The How and The Why

Fri, May 4, 2012 - 10:25am

In a stunning development, much to the surprise of The Shill, The Coug and LIESman, today's job report was "weaker than expected". Surprisingly, the only mouthpiece that came close to predicting the actual number was former O'Bomney hack, Austin Goonsby. What does that tell you?

So here's the deal. Though I firmly believe that political pressure sways the calculative ability of those within the BLS, it's also possible that, because we are truly in a new paradigm, the current BLS methodology is simply outdated. 

From 1982 to 2007, the U.S. economy was measured as expanding. Those who didn't have jobs often found jobs. Those who still couldn't find jobs, applied for unemployment "insurance". This transfer payment program provided some welfare to those in need of it until they could secure employment and, since the economy was "growing", most found work before the government checks ran out. And that's the key...the program has an expiration date for those on the dole. 

The current expiration date is 99 weeks. This means that anyone receiving unemployment insurance will only receive checks for about 2 years before the government cuts them off. Now, as this pertains to today's jobs number is important. You see the BLS counts those receiving checks as part of the unemployed base. As part of the calculation, when someone stops receiving checks, they are no longer considered to be unemployed. For the 25-year period of 1982-2007, this was an OK way to do things as it was statistically correct to assume that someone no longer collecting unemployment insurance had now found a job. Now, however, that's not the case.

Instead, many folks are "long-term unemployed". They lost their job and applied for unemployment insurance and, after 99 weeks, the checks stopped coming. These folks are now considered by the BLS to have found a job but have they? Maybe a few have but just because the checks ran out does not mean that you are no longer unemployed. However, to the BLS, this is exactly what it means. So, payrolls can only increase by 115,000 and the labor force participation rate can fall to 64.3% but the stated "rate of unemployment" can also fall to 8.1%. TA-DAH!!! Barack The Magnificent can again proclaim at today's press appearance that the economy is strong and he should be re-elected.

More details can be found by reading these excellent, brief summations from ZH:

Again, many of the people not in the measured "labor force" have simply given up. Their unemployment checks have run out and the BLS simply ignores them and fails to count them as if they don't exist at all. And this is how things work in the good ole U.S.A.

Ignoring and manipulating facts and data is also how things work in the gold and silver markets. Look, here's the deal. Everything...and I mean everything...points to a bottom here that will lead to a very strong rebound, particularly in silver. But it's a little like the BLSBS. Post-MFG, we may be in all new paradigm where the only entities left trading paper metal are Cartel Monkeys and HFT WOPRs. Under those conditions, it's going to be very difficult for the metals to surge without some type of "flipping" event which causes the algos to by tilted positively instead of negatively. A sustained short squeeze that drives price back through the 200-day MA would do the trick but can we get that to happen absent news of impending QE? More importantly, will The Gold Cartel allow that to happen ​absent the imminent appearance of overt QE3 or a Cartel switch to net long?

So, just as every traditional indicator I follow screams BUY right here, in this post-MFG world we have to remain cautious. Not so much cautious from a risk perspective, just cautious from a timing and frustration perspective. 

Hang in there. Let this nonsense play out. The American economy is moribund. Europe is an economic disaster. Global demand for physical precious metal is only going to increase. Do not let the minute-by-minute, hour-by-hour shenanigans of the Comex scare you. Your silver and gold will have a higher fiat-conversion price 6 months from now. They will have a higher fiat-conversion price 12 months from now. And, if there are still traditional fiat to which you can convert 24 months from now, the price of gold and silver will be higher still.

OK, that's all for now. As I've typed, I see that we've begun to squeeze the smarty-pant shorts a bit. This is encouraging. In gold, a move abive 1650 will intensify the pressure. Silver needs to crawl back above $31 before anything other than weak hands begin to get squeezed. Keep your fingers crossed and look for a new thread after I've had an opportunity to review what should be a very interesting CoT later this afternoon.


About the Author

turd [at] tfmetalsreport [dot] com ()


Airgead · May 4, 2012 - 10:26am

I could have been furst

I am not that silly

SV · May 4, 2012 - 10:28am

Silver Vigilantes!! These shorts are gonna get phyzzed out!

Silver below thirty cannot be maintained by the banksturds.

