Friday Fun

Fri, Aug 10, 2012 - 10:30am

So much to do and so little time. Let's get started.

Thank you for the day off yesterday. It was very productive and helpful. However, the world doesn't seem to stop just because I want it are a number of things that have piled up while I was away.

First of all, the USDA crop estimate that I was anxiously awaiting finally came out this morning. It was pretty much what most expected. Bad...but not horrific. Yet. By late yesterday, I had come to expect a quick pop at the news and then some profit-taking. That's pretty much what has happened. From late Wednesday through the close yesterday, corn had already risen by 40c and soybeans bounced 80c. This indicated that we were onto a "buy the rumor, sell the news" type of event and that's exactly what has happened. From here, let's see if we can get a little pullback and subsequent erosion of option premium. Nothing can save the corn crop at this point so yields will likely continue to be marked down. Nine dollar plus corn is still likely as we head toward harvest.

Crude ran out of gas today and you can see it on the chart. I'm not too worried, though. The 16-day global festival of peace, love and utopia is about to end in London so next week should bring a renewed focus on all the strife and chaos in the Middle East. The next move, through this week's highs of $94+, should carry crude toward $98.

Lots of talk about Uncle Ted's latest piece. Since it has now been widely distributed, I thought I'd c&p the two paragraphs that I personally found the most interesting:

"More importantly, were the agency to charge JPMorgan with manipulation of the silver price (as it should) that could set off a series of events that could easily grow out of control. One thing that makes the silver manipulation so potentially profound is that the core allegation is of a crime in progress. The CFTC has never busted up a manipulation that was in force; like most government agencies, it only reacts after the fact. Don’t take that solely as a complaint, but more as an observation that governments are more reactive than proactive. Because the silver manipulation is very much in force, were it to be terminated by CFTC actions against JPMorgan and/or others, it would be a “live” event for the first time. History shows that all manipulations end violently. In the case of silver, since it has been depressed in price by a downward manipulation, its termination would necessarily cause prices to explode higher. Any charge brought by the CFTC would send a clear signal to the world that silver had been depressed in price and was undervalued and, therefore, should be purchased. This would cause a flood of buying and discourage new selling, causing the price to truly explode, most likely in disorderly market conditions. Do you find it likely that the CFTC would wish to cause that disorderly pricing that could lead to further unsettled conditions in other markets?

If JPMorgan (and perhaps the CME Group) were found to be the main culprits in the silver manipulation and the CFTC brought charges against them, the repercussions to JPM and the CME could be a threat to them as going concerns. It was never a case that JPMorgan couldn’t financially afford to buy back its concentrated silver short position; it was always a case that should JPM ever move to buy back aggressively to the upside that would prove conclusively that it had been manipulating the price of silver all along. That would set JPMorgan (and the CME) up for a legal holocaust, both civil and criminal. There has been talk of a civil litigation nightmare for those banks deemed guilty in the developing Libor manipulation; but determining damages will be difficult because the Libor rates were allegedly manipulated both up and down, making the damages unclear and hard to prove. Were there to be findings of a downward manipulation in silver, those damaged, from investors to producing companies and countries could easily demonstrate the damage. Back in the Hunt Bros silver manipulation of 1980, one of the successful litigants was Minpeco, the government producer organization from Peru, who I remember collected more than $100 million. That would be chicken feed compared to the consequences of the much longer downward silver manipulation of today by JPMorgan. And this says nothing of potential criminal liability."

High hopes, indeed.

And here are a couple of updated charts for you. I posted similar charts into yesterday's comments section when I saw the clear and determined effort to keep gold under $1620. I suspect that there are an enormous amount of buy-stops above 1620 and 1625 that must be protected. A move that trips those stops would cause a surge in price that would likely break gold through 1635-1640 and present a clear technical buy signal to the momentum-chasing algos. To keep this from happening, 1620 is being defended. That said, The Cartels are fighting a losing battle here. Demand for physical metal continues to be extraordinarily strong in London, particularly in euro. Trader Dan wrote an excellent piece about this yesterday ( Soon, gold will break through 1620 and silver will break through 28.20. It is simply a question of when. Today? Monday? Soon. Very soon.

