Whatever. Sterilize This!

Thu, Mar 8, 2012 - 10:28am

Before we begin, I would like to thank everyone who participated in the lively discussion thread of the previous post. Solid, thought provoking stuff the kind of which makes this site special. I agree with most of the discussion, particularly that gold is your ultimate, certain store of wealth. I believe, though, that silver has a place, too. I've consistently maintained that gold protects your wealth while silver protects your purchasing power and the simple ability to even purchase things, in the first place. Let's hope we don't reach a point where it takes ounces of gold to fund a trip to the grocery store or gas station. Silver should fill that role.

Let's get to the charts first today before we move on to the news. First of all, the metals are trying to base and rally. Though I'm still concerned about drops to 1625 in gold and 31 in silver, we could very well have seen the bottoms on Tuesday. Why? Well look where the prices stopped. If I'd told you 10 days ago that the metals were about to be slammed into a brief "correction", where would you have thought they would bottom? Go back and look at the charts from late January and early February and you'd clearly have your answer. $32.80-33.00 in silver and 1680 in gold would seem to be obvious. Well, looky here:

If the metals are going to bottom here, they're going to need some help from The Pig. The nonsense rally from The Bernank's speech last week looks to have run its course. Could the POSX be ready to roll over and play dead again? This chart seems to suggest so:

And at the same time, you've got to figure that The Bernank would give his right arm to get the S&P back into the uptrend channel that he and his buddies at 33 Liberty Street worked so hard to build and maintain.

And crude looks to have found a floor just south of $105. Of course, having Bibi and Leon do their best Tommy Lee impression certainly helps.

OK, onto the news and there's really only one thing that I wish to discuss. It's this:


Now, I'm going to warn you. If you are easily offended and do not like the use of profanity, please look away from your screen for a moment.


For the sake of clarity, I'm going to rely again upon my old friend, Mr. Black Dot Chronology:

  • All of this...all of the QE, all of the ZIRP, all of the LTRO...it's all about funding government debt.
  • The only way The Great Ponzi can now be maintained is through low interest rates. Simple economic growth cannot and will not produce the tax revenue necessary to "grow our way out of it".
  • If rates move higher, the economy will slow even further, exacerbating this problem.
  • More importantly, if rates move higher, the interest on the accumulated debt will take up an accelerating portion of the U.S. federal budget.
  • QE1 and QE2 was the method through which The Fed purchased U.S. bonds outright, thereby creating an artificial demand for U.S. government paper and keeping rates low.
  • ZIRP and Operation Twist is the method through which the Fed continues to suppress long-term rates. It's been estimated that the Fed is currently soaking up as much as 90% of the 10-30 year auctions.
  • ZIRP and Operation Twist require regular, "traditional" demand for short-term U.S. debt. This demand is managed through the creation of uncertainty regarding Europe, Iran, etc.
  • So, now, here we sit. Three years of this centrally-planned fiasco and The Fed is pressed back against the wall again. Their Primary Dealers have balance sheets that are completely chock-full of treasuries and a PD cannot raise funds to continue buying even more without a) selling some of their current holdings, OR, b) getting some fresh, new cash from The Fed to use. Option "A" is off the table because selling holdings will push down price and, as you know, lower prices means higher rates and, as you know, higher rates cannot be allowed. But Option "B" doesn't look too good, either. Calling something overt Quantitative Easing isn't going to fly in an election year and, additionally, much time and energy has been spent convincing The Sheep that the U.S. banks are completely healthy and recovered. Giving them billions of dollars to spend on treasuries might dispel that myth.

    So, The Fed rolls out this idea yesterday. In this new program, The Fed is going to buy bonds directly from the PDs. In return, the PDs will get "digital credits"...CASH. The PDs will then use this CASH to buy more U.S. government bonds and we are supposed to believe that because these are "digital credits" and not CASH, none of this NEWLY-CREATED MONEY will ever make it into the system. WHAT?!?!?!?!?!?!?!? Let me see if I've got this straight. The PDs will take this new money and loan it to the U.S. government which will, in turn, use the funds to cover their deficit spending on items like transfer payments, social programs and military hardware. This NEW MONEY will move directly into the U.S. economy, further devaluing the U.S. dollar and create even more cost-push inflation. Period. End of story. Done deal.

