Party Likes It's 2009

I don't know if anyone else feels this way, but I've been having a strange feeling of deja vu and I couldn't seem to place it. I was standing there this morning, making some coffee, when it hit me. This is late 2009 all over again. If you were trading and stacking back then, I'm sure you'll recall that painful period. If not, let me give you a little refresher.

Where were you in late 2009? Were you listening to this:

Or in line to see this:

I know where I was...I was making some serious cash. In July of 2009, gold was trading in the low $900s. By Thanksgiving of that year it was near $1200 and Turd was flush (no pun intended). And I will never, ever forget where I was when gold peaked. I was reading ZH and watching Fox Business when I saw gold trade at 1225 and read a headline on ZH that the Bundesbank was going to be announcing a huge gold purchase in the morning. My personal sentiment indicator went to 10+. Unfortunately, that didn't work out so well. Beginning the next day, gold began to roll over, instead, and by the first Friday of December, I was doomed. The BLSBS report came out and was spun into good news. Dreams of "green shoots" and a "recovery summer" soon took over. The POSX shot higher and, over the next 3 months, rallied nearly 10% from 74 to 81.

The resulting decline in gold was brutal. First, it had peaked at $1226 and Santa had promised an "angel" at $1225 for years. The fact that I'd let greed overcome me and consequently didn't sell at $1225 was crushing and when gold rolled back down through $1100 in January, I was seriously depressed. All of the same old AGAs were claiming that $1225 was a blow-off top and that gold was soon going to be trading back below $1000 and was probably headed back toward $800. I was sick, Mister Hyde was furious and it seemed like all was lost.

But we didn't quit, we didn't give up. I knew that the whole "recovery summer" thing was a joke. The U.S. economy wasn't going to recover, the best it could do was stagnate and limp. The MOPE and the SPIN were so thick, I could barely breathe and when gold bottomed at $1052 in February of 2010, there was hardly anyone around who noticed or even cared. And that's the funny thing about bottoms, you rarely, if ever, notice them in the present as they are only visible in hindsight. With hindsight, we now know that the "green shoots" of 2009 became the dead weeds of 2010. All of the breathless proclamations by LIESman et al not withstanding, the facts, the math and reality took hold again by mid-2010 and gold finally surged back to the $1225 level in May and through $1225 in September.

paper_3-21amgold09.jpgpaper_3-21ampig09.jpg

My point is simple: We are currently in an identical situation. Gold surged to $1925 last September and, on 9/6/11, gold was ready to rocket higher on news that the SNB was going to devalue the Swissie by 10%. Again, sentiment was at the 10+ level and, again, we were within a few dollars of a Santa "angel" at $1936. Well, we all know what happened next and now, after six months of this brutal "correction" where gold has again fallen 15% while the POSX has rallied 10%, we are once again staring into the Pit of Despair. LIESman et all are screaming from the rooftops that the economy is improving and The Bernank is desperately implying that QE is over. Well, I call "bullshit" and I'm standing tall against them. Will you join me?

As I type, gold is at $1632 and silver is at $31.43. I've been maintaining all month that gold would likely bottom between 1600 and 1650 and that silver was headed to 31, maybe even 30. Why would anyone panic now when we are so close to the bottom. Always remember and never forget: THE ONLY WAY YOU WILL CONSISTENTLY MAKE MONEY TRADING GOLD AND SILVER IS TO BUY WHEN EVERYONE ELSE IS SELLING AND SELL WHEN EVERYONE ELSE IS BUYING. Period. Why is this true? Because this strategy essentially puts you on the same side of the trade as The Cartels, which as you know post-MFG, are exerting an increasing level of influence on the paper metal markets. It is clear to me that now --right now-- The Cartels are buying and covering not selling and adding. I discussed this yesterday in two, separate comments to the previous thread and they are reprinted below:

Back at the last highs of 2/28, total gold OI was 479,044. As of Monday's close, it had fallen to 434,226 for a drop of 9.35%. The last time gold total OI was at this level was 2/14/12 when price closed at $1718. Additionally, even back in January, we find higher total OI numbers. The week of 1/16 averaged total OI of about 439,000. Gold began 2012 with a price near $1600 and a total OI of 420,000.