I've got two other posts that I have to create this morning and a podcast for TTM, too. Again, lots to do and little time to do it in so I'd better wrap this up. Please keep checking back as I will be adding content through the day.

Have a great day and a great weekend!


About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 10, 2012 - 11:57am



Well, it looks like there are a few exceptions to the overall lousy performance in the gold and silver miners. Here RANDGOLD actually had a nice increase of profits for the first 6 months of 2012 at 41%:

Their true net income (not shown above) was $243 million for the first 6 months 2012, compared to $169 million in the same period in 2011. The reason for Randgold's profits is due to an increased overall ore grade at the mines, higher price of gold and a 7% increase in production.

So, yes there is some good news out there, and there are some exceptions to the rule. Randgold also has another mine coming online next year that will be producing 600,000 oz of gold a year. This will consume serious diesel.

Aug 10, 2012 - 12:04pm

SRS, my question about open pit vs shaft mining

I don't know if you saw that. I would think open pit would be much more energy intensive, as the volume of material removed goes with the third power of depth. E.g., when you think you've drank half your martini, you've actually drank 7/8ths of it.

Aug 10, 2012 - 12:07pm

No offense taken

Rick James - Super Freak

maybe pining can photoshop a Turd Hat onto a still of RJ

Fat Willie
Aug 10, 2012 - 12:07pm

Lesson learned

My son turned 6 today. So I gave him his first ASE. Him: What is it? Me: It's money. Him: REAL money? Me: Exactly. The only REAL money. What do you think you should do with it? Him: Keep it. No prompting. No training. Even a 6 year old understands stacking. FW.

Aug 10, 2012 - 12:10pm

This is a stupid question, but.....

......Is it considered 'normal' trading in the commodities world for the commodity price to go up and down in basically an identical cyclical-type manner on a weekly basis?


Aug 10, 2012 - 12:10pm

Pretty impressive shoveback

Pretty impressive shoveback from the highs.

Please be patient.

I expect a very interesting and exciting week next.

Short Stack
Aug 10, 2012 - 12:13pm

Just got my book: Gold- The once and future money.

So I'm taking a break from reading and posting rants and sitting down with book in one hand, coffee cup in the other and no doubt cat on lap. (she gets so jealous when I'm at the computer).

Just wanted to say to all hat-tippers, thanks and keep 'em coming. Nothing but God,my daughter and my grand childrens' love beats the recognition of my fellow Turdites.

God bless one and all and I'll be back posting as soon as God is willing and the devil don't care.

Aug 10, 2012 - 12:16pm

We'll Address The Economy And Debt Later..

...everything is f*#@ing "scripted" now.


DNC Planning Document: We Need To Find A Gay Soldier Who Helped Save Life Of Straight Soldier During Firefight For Our Convention…

Read it all if you have the stomach for it:

Each night of the convention will include a star turn for what planners call “real people” — for instance, an auto worker whose job was saved, a student who benefited from college loans and an entrepreneur fueled by federal research-and-development funds.

The most innovative — and harshest — element of the preliminary program is a nightly “social contrast” in which two people describe their personal experience with a hot-button issue — one person lauding the president’s actions, the other taking Romney to task. “Each paired-testimonial should have an ‘unexpected’ participant,” the documents say.

But the plans show organizers intent on steering clear of controversy as well. For the gay marriage social contrast, for instance, the documents state the participants should be “not a gay couple” — but a “parent and gay son or daughter.”

Other examples: “Don’t Ask Don’t Tell: Gay soldier and fellow (straight) soldier who served together in Iraq or Afghanistan (ideally the straight soldier was helped by the gay soldier, i.e., medic, in fire fight) … Planned Parenthood: Husband who talks about how a PAP smear saved his wife’s life and his spouse … Immigration: Two young people from the same family, one who was born here, the other a few years older who was not … Choice: A couple who has children, but wants to make their own decisions, not have the government do it for them (or who has confronted a difficult medical situation).”

