Still Pounding Away

Mon, Jun 11, 2012 - 10:48am

In moves that are increasingly disconnected from physical reality, paper metal is under siege again today. Whatever.

You see, here's the deal. Quite literally tonnes of precious metal are leaving London and heading east to China, Russia, India, Turkey, Iran, name it, they're buying and taking delivery. This is metal that won't be coming back! The foolish bullion banks think that they are just playing another round of fun and games with paper metal, leasing and hypothecation. They're not! This time it's for real and they don't seem to get it.

Think of it this way. I am a car dealer with a fleet of vehicles that I own. I lease these vehicles to borrowers who use the vehicles in their business. These borrowers routinely return the vehicles to me, only to release the same or other vehicle out of my inventory at a later time. I, the dealer, continue to recycle leases from one customer to another, moving cars from here to there based upon demand. As long as the cars are returned to me safe and sound, I can continue to run this program.

What happens, then, when a few of my customers take the cars I have leased them and sell them instead of returning them? My customer takes the cash and then, when I expect my car back, there is no car to return. It's been sold to someone else? But wait a minute. That was my car! I want it back. Too bad, says the new owner, I sold it, too. The next owner also sold it and so on and so on. Eventually, the final owner took the car, broke it completely down, refabricated the parts, reforged the body and, eventually built a completely different car. My original cars are gone and they're not coming back! My entire business model collapses and I go broke.

This is where we are now in London and New York. Gold and silver have been leased for decades. This dangerous game has been perpetuated by the ability to rehypothecate, the ability to "raid" the big ETFs and the ability to "manage" the paper markets. The Bullion Banks foolishly and naively believe that nothing has changed. They hope and expect that the precious metal currently being withdrawn from their vaults will return one day soon. Not gonna happen. This time it's for real. The metal, once withdrawn from "the system" isn't coming back. It's gone. For good.

It hardly matters why. Perhaps the "eastern" central banks are switching from dollars to gold for simple protection from dollar debasement. Maybe China in planning to start their own metals exchange to rival London in the 21st century. As mentioned here repeatedly, maybe all the countries listed above are planning a new gold-based, international trade settlement system. Again, it hardly matters. What does matter is that the gold isn't coming back. Ever. And just like the car dealer whose business model collapsed when he no longer owned any cars, the "western" central banks and the bullion banks are about to have a very rude awakening.

In the meantime, as mentioned above, paper price is being melted down yet again today. Though we have clearly bottomed in price for both gold and silver, last week's action certainly put a damper on any immediate bounceback. By driving price back under $29 and $1600, the Cartels were able to dissuade any additional spec buying and momentum has been halted. I'd expect this to continue for a while this week as both charts appear rangebound.

The only other interesting thing to discuss this morning is the latest CoT and Bank Participation Report. Within those reports, Uncle Ted found something rather telling. He now estimates JPMs net short position to be around 16,000 contracts. However, from the CoT, we know that the entire commercial net short position is 16,525. This tells us that JPM alone accounts for the entire net short position in silver. Remove them and the silver market is "balanced"...equal numbers of banks and specs, long and short. Instead, we have one bank with an extraordinarily large and concentrated short position. This is the essence of manipulation. One market participant with a huge, one-sided position. The only solution is to convince or force JPM to exit the silver market. Lord willing, one day soon, this is exactly what will happen. Until then, stay patient and keep stacking.

Have a great day.


About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 11, 2012 - 10:53am


A new record! Still trying for Furst!

Jun 11, 2012 - 10:53am

so true

of course... when the metal has left for the orient... it's gone.

how much did you stack while you still could?

Jun 11, 2012 - 10:53am

Couldn't do it and even

Couldn't do it and even waited to not be.

edit. dammit..........

second edit. Excellent post ​ Turd

stalking wolf
Jun 11, 2012 - 10:54am


YES! Finally

Jun 11, 2012 - 10:54am



stalking wolf
Jun 11, 2012 - 10:54am



Jun 11, 2012 - 11:03am


Thanks Turd - You are a voice of reason and level-headedness in an insane world.

