9:58am

The battle over 1120 ( S&P )

The battle over 1120 ( S&P ) looks to be a bloody one.

Oct 3, 2011 - 9:59am

Thanks Turd - Good Morning Man!

Boy that was some depressing reading (link above)

The truth sux so bad - no wonder no one wants to hear it... Grateful for your guidance and this website!

Oct 3, 2011 - 10:00am

Silver taken down before market open...

Right on time. Before the market opened. Just as before. Again and again and again. One day we will wake up and everything will be great.

Protests around the world all seem to wind up benefiting the ones (EE) who planned, engineered and implemented them. Again, again and again. Bell on protests:

Oct 3, 2011 - 10:01am

10:00a September ISM

  1. 10:00a

    September ISM manufacturing 51.6%

Oct 3, 2011 - 10:01am

"but he fundamentals,

"but he fundamentals, particularly the latest CoT report, remain decidedly bullish"

Hehe. Again something very very familiar. Turd, why don't you at least once give props to where they belong? ;)

Oct 3, 2011 - 10:05am

i spy a sock puppet

i spy a sock puppet

Oct 3, 2011 - 10:05am


Great spot ScottJ, in total agreement, the mining stocks are holding up very well all things considered....not before time!

Physical demand in Asia overnight was WHITE HOT, so much so that my trader contact was up all night dealing with wholesalers....On a related note I also wanted to flag a v amusing Nomura piece on ZHedge - goes to show difference between there and here...Nomura are claiming that the market decline in Au/Ag had been caused by weakness in Asia - The TOTAL OPPOSITE is the case - what they meant (if they understood ass from elbow) was that the western banks had been shorting huge volumes in thin trading in the early part of overnight trading (ie when easiest to get the price down) before serious buyers have been showing up EVERY NIGHT during this decline and EVERY NIGHT the closing price is AU/AG in Shanghai has been WAY above the going rate (either spot or front month).

ZHedge falling way behind Turdville for PMetals analysis - Tyler should stick to POMO and Primary dealer analysis imo if he cant spot the relevance of that nomura note.

Dr G
Oct 3, 2011 - 10:09am

Some of my miners are

Some of my miners are actually green today. Still haven't logged into my options account for the past 2 weeks. I'm sorely lacking motivation at this point.

Nice to see Crimex drop us 60 cents or so upon opening. Shocking, not.

Agree that the OI numbers are bullish but we need money to flow into silver to get it to move again. Even without any other planned raids, this could take weeks/months to get the wheels moving again. Nothing particularly wrong with that, but sideways trading isn't too fun to watch.

Oct 3, 2011 - 10:10am


Granny requests that Turd post at least one daily chart a day.

These short term charts are for gamblers and do not reflect bigger perspective.

My opinion and that of my wonder dog Dolf who sniffs out COT intention and methane blasts in the metal's market.

Meanwhile JPM is reading the Turd site and playing with all the trendlines on the short term charts. Or so my paranoia rules.

Oct 3, 2011 - 10:11am

General Market Indexes squeezing shorts before....

This surge in the equity markets right now feels like one that is squeezing as many shorts before the tumble down.

IMO only.

Oct 3, 2011 - 10:11am

You said it Tezz..

Yeah timpa... ez on that stuff this early on a Monday in a highly uncertain PM market.

I mean not everyone's tab of Fuckitol has kicked in yet, so get some sensitivity will you?


Oct 3, 2011 - 10:15am

Good morning all

I couldn't bear to read the link at ZH on the 12 quotes. Too early in the week so I took the avoidance route. I've probably read most of them somewhere at some point already.

Eric O' has a excellent link above about nationalization of PM miners. Something to consider and it's not far fetched at all if you think gold is going to become a much more valuable commodity in the future of the monetary system. If it does become a integral part of the U.S. or IMF monetary system at some point then I'm pretty sure they will want to control as much of it as possible. That sounds logical as it would be a sound strategic move for them to consider and implement at some point.

Interesting times ahead.

Oct 3, 2011 - 10:19am


Interesting that the twist starts today, in light of the Europe situation. On one hand, the jitters should send money into USTs, lowering all rates (as is happening so far today). However, I understood that the Fed wanted to close the gap between short and long term rates, but the jittery money flows would have the opposite impact, being biased toward the short end. So is the twist fighting againstt the European crisis money flow effects?

Oct 3, 2011 - 10:21am

Quotes from insiders URL

That ZH story (which was really nothing new to us) had a URL in the comment section.

I've not individually tested each of the links, but each quote has a reference link.

The person who pulled this list together did a remarkable job of summarizing the feelings of these players and provided links for us.

Oct 3, 2011 - 10:21am

This surge in the equity

This surge in the equity markets right now feels like one that is squeezing as many shorts before the tumble down.

Yup, just watching and waiting. :)

Oct 3, 2011 - 10:23am

COT reports

Surprise,surprise. JPM plays both directions and holds huge amounts of physical as well.

No one takes down JPM. Forget about it.

Banksters buy low and sell high in all cycles in all commodities. And they do it automatically without emotion.

Knowing where one is in the cycle is key. Forget about breaking JPM.

Follow them.

Oct 3, 2011 - 10:25am

Slaves to the POSX

Markets have turned a bit and so has the POSX if you go look right now. The strength of the USD right now is controlling just about everything.

Oct 3, 2011 - 10:27am

possible gold and silver confiscation comment

It appears that article was written during the Bush administration. I and I bet others, would appreciate anyone posting an old article at least note it as when it was originally written

Obviously some things still do apply and others do not--times change.

Become a gold member and subscribe to Turd's Vault


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 1/21

1/22 10:00 ET Existing Home Sales
1/24 9:45 ET Markit Manu and Svc PMI
1/24 10:00 ET Leading Econ Indicators
1/25 8:30 ET Durable Goods
1/25 10:00 ET New Home Sales

Key Economic Events Week of 1/14

1/15 8:30 am ET Producer Price Index
1/15 8:30 am ET Empire State Mfg. Index
1/16 8:30 am ET Retail Sales
1/16 8:30 am ET Import Price Index
1/17 8:30 am ET Housing Starts
1/17 8:30 am ET Philly Fed
1/18 9:15 am ET Capacity Utilization and Ind. Prod.

Key Economic Events Week of 1/7

1/7 10:00 ET ISM Services Index
1/7 10:00 ET Factory Orders
1/9 2:00 ET December FOMC minutes 
1/10 Speeches from CGP, Goons Bullard and Evans
1/11 8:30 ET CPI

Recent Comments

by RickshawETF, 7 min 11 sec ago
by cavalier, 22 min 11 sec ago
by Turd Ferguson, 1 hour 26 min ago
by JAL, 1 hour 29 min ago
by indiana rod, 1 hour 48 min ago