Stand Back

Mon, Dec 12, 2011 - 9:23am

I trust that today's action doesn't come as a surprise to anyone. If you are still trying to trade this "market", I hope you are short.

Rather than regurgitate all that we've discussed since last Wednesday, let's just sum up:

1) Central banks are lending gold to the bullion banks at a negative rate of over -0.5%. This means that the EE can borrow gold and sell it on the Comex or LBMA and actually get paid interest to do it! The last time we saw lease rates this low was back in September and we all remember what happened then.

2) EE selling has now turned the charts decidedly negative. WOPR is using this information to accelerate that downward pressure by mindlessly spitting out sell orders.

3) Actual human beings are selling Comex paper because they are finally learning via the MFG-HSBC lawsuit mess that trusting your broker to hold and/or deliver your precious metal is a fool's errand.

That's a lot of combined selling pressure. Regardless of the fundamentals, paper metal is going down. How far? Well that's the question, now isn't it?

It may be foolish to try to find support and a bottom by looking at the charts. What do I know? I'm just a Turd. However, there will be a point where investors and traders will halt the paper carnage, if anything because the paper system still exists and there will be an arbitrage opportunity with physical. So, what do the charts show? I'll let you draw your own conclusions but I think you can plainly see where ultimate support will lie. I wouldn't buy any futures, options, etfs or miners until we get close to these levels.

Lastly, just another word about the discussion I had over the weekend where "bulk" metal prices were mentioned. Please use your brains on this. Of course anyone can log onto Apmex and buy a couple of AGEs for 5% over spot. That's not what I'm talking about. I'm talking about big money. Big money. If you've got 20, 30 or 50 million dollars you're looking to move into gold and/or silver....and you want it in your hands and out of JPM or HSBC or are going to pay a very hefty premium. It appears to be something like $200 over spot in gold and $7-8 over spot in silver. Non-cartel metal in bulk size is very hard to come by. One only needs to review the MFG-HSBC lawsuit documents to get a feel for why.

I've got a last of 1666 in gold and 31.07 in silver. If you're trading, I sincerely hope that you heeded my advice back on Wednesday and Thursday and used the strength of Friday to liquidate some longs. If not, be prepared for at least another $100 on the downside. Paper is de-coupling from physical and the process is going to be ugly and bizarre. We are sailing into uncharted waters where anything is possible.

Be cautious. Do not use margin or leverage. Buy physical only. Prepare accordingly. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Dec 12, 2011 - 9:30am

But I should add

None of this changes my outlook for 2012. In fact, it only enhances my confidence.

Gold and silver are going to dramatically appreciate against every fiat currency next year.

Dec 12, 2011 - 9:30am

watch the 150 day MA

So far it hasn't failed on a closing basis in about 3 years. just saying, although i am cautious too.


ps first?

Dec 12, 2011 - 9:31am


By physical only folks.

Dec 12, 2011 - 9:32am

Paper gold and silver?

Or real gold and silver Turd?

Violent Rhetoric
Dec 12, 2011 - 9:37am

Looking at the 5 year

Looking at the 5 year charts I fear we may see a 24 handle on silver before this is over and low 1500's on gold.

Dec 12, 2011 - 9:41am

Year is almost over

Maybe ill get a coma induced and i can wake up around march:)

Dec 12, 2011 - 9:41am

Year is almost over

Maybe ill get a coma induced and i can wake up around march:)

Dec 12, 2011 - 9:41am

sheep shearing

before BEN mentions the "Q" word tomorrow????

you don't think they're all back slappin buddies do you? think?
Dec 12, 2011 - 9:42am


Tomorrow's another FOMC meeting. It seems like few are expecting Bernanke to announce another buying program, but he has to do so soon.

Air Garcia
Dec 12, 2011 - 9:43am

@OC15: Real, bro, real. physical

the paper markets are getting "found out" in other words ... i don't know what your history is on this, but the paper gold is "sold" 100x for every 1 oz of real. in both silver and gold. it's supposed to be a 1-1 ration, but it's a 100-1 ratio which is kinda bunk.

Go buy physical ... now looks like a great opp to buy and hold phusical - in your hands.

Dec 12, 2011 - 9:47am

Physical premiums

Over on this side of the pond, our little UK goldbugs community is watching spiking premiums at major coin dealers in real time. Either MF Global has killed their hedging strategy and we're going to see higher spreads going forward, or there is pressure on physical.

Dec 12, 2011 - 9:49am

Thinking long term

Whatever happened to the mentality of embracing these quick declines as a chance to add to a position?

It seems that used to be the sentiment, but now too many seem willing to be whipsawed by headline-related price events.

No one, and I mean no one, can correctly minute-to-minute, hour-to-hour price movements in this superheated atmosphere.

Better to have a long-term vision and stick to it. Santa calls this daily action noise and he is correct. Long-term, most can make it work. Short-term, be prepared to be chewed up and spit out.

Dec 12, 2011 - 9:50am

Hey Turd know how celebrities get sandwiches named after them?

Well the Turd Burger has infinite slices of paper gold (or silver depending on appetitie) sandwiched between government technocratic policy and CB manipulation with some peak oil dressing.

It will go down in history as the WORST sandwich of all time. Your reputation will always shine however.

Dec 12, 2011 - 9:57am

Thinking long term

I think this is where a lot of the big money players speak about. If you've listened to Rick Rule this entire year, he's been very accurate with his thesis. I've never heard him say gold will go to this price or that price. That's not his game. He looks at the longer trend. Gold is going up because of debasement of the fiat currencies. And he said could gold go to $1500 again - he said sure it can. But he builds his posistions with one to two year or even longer time frames. He would probably say today is a good time to buy. could things go lower =he's said sure in the short term they can. But if you are building your positions for the longer haul, then youhave to sit back and relax.