Back at the price highs of 2/28, total silver OI was 115,866. Total OI was actually higher on 2/24 at 118,204. As of Monday's close, it had fallen back to 108,268 but actually bottomed back on 3/15 at 106,723 or a drop of 9.71%. The last time total silver OI was below 107,000 was 2/17/12 when price was $33.28. Total silver OI averaged about 103,000 in January after beginning the year at almost exactly this level, near 106,000.

Clearly, any "excess" open interest brought about by the early year rallies from 1600 to 1800 and 28 to 37 has now been wrung out. Again, this is just another signal that we are very near a bottom.

Crazy silver OI report basis yesterday.

Yesterday, gold was down $20.20 and total OI was down 3,200 contracts. Perfectly normal.

Silver, however, was down $1.12 yet total OI expanded by 3,154 contracts. ​ The July12 alone went from 12,404 to 14,018. The only deduction that can be made is that a significant amount of new shorts entered the silver pit yesterday. What we don't know is whether it was Cartel or spec shorts. The CoT on Friday will provide some clues but it is highly likely that these are spec shorts. Why? Because The Cartel typically only adds shorts to:

  1. Cap price    OR
  2. Attempt to start a waterfall/cascade selling event.

If only now we are seeing a huge run-up in spec shorts then we truly are very close to a bottom as the late-coming spec shorts will soon be fleeced just like the late-coming spec longs were fleeced on 2/29.

Total silver OI is now back to where it was two weeks ago, when silver was almost exactly $1 higher.

Ahead of the CoT on Friday, here is what we know:

Gold for the week 3/13--3/20 saw the total OI fall from 442,319 to 431,039 while price fell by $47 (2.77%).

Silver for the week 3/13--3/20 saw the total OI only fall from 111,730 to 111,422 while price fell $1.75 (5.2%).

Likely Conclusion: This week's CoT will be slightly bullish for gold but will show a significant improvement in the CoT picture for silver.

Anyway, the point is that is is always darkest before dawn and we are very deep into the wee hours. The global economies have not and will not improve to the point where we can "grow our way out from under the debt". No way, no how. In 2010, it took 6-8 months before logic, math and facts finally prevailed over hope, MOPE and SPIN. The truth will win again in 2012, you just have to be patient.

One more thing, I received some communication from "Winston" this morning and he provided some very helpful information. He is of the belief that the down move that began Tuesday evening and continues this morning is almost entirely related to April gold option expiration. Again, the Comex is now almost completely controlled by The Cartel as the only participants left are Cartel monkeys and HFT-WOPR momentum chasers. This allows The Cartel, which has full knowledge of the order books for both futures and options, the ability to swing price at their leisure and position price in such a way as to maximize pain for option holders upon expiration. Winston believes that the current target of their malice are not only the call buyers but also the out-of-the-money put sellers for April. Remember, gold was near $1800 just 4 weeks before expiration of the April options. A lot of traders believed that there was easy money to be made by selling out-of-the-money puts, the April 1650s and the April 1600s. Those that did are getting seriously squeezed right now and they are being forced to short actual gold contracts to hedge themselves. Winston thinks that the 22,000+ contracts between 1600 and 1650 are the true target of The Cartel here and that their ultimate intent may be to drop gold as close to 1600 as possible before expiration at the close of business next Tuesday.

What's interesting about this is how it fits right in line with all of the other "bottom signals" we've been discussing here as of late. A low near $1600 tomorrow or early next week would:

  1. Complete the drop to stout support at 1600
  2. Complete the right shoulder of a massive reverse head-and-shoulder bottom
  3. Bring silver down to 30-31, just like we'd envisioned
  4. Drop gold open interest levels all the back to early January levels
  5. Put the RSI and MACD indicators into deeply oversold territory
  6. Drive sentiment and our new TITS indicator to record low levels. Even Mister Hyde is once again suicidal and ready to simply cash out his IRA before it goes to zero. He'd like to take it in cash and go to Vegas where he can blow the rest on blackjack, Jack Daniel's and hookers.

