Wednesday Wobbles

Wed, Jan 4, 2012 - 4:10pm

Just a few housekeeping items today. I also have for you the latest analysis from our buddy, Ned, in England.

First up, the metals. Reasonably solid action today. Prices were predictably smashed back in London but they recovered some in New York. As speculated in the last post, gold fell back to 1595 before catching a bid and charging higher. This was very nice to see and certainly constructive for the days ahead. Next, it needs to move through 1620 before the end of the week. If it fails to, The Cartel will be emboldened and may very well initiate a minor raid in an attempt to squash this nascent recovery and drive gold back under 1600. Silver is holding the line under 30 but, similar to gold, it needs to continue moving higher or the Forces of Darkness will prevail and drive prices back down. As of right now, it does not look to have the momentum necessary to mount the sustained charge through $30 that it will need to generate some interest.


OK, now let's talk some politics. I was amazed to see so many vitriolic comments overnight about the Iowa caucuses. Frankly, I'm just surprised that any of you actually thought that Ron Paul was going to win, much less charge on from Iowa to the republocrat nomination.

Some have tried to claim that this is a "Ron Paul site". It is not. Some folks want me to support Ron Paul. I do. But, see, here's the doesn't matter what I think or what you think. A candidate like Ron Paul would never, ever, in a million years be allowed to win the republocrat nomination. Ever. Romney will be the nominee to run against O'bottom, regardless of how badly you and I dislike him. It was decided four years ago. See, here's how this works:

  1. Nixon lost the election in 1960. Nixon stands down in 1964 as Goldwater is finally given his chance.
  2. Nixon returns in 1968.
  3. Reagan wants the nomination in 1976. Stands down for Ford.
  4. Reagan is rewarded for being a good soldier with the nomination in 1980. GHWB stands down.
  5. GHWB is rewarded for being a good soldier with the nomination in 1988. Dole stands down.
  6. Dole is rewarded for being a good soldier with the nomination in 1996.
  7. W gets the nomination in 2000. McCain stands down.
  8. McCain is rewarded for being a good soldier with the nomination in 2008. Romney stands down.
  9. Romney will be awarded for being a good soldier with the nomination in 2012.

You see, none of them had a chance. Perry, Gingrich, Bachmann and especially Paul. Romney was coronated in 2008. It is a done deal.

This is why I'm trying to control the blatant, political flaming on this site. What the fuck is the point? If you're going to come on here and argue for anyone other than Romney or O'bottom, you're wasting your time and everyone else's. It makes no difference how passionate you are. It matters not whether Ron Paul is the only candidate who has a chance of "righting the ship". All that matters is that the government/media/financial complex has already decided who will stand for election. Until and unless TPTB become The Powers That Were, none of the arguing, debating and voting will amount to any change at all.

And, finally, this great new piece Ned Naylor-Leyland. Ned neatly summarizes the events currently affecting the PM markets. Nice job, Ned!

Gold and Silver in 2012 – Deliverance
(DELIVERANCE: 1. ‘The act of delivering or the condition of being delivered’. 2. ‘Rescue from bondage or danger’.)
Why are Gold and Silver falling when they should be rising?
The collapse of MFGlobal proved that US Regulators now consider the balance-sheet stability of SIFIs (Systemically Important Financial Institutions) to rank above the cash deposits or collateral belonging to Joe Public. We have now officially gone through the Looking Glass and down the Rabbit Hole, into a world of Soviet-style central economic planning. The CME, the CFTC and the SEC appear to think it reasonable that a bank, lending funds to a brokerage house like MFGlobal, should then be able to take (and keep) the underlying client money and collateral as part of a margin call against the brokerage house. The implications of this event have not sunk in everywhere, even if they have to owners of Precious Metals. As ever, Gold and Silver investors are the most sensitive to issues of solvency and counterparty risk, and as such they have fled the COMEX and the paper market (as per the reduction in Open Interest). This flight has led to substantial pressure to the downside for spot prices. It is clear that the hypothecation of customer ‘assets’ held within the banking system is yet another form of woodworm hidden within the global financial architecture. Meanwhile, even if you can buy coins in the Bullion Dealer at 5% over spot, the much bigger wholesale market is showing signs of extreme stress and Deliverance. CEO of Anglogold, Mark Cutifani, summed it up as follows:
“Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold.” Thanks to MFGlobal the custodial chains that lie behind the veneer of physical ‘ownership’ have been laid bare for all to see and the sight is truly ugly. No-one buying Precious Metals in size will now risk using the CME/COMEX, unsurprising after the debacle of the last month. They have shown their hand and it was a breathtaking sight. The CME could not make even less than $1B of customer funds whole, for fear of setting a precedent with respect to hypothecation. 

