Monday Night Discussion

Mon, Apr 23, 2012 - 6:33pm

Hot on the heals of the Sunday Night Discussion, here comes the Monday version. If you have a few minutes, I'd really appreciate your feedback on the following items.

First, a quick update on the open interest changes for Friday. Recall, first, that it was a relatively flat day with gold up $1.50 and silver down 13 cents. The gold OI was quite curious in that the front-month June dropped by a scant 24 contracts and the next delivery month of August dropped by only 1. One! Now, with total volume for Friday coming in at 137,937, do you find it more than a little strange that the two most active months only saw a drop of 25 contracts, combined? Just another sign that almost all of the Comex volume these days is HFT WOPRs that open and close positions intraday. (It could also be another sign that the CME-supplied data is simply bogus.) In silver, the total OI rose to a new 2012 high of 121,702 with most of the gains coming in the OI of the Sep12 contract. I will be very interested to see the OI numbers tomorrow (basis today) after today's EE beatdown. I would suspect that the total OI will show another rise to new 2012 highs as brand new shorts were added today.

Next, an interesting note for Mike Krieger's new site. Lots of folks seem to incorrectly misinterpret the abundance of "WE BUY GOLD" stores as a sign of a gold bubble when, in fact, it's the opposite signal. Additionally, the willingness of regular people to unload their gold in exchange for much-needed fiat speaks volumes to the true state of the economy. Now comes this story about pawn shops seeing a dramatic dropoff in the amount of gold exchanges. Is this "supply" of gold from weak hands nearly exhausted? Maybe.

In world news, I thought this next piece neatly summarized the deteriorating situation in Europe where things are going from bad to worse to awful to crisis very quickly.’-weekly-market-forecast-here-comes-spain-edition

Lastly, please take five minutes and read this excellent new piece from Jim Quinn. As preparation for the FOMC nonsense this week and the BLSBS next, this article will strengthen your fortitude against the SPIN, MOPE and outright propaganda that is sure to come.

OK, off you go then. See you tomorrow. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Ag Surfer
Apr 23, 2012 - 7:16pm

Cash for gold

Who is the end buyer of all the cash for gold places?? I've wondered for awhile if it isnt CBs and large buyers overseas? Does anyone know who is the end buyer of all that "scrap" gold? (lol, everytime I hear a commercial say, bring in your mismatched and scrap gold jewelry, I have to laugh!) When the PM craze culminated in 1980 people were lined up around the corner of their LCS to BUY silver and gold. I'm going to continue stacking while the line at my LCS is sellers. I will have to say that even in the last few months there have been fewer sellers, which I would agree means that the weak hands have sold already, but I think the next time there is a wave of sellers it will be when the price is climbing. The buyers I know that buy from individuals are doing less buying than they would like to right now. Be right and sit tight! Ag Surfer

Apr 23, 2012 - 7:19pm

CME Supplied Data

Turd said: "It could also be another sign that the CME-supplied data is simply bogus."

I'm glad you brought this topic up again - I 've been wondering about it for a while now. A quick 30 seconds on google found this:

Commitment to accuracy of CFTC data in doubt:

FCM fined for submitting inaccurate reports:

CFTC Orders Newedge To Pay $700,000 For Inaccurate Trader Reports:

So, if I was to venture a guess, I'd say the CME data is just as accurate as a Spanish bank's housing appraisal, Greek tax projections, or US unemployment numbers

Apr 23, 2012 - 7:32pm


Gold Stocks: Half Way?

Ned W Schmidt CFA 04/23/2012

With the calendar moving into the second third of the year, some of the popular delusions of the crowd seem increasingly remote possibilities. Have we been waiting a year for QE-3? But like a broken clock, those forecasting QE-3 to be imminent still have a shot at being correct. At the same time, some are chopping down the AAPL tree. Already down 10% from the high, the leading delusionist on that stock is still forecasting a $1,000 price. Gold seems well short of $2,000. Would that be still or again? And the pick up trucks loaded with Silver ready for the ride to $100? Well, seems most have broken down in the middle of the road. And the Gold stocks? Perhaps about half way to the bottom.

Second, for larger mining stocks set a price target roughly 30-40% below today’s price. Should the stock reach that level this Summer then consider purchasing it. However, do so without expecting immediate gratification. Third, for smaller mining stocks that actually have production, or production that is imminent, set a price target to consider the stock at 40-50% below today’s price.


Well, there you have it. Ned Schmidt thinks LARGE CAP GOLD STOCKS are a good price at 30-40% below present values and JUNIORS at 40-50% below current values.