And don't forget that lease rates have clearly bottomed and have significantly reversed. In September and December of last year, lease rates reversed about two weeks before price.

So, in the end, hang in there. I know it's tough and painful to watch everything go down when you know you are on the right side long-term. But let me assure you: This, too, shall pass. Soon...very soon...the metals will bottom and resume their inexorible march higher. Of this, you can be certain.

TF

267 Comments

apex101's picture

Rolling through the gold

Rolling through the gold futures now i dont see any backwardation?

JimmyTheHand's picture

@Diamond

You gotta be made of tougher stuff than that. Where else will you put your money besides? In a savings account so that it can shrink eight or ten percent a year? No thanks....

silva's picture

Sentiment

Anybody knows what are the sentiment levels on HGNSI and Market Vane today?

silverstax's picture

Re: Capitulation

Anyone dumping their PMs now, especially at a loss of 60,000 Pounds, should never have been involved in the PM market in the first place!

Fred Hayek's picture

@Diamond. That guy deserves the Lord Jim award

Or maybe we should call anyone expessing such a woe is me, I haven't got my riches yet, I'm giving up before they scalp me point of view "Lord Jim".  

It's the nickname of the main character of Joseph Conrad's book Lord Jim.  Spoiler alert, here for anybody who hasn't read it.  It's considered to be in the canon of classics but the truth is that the book kind of sucks.  It's written as though all 300 or whatever pages were delivered as ONE freaking conversation between two guys talking about a third guy, Lord Jim.  Anyway, the main action of the story is that Jim abandons ship in a storm thinking that the freighter he's piloting is going to capsize and sink.  Only it doesn't.  And so he looks like a tremendous coward.  He spends the rest of the book trying to make up for his cowardice.

Anyone jumping ship on gold and silver now is the Lord Jim of the precious metals set.

silva's picture

Energy

Have we learned to tap into our own internal energy resources (the ones which are inside our body)?

¤'s picture

Pink Floyd - One of These Days

¤'s picture

The Dark Side Of The Moon

silva's picture

I Would Like to Thank EricO and BOG

For the wonderful service that they've been providing... Now is the best time to do so!

BUDDHA PRINCESS's picture

Major Currencies Appear to be Returning to Pre-2008 Trading Patt

Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Major Currencies vs. US Dollar

(week-to-date % change)

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_5.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Talking Points

  • Euro, Pound Outlook Dim vs Dollar on Shifting Monetary Policy Expectations
  • Japanese Yen Reclaiming Long-Standing Relationship with US Treasury Yields
  • Commodity Bloc Currencies Continue to Track Global Equities’ Performance

Economic growth expectations continue to emerge as the prime driver of currency markets. The outlook is far from rosy, with the Eurozone widely expected to have entered recession in the first quarter while China is targeting the lowest GDP growth rate since 1999 this year. This leaves an improving recovery in the US as the lone major countervailing force, fracturing the binary risk on/off trading patterns investors had become used to since the onset of the 2008 global financial crisis and producing a more nuanced landscape.

For the US Dollar, this has meant that prices have become positively responsive to supportive domestic economic news as Federal Reserve officials begin to gradually back away from ultra-dovish rhetoric. Taken against the Euro and the British Pound, the result has been the return of interest rate expectations as the leading guide price action. Indeed, both EURUSD and GBPUSD now track benchmarks for near-term yield expectations, reflecting the likelihood that the slump Europe will keep ECB and BOE policy in accommodative territory even as the Fed backpedals.

