Ramblings - Let's Talk Dollar, Gold, Silver, Crude and Freedom

Thu, Feb 9, 2012 - 12:40pm

One of the major challenges in compiling and writing this website every day is in keeping it all coherent. Since I am currently only able to offer one or two threads per day, I struggle to include all that I feel is pertinent into one, tidy and neat little package. Today is particularly challenging in this regard. Please bear with me.

So, where do we start? How about this? As you know, my Lind/MF account was transferred to RJObrien back in November and the charts I use every day come from the RJO website. When I open the charts window, the default screen is a chart of the ES, which is the heavily-traded, mini S&P futures contract. Every day, I have to look at this silly chart and, every day, it makes me want to puke. Of course, there's nothing to see here. No. The Fed, through the Primary Dealers, isn't slowly goosing the market higher. Of course not. Rrrright... What kills me is the horseshit nonsense that is constantly peddled be the media and the paid, disinformation agents of the blogosphere. Equities can rally 20% in 10 weeks. No "bubble". Not "overbought". Never. However, you get one little sustained move in the PMs, even against constant Cartel suppression, and every deltabravo shill from Christian to Nadler comes out of the woodwork to defame them.

Next, let's talk about the U.S. dollar index or, as we affectionately call it around here, The POSX (or The Pig or Pigatha). While it's true that The Pig is, roughly, flat year-over-year while gold is up 25%, DO NOT discount the impact that moves in the index have upon the daily fluctuations in PM price. This has always been the case but it is especially pronounced here in 2012. In the post-MFG world we now inhabit, the paper metal trade is dominated by The Cartels on one side and HighFrequencyTrading computer programs (WOPRs) on the other and most WOPRs are programmed to buy or sell precious metals based upon minute movements on the POSX. So, what we have are PM "markets" that are subject to wild gyrations based not upon their own fundamentals but, instead, the fluctuations in the dollar brought about by ever-changing headlines out of Europe and the Middle East.

Below are charts of The Pig. First, there's a refresher on the makeup of the POSX. Remember, the POSX is an index. This means that it is a measurement of dollar strength against a "basket" of other currencies. As you can see below, though, the primary component is the euro so big moves in the EURUSD have a disproportionate impact on the POSX.

The Pig has been desperately trying to stay above 78.50 for the past two days. Will it hold in there again today? Answer that question and you'll go a long ways toward predicting the next move in PM price.

Below are your PM charts. As you can see, gold is still being suppressed below 1750-55. Silver, however, continues to show some real strength and I'm getting increasingly enthusiastic that it is about to break higher and race off toward 35 and 35.50.

As we wrap up the "chart section", here are a couple of looks at crude. Study these for a moment because there are some headlines below that will be affecting the fundamentals of this market soon.

Now, onto those headlines.

It certainly appears that the U.S., NATO, Israel and Iran have all come to the conclusion that conflict, or outright war, is inevitable. Maybe someday soon we can discuss the unpredictable, geo-political, economic and biblical implications of all of this. For now, you should at least be considering how to prepare yourself financially for what seems to be coming over the horizon. Some of you will undoubtedly buy some crude oil futures or options but I know that most of you don't fiddle around with that stuff. My friend Mister Hyde trades the UCO, which is a 2X long crude oil ETF. It's probably not something anyone should sink big bucks into but, if the world is going to end, you might as well go out with a little extra fiat in your pocket.







And Syria is all part of the equation.



I could keep posting headlines but I think you get the point.

The metals have pushed higher today because of dollar weakness brought about by headlines of an impending Greek "deal". If the recent pattern holds, look for these headlines to be refuted by later today.



As expected and right on cue, there's this:


Many have asked what I think will ultimately happen here. (Keep in mind that I'm the guy who thought that S&P would never downgrade U.S. debt.) To me, it's quite clear after Santa filled in the missing pieces last week.