Another important point with respect to the recent ‘price action’, is that when ‘selling’ something, the seller usually looks for ‘best execution’. That is to say he wants the highest price for whatever it is he is selling. If we are to imagine even for a moment that the price action in Gold and Silver is reflective of free markets, we can expect sellers to sell only when they get best price, during times of maximum market participation. The reverse of course is the case here; throughout 2011 we have repeatedly seen waterfall declines in both metals during the illiquid ‘access market’, designed to trigger further technical selling. Effectively, the big drops in price have all happened when any selling in size would guarantee the largest drop, as there were no buyers around to take the other side of the trade. This doesn’t sound like an attempt at best execution, rather an exercise in ensuring worst execution to drive the market lower. In the background, meanwhile, there are just 600million ounces of deliverable Silver in global inventories. Every year total annual mine production is around the 700million ounce mark while every day around 260x total annual Silver production is traded in global markets. We also know from recent comments by Jeffrey Christian of the CPM Group that the leverage in the huge unallocated Gold market is around the 350:1 level. No-one could reasonably claim that investors buy Gold to get just a 0.3% physical backing to their contracts. Investors buy Gold as a hedge against non-linear events, and as insurance against the behaviour of Bankers and Governments. The buyers of delivered physical metal are being swamped by the Collectivists selling paper promises of Gold and Silver which no longer have any semblance of reality.

With the leveraged western futures market now vacated by speculators after the outrage of MFGlobal, with a 1:1 allocated spot market being developed in China, and with institutional investors waking up to the difference between real and ersatz Precious Metals, 2012 is set up to be the ultimate year of Deliverance. This idea of a sea- change coming over the horizon is also supported by technical analysis of important and secular Bull markets, where the biggest move tends to happen after a period of capitulation by weak hands. See the comparison of the current Bull market in Gold and the decade-long NASDAQ (in blue):

Global ‘fiat’ currency markets are going through their death throes. These confidence-based currencies are being nursed and eased through their terminal phase by Central and Commercial Banks. On a cursory examination Governments and Bankers are doing a reasonable job of making the currencies appear viable in the short-term, despite the ever-expanding black-hole of indebtedness surrounding them. A closer inspection, however, reveals that the US is technically insolvent. The UK is technically insolvent. The Eurozone is technically insolvent. There is no viable way for Western nations, especially Spain, Italy or France (another SIF acronym) to borrow their way out of their deficits. The US recently even set up an esoteric and open-ended Dollar Swap line with the ECB to bail out the European Banks, keeping the overall ‘fiat’ system alive in the short-term and kicking the can just a little further down the road.

The US, the UK and European Governments are ALL intervening in Precious Metals markets in the vain attempt to prop up their currencies, as is shown by the flooding of leased (paper) Gold into the system in December. Indeed instead of charging a rate of interest to lend (paper) Gold, Central Banks were paying the commercial banks to lease and then dump metal this month. The London Gold Pool of the 1960s is back and in full and overt effect. The leased ‘Gold’ already has multiple owners, has been rehypothecated endlessly and serves to further depress the true coverage in the unallocated Gold market below the already absurdly anaemic 0.3% level. From here, on a macro ‘Central Banking’ level, there are really only 2 realistic outcomes – one is a total systemic banking collapse (caused by the black-hole of debt consuming everything in its path), leading to deflation and martial law. The other, one would hope, is the more likely outcome – more monetization (QE), dilution and leading from that, inflation. Historically, Central Bankers that have recourse to the printing press will always use it, and Ben Bernanke at the Fed is the most overt supporter of such activity there has ever been. He once even threatened to drop freshly printed bills from helicopters should the threat of systemic deflation rear its head in earnest. 2012 will undoubtedly see more rounds of Quantitative Easing. The US, the UK and the Eurozone have signaled as much already, it is just a question of timing. When this happens no amount of selling paper contracts into thin volume in the access market will stop the ascent of Gold or Silver. Genuinely, the only liquid and viable competition to ‘fiat’ stores of value are Precious Metals. Gold and Silver have always been the enemy of the Statists and have represented free markets and individual liberty for millennia. Never has the need to squash Gold and Silver been more critical to fractional-reserve banks or bankers. The clash between the individual and the State is building to a crescendo. The set up for 2012 looks profoundly bullish despite the brazen paper selling of promises to deliver Precious Metals by the collectivist paperbugs. This reversion to the mean (ie reversion to a physical market for the metals) has been a very long time coming. It does however appear in terms of today’s price on the screen, to have been an example of ‘be careful what you wish for’. Continued volatility can be expected from here, but I am with the Commercial Banks (for once!) in expecting new all-time highs for the metals as 2012 progresses.
Ned Naylor-Leyland, Cheviot Asset Management
January 2012

Have a great evening. TF

p.s. A Turdite has started a new site. There he has posted all of the data he has acquired through following the am and pm LBMA fixes. You should check it out:

p.s.s. A special thank you to Turdite "Fool" who took the time to ship some "survival goodies" to Ron who then forwarded them on to me. I received them today. Very thoughtful.

