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 ()


    Eric Original
    Feb 9, 2012 - 1:47pm

    Doc J

    I totally understand. I worry about that crap every single day myself. Message me any time to touch base.

    I believe it was you, a long time ago, in a galaxy far far away, that posted the phrase "up the stairs...and out the window!" I'll never forget it.

    Feb 9, 2012 - 1:48pm

    Fukushima Fallout Exposure

    Good Luck Dr. Jerome on your fading into oblivion...see you on the other side.

    This might be a useful site to check out: https://www.japannuclearreactordisaster.com/


    "If we all capitulate, we get what we feared. But if we fight, things may be different"

    - Anonymous

    Jeanne d'Arc
    Feb 9, 2012 - 1:50pm

    Nice post

    I know we (and our two sets of readers) don't often see eye-to-eye on much, but I thought this was a really strong post, Turd. Credit where it's due.

    In particular, it's a great summary of the macroenomic machinations at play with the USD and the Euro, and the role of CDS, which is far too often overlooked. How the US reacts to protect its banks' CDS liabilities will, in my opinion, determine the course of all markets during this financial year, and what you've set out here looks like a really strong analysis to me.

    It's also, of course, a searing endictment of our banking system, which is rotten and severely wounded (but perhaps not dying), and I think that element is something that the whole PM blogosphere can agree on.


    Feb 9, 2012 - 1:51pm

    But Turd. . .

    . . . Obama saved the day, didn't he?

    "News from The Hill:

    "Obama says landmark deal will help millions of homeowners, By Amie Parnes and Vicki Needham

    "President Obama hailed a landmark deal struck Thursday with the nation’s largest banks over alleged foreclosure abuses, arguing it would relieve millions of people dealt a blow by the sagging housing market.

    "Under the agreement reached on Thursday, large banks—including JP Morgan Chase, Bank of America and Citigroup—are expected to pay approximately $26 billion to cover refinancing costs for homeowners and reimburse homeowners for shoddy foreclosure practices.

    “These practices were plainly irresponsible and we refused to let them go unanswered,” Obama said at the White House, standing before Attorney General Eric Holder and Housing Secretary Shaun Donovan, who helped guide the settlement. “This settlement is a start. We’re going to make sure that the banks live up to their end of the bargain.”

    Feb 9, 2012 - 1:56pm

    Be Prepared--Platinum

    And yet, at $1661, platinum remains about $75-$100 below gold, depending on the day! Wow. When, in your memory, as gold held above platinum for months on end? What, historically, has been the highest platinum : gold ratio? How about gold : platinum? This is an aberration that, over the next two years, should correct itself, right? Platinum should be at $1900 or thereabouts.

    Feb 9, 2012 - 1:59pm

    Losing the psychological war

    Silver guru Dave Morgan is fond of saying the precious metals and related stocks can scare you out (with huge drops) or wear you out (with prolonged periods of stagnation or declines that make one question his or her investments in them).

    Judging by this and other recent threads on this site, this community is suffering what they used to call combat fatigue and now has acquired the tag of post traumatic stress disorder.

    Whatever we call it, we can't afford to lose the psychological war. Those who would suppress the precious metals and manipulate the stocks have deep, virtually unlimited pockets. Arrayed against them, we can sometimes seem like peasants with pitchforks and torches. Added to the psychological warfare of price manipulation are the reports that sites such as this, where the resistance gather to exchange information and support, are being closely monitored.

    We are the underdogs, but we also have economic reality on our side. Eventually, the reality will shatter the various mirages and Ponzi schemes being fostered by the powers that be. For those able to hang in, to suffer all that is thrown at them and maintain the faith, the rewards will be great.

    Staying strong emotionally as well as financially until such time is the challenge.

    Feb 9, 2012 - 2:05pm

    Thanks TF / Dr J

    Great post and thanks for the effort. That took awhile.