This is all about the word default. On March 20, the Greek government faces a 14.5 billion euro debt payment. Currently, they are unable to make this payment. If they miss this payment, they will be in default. No ifs, ands or buts about it. Regardless of how someone might attempt to spin it, missing your payments is a default. End of story. From Merriam-Webster:

Definition of DEFAULT
1 : failure to do something required by duty or law : neglect
2 : a failure to pay financial debts

If a "deal" is not struck before 3/20/12, Greece will be in default. As Santa has alerted us, a Greek default will trigger a payable event for the Credit Default Swaps issued on Greek debt and 97% of the Greek CDS were sold by the Big 5 U.S. banks. I HIGHLY DOUBT that this triggering event will be allowed to take place. Sometime in the next 5 weeks, A DEAL WILL BE STRUCK which restructures the Greek debt and avoids "default". The impact will be very much precious metal positive long-term. Why?

  • A large proportion of the Greek bondholders are European governments and European banks. The "haircut" that the bondholders will be required to take will stress the already-underfunded balance sheets of many of these entities. So cash must be created to shore up these balance sheets. However, by charter, the ECB cannot simply print money from whole cloth like the U.S. Federal Reserve. Can you say LTRO to infinity?
  • But LTRO will not be enough. The IMF will also be used to funnel dollars to European banks and governments, too, and from where does the IMF get most of its funding? The U.S., of course! Can you say QE to infinity?
  • If, on the off chance, a deal is not struck and the Big 5 TBTF banks get put "on the hook" for billions in CDS, the FED will simply create the funds necessary for the banks to slide to Europe.
  • The final bullet point is EXACTLY what The Fed did in 2008. Recall that, back then, AIG was the issuer of billions of CDS. When the underlying financial instruments (CMOs, CDOs, etc) went into default, AIG was on the hook for billions that they didn't have and the TBTF bank balance sheets were insolvent without the CDS "insurance". What happened? The U.S. government took over AIG and settled the outstanding CDS debt by having the Fed print money to be funneled to the TBTF banks.

    Ultimately, the only question is: Who is going to be stuck with the losses that the Fed will paper over? In the end, it doesn't really matter. The Fed will print dollars to soothe the crisis. These dollars will be sent to Europe either directly, through the IMF and ECB, or indirectly through the CDS payoffs by the TBTF banks. Billions....maybe even trillions...of new greenback is about to be created. The only protection you have against the purchasing power destruction of this event is to buy and hold physical gold and silver.

    I feel I must take a moment to touch upon the "robo-signing" settlement, too.


    Lest you think otherwise, all this "settlement" represents is covert QE for the bankrupt states of the U.S. The banks, which will be forced to shell out the $26B, clearly do not have the funds to do so. From where will the money come? The Fed, of course! As they have for 3+ years now, The Fed will simply journal over $26B in newly-printed dollars for the TBTF banks to distribute to the states. Only a fraction of this money will ever reach the homeowners who were screwed out of there foreclosed homes. The states will simply include these settlement dollars in their "general accounts" and use the proceeds to cover their varying budget shortfalls. It is all just a gigantic scam constructed as a way to covertly give the states the money they so desperately crave.

    Lastly, I find myself spending more and more time considering and discussing the ever-encroaching powers of The State. In ways both large (SOPA and NDAA) and small (The Catholic Church vs Obamacare), American freedoms are being constantly nibbled away by the government piranha. It is also happening at the local level as the story below shows. The American nanny-state is now so expansive and inhibiting that children in California are no longer able to dig holes in the sand at the beach. Sadly, it is likely too late to reverse this tide of government intrusion upon the most basic and miniscule components of your daily life.


    That's all for today. I've been banging away here for almost 3 hours and it's time to get on with my life. As I close, I see that the metals have barely budged while I've been at it so at least I haven't missed much. Watch out for volatility though this afternoon and overnight. Not only will the headlines be moving The Pig around but The Cartels would very much like to see silver under 34 and gold under 1750 at the Comex close tomorrow.

    Keep the faith. TF

    About the Author

    tfmetalsreport [at] gmail [dot] com ()


    Feb 10, 2012 - 5:14pm

    Thanks that list is a good

    Thanks that list is a good place to start,every bodys needs are not the same

    love your hat

    Feb 10, 2012 - 4:02pm

    Top 100 items to disappear

    Great post napa... I started my prepping by checking the master list that has made it's rounds on prepping sites for years.


