The Only Charts That Matter

Wed, Dec 14, 2011 - 10:34am

Boy, oh boy. Lots of wailing and grinding of teeth this morning. Look, I know it's hard to see paper gold at 1610 and paper silver under 30. Frankly, it sucks. Again, though, I must ask you: Which fundamentals have changed? Additionally, why on earth would you sell your metal here and convert it back to fiat? However, I know it's hard and many of you feel like Clark Griswold. (Substitute Jamie Dimon or Jon Corzine for "Frank Shirley")

Tylenol Commercial

Again, things can change and we must be mindful of the possibilities. I think paper gold at 1550 and paper silver at 25 are extraordinary buying opportunities BUT, IF PRICE CONTINUES TO DECLINE, THROUGH 1500 AND 23, we'll need to stop out any new trading positions and seriously re-assess where we go from here.

Lastly, many have asked how I could successfully warn you of this debacle a week in advance. Like most things around here, it's not complicated. Take a look at this chart of gold lease rates:

Again, the "lease rate" is the net rate of interest a bullion bank like JPM pays to a central bank like the Fed to borrow gold. The bank then takes the gold and sells it on the LBMA or the Comex. After painting the tape and initiating the beatdown, the bank can then cover the new short position, thereby reclaiming the gold it borrowed for return to the central bank. With one-month lease rates at -0.5%, the bank actually gets paid interest by the lender to borrow the gold. Its a win-win for JPM et al. They make interest (which they like) and prop desk trading profits (which they like even more).

After a lease rate-induced selloff such as this, the key to confidently calling a bottom will not only be technical price levels, but a lessening of negative lease rates, as well. IF, by later this week or early next, we see gold at 1550, silver at 25-26 and one-month lease rates back up to -0.3% or so, we'll be able to call another bottom similar to January. Stay tuned.

So there you have it. As I wrap up, we're down to 1602 and 29.10. Looks like the 200-day isn't holding. No big surprise there. Keep the faith. TF

3:55 pm EST UPDATE:

Searching for a bottom? I think we're pretty close. These charts tell the story:

And if you haven't read this yet, you should do so now. It might put a smile back on your face. You'll likely recognize many of the price targets listed in the report. (Full disclosure: Though I did work for Smith Barney for a few years back in the 90s, I did not write this report. )

A full update later today. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Dec 14, 2011 - 10:36am


What a rancid day to manage to be first.

Get it over with.

Dec 14, 2011 - 10:38am

Silver Dollars

Colorado Gold has Maple Leafs at $31.84

Dec 14, 2011 - 10:38am


Thurd! Now BTFD!

Dec 14, 2011 - 10:39am


The U.S. government has $145B in treasuries to roll on Thursday. This is a massive one day amount! Only $8.5B is owned by the Fed who has already agreed to roll all of their maturing treasuries. The planners have to keep gold and silver suppressed in the meantime. As long as there is the perception of demand for USD and USbonds, the Ponzi survives.

PPT all over BAC this morning. It seems $5 will be defended to the death.

Dec 14, 2011 - 10:43am

RE: Colorado Gold

Yup the maples are $31.37 as of this moment, but you have to be ready to buy a monster box worth of them. I'm not ready for that big an order yet.

As I was typing this, silver broke into $28 range - $28.92.

Bay of Pigs
Dec 14, 2011 - 10:43am

Whats that smell?

Gartman says the Golden Bull is dead.

“Since the early autumn here in the Northern Hemisphere gold has failed to make a new high,” Gartman wrote. “Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.”

Dec 14, 2011 - 10:44am

Turd Interview

Hi Turd -

It would be great if you could interview one of the executives at the gold/silver producers to find out how they sell in this environment.

For instance - do they hold back inventory/or do they sell at a higher physical price than the paper market.

I would find that fascinating!

Dec 14, 2011 - 10:45am

CME Broke?

I've written an op/ed piece on the CME behavior in the last 90 days.

I'd like to get other's take on my comments.

Please feel free to destroy my argument.

However, my current conclusion is that the CME is broke.

I think we're seeing an attempt to paper over the default of the market itself.

CME can not back the trades being made on its market.

CME can not claim to have a legitimate price action on gold or silver because the settlement of the contract itself is broken.

Therefore, my conclusion is that the MF Global bankruptcy is a financial 9-11 event.

MF Global has taken out the entire agricultural industry's financial structure.
MF Global is much worse than 9-11.

MF Global has essentially interfered with the planting season for 2012.

Dec 14, 2011 - 10:46am

They just prove

They just prove the fact that everything of their's which is paper is really in fact WORTHLESS.

Look how adjustable it all is. Zero Credibility.

Fr. Bill
Dec 14, 2011 - 10:47am


If you'll trying singing your posts, you might be able to avoid the stutter.

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

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Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

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