The Fed Disappoints

222
Tue, Dec 13, 2011 - 3:48pm

HAHAHAHAHA! That's a good one! As if having the Fed overtly printing money would solve all the worlds ills.

Once again the media incorrectly spins today's FOMC minutes as a postponement or even a (gasp!) cancelation of further quantitative easing. Buy the dollar! Your evil Sith masters are such responsible stewards of the economy that they are prepared stop the presses and enforce credit discipline upon a spoiled, bloated populace.

What a joke. Up goes the dollar and down goes nearly everything else. Please, I hope you are able to see through the fog of this nonsense. Again I ask you, from where is this year's $1.5T U.S. budget deficit getting its funding? From where did the U.S. government get their funding last year? From where will they get it next year?

Oh, whatever. I'm not going to go through all this stuff again. QE to infinity is the only possible option, whether or not Maria Headiromo and Bob Pissonme agree makes no difference, whatsoever.

Anyway, back to important matters. I trust that the continued weakness in the metals is not catching anyone by surprise. Nothing has changed from yesterday or last week and the selling continues. Gold looks almost certain to head toward its 200 day moving average near 1615 and silver looks to be headed to 30. The big question is:

WILL THEY STOP THERE?

Maybe. However, I've got a sneaky feeling that they won't. I suspect that we will see a capitulation in paper selling when gold doesn't stop at 1610 and silver doesn't stop at 30. I've maintained for some time now that paper gold was vulnerable to a drop to 1550 and that paper silver could drop toward 25. Why change that forecast now?

I just saw the OI numbers for yesterday and they are very interesting to say the least. The Feb11 contract only saw its OI drop 1500 contracts. For a drop in price, this is an extremely surprising number. First of all, this nearly confirms for me that much of the front-month trading is done by WOPR. There seem to be very few, human holders of these contracts. Also, it's clear that much of the decline yesterday was due to the initiation of new short positions by The Cartel. Again, with lease rates at -0.5%, this shouldn't surprise anyone. The BIG story is the rise in Dec11 open interest by a net of nearly 500 contracts, from 1545 to 2034! The question is: Who is jumping the queue and why? Is global demand for physical metal this month finally going to be sufficient to explode the Death Star? Is this why The Cartel has desperately suppressed price over 0 in the past 3 months? I sure can't wait to see what tomorrow's numbers are.

As I wrap up, gold is 1633 and silver is 30.65. I sincerely hope that the discussions here over the past week have helped prepare you, financially and mentally, for this brutal selloff. Keep the faith. The only thing truly declining in value is paper gold and silver. I say this with confidence because thephysical gold and silver you have in your possession is invaluable and thus insulated from the day-to-day shenanigans of the paper market.

I'd like to type more but the LTs are planning a birthday party tonight for Taylor Swift and I have to go bake a cake. I hope to have more commentary this evening. TF

About the Author

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  222 Comments

realitybiterBay of Pigs
Dec 13, 2011 - 4:18pm

Gartman

Gartman has called more tops than anyone:

Quote:

“. . .we shall urge the greatest of caution upon everyone, everywhere regarding gold. It is not just over-extended to the upside; it is hyper-extended. It is not just overbought; it is hyper-overbought. We cannot strongly enough urge everyone to avoid buying gold here and we shall go so far as to suggest that those who are long begin the process of quietly heading for the exits and to reduce their positions to the most minimal ‘insurance’ positions possible. Everyone should have perhaps 5% of their liquid assets in gold, but at this point anything beyond that level is excessive.”

–Dennis Gartman, September 29 2010

Gold was 1350 at that time.....

I don't know why he gets so much airtime.

Also, he has always been very emphatic that you had to own your gold in euros. Ok. The Euro was just breaking down to new lows....at 130. It was par with the dollar in 2000.....It was 130 in 2005...if you take a big step back it really doesn't make much sense for an American to hedge their gold with euros....If anything, we are getting a MASSIVE discount because of the euro noise. What happens when they carve all the cancer out of the euro? The fact is none of these fiat currencies are worth hedging against another.

I'm just not convinced that Gartman is worth much paying attention to.

JimmyTheHand
Dec 13, 2011 - 4:18pm

Wanted to share this from Turk on KWN

Bob Pissonme... ahahhahahahahha

I agree Turd, the FED and everyone else in the world that's got a printing press is going to run the hell out of it soon.

I read an article on KWN and I would like to share a excerpt of it with you Turd and fellow Turdites as I think it hits the nail on the head:

"When asked about the implications for gold and silver, Turk stated, “I see the outcome of this mess as inflationary because central banks have only one answer to everything, and that is print, print and then print some more. But even if I am wrong and some central bank keep its currency from inflating and actually deflates, you will still be better off owning gold and silver."

"Their price may go down, but the price of everything else would go down even more, so you would still be better off owning the precious metals. And even more importantly, physical gold and silver do not have a counterparty risk, so you never need to worry about the precious metals defaulting on some promise."

The second paragraph line I italicized to draw attention to it as it really stuck out to me. Darn good point, with Gold and Silver, you are safe either way!

tmosley
Dec 13, 2011 - 4:21pm

Near the start of the year, I

Near the start of the year, I pegged the chances of a COMEX collapse by the end of the year at 75%. In a way, with the MF Global boondoggle, I was already correct, though the evidence of COMEX collapse is obscured by that same action.

Regardless, it will be an interesting new year.

pointer
Dec 13, 2011 - 4:27pm
Dr G
Dec 13, 2011 - 4:33pm

A bit of advice: buy, buy,

A bit of advice: buy, buy, buy. Santa says to never chase gold into strength. Guess what? That means buy now. Buy, buy, buy.

I was PRAYING that I would see Krugs below $1700 in the near future. Well whadda ya know? Picked some up for $1660 today. I think I can get more for a bit cheaper later in the week.

Buy, buy, buy.

Prize Fighter
Dec 13, 2011 - 4:37pm

I'm picking up what they're

I'm picking up what they're throwing down. Just bought a bit of both.

CrazyCooter
Dec 13, 2011 - 4:37pm

What is WOPR?

I spent 5 minutes trying to look it up and its not in turdisms ...

Regards,

Cooter

SilverWealth
Dec 13, 2011 - 4:38pm

Correction

Though I agree with the Turd that physical is most valuable I am not naive.

We live in a lawless land. They will demonize metal 'profiteers' and slap a 90% tax on all gains. They do not need to confiscate. And the penalty for not paying the tax will be major jail time. Anyone following the course of legislation in the Defense Authorization bill and the Patriot Act knows this is a real and easy possibility. Anyone who has been to an airport lately knows how many new goons they are hiring each month to act as implementers.

Sure they'll be a black market if this happens. But it will not be without real risk. For anyone counting on physical to bail them out, it will if you move to another country and take your metal with you. Jim Willie I assume has his off shore and he lives in Costa Rica. Those kind really take action. But for the rest it will remain a struggle thruout. There is no easy way out. No easy safety. Even Faber refers to gold as a store of value held outside the U.S.

tread_w_careCrazyCooter
Dec 13, 2011 - 4:40pm

RE: WOPR

https://en.wikipedia.org/wiki/WOPR

euphemism used here to refer to the computer systems leveraged by the brokerage houses to do their High Frequency cheating and stealing

aurum argentum
Dec 13, 2011 - 4:40pm

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