Well, THAT Was Interesting

227
Wed, Apr 25, 2012 - 4:45pm

What a day, huh? First we saw some May silver call-sellers get squeezed. Then, the FOMC statement caused a sharp selloff. Unfortunately for The Cartel, no waterfall ensued as price quickly rebounded. We now look to be on the verge of a rally. Let's get started!

I know that many folks come here only to read my blogs or to visit Pailin's Corner. In doing so, many miss out on the terrific information that is shared in the comments. Rather than re-type my thoughts from earlier, here are some C&Ps of my comments from the previous thread:

Submitted by Turd Ferguson on April 25, 2012 - 10:46am.
If anyone is willing to gamble in the casino, now would be the time. This reeks of a screwing of put sellers ahead of option expiry. The final beatdown before the reversal.

Submitted by Turd Ferguson on April 25, 2012 - 11:17am.
The summer is going to be hot and explosive, though, so anyone gambling should be sure to buy time, too.
Maybe (buy) the Oct or Dec (silver) $40s?
All I know is that today's action is bullshit. May call sellers have been forced to hedge by shorting futures. Just like the action we saw in late March prior to April gold option expiry. Recall that after dropping to 1630, price rallied sharply back toward 1700. Same shit here.
I expect silver back to 32 or even 33 relatively quickly, The Bernank notwithstanding.

Submitted by Turd Ferguson on April 25, 2012 - 11:21am.
A drop to 30 or just below is possible but I firmly believe that that is it.
Physical demand is very strong and there are literally tonnes waiting and hoping to be filled at $30.
EVERYTHING points to a bottom here. Longterm holders WILL NOT be disappointed.

Submitted by Turd Ferguson on April 25, 2012 - 11:48am.
And most should NOT (be trading).
However, this action reminds me of the day in early November 2010 when QE2 was announced. A beatdown headfake occurred that day prior to the announcement.
Again, if you are willing to risk a loss in the casino, this looks like an excellent opportunity to give it a whirl.

Obviously, I believe today's low was the bottom. Maybe there will be a retest but $30 silver is going to be a very difficult barrier for the permabears to break. I would still be looking to put on a speculative position here with money you are fully content to lose if you are wrong or if it is stolen from you. That said, if you absolutely feel compelled to trade in the casino, this would be a good time to give it a try.

Gold is basing above what appears to be solid support between 1625 and 1635. As our pal, Winston, pointed out earlier today, physical demand is so strong and consistent here that further, sustained drops in paper price are highly unlikely. Gold will show signs of life when it trades back above 1650 and then 1660. Let's go into more detail and begin to get excited then. For now, let's just be happy to be building such a strong base from which we can, eventually, catapult forward.

Clearly, I'm excited about silver here, too. $30 silver completes the right shoulder of our massive, reverse H&S formation and Winston has informed us about incredible demand for physical silver at that level. I am nearly 100% certain that silver won't fall again much below today's lows. As it bases here, it is preparing for Battle Royale II. Of course you remember Battle Royale I at $36 in late February and the ensuing crush. Well, Battle Royale II now lies near our old nemesis of $33. What will happen next time? I can't say for sure but I'm quite certain we won't have to wait too long to find out.

Just a quick word about open interest and the next CoT. Today's OI (basis yesterday) came in at a new low of 395,389 in gold and 122,325 in silver. Recall that yesterday, price rose by about $10 so what we clearly saw was short-covering ahead of The Bernank. No doubt many of those same shorts were put back on this morning and are now, once again, waiting to be covered. While silver rose 22c yesterday, OI fell by about 400. Clearly this was a short-covering bump, too. Please allow me to emphasize this again:

Since March 15, paper silver has fallen in price by over almost $2 yet total Comex open interest has expanded by almost 15%. There is no question in my mind that this is the result of short contracts being added. Just as the EE fleeced the over-excited longs in February, they will soon fleece the over-indulgent shorts. Just be patient.

For the CoT reporting week, gold fell about $9 while shedding 3200 in OI. Silver fell $1.22 while adding about 1000 contracts. Here's why both are ultimately positive: Gold liquidity has been wrung out and now sits patiently in the sideline, waiting to return as the charts improve. The much smaller silver market has swung from speculative long excess in late Feb to speculative short excess in late April. The EE, playing both sides of the specs for profit, will soon close the trap on the foolish spec shorts.

Finally, this short video about government debt. Not much new here for the average Turdite but, since it's presented in such a brief and simple manner, perhaps you can C&P the url and email it to your friends.

Does Government Have a Revenue or Spending Problem?