This shit is really, really starting to get tiring.

Jun 11, 2012 - 11:05am

With utmost respect...

Turd, as you've stated in the past, you are just a lowly turd living in Flyover, Turdville. If you or I can see the massive outflow of metals heading east and the implications thereafter, don't you think The Bullion Banks or US Government are clued in as well?

Of course I am a lowlier turd than you so I can't propose any guesses as to what their plan is, but with the level of corruption we see daily I think anything is possible.

Jun 11, 2012 - 11:06am

SI 20

Fork working good, great touch up there on medium line last night at 29.00. Fork has been working close to 2 weeks, it's been a long time since I've had an upward trending fork work this long on 20 minute chart, good stuff. Looking for entry position on lower parallel around 28.15, stop at 28.00.

Jun 11, 2012 - 11:08am

Stack for the USA

I really wish more people in America were turds and stacking like never before. Once the SHTF, the only wealth that will remain in the US is going to be the PM's that the turds and other aware people tucked away, and let me tell you, the east is far far far ahead of the west. Don't expect America to be the head honcho to much longer...

Jun 11, 2012 - 11:08am

How Long?

Thanks Turd. is anyone able to estimate:

1) what tonnage of Ag / Au is currently held by the billion banks

2) approx. how much physical is leaving every month

3) at what point there is so little physical left that the comex becomes so over leveraged that it is unsustainable?


Jun 11, 2012 - 11:08am
Island Guy
Jun 11, 2012 - 11:11am

Maguire's Army and Eastern Powers

Will someone help to clarify something for me. The purpose of Andrew Maguire's Army is to actively trade the market, and then use profits to take possession of the physical metal so that it will break the Cartel. So far, so good.

However, as Turd points out, eastern governments are taking possession of physical metal on a massive scale. A scale that Andy's Army could never hope to match. If the eastern governments' taking possession has not broken the Cartel, what hope does Andy's Army have? If the eastern governments are successful in breaking the Cartel, then was Andy's Army just an exercise in futility?

Jun 11, 2012 - 11:13am

BBs don't know what they're doing?

The idea that the BBs don't know what they are doing seems ridiculous... it seems far more likely that they either have something up their sleeves (A deal with the giants?), or are stuck in a position that includes no alternatives. (They must continue to manipulate, to continue to kick the can, because attempting to unwind this ball of string would lead to systemic breakdown.) Either of these options seem way more likely than ignorance.

Jun 11, 2012 - 11:16am

Could Chinese paper gold be the future?

I just did some quite laborious but very interesting searching around the Chinese language only banks and precious metal sites and blogs. Quite revealing.

To my Google-translated gaze the following suggestions emerge:

1) "Paper gold" is promoted to Chinese citizens overtly, with no obfuscation or suggestion that it is actually metal.

2) Some "paper gold" and "paper silver" products can be redeemed for metal while others cannot; the difference is stated quite overtly on the front page, not merely in the small print.

3) "Paper gold" seems to be seen as a more sophisticated alternative to investment in physical metal, which is currently more popular.

4) "Paper gold" seems to be on the increase while physical is seen as old-fashioned and problematic (difficulties selling the gold back, assays, the usual stuff).

5) Where there is physical, it is clearly bars more than coins.

Could it be that the Eastward flood of metal of which we are hearing is simply being used to capitalise this system? It does seem to be a very large system involving a number of different banks and is aimed at retail.

Perhaps rather than a preference for physical (which is limited by people's crime risk tolerance), the need for metal is due to a preference for paper in an overtly fractional-reserve system, and the need for banks in a fraud-intolerant firing squad culture to be adequately reserved in case of accident.

Just my thoughts.

babaganoush2307 Island Guy
Jun 11, 2012 - 11:17am

True, True

Your right, Andy's Army more than likely won't even come close to what the east is purchasing, but I feel at this point people in the US need to keep stacking to preserve as much wealth as we can so when the dominos fall we don't come out on the other side completely broke. Unless everyone in the west suddenly woke up, stopped caring about the kardashians and american idol, did their research and started to buy physical PM's on a massive scale right now, the west won't be the big boy's once this is all over, all we can do is stack as much as possible while we still can to take care of ourselves and our families during the collapse and come out of it a little ahead of the game.