About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 4, 2012 - 4:12pm



Buzz Wired
Jan 4, 2012 - 4:19pm

Tracking Paper & Physical Silver Price Divergence

(a repost from the bottom of the previous thread)

Does anyone out there know anyone who is tracking & charting price divergence for Silver for the various purchase vehicles (and is willing to share)? 

I see Harvey Organ's daily report with the premium for PSLV (as well as other metals), but has anyone charted the whole daily history going back to 2007? I'd guess it is breaking out today.

As of ~3:30PM Eastern today...

Spot price for Silver is down about 2% to $29.14.

Sprott PSLV is up about 1% or $14.43 share, where 1 share = .388 oz, so this would equal a price of $37.19/oz, a 27.63% premium vs. spot....the fattest premium I can recall ever seeing. 

A 1 oz American Silver Eagle on is $31.50/each...which is a ~8% premium over spot. Is this increasing too or is that normal?

A share of SLV paper Silver is going for only $28.38, a -2.6% discount to spot.

PSLV and the Spot price are not just diverging, but one is going positive, while the other is negative the same day, by 3%! I have not seen that before. Anyway, I thought this was interesting. Any insights on charts or comments confirming what I see, that the divergence seems to be growing are appreciated. Thanks!

Jan 4, 2012 - 4:19pm

Ron Paul

Yes precious metals IN HAND is the way of the future...

The 'realistic' idea behind supporting Ron Paul is that if there is a split in the republican ticket and RP has enough swing votes, his words might get some air time. Isn't that the real message? Get the word out and let others know that small government, less regulation, more liberty, less war, etc. are NOT fringe ideas? Just like the birth of the Tea Party (which has been co-opted by the republicans now), once the word spreads, people are much more likely to chime in with their discontent...which might lead to action.

Better than being a lemming...or a newt!

Jan 4, 2012 - 4:20pm

Fed Looks to Further Socialize Housing

The Board of Governors of the Federal Reserve released a white paper today with the intention to “provide a framework for thinking about certain issues and tradeoffs that policy makers might consider.” In the paper, the problems with the housing market are described as “impeding the economic recovery.”

The real impediment for economic recovery is the squandering of resources with propping up housing. Hence, the problem with central planning is what one organization thinks is good, is not necessarily the best path to prosperity. To make matters worse, the Fed wants to further socialize housing through expanding Fannie and Freddie. So the banks are allowed to profit while housing is being propped up and all of the losses are put on to tax payers and dollars holders for when housing inevitably tanks again.

Jan 4, 2012 - 4:21pm

Some PM's related 1/04   

Some PM's related

1/04 Negativity in gold reaches epic levels – MineSet
1/04 Gold will not trade below $1,500 ever again – King World News
1/04 Is gold washed up? – Daily Reckoning
1/04 Gold resolutions for 2012 – 321Gold

Jan 4, 2012 - 4:25pm

Thanks Turd

& great job Ned!


Jan 4, 2012 - 4:28pm

‎"These candidates are dog

‎"These candidates are dog shit. All we're doing is picking out the dick that's going to fuck us."


Jan 4, 2012 - 4:32pm

Ron Paul and Gold and Silver

Please consider my point about gold and silver to be exactly Turd's point about Ron Paul. Astronomical gold and silver prices can NEVER happen under the current financial and monetary scheme, just as the current financial and monetary scheme can NEVER allow someone like Ron Paul to take office.

Gold/Silver/Ron Paul/Honest price discovery, all of these things, are antimatter to the current Ponzi sceme. They can't happen under the system. So when we discuss astronomical prices, what we are really speculating on is when will the system collapse/TPTB step in and devalue.

PS: Ron Paul damages TPTB by just being in the race. Central banking works by hiding in the shadows.

Jan 4, 2012 - 4:36pm

Romney v Paul (others)

i agree that Romney was promised the victory in 2012 (saw it with mcain in 08). However, nothing is of course, guarenteed.

I think the head of the Repubs were shitting bricks when santorum soared as much as he did against Romney. That shows just how bad Romney will be. This of course is good for Paul (currently) and everyone else.