    But that's not what The Wall Street Journal and CNBS would have you believe. The Fed told them that this was a "sterile" process, a zero-sum event. The Fed will exchange "digital credits" for existing bonds and that's it. Move along, please. Nothing else to see here. Again, and I apologize for the profanity:


    But don't just take my word for it. I've searched for other opinions on this. Let's try these two:



    Anyway, it's quite clear that the lies, obfuscation, manipulation and MOPE will never, ever end. You must continue to buy and hold physical precious metal. It is your only financial protection and against the certain, impending disaster that your "leaders" have created.

    Lastly, you should be sure to read the latest two entries from Eric King's mysterious "London Trader". Whoever this person is, he/she has a track record of being pretty accurate so it would be worth your time to check it out.



    That's all for now. Have a fun day! TF

    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Mar 8, 2012 - 10:34am


    "sterilized" QE would not be inflationary according to the Fed. Are you buying that?

    No, not buying. Inflation has little to do w/ quantity of money & everything to do with velocity. M can be a partial function of V

    Hide conversation
    Mar 8, 2012 - 10:36am

    Called the bottom...well so far...

    hopefully $1665 holds... :)

    Mar 8, 2012 - 10:36am

    Don't forget

    Plosser did some BS'ing of his own after bernanke last week when he said interest rates might go up later this year--this was what--a couple of weeks after the Fed said low rates till 2014 and the dissenting votes were 2016.

    The amazing thing is they are getting away with MOPE since most of the folks do not pay attention and do not think.

    But as Ralph Kramden said, (give or take) . "One Day Alice, to the moon"

    Mar 8, 2012 - 10:36am

    Rickards again

    It wil be "sterilized" for exactly so long as banks don't want the money and then it will instantaneously become unsterilized

    Another way to describe "sterilization" is highly leveraged borrowing short & lending long. Recipe for bank failure since Renaissance

    Mar 8, 2012 - 10:36am

    Life of fiat

    Last year my history colleague and I began talking about PMs and fiat. I suggested to him that our currency was dying and that he ought to invest in PMs. He looked up , said out loud, "Hmmm, decoupled from gold in '71...hmmm... 40 years is about as long as any pure fiat currency lasts... hmmm, where should I buy silver?"

    He was converted in 10 seconds, knowing history as well as he does. Our main difficulty is educating our friends and family. Even then it can be difficult. As a wise man once said: "Truth is no always seen when shown, and is not always loved when seen."

    Mar 8, 2012 - 10:37am


    Interesting that silver is going down now around 33.56 and slw and pslv are both up .34 and .10

    A First! physical pulling away form Paper.

    Haole Guy
    Mar 8, 2012 - 10:41am



    Mar 8, 2012 - 10:42am

    Don't forget

    BTW--there are so many good opinions on PM that are shades of differences enuf to confuse us all. This is not a precise science by any stretch of the imagination.

    But where do people think we are getting the fiat to support the regular deficit of over 1 trillion and everything else?

    Its the printing stupid! The other side of equation is who's buying our junk bonds? Is it the 67% or so we hear from data or is it the higher number Turd just mentioned. Whom can we trust, not the govt.

    Mar 8, 2012 - 10:42am

    Conversation between Ben and Plosser

    Ben B: hey plosser, can you do me a favor, can you go out and talk up increasing rates and no more QE. I'm getting fcuked with this gold shit going up. I know you don't vote, but if you do me this favor ill get you a couple of girls to hang out with.

    Plosser: Ben, Gold can't be stopped long term, but ill do you this favor, ill be the shit head that goes out and disagree with your approach in the press. Just hoping we can stop gold a little longer before you announce the next QE

    Ben b: Thanks P man..we are buying up some gold too so we can back up the next US dollar when we are out of ammunition.

    Plosser: Ben, can i get two blondes this time, the brunetts you sent last time ran out of steam.

    Ben B. Ok, but not pictures this time P man

    Mar 8, 2012 - 10:44am

    Pap? anyone Pap?