Jun 11, 2012 - 11:21am

@Riides - Billion banks

Gave me a giggle. Billion banks - I reckon they are just thousand banks really, and most of that probably belongs to someone else.

Bankers are going to have to get used to some much bigger numbers - and then some much smaller ones.


Jun 11, 2012 - 11:22am


I agree 100% with the metaphor, but the thing is the car dealership/leaser will continue to stay in business as long as new cars are being produced and purchased from the manufacturers. I was in that business and there was never a problem getting more cars. The same with these jokers. As long as there is demand for new car leases (gold leases), and the manufacturers (mines) continue to sell them cars (gold), they'll stay in business.

So how long will it take to exhaust all of the mines? Will the mines stop selling to them? Am I missing something here?

Brotha Bob
Jun 11, 2012 - 11:24am

Taking a pounding

Taking a pounding like fresh fish in jail!

Jun 11, 2012 - 11:24am

Cash-for-Gold Thoughts

Turd, fantastic post, as always. Thanks again.

Meanwhile, I want to focus on the cash-for-gold phenomenon.

I'm 47, and have lived in the USA for 46 of those years.

Until recently, there was no such thing as cash-for-gold. Why not?

What caused the sudden increase in the number of retail stores buying gold, the sudden increase in commercials on television, the press coverage, etc. about this?

Is this cash-for-gold just a simple, natural result of gold's increase in price over the last decade? If so, then could that alone explain the exponential increase in the number of retail stores buying gold?

Or, is there something more to add to the analysis?

Could it be that Americans bought so much gold in the form of trinkets and jewelry, which has basically languished in some out of the way drawer, and with the economy doing so poorly, then people simply wish to sell the jewelry since it is basically "found" money? If so, could simple arbitration be the reason for the phenomenon?

OR, is it that something nefarious is going on behind the scenes, with physical gold? Like, for example, some giant buyer of size wants to acquire all the gold possible, knowing of the pending system collapse?

The more I think about it, the more I tend to think the reason for the cash-for-gold phenomenon is a combination of simple arbitrage and forward thinking, and further, that there is no sinister behind-the-scenes effort to acquire physical gold. I make this conclusion based on my own observations of human behavior. Never underestimate the ignorance of the American minimum wage worker.

Americans in general are complacent and unaware. Heck, most do not know what an American Silver Eagle is, let alone know the concept of fiat currency like the FRNs. Think of things like yard sales. Americans haul their "stuff" outside onto tables and blankets spread across the lawn, hawking their unused stuff for pennies on the dollar. Why would Americans not also think that way about their broken gold necklace they got from high school graduation in 1983 [I have one of those, sitting in the drawer, too!]. Or similarly think the same thing about old earrings, or rings, etc.?

Since gold has gone from the low hundreds to near $2,000 per ounce, there is a lot of room for profit all along the chain [pun intended] from acquisition to smelting and conversion into assayed bars.

I also think about Gold Rush, and how those inept miners spent a fortune in operating costs to mine not very much ore. If they had taken out a simple loan and opened up a cash-for-gold kiosk in a local mall, they could have quadrupled their take, and could have spent the whole summer inside an air-conditioned mall instead.

In the end, someone is getting the gold bullion for much less than it costs to take it from the ground. Maybe a gold miner is behind the phenomenon? Who knows.

Why has there not been a similar effort to arbitrage silver? Is silver not as valuable as gold? Is silver fairly priced such that there is no arbitrage possible? Is silver too ubiquitous and available, such that the acquisition costs will have to be higher at the retail level, such that it is not profitable, yet, to in turn smelt the silver and convert it to assayed bars? Why would it be any harder to cookie-cut the cash-for-gold model into a silver model?

So, an indicator in my mind of the coming collapse, will be the opening of cash-for-silver retail stores. Until then, keep stacking.

And, if anyone makes money opening a cash-for-silver operation, please let me know so that I can pick your brain and open my own store.

