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

    turd [at] tfmetalsreport [dot] com ()


    Feb 10, 2012 - 11:03am

    Nanny State

    What do you expect?

    You elect congress to make laws, so they do, which is why there are ka-zillions of 'em on the books. You can hardly get out of bed and make your morning coffee without breaking one of them.

    Since they have to make laws AND get re-elected, they go out of their way to create and support imbecilic new laws that make them LOOK good to their constituents, all the while selling us down the drain to the "Nanny State".

    I don't believe it matters one whit whether a democrat or a republican or a liberal or a conservative (with the exception of Ron Paul) gets elected to congress OR the white house - they ALL live to sell off our rights to make their Media-brain-dead constituents think they are tough on whatever the issue-de-jour happens to be at that particular moment.

    They've got a new one they're all champing at the bit to enact that will force ISP's to log EVERYTHING their customers do for literally years on end to, ostensibly, protect children from becoming the victim of child pornographers. This is one hideous bill, but whose going to vote against it since all rational people believe in stopping child pornography? Hardly anybody, since who wants to go on record as being 'soft' on child pornography?

    The ghastly state we're in fair boggles the imagination. When I was young I never dreamed things would turn out the way they have. Sad thing is, they're getting worse, not better.

    Feb 10, 2012 - 10:40am


    How 'bout braised backstrap and potatoes with carrots and onions!!

    Just Kidding!!

    When my kids were little and we adopted a new pet, they would look for a distinguishing feature on the animal and come up with a fitting name. Does the doe have anything that is obvious that could be the inspiration for a unique and fitting moniker?


    Smiddywessonargent rampant
    Feb 10, 2012 - 10:39am

    @betterand better

    Those observations match my own. The increasing movement of ever larger amounts of silver between vaults is a three card monte game which tells us something is going to happen. The analogy I used a few weeks ago was to the book, Beau Geste. When all but three of the soldiers were dead, they propped up the dead on the walls and ran back and forth from wall to wall shooting at the enemy to make it appear the fort was adequately manned.

    You don't need to frantically move silver around if you have enough silver and are not under attack.

    Feb 10, 2012 - 10:27am

    Strongsidejedi, you seem to have missed my point...

    I couldn't agree more about CPAC! However they weren't the point of my post, I was trying to highlight what the Senator was talking about, the idea of personal responsibility and the freedom to take risks and succeed or fail based on equal opportunity. The power wielded by the right and the left is given to them by US.

    We are the ones responsible for our current situation, we have allowed the bankers, politicians and behind the scenes power brokers to foist this current oligarchical control on us. Unfortunately, it may be past the point of no return without some sort of upheaval.

    GL, I'm not sure yet either about Rubio, he says some good stuff yet he voted for NDAA as did all FLA congresscritters. He is part of the establishment in my view. My wife thinks he is just another oligarch clothed in anti-establishment garmets.

    Mudsharkbytes, you are right in your post, althought the argument is much more complex than either of us can quickly communicate in a short blog post.

    The point of my earlier post was to say that if we could somehow get back to a simpler societal underpinning, we would all be better off. Hell, just look at the size of the Tax Code. Our leaders for the bulk of my adult life have tried to legislate morality, hence we now find ourselves with a nanny state hellbent on controlling our every move.

    When is enough, enough?


    Feb 10, 2012 - 10:07am

    Ranting Andy on the Miners

    In his 7 Feb 12 blog Ranting Andy posted the following:

    The Cartel uses numerous tools to suppress metals, including hitting the HUI [and naked shorting the miners]. But they have been experiencing DIMINISHING RETURNS in every attempt to knock the sector down. I don’t own mining shares anymore, and NEVER will. However, DO NOT FEAR THE CARTEL, particularly if you own PHYSICAL gold and silver as opposed to PAPER investments such as mining shares. If you own PHYSICAL PMs, you have already won, so rest easy and make further preparations for the financial Armageddon heading our way like a runaway locomotive.

    PROTECT YOURSELF, and do it NOW!

    Feb 10, 2012 - 10:02am

    DaddyO, it's not just greed…

    It's also a combination of the element Frank Zappa claimed was more prevalent in the universe than hydrogen, stupidity, combined with a generous dollop of self cultivated ignorance. And it is, unfortunately, widespread amongst the baby boomers, my peers, and they're a difficult bunch to teach new tricks to.

    We got this way by spending way too much time believing what the media tells us - by trusting that TPTB have our best interests at heart. News flash, with few exceptions they don't give a shit about anything but stuffing their own pockets and those of their enablers with fiat and to hell with everybody else. But they're NOT stupid or ignorant, which is why they made sure to spread the paper around to various members of the legislature and judiciary so they could buy up all the media so THEY can make sure to control the message and KEEP us nice and stupid and ignorant and controllable.

