The Significance of 1665

Fri, Jan 20, 2012 - 11:04am

I was recording this week's podcast yesterday when it finally dawned on me. Frankly, I'm disappointed in myself that I didn't figure it out sooner. Take your eye off the ball and get a little distracted and this is what you get. No matter, at least now we know.

First, some history. Without a doubt, the $250 run in gold over five weeks in August and September was almost entirely caused by Cartel short-covering and we spent a considerable amount of time discussing this last fall. In summary, the gold CoT numbers told the tale. The CoT from Tuesday evening, August 2 was:

Spec long = 292,000

Cartel long = 155,000

Cartel short = 443,000 (Cartel net short almost 3:1)

Gold price = $1650

By Tuesday evening, September 6, the picture had changed rather dramatically:

Spec long = 248,000 down 15%

Cartel long = 174,000 up 12%

Cartel short = 402,000 down 9% (Cartel net short almost 2.5:1)

Gold price = $1900 up 15%

Again, this is why the reporting of a gold "bubble" was such utter nonsense and any reporter/blogger espousing that idea is to be permanently avoided because that person is either stupid or deliberately misleading you. Gold went up 15% in five weeks because The Cartel panicked and began to rapidly decrease their net short position. As you can see in the data above, the speculative (supposedly dumb) money was selling into the strength, undoubtedly locking in gains along the way.

So, now, put on your thinking cap. Try to recall what happened shortly after August 2, 2011. Anyone? Anyone?

After the close on Friday, August 5, S&P announced that they were downgrading the credit rating of the U.S. from AAA to AA+. I believe this singular event was the "final straw" for the banks that have been willfully manipulating gold and silver for decades. All of the market action since has been a reaction to the S&Ps move. The massive and deliberate takedown of gold and silver in late September was orchestrated to drive price lower so that The Cartel and The EE could continue covering their massive short positions but at a much more profitable, lower price. This effort continues to this day. Look at the latest CoT numbers:

Spec long = 166,000 (down 43% from early August)

Cartel long = 160,000 (flat from early August)

Cartel short = 327,000 (down 26% from early August) (Cartel net short now 2:1)

Anyway, the point of going through all of this again is to demonstrate that The Bullion Bank Cartel clearly got spooked and changed their modus operandi post the S&P downgrade announcement of 8/5/11. Getting back to current day, how does this affect current price and technical action. Well, my brothers and sisters, $1665 is exactly the opening level of gold on Sunday evening, August 7, when the metals resumed trading on the Globex. For the next several weeks, we speculated upon whether or not gold would ultimately fall back and "fill the gap". Nature abhors a vacuum and charts abhor gaps. Always have and always will.

It didn't take too long, unfortunately, for us to have our answer. Here's a reprint of a chart from September 23 where we were watching the 1665 level very closely:

Clearly, by reviewing the action of this week, a line has been drawn by The Cartel. They do not want to see gold move back above least not yet. They may soon get overwhelmed and lose the battle but, as we've seen on the charts and in the daily growth of open interest, The Cartel would like very much to keep gold under wraps for a little while longer. Do they want to get their gold net short position to 1:1., similar to the progress the EE has made in silver? Maybe, but the fundamentals in gold are so overwhelmingly strong that I don't think that they are going to have the time to pull this off. (It's taken The EE almost 9 months to move from the same 3:1 net short position to the current 1.5:1. It will be nearly impossible to hold gold in its current range for another 6 months.)

Anyway, now we know why 1665 is so important to The Cartel. Hopefully, near-term pressure will force gold higher and through that level. The Pig and DrC are helping its cause. However, next week is option expiry for Feb12 and first day notice, too. You've got to expect that The Cartel will try to keep gold down for a while longer.

By the way, you can bet your batooty that the next, major resistance for gold will be 1705. Longtime turdites will undoubtedly recall the significance of that level, too.

Lastly, here are three items that you need to check out, either today or over the weekend. First, another KWN interview of Santa. (I've tried to get Santa to do a podcast but he won't commit. I'll keep trying.)

Someone sent me this article that discusses the PAGE. The author claims that the exchange won't be open until June. Nuts. I've sent a few emails trying to confirm this. I'll let you know if I hear anything.

And, lest your heart despair with CNBS et al fawning over the "earnings" report of Bank of America, Dave in Denver knocks it out of the park with this analysis. Be sure to read:

That's all for now. Please check back later this afternoon as I will be posting TFMR podcast #11. As I mentioned above, I recorded it yesterday and it's a pretty good one. Thanks again for all of your support! TF

12:20 pm EST UPDATE:

Very, very nice FUBM rallies this morning, particularly in silver where the price is now $31.50, well clear of $31 and headed toward stout resistance near $33. (Do you recall the significance of that level, too?)

That said, we must watch things very closely here. The charts below are self-explanatory.

Stay vigilant. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 22, 2012 - 8:58am

x-post from the Speakeasy

Captain dining on shore with Eastern European girlfriend sold separately

Too soon?

It's already laying on it's side.

Jan 22, 2012 - 8:44am


We are lucky digital photography came around when it did. If we were still using film photography and lead-free solder and solar and all the new Ag uses of the last decade came about, silver would be in short supply.

Remember that movies are all digital now. Ten years ago they would make 3000 copies of three reels of film for each movie, tons of film fore each release.