Dennis Gartman says the GOLD BULL MARKET is over... so he is unloading all of his gold positions.

Jon Nadler states the following:

The Sydney Morning Herald’s Business Day contributor Matthew Kidman notes several interesting aspects of a gold market that now has everyone (and their cousins) suddenly turning into self-proclaimed analysts. First, Mr. Kidman correctly underlines the fact that “there is not an analyst on the face of the Earth who can accurately value gold” since it cannot be based on conventional metrics such as ROA or discounted cash flows. Score one for Warren Buffett.

He then punctures the myth of supply/demand tables being in favor of (higher) gold by noting that “gold bugs like to say that the demand for gold is strong, but the reality is the supply of bullion far outstrips demand that is going to be the case well into the future.”


I don't think I have ever seen JON NADLER write anything BULLISH about gold. It is always either sarcastic, negative or bearish. According to these FINE ANALYSTS, it looks like GOLD and SILVER BULL MARKET is over.

I can't wait until the day comes when GOLD and SILVER take out there HIGHS, I will beg TURD to allow me to write an article naming these analysts and how LOUSY their forecasts turned out to be.

Apr 23, 2012 - 7:40pm

Some observations

The US government will need to sell $1.3 trillion in new debt. This doesn't include another 3 trillion or so in debt that must be rolled over as it matures.

The US will hit its debt ceiling later this year. It is a certainty that it will be a public fiasco of EPIC proportions since the elections will be in play at the same time.

The Congress will need to determine whether or not its going to postpone the draconian tax increases that are slated to take effect this upcoming January 1, 2013. The Social Security tax cut, the Bush tax cuts and the extended unemployment all expire at the end of this year. The uncertainty of whether these will be postponed will deter many employers from hiring new employees, will cause many consumers to postpone major purchases and will cause a dramatic number of investors to book profits on investments to avoid paying higher taxes. This would have a MAJOR impact on the equity markets.

The situation with Israel/Iran will only continue to get hotter and hotter with each passing week. There is zero chance that Iran will give up its nuclear program and capitulate to Western demands.

At some point a new PM exchange will open in China creating another exchange for price discovery.

The paradigm shift of trading oil for gold will have significant negative repercussions on the US dollars hegemony.

The exponential function in US debt is in play.

The exponential function in gold is in play.

Silver is still up over 10% YTD.

PM miners are at generational lows when priced against gold. That portends 2 possibilities. Either the miners are signaling that gold and silver are on their way to being worthless; or, they represent the buying opportunity of a lifetime. While there is precedent for the miners leading the metals - I am going to opt for the latter option.

There are many that bad mouth Turd and company as being naive, apt to follow charlatans such as Harvey Organ, Andrew Macguire, etc... while they proclaim that they are the true bearers of truth. These people are always very well spoken, educated and have really persuasive arguments. Its hard to disagree with them until you take a step back and realize something. Turd, Macguire, Organ, et al are strong advocates of buying physical metal and holding it in your possession. Perhaps that is why they are lightning rods of opposition?

I am bleeding heavily in many of my miner positions (including JAG, MUX, PNPFF, AUMN, amongst others). I will NOT sell into this weakness. Instead, I have added USLV and recently NUGT. I am arranging a personal loan from a dear friend that I will collateralize if required with some physical metal so that I can purchase some LEAP options in silver in the next 2-3 weeks (unless we have a price explosion before then).

We are at war ladies and gentlemen. Gold and silver are objective standards of value. Nothing more - nothing less. Gold and silver are tools provided by God to allow people to trade with one another in a fair and honest fashion. It has been that way since time immemorial. The enemy is doing everything possible to obscure that truth.

Hold strong. If you have the ability to add to positions on price weakness - the risk/reward is heavily slanted in your favor currently.

Just sayin'

Apr 23, 2012 - 7:51pm

Surviving 'interesting times' + pawnshops

Repost from previous thread, with update:

In looking around for accounts of another episode of fiscal calamity, I stumbled upon this one instead. I remember if pretty well, insofar as it was one of the few (if not only) times the currency I used was 'hard commodity' -- at least in a relative sense, compared to the zloty, the dinar and the hrivnya. Ukrainians were a regular fixture of the town market, selling everything that was not nailed down (and a few things that were/should have been).

Worth a look, the gentleman is certainly a Turdite at heart, if not already in fact. Here he is talking about hyperinflation in Ukraine in the early '90s:

"People tried to buy something, anything, to convert useless paper into something real. A sack of sugar or flower were worth their weight in gold, although, surprisingly, no precious metals were ever involved in economic transactions."