    And it's working.

    Hell, I read about TSA, NDAA, SOPA, PIPA, ACTA, WTFA and it makes me go weak in the knees, but does your average Joe Blow give a crap? Nope. In the not too distant future there's going to be some serious shit hit this country and those who have had the foresight to stack metals, food, guns & etc… are going to weather it better than most, but try explaining that to anybody and they give you that sideways look that says, "I think you're some sort of looney". I've given up even trying to explain.

    Couple of days ago we had a primary here. My whole family went in and voted for Ron Paul. On the way out there was a Ron Paul supporter handing out flyers and conducting a decidedly unscientific exit poll. I asked her how it was going and she was pretty excited, said roughly 2/3'rds were voting for Paul. As results came in, Paul started out at 12% and NEVER VARIED a single point from that percentage, not ONCE! Romney and Santorum kept vollying with Santorum, finally taking the prize. WTFIWIYP!

    I don't know for sure, but I fear we're screwed politically and societally until my generation finally dies off. Unfortunately, by then, the NEXT group to wield political control will likely be just as brain dead from overexposure to controlled media as we were.

    Sorry for being such a grump this morning.

    Key Economic Events Week of 7/6

    7/6 9:45 ET Markit Service PMI
    7/6 10:00 ET ISM Service PMI
    7/7 10:00 ET Job openings
    7/9 8:30 ET Initial jobless claims
    7/9 10:00 ET Wholesale inventories
    7/10 8:30 ET PPI for June

    Green Lantern
    Feb 10, 2012 - 10:00am


    Very interesting video. I've never listened to him. Indeed, a good speaker with humor. At first glance, he doesn't seem part of the establishment with hair growing out of his nose and ears.

    I'd have to hear more about his thoughts on foreign policy and monetary policy but from that speech alone. Sounds like promise. Thanks for sharing it.

    Feb 10, 2012 - 9:56am

    Message on CPAC

    I can't believe how much pandering the MSM gives to CPAC.

    Do you guys really think CPAC is anything but a bunch of old farts sitting in the same set of stalls?

    CPAC blew it when they bailed on guys like Gingrich back 15 years ago.

    CPAC blew it again when they hailed guys like GW Bush and then spent our nation into 14 trillion of debt.

    CPAC then points at Obama and complains that the deficit added 3 Trillion while CPAC ignores the other 14 trillion in spending that is on their tab.

    CPAC at its core is NOT conservative because CPAC believes in big government spending. That's why all these politicians show up to talk to a bunch of old farts sitting in the same set of stalls.

    There's no base because Ron Paul isn't there and its the Ron Paul voters who ARE the base of the old GOP.

    CPAC has a bunch of neoconservatives who turned GOP during the Clintonian era and held the reigns of power under Bush 43.

    I hate to burst the partisan bubble, but anyone who thinks CPAC or their speakers are going to "change" anything is "hoping" on the wrong thing.

    argent rampant
    Feb 10, 2012 - 9:53am

    Something up in the silver vaults?

    If you are not already visiting https://silverandgoldcoinblog.com/

    daily, you should. Here is a little something I picked up there today:


    "If you look back at last weeks comex reports done by Harvey, you can see that there is an increasing amount of 'silver' being sloshed around. I mean, a hundred thousand here and there was normal, but these increased levels in and around the million to two million mark signals something is coming. Now if I could tell you when that is, well, we would be owning Islands that we cant even pronounce. Until then we can speculate that the increased activity is signalling major moves soon. Down or up, last time we had these fluctuation was last February and we all know what happened in the spring."

    Live well, love much, laugh often, learn always!
    LaMachinnaEric Original
    Feb 10, 2012 - 9:47am

    Dear Doe/what shall we name her?

    she is family and visits us so often.....and she is a beaut. Any ideas?

