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Spoke Too Soon - Gold and Silver Still Declining

Tue, Mar 6, 2012 - 9:58am

Well, nuts. I sat here yesterday and kept looking at that gold chart and thinking (hoping?) that maybe, just maybe, the worst was behind us. Once again, it looks like I spoke too soon and should have, instead, stuck with my ideas from last week.

Patience, Turd. Patience. The Cartels have acted ruthlessly but they never attack just once. You know this and I know this. This was evident and I was on the right track last Thursday when I posted these:


Since Thursday, The Cartel has increased their "body count" and is clearly intent upon inflicting more damage. This won't go on forever, though, so we must be prepared for when price turns. What are we likely to see?

  • A further drop in open interest, back to the levels of 3-4 weeks ago. This would be somewhere around 105,000 in silver, 435,000 in gold.
  • Significant changes in the net short position of The Cartels on this week's CoT.
  • Reverse head-and-shoulder formations on the daily charts.
  • A reversal of 1-month silver lease rates and a move back toward 0%.

Speaking of lease rates, can we cut the crap now about how they mean nothing? Since I first pointed out the "warning flag for silver" a couple of weeks back, (https://www.tfmetalsreport.com/blog/3375/warning-flag-silver) there has been all sorts of discussion regarding whether or not changes in 1-month rates matter. I really don't care what other "experts" think. All I know is what I see with my own two eyes and this "event" now makes 3 trips in a row into sharply negative territory that has preceded sharp drops in silver price. Rates have now reversed and are headed back higher. This is good news but don't get carried away. Notice that price bottoms have followed rate bottoms by about 5-7 days. This would seem to indicate that silver could decline further before bottoming.


So, where are we going? I'm going to stand by and stick with my original ideas now. Gold could be headed as low as 1600 but will likely stem its decline somewhere between 1600 and 1650. Silver looks to fall all the way to 31 but a sharp stab at 30 is not out of the question.


Look, I know that this is a drag. I hate it, too. But, we can't complain that the warning signs weren't there. The falling silver lease rates and the surging Cartel net short positions being chief among them. At this point, all you can do is let The Cartel finish its business and wait. Don't believe the doom and gloom and don't fall prey to your own depression. Silver and gold are your only protection against the financial calamity and global systemic collapse and restructuring that is coming. Use this and all dips in price to accumulate more physical metal. Take delivery and store it in a safe place. Do not let your heart be troubled by the unfair games of The Comex.


About the Author

turd [at] tfmetalsreport [dot] com ()


bellyacre · Mar 6, 2012 - 10:00am


cliff 567 · Mar 6, 2012 - 10:00am

ta da

Anonymous · Mar 6, 2012 - 10:01am

Removed comment.

BASEBALL 13 · Mar 6, 2012 - 10:06am

Enjoy the ride down and wait for the bottom...


ouchtouch · Mar 6, 2012 - 10:09am

Until the real problems in Euroland are priced in. It's not about a specific price point, it's about world events, this time.

Haole Guy · Mar 6, 2012 - 10:10am

I have to say I like second chances! Unfortunately, I missed the buying opportunity in December and early January because I donated a shit load of Fiat to the Ron Paul campaign and Holiday spending. I won't be making that mistake this year! Anyway, I'm like a kid at the candy store. It will soon be time to buy with both hands!

tread_w_care · Mar 6, 2012 - 10:11am


wopr tags: gloom, despair, agony on me

I sold all my metals, I want to go free

Cash, Treasuries, and AAPL will be

My 401K savior for this retire-eeeeeeeeeeee

cpnscarlet · Mar 6, 2012 - 10:15am

Exactly what do you recommend I put in an email to Bart Chilton today? Bullets - I'll take care of the prose.

tread_w_care · Mar 6, 2012 - 10:15am

Haven't been back to APMEX in some time due to their price shenanigans a while back, but, this ain't a half bad sale today through 3 p.m. CST:


El Gordo · Mar 6, 2012 - 10:18am

I had set my strike price in the mid 33's, so I got into the wading pool this morning. Of course, after placing my order, the price continued to decline but has now recovered - nobody can hit the bottom every time, although I've been pretty good at buying at the top a few times. Anyway, my next strike price in in the mid 31's, so let's see how it goes. Thanks Turd for all the good info that helps me set some of my notions on a somewhat informed basis.