Jan 22, 2012 - 6:50am


real good advice....i have seen some nightmares......actually never hit one....10,000mi. under the keel over there....and i go where the charts do not even cover.

its all reading water depth by color........blues n greens n white....occasionally brown

brown is a reef!

where i go u can only travel between 10 n 3 in the summer...and towards the sun is REAL tough....which makes it real tough in the winter.

no polarized glasses.....u are where the cruise ship is......on the rocks.

28" draft in my 34' boat helps alot.

thats why i designed it that way.

oh-pirates....... wayyyy more danger in our cities or on the interstate.

Jan 22, 2012 - 4:12am

It is interesting to watch

It is interesting to watch these prices as they go up and then go down but the bottom line is that gold is still the best thing to invest in. The problem is that many people simply cannot.

Investing in gold is great for those that can afford it during times when money falls and for those that know where the markets are headed in the long term as well as the short term.

Jan 22, 2012 - 3:45am

Kodak bankrupt.... hmmm

Am I too suspicious?

When the price surpression is front page news, who is going to get the blame?

Maybe that big industrial user that is now out of business, out of cash, out of reach. Convenient.

Jan 22, 2012 - 12:38am

Cpn- Vamoose1's Numbers for fun

Just a thought experiment here to see where we might find a 3000$ valuation for silver: 1. Total US gov debt- 15trillion. Projected by 2020 to be around 30 trillion at current rate of increase. What would gold have to be valued at to "back" this much debt in a new currency system? 2. US has 8,133 tons- 16266000 pounds, therefore 26026600 ounces. 3. Divide US debt ca 2020 by total ounces held and you get : 115,266 dollars per ounce for a gold price. Given the recent 40-1 ratio average of silver to gold, this would mean a per oz price for silver of 2,881.65 $ per oz... Or around 3000. . Just saying do not dismiss this out of hand- sheeple aren't the only ones who can be misled by normalcy bias. Just some food for thought, I enjoy working through ideas like this. All the best, Pining

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
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5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Jan 21, 2012 - 11:21pm


i suspect that you're at least partly right. silver is going to unbelievable levels.

BUT, there are a couple of important questions. the first being "when?" the ee seems to be able to come up with delaying tactics without limit. i thought silver was ready for a rocket-ride in 2005 based on fundos, the inelasticity of both supply and demand, and lots of other factors. silver's up from 2005, but not really a rocket-ride - specially if you consider inflation. ...speaking of inflation that brings us to the second question. if silver at some point in the future has a hundred bagger, how much good does that do us if bread, milk, gasoline, and big macs have a ninety five bagger?

the longer the ee can play the delaying game, the closer we are to seeing a ninety five bagger in big macs. "it's all relative," said oedipus to jocasta.

Santa's Elf
Jan 21, 2012 - 11:09pm

@ bemoosed (FOFOA)

I read FOFOA's piece on 90% taxation and it's quite a time commitment. That said, if you want FOFOA's opinion without the lengthy rationale, it's basically this:

Taxation is unlikely and if it happens, you can bet it'll be short-lived. That being the case, if it does happen, be patient in selling your gold until it passes. Freegold will bring a valuation for gold that has scarce been contemplated by even the staunchest gold bug.

Jan 21, 2012 - 10:41pm

x times 100

Pay attention.

We are sitting here carping about 32 or 33, jesus fucking christ, we are headed deep into the hundreds. Possilbly the low thousands. Dont chatter to me abou the importance of 33. Kindly grow up.


The worlds silver is gone. Industrial silver consumers do not give a flying fuck about the price, its a very minor input, it could be 30 or 300 they dont care.

Well we do.

God grants gifts.

Who are the american patriots, its you guys n gals. The people on these sites. We see it. they the authorities are angling to shut them down, you are very dangerous. We deeply love our country, and our country is irretrievably fucked. there is no escape short of 25 years of incredible sacrifice, now kindly be serious,

Everybody is diminutized. A fucking fortune awaits.

I cannot save my country. 330 million souls, sluggin n tryin. And totally lost. In a miasma of benign ignorance.

You are here, and you see things. You are wildly unusual people.

For ten to 20 times you stack. for 100 times you buy 6 stocks, in order to aviod the exigencies of mining, which Hecla was kind enough to demonstrate, entirely inadvertently.

Could you make a thousand times your money????? Dont bet your wife or childern. Options on silver stocks.

The whole entire board is fiddling and faddling in the low 3os.

Are there any adults in the room? god has given you several hundred times your money. he likes principled people. he saved vamoose, who was so remote from being religious its the stuff of comedy.

I care for my friends, when i am right, it can be wild. Well, silver goes insane.

We are primarily Patriots, we love our misbegotten country. as an expatriate i love my yankees.

Central to the issue is you fucking save yourself, you multiply your assets times 100, THIS MOOSE HAS DONE IT, that moose was horseshit lucky,,, partly yes.

There sits silver, humming, vibing, and saying wanna kiss?

Remember Area 51, tbhe most incredible chart in the history of TA. Do you want to scream at your friends.

You cant do that, ok then i will scream elliptically.

The trade of the century sits there, THE FUCKING SILVER IS GONE, do the math. Sorry friends. Over the top so sorry, forgive me. BUT I KNOW. ciao.

Jan 21, 2012 - 9:37pm

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