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    Key Economic Events Week of 7/6

    7/6 9:45 ET Markit Service PMI
    7/6 10:00 ET ISM Service PMI
    7/7 10:00 ET Job openings
    7/9 8:30 ET Initial jobless claims
    7/9 10:00 ET Wholesale inventories
    7/10 8:30 ET PPI for June

    Key Economic Events Week of 6/29

    6/30 9:00 ET Case-Shiller home prices
    6/30 9:45 ET Chicago PMI
    6/30 10:00 ET Consumer Confidence
    6/30 12:30 ET CGP and SSHW to Capitol Hill
    7/1 8:15 ET ADP Employment
    7/1 9:45 ET Markit Manu PMI
    7/1 10:00 ET ISM Manu PMI
    7/1 2:00 ET June FOMC minutes
    7/2 8:30 ET BLSBS
    7/2 10:00 ET Factory Orders

    Key Economic Events Week of 6/22

    6/22 8:30 ET Chicago Fed
    6/22 10:00 ET Existing home sales
    6/23 9:45 ET Markit flash PMIs for June
    6/23 10:00 ET New home sales
    6/25 8:30 ET Q1 GDP final guess
    6/25 8:30 ET Durable Goods
    6/26 8:30 ET Pers Inc and Spending
    6/26 8:30 ET Core inflation

    Key Economic Events Week of 6/15

    6/16 8:30 ET Retail Sales
    6/16 8:30 ET Cap Ute and Ind Prod
    6/16 10:00 ET Chief Goon Powell US Senate
    6/16 4:00 pm ET Goon Chlamydia speech
    6/17 8:30 ET Housing Starts
    6/17 12:00 ET Chief Goon Powell US House
    6/18 8:30 ET Initial Jobless Claims
    6/18 8:30 ET Philly Fed
    6/19 8:30 ET Current Account Deficit
    6/19 1:00 pm ET CGP and Mester conference

    Key Economic Events Week of 6/8

    6/9 10:00 ET Job openings
    6/9 10:00 ET Wholesale inventories
    6/10 8:30 ET CPI for May
    6/10 2:00 ET FOMC Fedlines
    6/10 2:30 ET CGP presser
    6/11 8:30 ET Initial jobless claims
    6/11 8:30 ET PPI for May
    6/12 8:30 ET Import price index
    6/12 10:00 ET Consumer sentiment

    Key Economic Events Week of 5/25

    5/26 8:30 ET Chicago Fed
    5/26 10:00 ET Consumer Confidence
    5/27 2:00 ET Fed Beige Book
    5/28 8:30 ET Q2 GDP 2nd guess
    5/28 8:30 ET Durable Goods
    5/29 8:30 ET Pers Inc and Cons Spend
    5/29 8:30 ET Core Inflation
    5/29 9:45 ET Chicago PMI

    Key Economic Events Week of 5/18

    5/18 2:00 ET Goon Bostic speech
    5/19 8:30 ET Housing starts
    5/19 10:00 ET CGP and Mnuchin US Senate
    5/20 10:00 ET Goon Bullard speech
    5/20 2:00 ET April FOMC minutes
    5/21 8:30 ET Philly Fed
    5/21 9:45 ET Markit flash PMIs for May
    5/21 10:00 ET Goon Williams speech
    5/21 1:00 ET Goon Chlamydia speech
    5/21 2:30 ET Chief Goon Powell speech

    Key Economic Events Week of 5/11

    5/11 12:00 ET Goon Bostic speech
    5/11 12:30 ET Goon Evans speech
    5/12 8:30 ET CPI
    5/12 9:00 ET Goon Kashnkari speech
    5/12 10:00 ET Goon Quarles speech
    5/12 10:00 ET Goon Harker speech
    5/12 5:00 ET Goon Mester speech
    5/13 8:30 ET PPI
    5/13 9:00 ET Chief Goon Powell speech
    5/14 8:30 ET Initial jobless claims and import prices
    5/14 1:00 ET Another Goon Kashnkari speech
    5/14 6:00 ET Goon Kaplan speech
    5/15 8:30 ET Retail Sales and Empire State index
    5/15 9:15 ET Cap Ute and Ind Prod
    5/15 10:00 ET Business Inventories

    Key Economic Events Week of 5/4

    5/4 10:00 ET Factory Orders
    5/5 8:30 ET US Trade Deficit
    5/5 9:45 ET Markit Service PMI
    5/5 10:00 ET ISM Sevrice PMI
    5/6 8:15 ET ADP jobs report
    5/7 8:30 ET Productivity
    5/8 8:30 ET BLSBS
    5/8 10:00 ET Wholesale Inventories

    Key Economic Events Week of 4/27

    4/28 8:30 ET Advance trade in goods
    4/28 9:00 ET Case-Shiller home prices
    4/29 8:30 ET Q1 GDP first guess
    4/29 2:00 ET FOMC Fedlines
    4/29 2:30 ET CGP presser
    4/30 8:30 ET Pers Inc and Cons Spend
    4/30 9:45 ET Chicago PMI
    5/1 9:45 ET Markit Manu PMI
    5/1 10:00 ET ISM Manu PMI

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