    Feb 10, 2012 - 3:02pm

    wow that was scarey

    i hat tipped napa698 above on page 4, n i got recognized as him and was able to edit his words.

    why couldn't it happen to some knucklehead post......some obozite's........

    flying monkeys?

    Feb 10, 2012 - 2:36pm

    I'm not sure if this is the

    I'm not sure if this is the right place to talk about this but i thought i would throw it out there anyway.We all seem to agree that hyperinflation is in our future that's why we are stacking our pms.First let me say that pms should only be purchased after all other prep are taken care of first,how much food and water do you have on hand can you heat your home or have a way to light it up ay night?Now i'm not saying that you won't be able to buy these thing but the price will go up to the point that you cannot afford it.What if gasoline went to $8.00 a gallon,thats what they pay in europe,could you still afford to go to work?

    I believe that hyperinflation will not all of a sudden show up, but will be instead a process that will evolve over a period of a year or two and the government will not sit by and do nothing they will try to fix/control things, big surprise, wage and price controls will come bank holidays and when all else fails martial law will be imposed.

    Let me talk about each of these things and what you should do to prepare for them:

    1st Wage and price controls won't work never will but that does not mean they won't try the way i look at it they will say that if they freeze wages at a certain % increase per month or year that will keep prices from going up, but what they won't understand is that it's not that people have to much money but they have lost confidence in that money and that is what hyperinflation is loss of confidence, they will spend it as fast as they get it.price controls might work for a while but i don't see food rationing working out that well, all that will do is drive the things you really need onto the black market or underground if you prefer .They will talk about the evil people that horde things and have gold and silver, they are the problem they are the ones causing prices to go up think i'm kidding they will always find someone else to blame.

    2nd Martial Law this scares me the most and here is why,they will want to take your gold your silver your weapons your excess food they might even offer a reward for information about "these kind of people" and at this point you will have to ask yourself the question that Sir Sean Connery asked Kevin Costner in the 1987 movie the Untouchables, What am I prepared to do,if you don't comply you will be considered a outlaw, read that again, let it sink in,WHAT AM I PREPARED TO DO.

    Sure you could pack up and head for the hills with some like-minded friends, but unless you have thought this through in advance it doesn't sound like a very good plan to me,you might be able to do it but what about your wife or children do you have parents to worry about, brothers or sisters ,are they ready/able to do this can you leave them behind, I think not.

    So there it is the bad news,I did say that i would offer some suggestions for getting threw what i see as the future of the American people in the not to distant future.

    The first thing is do not go on Nat Geo and tell everybody, what your name is,where you live, how much food you have and that you have a lot of guns,are you kidding me,these people are first going to have every single person they ever met showing up and asking for help next you know who will be stopping by.Keep your preps to yourself loose lips sink ships the old saying goes.You have to do everything in your power to get your loved ones on board use the inflation argument not the end of the world as we know it story ask the person who does the shopping have you noticed the price of coffee or tuna lately.Guns should be brought up as an investment not a means of protecting themselves.Let them ask you questions don't preach.

    Ok i am not a financial guy but i don't see the reason anyone would keep there money in a IRA or a 401K.I know that you can't take it out because of the penalty and taxes argument but if inflation is running at 10% like it is now are you really making 10% or more now just to keep even and do you really think that taxes are going to be less in the future.Will there be some law in the future that a certain amount of money in retirement accounts will have to be used to buy US bonds,i don't know but are you willing to take that chance,maybe you are waiting to see what happens and are going to get out when you see trouble coming,just remember this that your financial guy calls the brokerage house and they sell at the close of the day they send the check to you or to the bank it will take 5-7 days for that to clear and who knows how much they will let you take out by then. Get YOUR money out and buy stuff that will continue to go up in value,food,tools ,ammo,guns,gardening tools,seeds for gardens and most important PMs you get the idea.If you believe as i do you have to commit ,you know its coming what are you waiting for.