Meanwhile, the Japanese Yen appears to be returning to its long-standing relationship with US Treasury yields once again. As a benchmark for the baseline return on USD-denominated assets, Treasury yields reflect how relatively attractive it is for Japan to recycle its Dollar surplus (earned courtesy the trade imbalance) into US versus converting it back into the local currency. With that BOJ intensifying efforts to unhinge deflationwhile the prospects for a third round of Fed QE appear increasingly dim, the sharp rally in USDJPY begins to make sense against a backdrop of rebounding returns on US bonds. The Yen’s carry trade funding currency status cannot be dismissed however – particularly as the greenback fades as a viable alternative – meaning sharp flare-ups of risk aversion are likely to prove supportive.

This leaves the consistently sentiment-linked Australian, Canadian and New Zealand Dollars to continue tracking stock prices. All three currencies have long-established sensitivity to the global business cycle courtesy of a link between commodity prices and monetary policy in all three countries. Canada’s economic growth prospects largely depend on raw materials demand from the US, the world’s biggest economy, while that of Australia and New Zealand hinge on a similar relationship with China, the second-largest one. This means the critical engines of global growth as a whole and those of the three Commonwealth countries are one and the same. Since the overall performance of the world’s stock exchanges reflects earnings expectations that hinge on broad-based growth trends, the so-called “commodity dollars” track the MSCI World Stock Index.

EURO

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_6.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Source: Bloomberg

BRITISH POUND

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_7.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Source: Bloomberg

JAPANESE YEN

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_8.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Source: Bloomber

CANADIAN DOLLAR

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_9.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Source: Bloomberg

AUSTRALIAN DOLLAR

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_10.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Source: Bloomberg

NEW ZEALAND DOLLAR

Major_Currencies_Appear_to_be_Returning_to_Pre-2008_Trading_Patters_body_Picture_11.png, Major Currencies Appear to be Returning to Pre-2008 Trading Patters

Source: Bloomberg

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

Santa's Elf's picture

@ number 47

I appreciate where you're coming from and I agree, there's no problem in making a plan.  Fact is, I have a plan for my family....it just so happens that my plan doesn't involve relocating them to another country.  I'm not trying to be overly dramatic in claiming that I intend to stay put and fight for my freedoms.   The mere impracticality of the idea is enough to keep me planted on the ground where I stand.  Besides, there's no assurance that my lifestyle and freedoms will be better preserved anywhere else.  If this ship sinks, it won't be the sole casualty.

Turd Ferguson's picture

The backwardation

MODERATOR

appears to be in spot vs front-month and beyond

http://www.zerohedge.com/news/guest-post-temporary-backwardation-path-forward-2008

Antal Fekete, whom FOFOA mentions in the article, also claimed today that gold entered into backwardation yesterday, the 21st.

Fred Hayek's picture

@ Tread

It's simple.  Check the GOFO for mojo, mofo.  If it's hoppin' and the lease rate goes up and price jumps then it's wango to any ideas of contango; you're in backwardation.  I think it's all explained in the liner notes of a Ted Nugent album.

Magpie's picture

I wish I knew if this is really true

http://theulstermanreport.com/2012/03/22/white-house-insider-america-doesnt-have-a-racial-problem-america-has-an-obama-problem/

Even got word on pressure mounting against Bernanke as well.  Wants rate hike sooner vs later.  Don’t understand the logistics of why but apparently involves at least one of the board members.  He really does dislike Bernanke.  Not sure the history of that he gets the old man riled up and he really doesn’t rile easily.  You know that.

Bugzy's picture

Big picture small picture capitulation

One ought not buy the precious if one wants to get rich quick.

The precious is more like a religion a belief if you will. A belief that this current status quo is doomed. The timeline may not be to everyone liking. Personally if it going to blow then tomorrow is not soon enough. (actually let me sell my house first).

I do suspect that it is the best way to ride out this storm, believe me I have thought of little else for the past five years.

Calm seas do not a mariner make.

They want you to go back to fiat. Or what appears to be dry land. It is all about control. They have way less control over me when I have the precious. (talking about control, some earlier poster did not want to put stash offshore because they did not want to give up control - you put it there to keep control, that is the point).