    Dr Jerome....What you say makes sense and it's regrettable to hear but I understand where you're coming from. I've given it a thought also and I don't like what I'm reading or hearing regarding big brother. Fading away has come to mind.

    We're at a whole new level of awareness by surveillance across the spectrum by the Govt. and they've set the bar lower in their tolerance of some things they've redefined and legalized as terrorism. We seem to be on a pre-war footing regarding information surveillance and identification of sources imo.

    We're at a point where a steady trickle of civil rights/law enforcement issues are making me question some of what I've written also. "Ameri-skizm" and many others come to mind.

    Thanks for your many thoughtful contributions as Dr Jerome in Turdville and just for being and coming across as a nice person

    Adios' DrJ

    Feb 9, 2012 - 2:05pm


    or we'll just be bagholders with phys

    it can go any way, but I'm betting on metals too for now

    Feb 9, 2012 - 2:09pm

    trader dan has explained

    manipulation plenty of times.

    and everytime the mossad takes out a iranian nuke scientist i crack a beer n toast them.....eh, MONEDAS?....clinknky?

    Feb 9, 2012 - 2:11pm

    Gold is just brutal

    Why on earth would it sell off $22 from its highs? Anyone? Anyone???

    Feb 9, 2012 - 2:12pm

    look at the action today..

    how can you explain it? the US pig has hardly moved..

    Oh , I know its the charts.

    Feb 9, 2012 - 2:14pm

    Why on earth the sell oFF?

    The Kleptocracy needs to keep their Ponzi scheme going a couple more days.

    Feb 9, 2012 - 2:15pm

    Cartel taking it down to 1725 resistance

    and it bounced again. Shaking out the weak hands. Personally, I think the PIG is going LOWER because they know to keep the equities party going and to break through ES 1350 is going to take a little more juice.

    Great buying opportunity. Plus a Greek deal is all but in the bag at this point, despite the rumblings out of Germany. Germans are stuck with Greece for better or worse for another year.

    Feb 9, 2012 - 2:17pm

    Gold just brutal

    Turd, the only thing I see going on is USD/JPY cross is soaring higher. Maybe driving out carry trade players? WTFDIK but it is happening at the same time of this gold/silver sell off.

    Feb 9, 2012 - 2:20pm

    Typical bombing from the cartel

    They have to play dirty to get more bang for their buck and hit it on low volume times.. DESPERATE!!!!

    EBR Mod 0
    Feb 9, 2012 - 2:21pm

    A BIG A$$ thank you Turd

    I have joined this site much later than some of the Turdites but have been in silver since $17 so at least not too late, anyway. I can only say thank you for the words of wisdom and guidance and your time to do it, it is greatly appreciated by me and the other Turdite's comments as I read and learn every day.

    My Old Eagle scout motto "Be Prepared" I am trying with your help as much as I can.

    BTW, I am also into Cu and Pb commodities that I stack also.

    Always carry 3 full mags +1

    Feb 9, 2012 - 2:22pm

    Feb 9, 2012 - 2:24pm

    Globex gold raid

    As mentioned above:

    "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."

    What a joke!

    Maybe support between 1725 and 1730?

    Yes, I suppose its possible that a hedge fund is selling on the Globex in response to the USDJPY but its unlikely. The executions on the thinly-traded Globex are so awful that profit-oriented hedgies would rarely if ever blindly dump into a bidless market.

    Nope. The Forces of Evil have been trying to suppress price below 1750 for almost a week now. This is just their latest escapade.

    Feb 9, 2012 - 2:24pm

    Don't forget $1T fresh Euro's coming online second LTRO

    The second LFMAO will bring $1T fresh Euro's online. I think the cartel is pushing it down now for a nice push to 1800 closer to LFMAO time when jaws drop at the headline news of massive money printing.

    Feb 9, 2012 - 2:24pm

    Why did it spike earlier?

    I dunno. Good luck trying to beat whoever it is that's got paper gold on a yo-yo.