Dagney Taggart
Aug 10, 2012 - 12:18pm


From the article: "the alleged rigging of an international interest rate benchmark". They can't just come out and call it what it is, can they? Like saying Iran wants nuclear weapons to spread terror but Israel only has lady fingers to defend itself with. Nevermind.

Anyway, the problem with well-dressed whores isn't that they're whores. It's that they pretend not to be. Got that, Reuters?

Money By Trading
Aug 10, 2012 - 12:19pm

Gold Miners about to outperform gold again?

I'm getting interested in the miners to supplement my gold futures, but not ready to buy just yet:

The Watchman
Aug 10, 2012 - 12:24pm

From Zero Hedge--

Gold is significantly #winning today - well ahead of stocks and the USD after being closely synced with them since the lows last Friday pre-ramp. The question is why? We have an idea. Gold and stocks have been closely correlated on the back of expectations of Fed/ECN unsterilized printing - as gold has taken on the appearance of a risk asset - and rightfully so given the nature of these markets dependence on CBs. However, stocks have outperformed in their own manipulated manner as whatever magic pressure has held gold down continues (as they both rise as simple proxies for more money flooding the system). In a very similar echo of 2009, the last 6-9 months have seen the value of the S&P 500 priced in Gold dip aggressively and then surge back. At current levels we are getting 'rich' in terms of equities priced in real stores of value. And perhaps, just as in 2009, we are about to see real stores of value catch up to equity valuations and continue this outperformance...Gold rallied 23% relative to stocks in the preceding three months.

A 23% rise would bring the price to $1992-NICE!!

Aug 10, 2012 - 12:27pm

I looked at longer term gold

I looked at longer term gold charts posted above and certainly such corrective triangles that we are experiencing now is not an exception, its not even something new, but a regular feature of this bull run from 2001.

So excuse me for poor graphic, but below I have counted the few most obvious ones (there are many smaller) . The correction triangles are just as regular as the exponential price increase itself. The amplitude of corrections in absolute terms grows as scale ( price ) grows exponentially over time, does not look so bad in log chart I could not produce.

In percentage terms, all corrections are standing within reasonable comparable boundaries, of course some of them like 2008 being in high end and other lower, but the regularity is there and in fact we can also predict further such triangles happening with bigger or smaller correction amplitudes. Anytime price action get superexponential (grows faster than exponential) we will see such a correction triangle very soon. On a log chart, that means growth faster than along the straight line in the direction of trend.

So we are lucky we are coming close to the and of this one. See what follows each triangle- continuation of exponential growth - which will happen also this time.



Here we go! And for silver, add also GSR reduction potential near term. GSR oscillates, so first it will help silver, than gold, then silver etc.

As long as US debt increases, nothing can stop the exponential growth of PM prices. And of course, there is not anything POSITIVE in this world right now that would change the exponential growth in USA debt, so any change would mean contraction of money supply which would mean deflation and heavy Greatest Depression- highly unlikely-as it is still a political choice in , at least in the next few years, not market driven- to turn USA to austerity or continue borrowing. Guess which one will be made? More likely even war driven acceleration of debt increase.

Aug 10, 2012 - 12:30pm

Off Topic....

but is a harbinger of an ever tightening noose around the necks of the serfs...


Aug 10, 2012 - 12:33pm

Survey Then Summarize

Keep your eyes on the ball. The fundamentals. What do they say?

Very good piece by Mark E. Grant over at ZH on surveying the landscape. Well worth a read.

As far as summarizing - How do you summarize a market that is suffering the lowest volume in five years?

Daily volumes are diminishing at 20% below the YTD on average, which in turn is 20% below the the 2011 average!

What this screams at you is, that anyone and everyone is fleeing this criminally controlled theft machine, just as fast as their wealth can find alternatives. Gold and silver are seeing some of this action this morning.

The only ones left in the market are the 'big thieves' and their HFT algos! Love to see the sharks begin to eat each other!

Aug 10, 2012 - 12:36pm

An interesting an exciting week next week?

Just for the usual reasons or something special coming up? Please hint more Turd :)

Dagney Taggart
Aug 10, 2012 - 12:38pm


Good picture. Does this fall under a buying or a selling bubble? I'll take a stab: Vendor buying bubble = retail selling bubble? It would be pretty easy to change that sign to We Sell Gold. That would be when I would start to wonder.