The precious will go up. The problem is keeping hold of it or being allowed to spend it. However we do see things from our own U.S. or whatever centric world view. Who knows what it will look like going forward. Fiat is not the answer for me though. All about risk...If I keep it in fiat I am 100% certain I will lose it in real terms. If I keep it in the precious I am 100% certain it will go up more than real inflation. Things may come from left field. I do not know. But I can think of nothing better in this storm. Nobody said it would be easy.

Actually I do not get stressed about it these days. I guess at the moment I have a firm and unshakeable belief. I bought most @ $850 then it did one huge reverse head and shoulders - lasted for months. I do believe also that true price discovery will come. It is not fundamentally paper it is real hard to get at stuff. One day both real Gold and Silver will be hard to get. Because I for one am holding it tight and I will not be letting it go. I know of nothing else to invest in right now. This rally in stock etc is a trap I am sure. 

El Gordo's picture

Alligators everywhere

When you are up to your ass in alligators, it's sometimes difficult to remember that your objective is to drain the swamp.

meddle magic's picture

SLW earnings look good to me

Haven't posted since watchtower move, had login probs and gave up. Like to say this is by far the best site for info on pm's all the best

Hook's picture

Quick LCS report

Stopped in at my normal place this afternoon to pick up some gray metal.  I was surprised that they didn't have much on hand, said that there had been a lot of buyers in the last week.  I still ended up with a few ASE's and Philly's.  Gold on the other hand...seemed like they had more than usual.  They had a 50 peso and I couldn't resist as I've wanted one for a long time and I got it for less than 2k, which has been my goal for one of these coins.

It pays to be a regular customer, got my ASE's for 34.

I'm in the middle of brewing a batch of chipotle ale - can't keep this stuff around, my friends drink it all!

myansrockasock's picture

Backwardsalright

Stacked again today.....I just can't stop and I have no idea why!  Hard to wrap my head around all the Tech Analysis of all this stuff but for some reason I know I did the right thing, again.  Theres only one place to head from backwards, it's Forward!!!  I really like this site.  Stack, Stack, Stack!

tread_w_care's picture

EUREKA!

AHA, this article that Turd posted: http://www.zerohedge.com/news/guest-post-temporary-backwardation-path-forward-2008

Has caused the epiphany for me.  I read it earlier, but only just now think I get backwardation.

Nutshell: Spot bid price is higher than the futures price.  That's backwardation.  If I have a boatload of gold and want to make a quick buck, I sell my physical and buy futures, or, a guarantee to get more physical in the future at a lesser price.  Instant profit!

Per normal market forces this condition shouldn't last very long at all, because enough takers on the free money would push the Spot bid down and future price up.  BUT THIS IS NO NORMAL MARKET.

Nobody wants to take this trade because they feel their physical gold (bird in hand) is more valuable than the future gold (2 in the bush), even if the future gold is priced lower.

TSIFU!

If you think your gold in hand is worth more keeping it and not worth the risk of the carry trade (sell it now, buy future, get it back later plus the "carry" profit), then yeah, YOU THINK THE END IS NIGH!

Holy crapola . . . enlightened

JimmyTheHand's picture

@tread_w_care

Spot on! No pun intended :)

Maybe not that THE end is nigh, but the end of lower spot prices maybe.

AinT's picture

@myansrockasock

I think that's what's so great about stacking, you can focus on all the technical aspects and daily movements or you can just look at the overall picture of the world economy and clearly see how FUBAR it is and make the decision to start buying shiny things. 

I'd say my understanding of what is discussed on this site from the technical perspective is maybe in the 20-25% region but even if you only understand 1% the message is pretty clear, go out and buy silver and gold.

Santa's Elf's picture

@ tread_w_care

Nice post!  Now that you're on a roll, would you mind extending a little more enlightenment to the rest of us and give us a nice accurate forecast for the next few months? wink  I figured I'd try to strike while the iron's hot...heh heh

Patrancus's picture

Peak oil?

If peak oil is reality, why would BP construct and tow the largest offshore oil platform ever constructed way the heck up too Prudhoe Bay? The Liberty rig appears to be for real and is designed to suck one heck of alot of earl out of the earth.