Lightning · May 4, 2012 - 10:28am

Lightning strikes

Lightning strikes second today.

murphy · May 4, 2012 - 10:33am

Cinco De Mayo, almost

The best reason to hold miners in one paragraph. As long as you hold 50% physical and 50% miners.

We all know the fundamentals, ad nausea. Are things better today than 11 years ago when the bull metal market starting running at $250 and $4.50?

We all know it''s manipulation and MOPE. They crushed MFG to take out the volume and remove players from the market. The HUI has been at the same level as it is now three other times. July 2008 au 960, Jan. 2009 au 1118, Aug. 2010 au 1216. What's the price now? Only about 70% higher than 2008.

The stock market that they refuse to let go down, will eventually. Whether before or after the US election, it does not matter. The miners may or may not crash with it. We would like to eventually sell our miners to convert to physical, right?

Since the miners have been beaten into submission already, to shake out the people without total conviction, they may not go down further.

Okay, here's the money shot (paragraph).

The paper market experiences a tremendous crash and all paper assets are wiped out, including the miners, causing the current financial system to change to something new. If this occurs then the price of physical gold and physical silver ( I'm talking to you Victor) will be soaring. It will make the paper losses we experience pale in comparison. But before this would occur do you believe that the miners may experience a SIGNIFICANT rebound? Think SLW in 2008 at $4.50 to it's high last year at what, $47.50? How does that compare to Apple from $200 to $600 folks?

Long and strong. Sit tight and be right.

Is there a way to incorporate my money shot paragraph into the T.I.T.S. index?

Hard Rain · May 4, 2012 - 10:33am

Good Read

This was a good read for me and very educational. Gotta love this site. It's on my daily must read. Better than a college education.


¤ · May 4, 2012 - 10:34am

Stand your ground... the face of any adversity and meet it head on!

That includes daily PM beat downs 

As always...thanks TF, we appreciate it!

A lion embraces the wind.

SpeakEasy, news, tunes/vids and eye-candy...

SV · May 4, 2012 - 10:35am

The commitment of traders

trading volumes been light, lets see if there is a line in the sand...

Hard Rain · May 4, 2012 - 10:36am

Thank you

That's very kind of you to say. I appreciate it.

Gramp · May 4, 2012 - 10:38am

Stacking this a.m.

Guess another deep sea fishing adventure is in the works!

few thousand years of history is on our side...

Oh, and did anyone catch the interview with Ted Nuggent on whatever MSM spoutlet?

He did come across as erratic.... though it was disgusting to see the interviewer wimper, squirm, and look like a child who wants to be a tattle tale to teacher... Oh the horror! Uncle Scam has you in his Cross Hairs there Teddy!

Groaner · May 4, 2012 - 10:39am

the usd just popped up.. crazy

I guess the market does not believe QE is coming

Urban Roman · May 4, 2012 - 10:39am

Like you have been saying,

The only winning move is to take delivery. Colorado Gold

Silver Meddler · May 4, 2012 - 10:40am

Gave Up

I'm one of the people who's not counted in employment statistics because I gave up looking. The good part is it gave me time to learn about silver & gold.

crackor · May 4, 2012 - 10:42am

here is good vid on the subject

Charles Biderman has a great add on to this BLSBS.

Also Mr F I am also grateful for this site, seems I lurk more than comment but I am a daily reader and proponent of this sites intent.

Cheers to you all!!

tpbeta · May 4, 2012 - 10:42am

Turd done good

Your $30 bottom seems to be holding up very well. Great calls (although I was hoping you'd be wrong, dagnabit)

Titus Andronicus · May 4, 2012 - 10:49am

Thanks Turd.

Thanks Turd.

Groaner · May 4, 2012 - 10:50am

$10 drop in 10 min.s

this stinks

OC15 · May 4, 2012 - 10:51am

Kick everyone off unemployment benefits

And the unemployment rate goes to zero, problem solved.

lodmund · May 4, 2012 - 10:54am

the action in the gold market

the action in the gold market today is extremely weak and a breach of $1612 looks likely....with all those enormous london physical orders at $1635 getting filled ( or perhaps just moved down a bit as they are always are)

achmachat · May 4, 2012 - 10:56am

...the drop

sorry for that drop guys and gals; i ordered 100 silver maples at that pretty peak.

ReachWest · May 4, 2012 - 10:59am

Sudden change again

So .. what news item initiated the reversal in USD [up] and Gold [back down] over the past 30 minutes ?