@IRB: Does that help?

Edit: You said, "hatred that these guys are stealing the true wealth of the sheeple". Shops like this aren't the plague although they are pretty hilarious. You know as well as I that it's the sheeple's incorrigible desire to only want the rosy picture even when it's a lie. The sheep are the sheep and we can do nothing about it. They BEG to be lied to and none of us can stop it. About the only thing we can do really is seize and retain enough wealth that we can restore honest commerce and put resources to their best use and what's left of the sheeple after the culling can raise their level of self-awareness to be among us. Believe it or not, it's really the SHEEPLE that are preventing that, not shops like this.

Why do sheeple need gold? To buy more useless shit that only destroys them. What a waste of gold. Agree?

Aug 10, 2012 - 12:40pm

Treasury Audit of Fed - Insider Mole?

Here's another ridiculous, silly and totally frivolous cartoon video News Report. Today RNN looks at the Treasury Dept Gold Audit of the Fed. [Hey, it's Friday!]

US Treasury Audits the Fed's Gold | Crude Oil Margins Increased
Aug 10, 2012 - 12:43pm

Keep Stacking. It's Coming...

Nanny State Alert: Man goes to jail for drinking rain water

You just can’t make this stuff up. A man in Oregon is currently in jail serving a thirty day term – along with a $1500 fine – for collecting rainwater and snow melt on his own property for drinking and household use. You think I’m kidding? I’m not.

Gary Harrington, the Oregon man convicted of collecting rainwater and snow runoff on his rural property surrendered Wednesday morning to begin serving his 30-day, jail sentence in Medford, Ore.

“I’m sacrificing my liberty so we can stand up as a country and stand for our liberty,” Harrington told a small crowd of people gathered outside of the Jackson County (Ore.) Jail.

Harrington was found guilty two weeks ago of breaking a 1925 law for having, what state water managers called “three illegal reservoirs” on his property. He was convicted of nine misdemeanors, sentenced to 30 days in jail and fined over $1500 for collecting rainwater and snow runoff on his property.

There’s simply not much more to say about this one. Let this be a lesson to everyone about keeping an eye on who you elect to public office and the policies they put in place once they are there. The law in question here may date back nearly a century, but it certainly could have have been taken off the books long before now if the political will existed to do so. The fact that it’s still being enforced demonstrates that it isn’t some ancient anomaly hanging around as a joke. And given the current, regulation heavy environment in Washington, seeing such laws passed in other places isn’t quite so far fetched as you may think.

Read more:

SIlverbee TF
Aug 10, 2012 - 12:53pm

Patient I am

But I thought you said this last week. This is a non event week for knock down news and no real movement in silver which I believe is the metal you are expecting the turd news to be about. What are you expecting to be different next week to this?

tobydaniel TF
Aug 10, 2012 - 12:59pm

Question about the exciting week ahead

Will it be as exciting as this week? Sorry, couldn't help I ask that because you said this week would be exciting that's all. I'm bracing myself and holding my breath:)

SRSrocco opticsguy
Aug 10, 2012 - 1:04pm


OPTICSGUY.... It is indeed true, OPEN-PIT mining consumes much more diesel (liquid fuel) than does UNDERGROUND. I have included the energy consumption per tonne of extracted ore in a production of copper (shown in megajoules) in the Chilean Copper Industry. This only lists the data for extraction only. You will see in the first two lines the stark comparison. The OPEN-PIT energy consumption is shown in the first line and UNDERGROUND, is shown in the second:

This is the information I used to make my copper energy consumption chart in my last article. I just converted the megajoules to gallons. If we use 2010 as an example:

2010 OPEN-PIT = 6217 megajoules = 42.4 gallons

2010 UNDERGROUND = 1092 megajoules = 7.4 gallons

2010 MINE (average of the two) = 5,705 megajoules = 38.9 gallons

Note: I actually used the average in my graph

The overall ratio in this case has been 4-5 times more fuel is consumed in OPEN-PIT mining per tonne of ore than compared to underground. I would imagine this ratio would differ in the gold industry.