    As far as getting ready not other than what i already said start to make contacts with people that could be of help in the future.Get to know the people at your local hardware store get to know their names if the time comes that you really need something he will be willing to sell to you vs someone he has never seen before and later down the line maybe he would be willing to use barter as a method of payment,thats not going to happen at the Home Depot or Lowes.Just stop and think about it, go to a smaller butcher shop get to know him is there someone nearby that sells eggs or firewood if they can't help they might know someone who can.The black market will be there but only to people that they know and trust you better be that person.I could go on with things to stock up on that will be as valuable or even more so than gold or silver little things that are cheap and easy to get now, 2 cycle oil for chain saws extra spark plugs,flashlights, batteries,diapers ,kerosene lamps ,kerosene,aspirin,and on and on get it now get out of cash before it become worthless.

    There are hard times ahead now is the time to commit and get ready don't think that you will be able to time it and get out at the last second.

    Good luck to all and may God Bless

    Feb 10, 2012 - 1:20pm

    @ mudshark.

    Gobsmacked, your post is pure poetry. So they look askance at you, well of course. Long ago we had a guy called Morton Shulman in my country, his mum made him be a doctor, but in his heart he was a stock operator, and so smart he ran rings around the street, made complete fools out of them, a renaissance man, the guy could do anything except be nice, he was kinda rude. Suffered very few fools. Not a bud, but he had a great expression which i memorized as a young man..... dont try and talk sense to people in love with their dreams. ......

    Feb 10, 2012 - 1:09pm

    There is no Gold or Silver being sold off

    A bunch of pieces of paper are being bought and sold.

    Feb 10, 2012 - 12:57pm

    What Does One Do.

    This is quite the state of affairs. The money is no damn good. Its plain worthless, so step one is get the Christ out of it while the illusion persists.

    What do you do though. Thats the 64 thousand dollar question.

    Im going to pay 1800 bucks for a little gold coin? This i sincerely doubt, first of all the average American has NO savings, Zilch, so forget it , once they had equity in their homes, so there was an illusion of prosperity that got spent on Lawn Boys, but that was then. People seem to have forgotten that they should be flat terrorized by their mortgages, its a gigantic debt, a terrifying debt, that can and has put you on the sidewalk,.... there is one direction, and one direction only for a mortgage and thats down. Not up DOWN. Stand on your head , that number has to come DOWN. This may sound arcane, but people used to have mortgage burning parties, the last payment is made, and you burn that mmmmmmf er.

    America has a fatal flaw in its tax code, namely the deductibility of mortgage interest, America stands alone in this pure idiocy, because it encourages witless behavior, like refis, take out 50, buy a SUV. Meet the bailiff.

    So we are effed right? Yup. A combination of generational decay, overabundance, and the nuclear umbrella. Humans fall apart in abundance, they flourish in scarcity, and thats what we have been since we dropped out of the trees and went hunting.

    Is there something out there to save me. I am cooked,

    Yes there is, SILVER... which is going deep into the hundreds... this is the shorthand escape hatch. We did everything wrong, conducted ourselves like complete drunken sailors starting in the 70s, we had no war to fight, Mr Oppenheimer fixed us up in New Mexico in 1944, so we did not take our turn fighting. he ruined the game. Sorta.

    Ok so silver was 50 bucks in 1980, in 1980 dollars, which, and people can carp, is give or take 400 in this scrip that passes as currency today. Thats about 15 times the present price of 33. You don't suppose this slothful post war generation could escape their gross irresponsibility. Do ya? few will , but this board does. Stack.

    But 50 dollar silver in 1980, disco dayz, i love disco!!! but lets face it, this was the Hunt corner, its not a very good number, but Blythe masters took notice, dad was a fishmonger, so a lot of cod went down that gullet.

    Lets adjust this number, 50 in 1980 is not good, its a corner, Corners are no damn good, inherently unstable, unrealistic, and it quickly crashed back to single digits once challenged. And stayed there for decades.

    Fair enough. Its a bullshit number.

    But of course our measuring rod has collapsed too , we have 8 to ten times as much chinese (worthless) paper flying around a planet with three times as many people.

    lets work with 400 for the sake of argument. Thats 8 times a 1980 dollar, which at the time actually had some integrity, we hadnt debauched it yet.