    CNBC's Michelle Caruso Caberra reporting from Athens that deadline on private equity acceptance of the 75% shave in payment is tonight. Announcement on CDS situation is 3AM EST tomorrow morning.

    Greek Fin Min claims that 60% of the holders have agreed to the shave (seems more like the deal they can't refuse) but I have also heard that they need 80% of the holders to agree (dunno if others have more specific info).

    I'd like more specific info because the dominoes will fall.

    Santa's 3-15-2012 date is important.

    Mar 8, 2012 - 10:44am


    Does the Fed and the MSM have a bunch of folks locked away in a brain room to come up with these silly new terms? Sterilized? Digitized-Credits? Quantitative-Easing?(now an old one) Really? .. Really?

    More fodder for the doofus's in the Financial media to banter about and fill up time between commercial breaks - all meaningless bafflegab.

    Thanks, Turd!


    Dr G
    Mar 8, 2012 - 10:47am

    I think we might still be in

    I think we might still be in the middle of this "manipulation event". Who knows. The POSX is rolling over but the metals are being smitten again in NY trading.

    Mar 8, 2012 - 10:48am

    A shell game of vocabulary...

    ....and rapidly changing accounting standards.

    Thanks for the post. I agree with you and Santa Jim whole heartedly on all of that.

    Just because the Fed might be floating this out there doesn't mean it's viable or will even happen. They've just planted a very large QE-like question mark in the markets mind.

    Is it QE or isn't it? If they keep repeating it long enough and often enough it will become believable and 'fact' even if it isn't.

    Doubt and hope is all the breathing room they need and they've just created a new "what if?' type of "is it QE or isn't QE?" scenario.

    They're supremely talented at all of this even if we find it distasteful and not believable.

    Mar 8, 2012 - 10:49am

    Why is Apple still counting?

    Why is Apple still counting? How insecure is this company? 1 billion, 10 gillion... Is anyone really impressed anymore? Oh 25 billion downloads... alright...Hey Tim Cook, we all get it! Whatever the number is, just put up a sign: 'Apple is doing very well'. We are tired of hearing about every goddamn one of them." - (ripping off Jerry Seinfeld)

    Mar 8, 2012 - 10:50am


    Last week was the final episode of GOLD RUSH ALASKA. I have to give the Hoffmans credit for actually mining some gold their first year at the Quartz Creek mine. That being said, the show should be renamed DIESEL BURN rather than GOLD RUSH. The truth of the matter is the Hoffman’s operation was not really mining, but rather running large earth moving machines back and forth on the property consuming large amounts of diesel with the added bonus of finding 93 ounces of gold.

    In my research on the top 5 Gold producers in the world, they consumed as a group on average 24 gallons of diesel for every ounce of gold they produced in 2010. I discuss this in detail in my upcoming article. If we compare this to what the Hoffmans did at Quartz Creek, you will realize why the name of the show should be changed.

    Here is some basic math from remarks made by the Hoffmans during the show:

    Todd or Jack stated that they consumed about $1,000 in diesel per day. I would imagine diesel is more expensive being delivered up there in Alaska. If we estimate diesel ran about $4.00 a gallon, the Hoffmans consumed approximately 250 gallons of diesel a day during their operation. If we also estimate that they only burned this for 90 out of the total 150 days that would be about 22,500 gallons of diesel consumed for the year. Again, these are just ball park figures as we don’t have the exact data.

    HOFFMANS = 22,500 gallons diesel / 93 gold oz = 242 gallons of diesel per oz gold

    TOP 5 GOLD MINERS = 470 million gallons diesel / 19.7 million gold oz = 24 gallons of diesel per oz of gold

    If we take the Hoffmans total of 22,500 gallons of diesel and divided it by 93 ounces of gold, we would get a figure of roughly 242 gallons of diesel consumed for every ounce of gold produced at Quartz Creek.