SuperLeggera · Mar 6, 2012 - 10:19am

From the Keiser Report

lairdwd · Mar 6, 2012 - 10:20am

LONDON (Reuters) - A disorderly Greek default would cause more than a trillion euros ($1.3 trillion) of damage to the euro zone and could leave Italy and Spain dependent on outside help to stop contagion spreading, the main bondholders group has said.

Greek private creditors have until Thursday night to say whether they will participate in a bond swap that is part of a bailout deal to help it manage its finances and meet a debt repayment on March 20.


SMELLS LIKE CAPITULATION TO ME!!! Did you really expect anything but a last minute deal? Great buying opportunity. I'm going to get some physical right now. 

opticsguy · Mar 6, 2012 - 10:23am

I smell a flash crash today.

zilverreiger · Mar 6, 2012 - 10:26am

a flash crash of what optics guy?

Dr G · Mar 6, 2012 - 10:28am

I would think that this presents:

1) an excellent buying opportunity for stacking. I'm buying all the way down in smallish increments.

2) a good set-up for a nice trade, if one so desires. If the metals hit those lows then some near-term calls seem like a good move.

Strongsidejedi · Mar 6, 2012 - 10:30am

Greece has already defaulted. It's just the small group of people sitting in these bank led organizations who choose to not recognize the 2 trillion FRN / Euro plank in their own ledger.

As Jim Sinclair says, it's ISDA that is claiming that Greece hasn't technically defaulted.

I would say that if 80% of the bond holders agree to taking a shave of more than 50% off their original contract's worth, isn't that a default?

By any stretch of the English language, it's a "default". From dictionary.com - 

1. failure to act; inaction or neglect: They lost their best client by sheer default.

2. failure to meet financial obligations. ... 8. to fail to meet financial obligations or to account properly for money in one's care: When he defaulted in his payments, the bank foreclosed on the car. ____________________________________

Now, going back to the reasons for this "dip"...

Someone take a look a the USD/Canadian Dollar chart on Forex.

The USD took a big strengthening move against the Canadian dollar on the same day that the silver and gold hit occurred.

I'd say that it's pretty clear that the US FRB is engaging in money tightening after their last meeting. If they aren't actively withdrawing monetary supply, the MOPE is doing it for them.

We're clearly back (in USD/CAN-D) ratios to the trading mean over the last two years.

These stock market dips and commodity dips are reflecting US FRB behavior more than market fundamentals.

Punk-Assets · Mar 6, 2012 - 10:30am

Dont sweat the small stuff, stack the heavy stuff. I'm buying a ten oz bar of gold just as soon as I see a hint of the bottom.

Velocity · Mar 6, 2012 - 10:33am

...for us to pick up Silver (and Gold) (and Silver and Gold miners) at the Cartels super dooper discount window

...and for Moi to extricate myself from some shorts without a loss and go Looooooong

Happy Days ...get stuck in Boys ;)

opticsguy opticsguy · Mar 6, 2012 - 10:34am

the general market, SP500 and Nasdaq. Volume, concentration of index movement in a few names, etc., all similar to Feb flash crash.