About the Author

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  227 Comments

Apr 25, 2012 - 7:34pm

I'll play

Silver Rarer Than Gold? - Mike Maloney - Why Gold & Silver?
¤
Apr 25, 2012 - 7:37pm

Victor

You could say the same thing about gold if some set of circumstances made gold a questionable asset of value.

For example, what if the use of tungsten was found to be so prevalent and intermingled in many of the bars of gold scattered worldwide that the authenticity of any gold was called into question for a period of time? Would silver not increase in value in that scenario especially if it had a dual use, one that gold really doesn't have?

That's a horrible thought of course, but shows how I can arbitrarily just pick gold for some reason like you do with silver for whatever reason and try to find a reason to diminish it's potential value. No one can say anything definitive about any of this so to continually go after silver (and TF) is an exercise in opinion and I'm not sure what else.

To not even allow into your argument or even consider that the Chinese will have something to say in the future about silver being a monetary asset renders the debate/opinion incomplete and blind in one eye.

What are your thoughts on silver as it relates to China in the future? They reportedly have about 95% of the worlds resources within their boundaries. Is it to be excluded and not even considered in your forward thinking on why silver is so really no different then....chickpeas?

Are you actually being serious? Fresh water at some point could knock gold off that altar you have it on.

Chickpeas? C'mon.

¤
Apr 25, 2012 - 7:40pm

lol

Ok...I see that your playing.

Chickpeas, he says. Haha.

Well, I'm glad we got that settled. You just stated that your being provocative and weren't really being serious. Now I know where we're at.

Done.

Apr 25, 2012 - 7:51pm

historic gold/silver

MONEY LAW The Coinage Act of April 2, 1792 (1 Stat. 246) Statute I. April 2, 1792 Chapter XVI.--An Act establishing a Mint, and regulating the coins of the United States. ... Proportional value Section 11. And be it further enacted, That of gold and silver the proportional value of gold and silver in all coins which shall by law be current as money within the United States, shall be fifteen to one, according to quantity in weight, of pure gold or pure silver; that is to say, every fifteen payments, with one pound weight of pure gold, and so in proportion as to any greater or less quantities of the respective metals. https://www.constitution.org/uslaw/coinage1792.txt
SRSrocco
Apr 25, 2012 - 7:54pm

THE DEVIL TRADE

THE BERNANK FOMC DEVIL TRADE

This is what I do when I get bored. Furthermore, for the TECHNICAL ANALYSTS I thought I add a little chart on the bottom right. Look at the part that says "WHAT DAT?" These folks who still read their JAPANESE CANDLESTICK CHEAT SHEETS would realize this is a nice HAMMER.

But, between you and I..... I don't follow that sort of RUBBISH. Anyhow... I am actually finishing my article tonight and tomorrow morning on THE CRITICAL FACTORS THAT WILL IMPACT SILVER.

So no more blogging for me.

kingboo TF
Apr 25, 2012 - 7:56pm

hey Turd, i'm tellin ya........

this "Victor guy" is to be watched closely..........he fucking screams dis-info agent.. just a heads up. keep an eye on this guy and let me know what you think.......

Apr 25, 2012 - 7:58pm

@Hard Rain

Congratulations to your daughter on her accomplishment -- and to you, for having helped bring her here. While the national (global?) average seems to keep going down, making sure kids like these have a chance is one of the few worthwhile pursuits out there. I sure hope to be in your position a few years hence.

For every instance of incompetence, stupidity, sense of unearned entitlement out there, I am nevertheless continually amazed by the resourcefulness, dedication and talent that STILL exists. And this is in no small part due to the fellow Turdites I seem to spend all too much time with...

Consider making use of a cost-free, yet highly selective advertising platform for your staffing needs -- you may be pleasantly surprised:

Turdland Jobs Forum

atarangi
Apr 25, 2012 - 7:59pm

Chickpea - -

Chick peas are quite valuable if they've been eating hallucinogenic mushrooms.

Apr 25, 2012 - 8:05pm

History of gold/silver ratio from SeekingAlpha, 2010

...

After Bretton Woods, the ratio fell to around 20 amidst the economic prosperity of the postwar era until Nixon abandoned the Gold Standard in 1971. As the price of the yellow metal floated, gold outperformed silver until the fallout from the 1973 oil crisis, and then for the remainder of the decade silver outperformed gold as the ratio fell. Restrictions on the private ownership of gold were lifted in late 1974.