    In 2010, the top 5 gold miners consumed a total (estimated) 470 million gallons of diesel to produce 19.7 million ounces of gold. This turns out to be 24 gallons of diesel per ounce of gold produced. If we estimate that these gold big cap miners only had to pay about $3.50 (maybe less due to hedging) for diesel, their grand total diesel cost per ounce was:


    $3.50 X 24 Gallons = $84 diesel cost per ounce of gold

    $84 / $1,600 (average price of gold) = 5% diesel cost per ounce of gold

    The top 5 gold miners’ diesel consumption was only 5% of their total cost per ounce of gold. However, if we look below, the Hoffmans spent a staggering 60% on diesel to produce one ounce of gold. This is why I am going to contact the Discovery Channel and have them change the name to DIESEL BURN.


    $4.00 X 242 gallons of diesel = $968 diesel cost per oz gold

    $968 / $1,600 (average price of gold) = 60% diesel cost per ounce of gold

    If we take this a step further and multiply the Hoffmans total diesel usage for the year by the price of a gallon of diesel we have the following:

    22,500 X $4.00 = $90,000 total diesel cost for the year

    $90,000 / $1,600 (average price of gold) = 56 ounces of gold

    I remember Jack coming out and saying that they had mined 15 ounces in four days which brought their total to 70 ounces. This was their breakeven amount which turns out to be about $110,000. We must not forget that they had repairs and other things as well to pay for during the year.

    Even though these are rough figures, we can now see that the kind of gold mining the Hoffmans participated in the show GOLD RUSH is not the way to make money… it is a way to make the oil companies money. The Hoffmans consumed approximately ten times more diesel per ounce of gold they produced compared to the top five gold miners in the world.

    Some say that the Hoffmans get paid for the doing the GOLD RUSH show. I sure hope they do, because if you figure all the work they did for those five months and each of their crew only got about five ounces of gold… that comes out to be about a salary of $53 a day for 150 day season . This is about $6.62 an hour for an eight hour day. They would have done better working at McFATs.


    I wonder if that HUGE WITHDRAWAL of Silver from the Comex yesterday had anything to do with the NEW SILVER EXCHANGE taking delivery of silver for their exchange?

    Mar 8, 2012 - 10:51am

    @TMoseley - how to buy a book on Amazon with gold…

    (note: moved from the bottom of the previous thread)

    That's easy.

    Sell some, deposit your FRN's in the bank, then use a debit card online.

    Yeah, I know, Mr. obvious, right?

    But in point of fact, as gold is, as they say, infinitely fungible, why wouldn't it be possible for us to be able to deposit in our bank or be paid in fractions of a gram of gold instead of FRN's? Why couldn't my bank statement include how many grams of gold I have on deposit? Amazon could, in theory, price their books in fractions of a gram, say 0.365 grams of gold (roughly $20 FRN currently) for the latest bestseller? Your debit card then transfers ownership of 0.365 grams of gold to Amazon's account.

    My point is, it is certainly possible to use electronic transfer methods to transfer gold. The issue would be making SURE there was enough gold available for Amazon, or whoever wanted the physical metal, to 'take delivery' as it were.

    If the system was 100% honest, it would work. Sadly the system will never be anywhere close to that.

    Mar 8, 2012 - 10:57am

    Sterile QE, D.O.A

    Steriziled QE = Fed running out of new suckers.

    worldend666 Mudsharkbytes
    Mar 8, 2012 - 10:58am

    Hi  Mudsharkbytes I agree

    Hi Mudsharkbytes

    I agree with you. In fact I own goldgrams with GoldMoney so I can testify it does work. But the question is what are all the guys with the bits and bytes doing with your gold money? How many times have they lent it out?​ Do they really have 1:1 backing and would they be forced to? Once you have banks you already have dishonest money.

    Dr G
    Mar 8, 2012 - 11:00am

    FUBM. Right. Now. @sniem,

    FUBM. Right. Now.

    @sniem, terrible comment about Apple. It makes no sense. People purchasing their products and shareholders are certainly happy to see some numbers relating to how the business is progressing.

    Disclosure: Long gold, even longer silver, and long AAPL since the mid 90s.

    Mar 8, 2012 - 11:04am

    repost, ..

    Thanks Turd, I too share in the frustration at the massive lies that we are fed by the media.

    One must remember though they say this stuff, and well over half of America looks only at the TV screen, oblivious to the reality of the world. Another 25% just look at the headlines, without being able to think independently. The other 25% like us, they really do not care about, as the administration only needs 50% of the vote to win and control,.....

    then this..