For example, Goldcorp's Penasquito mine is producing gold at 0.37 g/t... one of the lowest in the industry. Some of the South African miners are producing gold at some of their underground mines at 10-12 g/t. Now these mines may not be producing a great deal, but their liquid energy consumption compared to Penasquito may be a staggering 10-15 times less.

As the energy situation becomes more dire in the following years, we will see the mining community have to start dealing with PROJECTS they can produce, rather than ALL THE PROJECTS IN THEIR PIPELINE.


Aug 10, 2012 - 1:13pm

Now Butler gets it?

Ted Butler's post-mortem, where he lays out in detail why it was unlikely the CFTC would find silver manipulation, verges on the laughable.

All his reasoning could have been done before the story leaked that there would be no finding of manipulation. Yet, even as the CFTC "investigation" droned on and on, Butler was a defender of head honcho Gensler, opining that this guy had the guts to do the right thing. While Butler's support waned as time went on, he remained confident and/or optimistic of a positive finding.

Now, after the fact, Butler tells us why it didn't -- couldn't -- happen. It's sort of like picking one team to win a game, going into detail why it would win that game, then when the team loses, adopting an all-knowing attitude and explaining why the team had to lose, like that was your prediction all along. Seems a bit weak to me.

Aug 10, 2012 - 1:13pm

Exciting Video

This video is more exciting than PM's have been this week.

The most boring YouTube Video........Ever
Short Stack
Aug 10, 2012 - 1:15pm

This just in

Heard my computer beep while reading, thought it was email from my daughter but instead I see this headline from


Talk about you can't make this stuff up !(Now back to my book).

Aug 10, 2012 - 1:30pm

Cash For Gold Stores

I had one of these as a tenant. They left after around a year after an armed robbery and a burglary.

All of their intake went to one smelter who was working for a major bank. Our rent check came from a bank.

Just anecdotal but I have heard the same from a couple of other people. These places are mainly run by banks or on behalf of banks. If they would start closing I'd worry, but it doesn't look like the banks desire for metal from any source is diminishing.

Aug 10, 2012 - 1:35pm

JPM investigation to go same as GS finding?

"The U.S. Justice Department said it will not pursue criminal charges against Goldman Sachs Group Inc or its employees related to accusations that the firm bet against the same subprime mortgage securities it was selling to clients."

The door is wide open for the CFTC to announce similar news re: their 4-year "investigation" into JPM's silver rigging. If DOJ can stick their heads up their a$$ so can CFTC. After all, what's fair is fair.

The CFTC investigation, today though, apparently continues. I wonder what they are investigating right now? I'll bet they are "this close" to cracking the case, and Dimon/Masters will be hauled away in handcuffs any minute now!

Aug 10, 2012 - 1:40pm

Are we there yet?

Patience Grasshopper.

ancientmoney firstsilver
Aug 10, 2012 - 1:40pm


While I really like Ted Butler, and feel he understands the silver market as well as anyone, I can't argue with your synopsis.

However, I think he was trying to give Gensler every polite opportunity to do the right thing. But these GS alums don't easily change their stripes--once a wealthy banker-elite, always a wealthy banker-elite.

I guess Ted just doesn't understand the criminal bankers' minds as well as he thought--or hoped.

Aug 10, 2012 - 1:53pm

Pleeeeeeezzzzeee, Tuuuuurrrrrd?

Please will you tell us what is coming down the pike Turd, pretty please, huh? please tell us... will ya, huh, pretty please, ...Aw Turd, c'mon we need to know, we must know, please will you tell us --just a tidbit? Did you talk to Blythe? Barak? some other Bilderberger? maybe a hint? the suspense is killing us and you know how much we hate to wait. Please tell us jut a little bit? Does it start with a "C" or a "J" or a "G?" Will we have to duck? We have been waiting since may of 2011 for something good--any hope at all...?

Aug 10, 2012 - 1:54pm

SRS Silverwheaton

I noticed that Silverwheaton has an excellent summary (issued yesterday) of various mines that they receive silver and gold from. Several actually are seeing increased production . . . However, as SRS points out, they are few and far between.

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