On that note, Paul did not lose Iowa. All 3 got the same amount of delegates in the technical sense. In reality, only Paul has the ardent supporters that would stick around to BECOME delegates. Wich means anything could be possible come time to pick the national delegates.

Romney will take N.H., i would be suprised to see Paul in second there. Santorum is out of the race tho, he wont make it to super tuesday.

Over all i see a Romney/Paul race to the end with Gingrich and probably Perry sticking around to muck things up.

Beyond super tuesday tho... who knows.

People need to stop saying Paul wont win tho. Say it enough and people believe it.

What does that have to do with the price of rice anyways? Do you win some prize for not voting for him, but the obvious winner instead? Does that some how make Romney better? No, vote your conviction not what others try to tell you will happen.

Jan 4, 2012 - 4:37pm

Re: Ron Paul and Gold and Silver

Smiddywesson, indeed. The key for those of us holding physical will be in its utilization. It is highly unlikely that anyone will be 'allowed' to hold the physical if the situation becomes one where it's price explodes - it would then be "too valuable" in the eyes of TPTB for the average person to hold. One hopes that the sheer mass of intelligence on this blog can enlighten us as to when that premium utilization will be at hand.


Jan 4, 2012 - 4:41pm

So the banks are allowed to

So the banks are allowed to profit while housing is being propped up and all of the losses are put on to tax payers and dollars holders for when housing inevitably tanks again.

Well, that was and always has been the plan. Now the parasite has a steady stream of income of which it can continue to feed itself off of. Of course all the bobble heads will say this is good for the housing market rebound.

I Run Bartertown
Jan 4, 2012 - 4:44pm
Jan 4, 2012 - 4:44pm

Thanks Turd

just received my hat.

Jan 4, 2012 - 4:45pm

Turd's Full of Sh*t

Paul's gonna win. :)


Colonel Angus
Jan 4, 2012 - 4:49pm

Ron Paul, timing, etc.

I once thought that we were just days away from having a real explosion of liberty. I thought we would see people voting for Ron Paul and lots of people rejecting the USD and bracing for the coming storm with PMs. I've become slightly more jaded in recent weeks and months. Hell, I was at the Wal-Mart yesterday for some dumb reason, and it became clear to me that people don't even want freedom. There were fat asses in scooter carts that Wally World provides, like some Disney ride for the lamebrained. (I know some people really need those things but others have just put too much weight on to walk for themselves.) They were scouring the 50% off of Christmas shit sales. Then as I watched Romney's and Santorum's vote total rise to the top, it was all too clear that we are just years ahead of the time. People need to be forced to read 1984 and Brave New World and Anthem. (They'd never get through The Fountainhead.) More than that they must be forced to watch V for Vendetta and Luther. People would then have to have the dots connected for them.

I'm so far long actual physical metal that it almost hurts. I've been adding to my totals and have only begun to look at my savings in ounces of gold and silver rather than converting to USD. I'm learning. I'm also bringing some of my undergrads along with me. The grad students already know way more than I do (just ask them...until they start writing that dissertation...then things change in their minds) to take me seriously. But they know where I stand, and they are forced to think about it. Some day they will look back and start to consider what that old crusty bastard (all 37 years of crustiness) had to say. If we could just assure that the Wal-Mart shoppers would do the same, maybe we would have a choice other than Obama and Obama-lite. (Remember that Romneycare came first.) Until then, we have to keep on fighting the good fight. I may not see a free country, but maybe my kids will. They are worth the fight and the derision from the others.

Jan 4, 2012 - 4:51pm

Turd - Ron Paul

and pmetals are similar - just like stacking in the face of a blizzard of paper manipulation, open and vocal support for RP is an excellent form of water torture for TPTB. Both these things are about ignoring the 'facts' and focusing on the inevitabilities that lie behind them. 

drip, drip, drip

Jan 4, 2012 - 4:52pm
Jan 4, 2012 - 4:52pm

Ned's commentary

Loved it. I agreed with everything but the following:

2012 will undoubtedly see more rounds of Quantitative Easing. The US, the UK and the Eurozone have signaled as much already, it is just a question of timing. When this happens no amount of selling paper contracts into thin volume in the access market will stop the ascent of Gold or Silver.

Cowpaddies! QE has been going on continuously for years. They stealth print just enough to kick the can. Ned's description of 2012 is not how the system works. That's not how it worked in 2011, 2010, 2009.... Get the picture? But that doesn't mean Ned is wrong. The real significance is the way things work are about to stop working, all at once, all over the world. The can kicking will come to an end soon, and we all have to devalue our currencies and decide upon a new unit of international trade (SDR) and what's going to back that unit (gold).