Meanwhile, in part due to the restrictions on gold ownership prior to 1974, the Hunt brothers began to buy large quantities of silver beginning in the early 1970s. Their buying spree culminated with a mega-spike in the price of silver in late 1979 and early 1980, when it became known that they were gradually cornering the market. The gold/silver ratio hit a bottom of 16 at this time. In response to this, the Comex introduced “Silver Rule 7” in early 1980. Steep restrictions were placed on leverage and the use of margin when buying commodities.Immediately, the price of silver began to fall, culminating in a 50% drop at the end of March. The heavily leveraged Hunts were wiped out, and silver continued to fall even faster than gold, which itself crashed from $850 to $600 in just three months (refer to Charts 2 and 3, note the activity in 1980). By May 1980 the ratio was back at 40.

Charts 2 and 3: The Gold/Silver Ratios 1970 – 2009

For the duration of the decade and into the early 1990s, the ratio continued to rise because gold outperformed silver, but only because it did not lose as much of its value. While the ratio reverted back to its 20th century average by 2000, gold and silver did not bottom until 2001 and 2003, respectively. At that time, silver once again turned up and the ratio began to fall. This trend continued until the onset of the 2008 Financial Crisis. The 2007-2008 spike in the ratio provided a very attractive entry point for those who were in a position to take advantage of it.

...

https://seekingalpha.com/article/206897-the-historical-gold-silver-ratio...

Tyler
Apr 25, 2012 - 8:08pm

College

As a recent graduate, I'll give my opinion on these:

1) 90% of young people in college care more about partying and getting laid than getting an education Obviously depends on the college. But that is probably close. 2) 75% of people in class check their Facebook at least one time during class At least 75%. 3) Cheating is more prolific than ever I don't have perspective on this, but with current technology, probably true. 4) The newest and latest craze is ecstasy , or MDMA. Electronic music is the most popular genre at most colleges, and this drug goes hand in hand with the electronic musical festivals like Coachella, Together as One, and “HARD”. This is significant because this drug has clearly been shown to BURN HOLES in the brain... making these kids DUMBER than EVER. I was never exposed to this drug once in college. 5) Most tests are MULTIPLE CHOICE I rarely had a multiple choice test. 6) Most kids WILL NOT BE FAILED, no matter how poor their performance 100% true. 7) Most UNIVERSITIES care more about their SPORTS teams than their STUDENTS Probably true at most schools. My school did not care about sports. Social Posturing and Being Cool are MORE IMPORTANT THAN EVER Maybe. Social status has been important for a long time. 9) Very LITTLE time is ACTUALLY spent on school work and learning Not true from my experience. 10) MANY MANY classes are taught by Teacher Assistants (TAs) TAs taught sessions after class of small groups of students. 11) Many students are now using their student loans (now CONVENIENTLY placed on DEBIT cards) to purchase non-education related items such as alcohol, drugs, and ipads. I have never seen this. 12) Many college kids still have NO FUCKING CLUE about the greater impending IMPLOSION of the global economy 100% true. Neither does the general population. 13) Those that do are very well praying that by the time they graduate, it recovers. I don't know anyone else my age that has an idea of the hurt that is coming. 14) Over 50% of the kids that graduated in 2011 DO NOT HAVE JOBS (see: https://www.sun-sentinel.com/news/nationworld/sns-bc-us–overqualifiedco...) and many that do are working in NON-DEGREE requiring fields, such as: WAITRESSING 15) Obama is trying to BUY the youth vote back by luring in his young base (WHICH HAS ALL BUT LEFT HIM, HOWS THAT HOPE AND CHANGE FOR YOU) see: https://www.cnn.com/2012/04/24/politics/obama-youth-vote/index.html The only people left that support obama are huge deltabravos. 16) Many people openly acknowledge that the high price of PRIVATE EDUCATION is more for the “CONNECTIONS” than the “EDUCATION” aka being able to rub shoulders with the sons & daughters of the NWO and high ranking politicians. Of course. Life is about connections. 17) Extreme Alcohol Poisoning or “blacking out” is often described as an exuberant occasion, with many students bragging about how blacked out they got last night Yes. Multiple nights per week. It's scary. 18) College kids NO LONGER live the “starving, living in a HOVEL with their books, aching with the pains of studying” lifestyle, and often go out for every meal, sucking down Mommy’s checking account and their Stafford Grants Yes 19) Many still see “stock analyst” as a favorable and venerable position Graduates from my school view Investment Banking as a good short-term job to climb the wall-street ladder. 20) The Diploma Mills are becoming Resumé mills, where BACHELORS graduates can 1-CLICK-SUBMIT their resumé to 100,000 companies… effectively diluting the power of their labor even more. I wasn't able to do this.

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