I agree, Sinclair to has said don't worry about the day to day fluctuations. will see wha thappens

Dec 12, 2011 - 10:00am

Dec 12, 2011 - 10:02am
Dec 12, 2011 - 10:05am

The Honorable Jon Corzine

The Casey Anthony trial has led to a new defense. Let's call it the Casey Anthony Defense.

Prosecutor to Casey Anthony: "Where's Caylee?"

Casey Anthony: "I don't know."

Jury: "OK, you're free to go."

House panel to Corzine: "Where's the money?"

Corzine: "I don't know."

House panel: "OK, you're free to go."

Perhaps we should call it the Agnostic Defense.

Dec 12, 2011 - 10:07am

Ill say this

None of the newsletter writers that I subscribe to didn't make the call turd made. maybe i should fire them

Dec 12, 2011 - 10:14am

I dunno

If it becomes possible to get physical gold for $1200/oz, I'll be there, quietly nibbling away.

But I checked Tulving today and there are no 1oz Krugerrands for sale. Sold out, it says. So if it's sold out at these prices, something tells me that it ain't going to be available at even lower prices either.

Yeah. Bizarre is the word to use about things going forward. What concerns me is not what price physical gold will command, but how business will be conducted in this lawless anarchy we find ourselves in.

Dec 12, 2011 - 10:15am

2011 vs 2012

I have no doubt that you called this crap spot on, Turd.

Looks like we are off to the races again.

2011 was a race by all fiats to the bottom.

2012 will be a race of paper PM's to the bottom and phyz PM's to the top.

Let the games begin.

Dec 12, 2011 - 10:18am

yes, exactly...

the discussion I was trying to raise in the last thread!

“Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage [MF Global] and its client Jason Fane of Ithaca, New York, the unit of London-based HSBC said in a court filing yesterday. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said. HSBC asked a judge to decide who the rightful owner is.”

Dec 12, 2011 - 10:21am

my PSA for the day

visit your LCS and get your phyZZ on. Ag maybe some .50 beNNies or a handful of peace doLLars

Dec 12, 2011 - 10:21am

Thanks, Turd

I was finally getting ready to make the leap from silver stacking to dabble in physical gold last week when I saw your call and decided to wait. It appears you have saved me a tidy sum and you will be rewarded accordingly when I have more dollar bills lying around after I get my gold at $1500.

Dec 12, 2011 - 10:25am


Thanks TF.

You just confirmed what I've been thinking about this a.m. and I heeded your advice before I even read it. I just put a post at the Speak about the way I feel about the market and things right now.

(I'm glad I put the post there or it would've been the the dreaded "last post" on your last thread).

I'll suffer some paper losses for sure by going long and getting caught that one May weekend but I allocated just as much in phyz over the past couple years. One hand will wash the other at some point. Our PM's will counter balance it all and I'm actually OK with whatever happens to my paper.

Will it suck? Hell yeah. Am I sick to my stomach and letting it bug me? Honestly, no.

I was schooled by the market and events and paid my tuition and I now have my degree in anti-MOPE economics. One day that education, that's still ongoing, will make up for whatever I might give to the market machine soon. It's all in how you look at it.

Dec 12, 2011 - 10:27am

There are three simple

There are three simple factors at work here:
1. The utter failure of the Euro Summit to deliver any substantive response to the unraveling of the EMU.
2. The discovery (via the MF Global bankruptcy) that client funds are neither safe nor truly segregated at brokerage banks and funds.
3. The emergence of "re-hypothecation" and "hyper-hypothecation" into the market's lexicon.

The short answer is that assets have been used to collateralize multiple debt derivatives, like one house backing five different mortgages. It appears that JPM has stolen 140,000 client accounts at MFG to cover their own potential losses. It means that system leverage is far higher than actually reported.

Fund flows are OUT of banks, brokers and asset managers for the foreseeable future.

Tread carefully with YOUR money, nothing is safe.

Dec 12, 2011 - 10:27am

Disgusted with the burning paper

So tomorrow is the FOMC meeting?

Have we seen down days on the Mondays prior to FOMC meetings?

I think this is pretty typical.

Anyone else buying in later today or tomorrow morning?

Or is the HSBC v. MF Global trustee case a game changer?

Dec 12, 2011 - 10:27am

Great Post Turd

I agree with your first comment Turd. Gold and Silver both will appreciate greatly next year.

At the prices that we currently have it is a heck of a bargain, though I do appreciate you providing a little guidance as to what the previous/next trendline is.

Turd I do have one question for you. I know you don't have a crystal ball or anything, but would you look into the Turd Punch Bowl and tell us do the charts and price ranges mentioned above, do you see those playing out over until January or do you think that the lows will probably be hit this week? Next?

I am not trying to corner you, it's just that I am sitting on some powder and am itching to buy some silver soon.

Juan Moment
Dec 12, 2011 - 10:28am

Well my friends, when Gold

Well my friends, when Gold took off in July from $1500 and in short order raced to $1900, hands up if you wished you had bought more at $1500?

Thought so! Me too.

Been hoping for gold to come back down to these levels ever since, and I have a feeling I might get lucky.

Looking at a 10 year gold chart and blind Freddy can see that in the long run gold is heading for the skies. Don't lose sight of the bigger picture and appreciate the short term market corrections for what they are - buying opportunities.

Dec 12, 2011 - 10:31am


What a great time to be a small time bullion dealer.... NOT! oh well BTFD, I did. _______________________________ ~Handmade Quality Bullion~

Red Pill Swallower
Dec 12, 2011 - 10:33am

Keep Stacking

Hooray, I'm only small fry, so physical is on sale again! No $200 premiums for me.

My stack hasn't changed and the paper shenanigans are only relevant to me when I have some spare fiat.


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