"First, if you are convinced that it’s about to happen in the USA, you need to get out of the city, get out of the suburbia, and get into an area where you can have easy fresh water, farmland, and just a few people per square mile.

Second, hyper-inflation doesn’t just end by itself. It has to be stopped. Either governments stop creating money and deal with political and social consequences of gaping deficits, or social order as we know it collapses.

Third, there’s no reason for you to not buy laundry detergent, socks, toilet paper, grains, razors, light bulbs, canned goods IN BULK. Next time you get a little extra money, invest it into one or all of the aforementioned goods. You’re going to need them anyway. It’s an investment, not an expense. When was the last time you walked into a store and went, “huh, that’s weird, that canister of Tide just keeps getting cheaper!

Finally, anyone who learned the biggest lesson of the hyper-inflationary collapse in Ukraine understood how to live flexibly. Darwin often gets misquoted with this one, but it’s one of my favorites – “It’s not the strongest or the smartest who survives. It’s the one who’s most adaptable to change“."

Reason Silver - Ukraine 1993 Hyperinflation Lessons Learned

In other news, the proprietors of 2 out of the 3 pawnshops I called this afternoon (to ask if they had PMs for sale) said that they keep for themselves whatever coins they get in the store. I recommended they check out TFMR...


Turdland Jobs Forum

Apr 23, 2012 - 7:55pm


I have a scrap gold buying business and I can confirm the drop off in our gold purchases. We've been averaging about $15,000 to $20,000 in purchases over the past five months. This is down from our monthly average of $70,000 last year. I remember when Ben Davies came out on King World News and stated that silver looked toppy due to the large amount of scrap coming to market adding additional supply. We all know what happened in May to silver. We were buying silver hand over fist at the time and I could confirm what he was saying in the interview. If my business is a small sample, this means less scrap coming to market and thus less supply. I don't know how much scrap gold accounts for annual supply, but I know it's significant. There's only so many 14k gold chains out there. This could very well be the next catalyst gold needs to move higher...

Apr 23, 2012 - 8:00pm

I can't stand Nadler

It's like a CEO of a company saying, Don't invest here, we are a sham... he must be SO bought and paid for. What a joke.

Traffic to PM related sites appears to be bottoming out. All I can say is, BE RIGHT AND SIT TIGHT, don't ever lose conviction my friends, just do the math, it is obvious, we are in a finite world where the RETARDED economists (signal KRUGMAN) think that somehow exponential / infinite growth is both feasible and possible. Don't these guys even read a basic economics 101 text book? They sure don't appear to understand something as basic as the "Broken Window Fallacy" That Krugman character really has his head shoved deep up there... there are very few things in this world I despire more than a Keynesian "eCONomist" - its like an epic tidal wave of pleasure getting the best deal on the bullion stacks.

BTW, I picked up a ton of 1964 kennedies today, too bad I lost them in a boating accident on the way home..

Apr 23, 2012 - 8:01pm

Jim Sinclair had this to say today...

Dear CIGAs,

The implications of China paying for Iranian oil in gold is the most important event in the modern history of gold

1. It is reasonable to assume that China has been threatened with total or at least selective exclusion from the SWIFT system if it pays in any currency for Iranian oil.

2. Gold has been decided by China as the means of making payment for massive international purchases free of the SWIFT system.

3. Other Asian and Middle Eastern nations will now see the gold they hold as money free of Western economic interference.

4. Gold now is not only money free of liability, but also free from interference regarding settlement by the long arm of Western influence.

5. The SWIFT system is becoming ever more a weapon of Western international political will.

6. In case of war anywhere, it is now demonstrated for all to see that only gold will buy the materials required. Paper currencies are under the SWIFT system's control in settlement.

7. Far from being a barbaric relic, gold is now clearly the money of state survival in every sense.

8. It is reasonable and possible for the supply of physical gold to fall far behind the size of the massive short positions now common to algorithm and hedge fund paper shorts. That will make an effective cover at a reasonable price as compared to a certain day's close impossible the following day on an exogenous event.

9. It may not be possible to use TA of any nature to determine a price of overvaluation for gold. Should the USA decide to take on China in full out economic war with the physical market totally illiquid, such as through isolation from the SWIFT system, consider the gold price that might result.

Apr 23, 2012 - 8:15pm


WHen i see those pawn shops saying "we sell gold" then It will be a top. Thats when i plan on selling. as far as im concerned the "we buy gold" shows the exact opposite of a bull mania.

Apr 23, 2012 - 8:27pm

China's buying oil from Iran with gold?

@IndigoStar7 -> China's buying oil from Iran with gold? How did I miss that news piece? Or is that just a hypothetical guess from Sinclair?

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