Jun 11, 2012 - 11:27am


I am in agreement with (Cal Lawyer??) about being 100% committed.

If we are to believe all the news about the amount of gold being purchased by the East, and we are to believe the news that the West is "solving" its problems by adding debt, the logical conclusion is that something is broke, ( financially) and that something big is under way.

It may not be today, or tomorrow, but logically, I cannot come to terms with more debt fixing debt.

Isn't it interesting to see this past weekend the MSM attempts at showing the US debt is not so bad after all? Curious about the timing of these "reports", which are so illogical to a rational human.

Keep up the good work

Jun 11, 2012 - 11:28am

Island Guy: Turd's Army is just marketing

It is just a way for some guys to make money trading paper (often shorting the metals) and pile their profits into physical. Nothing more.

I think it is a fine idea. I wish there was a way those of us with time to trade, the desire, but limited resources, could participate, too. Then it would be truly an "army".

But as Shnozberries suggested, the EE is well aware of what is happening in the physical market with eastern entities draining the vaults. They are not ignorant. Yet still they short and trigger waterfalls.

This is where the real mystery lies for me. I can see these eastern entities shorting the paper to buy their physical cheap. But why are the bullion banks and the EE aiding and abetting? Or are they? Is it possible JPM's short position is on behalf of the East? I just don't get it.

bam ratioarbitrage
Jun 11, 2012 - 11:28am


Very interesting stuff. I've no doubt the Chinese are looking to get into the gold price manipulation game. But I also think this will coincide with a much higher price in the metals. There are too many simultaneous exogenous events happening on the periphery to figure otherwise.

babaganoush2307 OrangeAlert
Jun 11, 2012 - 11:31am

Miner's Hoarding the Gold

The miner's are well aware that the price of gold and silver are manipulated, especially silver. I read some articles not to long ago saying that the miners are holding on to the extra PM's instead of selling them until the prices level out and become fair, right now they are just selling enough to stay in operation. Ever wonder why mining stocks consistently get slammed? They are done with the BS and know that the more they hold, the more they will be pressured to produce and sell. Check out Endeavor (EDVMF), currently trading at $2.27 and forecasts point towards the $10 range. All it takes is enough hoarding from the produces and the game is over. It would be like the car manufactures producing cars but not selling them until there were so few cars that nobody could go anywhere, then we would see what people would really be willing to pay for a car...

Eman Laer
Jun 11, 2012 - 11:31am

Paul Craig Roberts interview

Roberts covers the basics of the global situation in an interview that would be a good tool for informing family and friends.

He recommends stacking bullion at around 13:30.

[sarcasm]I wonder what profit motive this respected economist has for recommending the purchase of PM's for regular people. [/sarcasm]

One on One with Paul Craig
bam OrangeAlert
Jun 11, 2012 - 11:31am


The rate of resupply (to the Bullion Banks themselves) is not likely making up for the rate of loss. They are not the mines only customers. And the rate of loss is going through the roof, if reports on this are to be believed.

Jun 11, 2012 - 11:32am

What is needed is a

What is needed is a boulder buster

Video unavailable
Jun 11, 2012 - 11:38am

Industrial Silver

SRS: "Wholesale silver is the market maker for price and is in an extreme shortage."

Wanted to look into this, so I checked one source of industrial silver and notice a $1.69 premium over spot. I wish I could be sure, but I think it used to be marked UNDER spot. Anyone else notice these changes in the industry anywhere?

Otherwise, could anyone please specifically cite how wholesale Ag is in an actual shortage, please?

It sounds promising.

Jun 11, 2012 - 11:42am

What happened to all the talk

the past few years about how Goldman Sachs was accumulating Au and would soon control the world? Their people head government treasuries and they seemed intent on being supreme ruler a few years ago. Can't fathom they're just watching metals stream away to pagan nations.

Jun 11, 2012 - 11:42am


Thanks for sharing what's on your mind. Love it!

Ok...I'm headed outside finally. Beautiful day out there.

Everyone have a great day.... ttyl

Thanks for sharing your thoughts and the post TF


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