Dr Jerome's picture

Wizard

Aren't some Eisenhower 40% silver?

I used to get several every Friday at the bank and put them on my desk. Had quite a stack in about 1984. But I got broke and traded them all in for face value. I'll start reading about them.

tread_w_care's picture

@Santa's Elf . . . forecast

My forecast is . . .

I might get in trouble with my wife for BTFDs.  What you do with you and yours is your bidness ;).  I leave the prognosticatin' to the real pros like the Turd here.  

If solidarity does anything for you, we're all in this together and you can't go wrong stackin' (IMHO).  Just don't use your rent money, mmmkay?  Everything in balance.  I still work hard to enjoy my life and help others who are less fortunate than my family.  I hope enough of us carry that forward into the post-dollar world.  If we do, we'll be OK.  

The Body's picture

Coincidence or Correlation?

I don’t remember which thread it was on, but someone pointed out the latest smash in Silver prices started basically right when Modern-Day-Thomas-Jefferson whipped out that Silver Eagle in front of the Bernanke.  Interesting.  Maybe coincidence, maybe not but demonstrating to the public just how flimsy Barbarous Relic & Barbarous Relic Junior are by smearing them at the very moment TPTB’s single biggest enemy stands tall in favor of them certainly doesn’t seem implausible.

Ron Paul publicly humiliated Bernanke.  RP's arguments are sound.  Their arguments are illusion.  The only real way they can win the truth game is by distorting it.  Smashing the price of silver right at a time when Ron Paul pulls an ASE out would be a very timely distortion for them.  Very timely indeed.

Ron Paul is the only meaningful threat to Them right now.  The propaganda machine would get an awful lot of mileage out of demonstrating how weak PMs are, how whacked out and wrong RP is and also, by extension, how great fiat is, by blowing up the fake paper USD price of them right when RP is on television holding a silver coin & handing Ben Bernanke his ass.

If this latest smash continues, I'll be curious to see what kind of headlines the MSM starts broadcasting.

Anyhow, thanks to whoever mentioned the Ron Paul – Price Smash coincidence or correlation; whichever it may be.

tread_w_care's picture

Speaking of Silver Smash . . .

Surely this has been covered here, but, I missed it, so here it is again

http://www.zerohedge.com/news/catching-silver-crusher-algorithm-act

Catching The "Silver Crusher" Algorithm In The Act

 
Tyler Durden's picture


 

 

There was a time when catching the silver "whack-a-mole" algo, or process, or intervention, or manipulation, or whatever one wants to call it, in action was a myth: an urban legend, perpetuated by silver conspiracy theorists. Until today that is. Courtesy of Nanex we now have direct evidence of just what the reflexive market (in which derivative products such as ETFs influence underlying assets) goes to town by taking silver to the woodshed at a whopping 75,000 times per second! From the broken market sleuths at Nanex: "On March 20, 2012 at 13:22:33, the quote rate in the ETF symbol SLV sustained a rate exceeding 75,000/sec (75/ms) for 25 milliseconds. Nasdaq quotes lagged other exchanges by about 50 milliseconds. Nasdaq quotes even lagged their own trades -- a condition we have jokingly referred to as fantaseconds." Translation: so desperate was the desire to crush silver at precisely 13:22;33, that the Nasdaq order flow directive ended up moving faster than light. Frankly, we don't know about you, but when someone is willing to bend the laws of relativity, just to get a cheaper price in silver, to perpetuate a failing monetary system or for any other reason, we quietly step aside...

onewileyz's picture

@Dr Jerome...

I think those 40% Ikes have a "S" mintmark...1975-'76

Edit: "I think"

Turdle GG's picture

re Santa's post on citizenship, etc.

Well, he's already got his US citizenship (I presume).

He's already got his wealth tied up in Tanzanian gold mines.

So, his final step will be to live somewhere else.   Perhaps in Singapore (was it he who mentioned Singapore in a very positive way recently?)

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