(And any country remaining under the Euro is going to have to issue domestic currencies so they can devalue too. They will all have two currencies, a domestic one, and the Euro which will trade against the SDR)*

I smell rate fixes and currency boards on the horizon.

* See Harold James, Striking Euro Gold (and Silver). It outlines the EU's only alternative to collapse.

Jan 4, 2012 - 4:53pm


Boatman posted this on the last thread and I wanted to thank him more publicly.

@smiddy, dr G........MS is easily cured

Submitted by boatman on January 4, 2012 - 4:06pm.

i have seen it.......course if diet changes are not easy then..................

A thousand hat tips to you. A very good friend's twenty eight year old son was just diagnosed with MS. I forwarded it on to them.

As so many have said, "I love this place". While not even looking for answers the community here supplies them. I'm not sure who posted something regarding this the other day, maybe Dr. G, I can't recall. He made mention of a very intelligent article from ZH. He followed it up with a statement about the posts after the article. After reading one or two he said, "who are these ignorant, obnoxious beings"? Okay, I'm not sure he said that, but that's what he meant.

While we may not agree, like, or find some offensive here, that is truly the exception in Turd Town. I know I don't say it very often, but TF you did a good thing giving us the platform to put this community together.

Thx, Murph

Jan 4, 2012 - 4:54pm
Jan 4, 2012 - 5:06pm

Hormuz Party...

Hormuz Party...

So the Iranians say that any sanction increase will lead to a closure of the Hormuz Straight. Ok...

Now Obama enacts new sanctions, and Europe rushes to do the same... This cuts from 5% of the world oil supply. So prices will go up... Is it the right time for high prices? Clearly no.

One word: force Iran to do something silly, like shutting Hormuz, to strike.

And WTI still at 103.3 ? What a fucking joke... We are clearly set up for a breakout of november high... Gold gonna go to the moon with it.

Jan 4, 2012 - 5:23pm

advice is to go die?

Geez, Turd, it sounds like I should just eff off and kill myself, then, because my Overlords are going to win anyway, in politics as it is in economics.

You may be right, but I'll be dipped if I'm going to consent to it, or let 'em burn me down without a struggle.


Jan 4, 2012 - 5:23pm

Received my order today. I

Received my order today. I noticed the 2012 Silver Maples are a fraction smaller in Diameter but thicker than the 2011's....still a lovely coin to say the least.

Jan 4, 2012 - 5:23pm
Jan 4, 2012 - 5:25pm

The Turd is angry Paul didn't win!

So am I but not at the media or big brother but in my fellow American sheeple. Victory and freedom only die once the last man has stopped thinking and proclaiming freedom. Our cause will never end, never, as long as there is GOD, victory will be ours in the end!

Why run for political office to STOP the NDAA, what's the point it's a done deal and all the venting compassion for those who oppose it is in vain anyway. (General Turd Ferguson)

Why you might even find some idiot without a printer who uses his cheese press to publish his writings on freedom. But then again what's the point as the chances of changing things are zero. (Benjamin Franklin)

Why these hopeless fools are a complete joke and just days from total collapse. (George Washington's army the night they crossed the Delaware and destroyed the Hessians)

The American army will be destroyed today on this field of battle, Trenton NJ. (Right before sharpshooter Timothy Murphy from atop a tree picked off both British generals at 200 yards!)

Be brave my Turd for when the army erupts into cheers and a fever before battle without the motivation of it's officers or generals then victory will certainly befall them no matter the odds. (Tsu Zu The Art of war)

In order to be free one most embrace all the freedoms and not the ones of our own choosing.

We stand with you oh General Turd,

Jan 4, 2012 - 5:25pm


That vid was awesome man.

Economical Disaster
Jan 4, 2012 - 5:30pm
Jan 4, 2012 - 5:40pm

I'm calling it

Romney for antichrist. See you at Gitmo.

Jan 4, 2012 - 5:47pm

I agree

@ TF: .... "A candidate like Ron Paul would never, ever, in a million years be allowed to win the republocrat nomination. Ever. Romney will be the nominee to run against O'bottom, regardless of how badly you and I dislike him."

I agree. The MSM likes Romney and he's ratings friendly (ad revenue). Also, John McCain came out and endorsed Romney today. It's Obama vs. Romney. Romney wins. Picks Newt or McCain as VP.

Thanks for the update TF and also to Ned for that blast of PM reality.

There's a upside down shot glass and a frothy mug at the Speak for both of you shortly.

Jan 4, 2012 - 5:52pm
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