    If one forecloses on their house, they really have no fear of eviction for a couple years. SOOO, free living, and THEREFORE... increased money to spend on crap, Works perfectly in the bizarro world in which we live.

    Good Grief, huh?

    Mar 8, 2012 - 11:19am

    Stealth Gold Necklaces

    Someone on the last thread posted about gold necklaces where you can remove one link at a time if needed during a bartering scenario. I remember reading about that myself a while back and I've spent the last half an hour trying to find it without success.

    Does anyone remember this article? If memory serves correctly, it was about some dealer who would make you a gold necklace where you could choose the weight of each link and they were easily removable.

    I've been thinking about it and it sounds like a good idea to diversify with at least one chain link gold necklace in case you need to travel - 1oz coins and bars will certainly draw attention, whereas a necklace can easily go unnoticed.


    Mar 8, 2012 - 11:20am

    This Jumped Out at me today

    So I remember reading this peice from Bruce Kasting on Zerohedge last week.


    I made a mental note of one thing he wrote here: https://www.zerohedge.com/contributed/2012-09-01/israel-and-iran

    How would the attack take place?

    Israel will use its F15s. Each plane will be armed with a single laser-guided bunker buster bomb.It will use their F16s as escorts.

    As of today, Israel “officially” has only thirty of these bunker bombs. It has a total of 100 F15 attack bombers, so it needs more bombs to fully utilize their strike capability. Look for a sign on this. If the US agrees to supply more bombs, the timing is close.

    What is your guess on the outcome?

    It is not possible to predict what will happen in Syria. The chaos today creates the best opportunity for Israel. Who knows what can happen in six-months? Every week Iran's defenses get stronger. This will be resolved, one way or the other, in less than six-months.

    Now I read this today on Zerohege:

    Obama Promises Bunker Busters To Israel If Netanyahu Delays Iran Invasion Until After US Elections

    This is wrong on so many levels that I cant even begin to comment on what pisses me off more. Have a nice day :)

    abguy4 SRSrocco
    Mar 8, 2012 - 11:21am

    SRSrocco - Gold Rush - Black hole

    All those numbers are good as far as you have taken it


    How 'bout Paying for the claim? That land is NOT free.

    Paying for all the equipment?
    Paying for food, travel, clothing, etc.???????
    NOPE, the numbers for this business don't work at all.

    Hey, wait a minute here..........silly me

    I got it , they work for Ben and the Gov.

    They borrowed from the Bank who loaned from the Fed who printed for free and loaned back from the PB who borrowed from.........................................

    OK, I see it now.

    Mar 8, 2012 - 11:23am
    Mar 8, 2012 - 11:34am


    abguy4.... You make excellent points. I would imagine things are far worse if we consider all the expenses. I believe that 70 ounce break even may have accounted for the percentage of gold for the claim owner. If not... it really should be called BLACK HOLE....lololhahaaa.

    Turd...GREAT JOB on the last podcast with NED!!

    Mar 8, 2012 - 11:34am


    is a full moon.


    And a big solar storm/flare is heading our way...



    Mar 8, 2012 - 11:34am



    Turd, it is not how stupid they think we are, it is how stupid they KNOW the vast majority of people are. Or at least uninterested. And a few want to line their pockets while they can. The people that are aware and have some understanding of what is going on, like the readers here, are a tiny minority. If the majority are not in the stupid category how do you explain the people electing the same characters?

    Is this sterilization being paid for from taxes? If so, maybe we can get the media to think it has to do with birth control so they will ask the presidential candidates about it. That is the only way we are going to see it discussed in the main stream media.

    Mar 8, 2012 - 11:34am

    TSA body scanners, Huh......... they don't work?

    Guy defeats body scanner and TSA's trying to down play it. How much did they cost again? Who sold them?

    How To Get Anything Through TSA Nude Body Scanners

    TSA's blog


    Mar 8, 2012 - 11:34am
    Mar 8, 2012 - 11:35am

    @ silverstax

    only problem is.. I'd end up looking like Mr T!

    and THAT would draw attention.


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