I suppose they're just setting the stage for next weeks action. It never gets old.

Be Prepared · May 4, 2012 - 10:59am

In Honor of Star Wars Day.... Luke Turdwalker

Turd... you always kick ass when you're flying your X Wing Fighter

Bobbejaan · May 4, 2012 - 11:00am

A Parable to cheer you up, Turd ....

Once upon a time – and for a very long time – Americans lived in a solid gold monetary system. They owned gold and used it for money. The dollar was literally as good as gold. It was a monetary system so solid that it was like a house of bricks. And then, in 1933, the state decided it wanted all that gold for itself, and it demanded all the gold bricks from the monetary house. It even threatened the people with 10 years in jail if they didn't turn over all the gold, brick by brick.

So the people were forced from their brick house and moved into something called the gold exchange system. This was a monetary system that pretended to be built of gold. It represented that the dollar was still exchangeable for gold. But it really wasn't, at least for the people who lived in it. In fact, most gold ownership remained a crime. It was a monetary system so flimsy that you could say it was built like a house of sticks. Of course, it couldn't hold up long. It collapsed in 1971.

When the house of sticks collapsed, the people were told that they must now move into a monetary house made of straw – the dollar reserve standard. This, they were told by the state, was even better than a house of bricks or sticks. But, of course, it wasn't. And now the winds of economic reckoning have begun to blow. And as the straws of today's dollar reserve system begin to be scattered to the four winds, the people must look for a new monetary home.


Robert Zoellick, the president of the World Bank, referred recently to introducing gold into the monetary system as "an international reference point of market expectations."

But if the currency is not redeemable in real gold that you can take anywhere you go and keep anytime you wish, it is not really a gold house at all, but only another monetary flim-flam by the state. It may be constructed to appear like the brick house made of gold, but it will only be a house of paper, painted to look exactly like bricks of gold.

And remember that a house of paper is even more flimsy than a house of sticks or a house of straw.



Also, please don't let the troggs get to you so much ... Remember the battle cry of Maverick Non-Conformists all over the world is = "Fuck 'em" ... You are being "Righteous unto your personal ethics", and that's ALL that truly matters.

Groaner ReachWest · May 4, 2012 - 11:00am

I guess the jobs number needed to be really bad.

they think QE is not coming soon apparently 

unthought known · May 4, 2012 - 11:02am

I give up...

they win... gold and silver will do nothing until QE3 is announced and they are not going to do it until the market and oil is MUCH lower than it is now.. of course it will take gold and silver down as well.. remember, in the 70s gold went down 50% right before its final bull market run.. dont be surprised to see that here, maybe not to that degree but down to 1200 and 20...

Dr G · May 4, 2012 - 11:02am

achmachat, drop isn't because

achmachat, drop isn't because of you ;).

Nobody left trading gold and silver, the only thing that will move the robots is formal QE. 

My feeling is that these are great prices to buy at. I also feel we will see lower silver before higher. Love to be wrong about that.

choke on paper · May 4, 2012 - 11:02am

So here is the bad part ...i

So here is the bad part ...i am so sick of this bullshit. I feel like I have been duped.

Here is the good part I will never sell my silver.

Lanikai · May 4, 2012 - 11:05am

slow and steady wins the race

The trendline can take Au down 'til we cry. No worries. Sinclair stated years ago how the deal was made, with China included, to take the dollar down slowly as to avoid social chaos... This chart is from post April 24, the second chart shows a fifth wave blastoff, but don't count on it, just stack, hope for the best and plan for the worst: a mantra from Jim Sinclair we first read in '05. For those who need periodic reminders, just look at the five year chart now and again.

Groaner · May 4, 2012 - 11:05am

Now Marc Faber coming with gold could

drop to 1400-1500... nice timing for the scum bags to hit gold

· May 4, 2012 - 11:07am


Welcome. Why do you think 1612 will be breached? Thinks looking rather different to me - 1630 holding so far - I see no reason to question the buyers of size.

50Jim · May 4, 2012 - 11:07am

two cents worth into this

I would like to put my two cents worth into this. The origin of this is from the Bible and refers to the widow with her two small coins.

Sometimes we think that the little bit we take off the market doesn't amount to much. But, at the end of the day if we just purchased two coins of little value each week, it would hurt the cartel.

Just my two cents worth of advice.

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