Doc1800 · Mar 6, 2012 - 10:39am

I laughed out loud thinking about the application of that here. Like i said second nibble 32.60 DONE- 30.66 next nibble region. If you want to FIB it out- 31.8 region then 30.53 region then it just gets silly at 28.6 then 26.2 . But hey in those 2 regions i get a little serious on the buy. Guys it is like the sales flyer you get- isn't it fun to see the prize on sale, the one you have been longing for. Guys it is a war of attrition- Waxy had a nice post last night and folks they can stall and stall , longer than we think- but it will come to an end..........and abruptly. So we live day by day, which is all we have anyway. The stack is the only way to prevent the leverage that kills specs bc of poor timing- the stack enables you to buy only what you can afford and move on, the stack enables you to be diverse but with ultimate security- the stack enables you to know that one day your silver bullet will slay that Mississippi leg hound and get a nice Aussie to round up your herd for you. good luck folks and don't take any of it too seriously.

lairdwd · Mar 6, 2012 - 10:41am

I'm talking about the mainstream media definition of greece default (i.e. PSI holding up the already agreed to deal). That is NOT going to happen, and that is what is prompting the selloff. A Thursday last minute deal will be struck. That is my prediction and I am sticking with it. 

If there is any good news to be had here with this selloff, is that the weak hands are getting shook out sooner rather than later. The weak handed specs are cratering left and right, and I look for the cartel to start covering in the later half of today's session - once the selling has abated and the weak hands have capitulated. 

Be Prepared · Mar 6, 2012 - 10:44am

The Battle is long.... and the trail full of woe.....

I think today represents a lot of Greek uncertainty and TPTB trying to take full advantage of it...... I think they were smart enough to align the timing of both the move up in PMs..... with knowing about the eventual move up of the DX.

No one said this would be easy.... and it Ain't.... :-)

Planters · Mar 6, 2012 - 10:46am

The big greek rumor comes to a head Thursday. What we are seeing is a lil prep for what the popular opine is. If the big d drops on Thursday this lil action will get some crystal meth and steroids and boom goes everything down. Aapl included. Oh well,

tmosley · Mar 6, 2012 - 10:47am

Good find on the negative lease rates. I remain of the opinion that the markets are wholly manipulated. The negative lease rate is likely one of the few "knobs" they pull that are fully public.

But what happens now that it is publicly known? My guess would be that they won't use it again for a while, or if they do, they will use it as a head fake.

dropout · Mar 6, 2012 - 10:48am

The fundamentals have gotten worse, not better.

This is gold/silver bullish in the long run. After all, stacking is for the long. Is it not? Wealth protection.

This is a late game, great opportunity, afforded the physical stackers compliments of the EE. Thanks Blythe! 

Just got off the phone with my dealer, better to start buying here, rather then wait for a bottom and miss it. Just hope that the canoe doesn't sink on delivery like the last batch!

As long as the fundos keep going the way they are ~ keep stacking. Don't sweat the small stuff.

Number 47 · Mar 6, 2012 - 10:52am

Well done keeping that bigoted troll Trav in his place over on zerohedge, I've never read such a tirade of drivel from one guy in my life. I don't know where you get the patience for it.

Tecumseh · Mar 6, 2012 - 10:54am

I know that Larry Edelson missed stocks (he has been anticipating a decline in the DJIA to $8700 to $9000 for what, a year?), but he has been spot on with gold and silver. He has said, as gold and silver traded sideways for months, then finally started to climb, that gold was going to pull back to $1400 and silver to $23. I don't know if they will go that low, but it sure looks like a possibility. Of course, Edelson also sees $5000 gold and $100 silver by 2015, so don't think he is a hater. He has been, and remains, a gold bull long term. He has been so confident of his analysis that he has been recommending gold and silver shorting for now.

tmosley Number 47 · Mar 6, 2012 - 11:03am

Thanks 47. It's nice to have support.

It is hard to argue with the criminally insane like Trav. But I feel the need to do it for some reason.

Smiddywesson tmosley · Mar 6, 2012 - 11:05am

Great observation.

I agree that negative lease rates may stop working for us at some time in the future. TPTB can probably manipulate prices lower without the assistance of negative lease rates,and they will when everyone starts watching those rates. The recent attack is a perfect example. Every time Bernanke spoke PMs went up. Everyone knew it and everyone expected the recent testimony to have the same effect. As soon as retail was all-in on the long side, wham!

Still, we have to use what tools we have.

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