    Feb 9, 2012 - 2:29pm

    Re: JPY

    I remember when it was 115. I remember because that's what it was when I bought my mostly symbolic JPY position. I knew that the JPY carry trade had to break down at some point. Shoulda bought more when I did.

    Tee Hee.

    Groaner TF
    Feb 9, 2012 - 2:29pm

    I agree, No one would dump a

    I agree, No one would dump a lot of contracts at once to drop the price $5 or $6 in seconds to get a bad fill if it was not to manipulate the price. GIVE me a break Dan!

    Feb 9, 2012 - 2:29pm

    Here's a good example of big bro's "curiosity ....20 yrs ago!

    FBI memos paint Jobs as driven, reality-distorting visionary

    The main Apple Inc website featuring Apple co-founder Steve Jobs is seen on an iPhone in this photo illustration taken in Central Sydney October 6, 2011.

    Credit: Reuters/Daniel Munoz

    Thu Feb 9, 2012 12:27pm EST

    (Reuters) - Apple Inc co-founder Steve Jobs, hailed as one of the greatest technology visionaries of his generation, dabbled in illicit drugs in his youth and alienated colleagues yet commanded universal respect, according to interviews conducted by the FBI in the 1990s.

    A series of interviews with friends and associates -- whose names were redacted by the bureau -- painted a familiar picture of a technology visionary who intimidated associates and insisted on getting his way, but whose drive and vision inspired admiration.

    The FBI in 1991 began questioning Jobs and associates as the increasingly high-profile CEO of Next Inc began to be considered as a candidate for sensitive, presidential appointments....


    Feb 9, 2012 - 2:30pm

    The Federal Reserve's Explicit Goal: Devalue The Dollar 33%

    The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

    An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.


    Feb 9, 2012 - 2:30pm

    Pressure building up on Gold - rotation soon?

    We haven't seen a good shot of hot money in a while now. The pressure is building.

    The Vet
    Feb 9, 2012 - 2:32pm

    Why the sell off....

    It's paper gold that's selling off not physical.... COMEX has become a joke; run entirely by the EE and with the traditional buyers of COMEX paper gun shy after MFing Global, there is nothing to stop the EE and a few HFT momentum players chasing the price all over the charts.

    While the price of gold and silver is set by paper monopoly games we are going to see these gyrations and they will get worse. The physical dealers are not following these prices anymore because they are meaningless. The ETFs are controlled to match the paper shorts by short selling of their stocks on the SM. As I reported last night there are 800 tonnes of silver sold short via SLV alone. That's the "official" figure which is only updated occasionally to avoid giving the small players any insight as to what is really going on... On top of that there is naked shorting, use of ETF shares to satisfy COMEX delivery (all paper and none of it backed by anything) and a whole raft of other shady deals that the public have no clue about...

    There in no transparence except for the "see through" invisible and imaginary metal being shuffled electronically from one computer screen to another...

    Feb 9, 2012 - 2:32pm

    Do an overlay of USD/JPY and spot gold on 5 minute chart

    Seems to me a perfect mirror image, coincidence?

    Feb 9, 2012 - 2:33pm


    Looking hard for laws that are still working. Why I am watching 1750 on gold/law of economics. Challengers to the system are on ice. When gold/crude stop working, the only thing real about "money" is its perception. They need to let gold rise from here- or they don't. The state of lawlessness, if you know what I mean.

    Feb 9, 2012 - 2:35pm


    That was interesting to read and consider.

    In your opinion, what would it take for that whole menagerie to stop in it's tracks and not continue unabated? A large player who can't cover their shorts for whatever reason, maybe a bankruptcy?

    Feb 9, 2012 - 2:36pm

    Always looked forward

    Always looked forward to your post Dr.J,glad to hear you will still be lurkin around!!!

    Thanks to all who contribute--This site is one of the best on the Net!! Hands Down.

    Now if we can just get a dip to 32....

    Ill be all in....once again!!!


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