    Cut it by two thirds, so give or take 250 dollar silver. Currently 33. In scrip.

    Was there an electronics industry in 1980, not really, not yet, It was Big Yellow ... Eastman Kodak, Polaroid, and every bank in the world had this heretofore useless grey metal taking up space in the vault.

    Nothing serious, there was 11 billion ounces then, with no material industrial uses. It hadnt happened yet, Steve Jobs was given up and adopted, great trade that was, but still in diapers.

    But the silver is GONE its a shell game ... a perfectly transparent racket, in the service of keeping idiots in the US Dollar. One by one the idiots are being converted.

    How much silver is aboveground today??? TRY NONE, Jeffie Christian belongs in the pantheon of shame along with Nadless, Kitco, Gartman, Dynamite kid, the lot of them that take money, or more accurately information, , when,, after Murphy read Mcguires testimony into the CFTC record in March 2010, he had a bolivian marching powder order, and revealed that silver was being fractionally banked at a hundred to one. Well done jeffie, silver went vertical, 145 days later it went from 17 to 50, JP morgan was 20 billion underwater, and they barely stopped it at the now double top. Not for long, the policy is demonstrably bankrupt. its dumb in fact, so silver pays a vist to Area 51, and heads straight to double digits. Deep.

    There is a comical irony here, with silver about to go up ten or 20 times, granted the measuring rod is somewhat suspect, but you dont suppose this fatcat lazy post ww2 generation who never had to fight courtest of the manhattan project, you dont suppose we could sloth ourselves right into the ground, having raped the earth on borrowed money, and good god IT WORKED.

    Thats a chuckle. A big one. Outrageous, who ever said it was fair, theres your trade, stack it and shut up.

    r , so cast about , and since we are amenable to facile and painless solutions to hardship

    Feb 10, 2012 - 11:49am

    out of line

    And i apologise to the board and tf. im an idiot.

    That said, consider the stakes, every day one after another some other country does a barter deal, some kind of reciprocal, but the common theme is exiting the US dollar as the medium of exchange. And why not. Its worthless.

    Who buys these sidesplitting treasury issues, nobody buys them to yield zero, you would have to be plain insane, the only buyer is the fed, its just monetization, desperate monetization, there is NOT ONE natural buyer in that market. China is trying to lose about 2 trillion, they are on airplanes on every continent doing deals trying desperately to diversify their error into some kind of hard asset..

    Go look at your chequebook, take a peek at what you paid for the same goods and or services in the last 2 years. face it, inflation is ten percent, a steady ten, a relentless ten, so the rules that have always prevailed are you get a real return of 300 basis points, a fact that has endured since the dawn of financial time. That means that a correctly priced US T bond should yield 13, not zero point something. This is plain and simple theft.

    Not zero point 88 .... this is theft. Pure criminality. Imagine if you had a value system, these people did , they saved us by winning that war, and that you worked hard your whole life and just turned 65 with your savings, and how do you do, meet ZIRP. What?? I have to live on this money. Its raw criminality. Craven criminality.

    So it goes kaboom. I mean really, it goes kaboom. maybe this afternoon, but soon.

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    Feb 10, 2012 - 11:25am

    $1724 and Bernanke

    Looks to me like the price acted this way for the last 48 hours because somebody knows something about what Chairsatan is going to say in 67 minutes. Maybe they had to create some pad between prices when Ben opens his mouth and $1750. (that and the POSX)

    Feb 10, 2012 - 11:13am


    This may be radical, all they have done is mute the rise, why would they do this..... THEY WANT IT AT 1800, it renders it impossible to buy for the average person, they could have stood on the thing at 300, what we are doing is rationing by price, get it the fuck up there with nobody noticing, and its now far too expensive for John Q.... you get a trinket for 2 grand.

    That's not such an outrageous idea as one would think. If I had a gold eagle for every time I have tried to get my father in law to buy gold and he has responded, "I would love to, but it's just too expensive now" I'd be rich.

    They use the bubble talk to scare people off,

    They use the volatility to scare people off,

    They use the ridiculous talk about no return and you can't eat it to scare people off,

    Maybe, just maybe, they use the price to scare people out too.

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