Head In The Sand

Fri, Aug 24, 2012 - 11:29am

In the past 24 hours, there's been lots of talk about a "return the the gold standard". Not surprisingly, the majority opinion comes from those who still have their heads buried deep in the sand or up their...

Hoodoo Gurus "Head In The Sand"

First, there's this from LIESman himself. What a jackass this guy is. The 1:30 minute "presentation" not only dumbs-down the discussion (I mean, seriously, explain the wisdom and economics of sound money in 90 seconds?) but note the carnival/ice-cream-man music the deltabravoes at CNBS chose to put in the background.

And CNBS also chose to run this companion piece in text form. It's made up almost entirely from bullshit and misinformation. I especially like how they quote as a source some clown from Royal Bank of Scotland who, later in the article, clearly (but unintentionally) lays his cards on the table as a died-in-the-wool progressive Keynesian. Here's some advice for you, Moorad: Forget about defending the current system and instead focus upon fixing the insolvency and "glitches" in your system that caused your bank holiday/disaster last month.


On the bright side, here is at least a partially-helpful discussion of the reports from yesterday. But I despise this CNBS(E) anchor as he has an annoying habit of putting an "e" on everyone's name. My experience with people that do this is that they are attempting to show their intellectual superiority. What a jerk. I wonder, though, if I was a guest, would he call me "Turdy"?

Anyway, the point of all this is: It matters little what CNBS thinks. The opinion of some douchebag chief economist at RBS is insignificant. Whether or not the Republican platform states a desire to audit the Fed or study the gold standard is irrelevant. One day soon, with little or no warning, either China alone or acting in consortium will offer the world a new, asset-backed medium of foreign exchange. All of this nonsense political grandstanding cannot stop it from happening. The U.S. and the rest of the world will be forced to devalue and return to a gold standard. Period. End of story.



https://www.tfmetalsreport.com/podcast/3835/tfmr-podcast-22-john-butler-author-golden-revolution (Please listen to this again over the weekend and BUY THIS BOOK!!)

Are you surprised that the metals are hanging in there today? Are you amazed at silver? You shouldn't be. The game has changed and prices are not looking back. Again, there will, of course, be brief pauses for profit-taking. There will not be, though, another drop toward 26 and new lows. If you're thinking that, purge the thought from your head or head back over to Kitco. I'm sure that you and Nadler could make beautiful music together.

While I'm confident that the root causes of this rally will soon be apparent for all to see, anyone who considers him/herself a "Turdite" should be looking to buy all dips and continue to stack. Next week may bring some volatility in both directions as Sep12 option expiration is on Tuesday. This is not a big month of liquidity, though, so I don't expect it to be too crazy.

Gold is banging around 1665-1675 again. Hmmmm. Does that area ring a bell with you? If it doesn't, then you must be relatively new around here. The area around 1670 has consistently been significant because it is there that gold gapped open back on Sunday 8/7/11, following the late Friday 8/5/11 downgrade of the U.S. by S&P. Recall that this move set off a Great Panic amongst The Gold Cartel and price rose from 1650 to 1920 (16%) in just four weeks. Here's a chart from that fateful evening:

And here are your up-to-date charts.

And here's a chart I "borrowed" from Trader Dan showing gold priced in euro on the verge of a breakout to new all-time highs:

OK, that's all for now. I've got a new podcast for you which I will be posting later today. I'll also be posting my impressions of the latest CoT, once it's out. As mentioned, I expect it to be very interesting so please be sure to check back either later today or over the weekend.

Now go. Get some rest. Relax and be happy. The fun is just starting.


p.s. Here's a little more Hoodoo Gurus for you to start your weekend.

Video unavailable

About the Author

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Aug 24, 2012 - 11:30am



Aug 24, 2012 - 11:32am

If your heads in the sand...

then other parts of your anatomy are pointing skyward!

This seems to be the mode of operation for the central planners, eh Bernanke?

A great crashing sound can be heard off in the distance and getting closer.


Mr. Fix
Aug 24, 2012 - 11:34am

Thurd Place

Off to Work I go now, 

Wishing you all a wonderful and profitable day .

Aug 24, 2012 - 11:41am

Zoltan's Lease Rate Spike Prediction

A week from today the lease rates will (again) spike to negative for the weekend to allow some lucky party (the US government?) to roll their leased gold.

Wanted this prediction on main street. Not sure if anyone cares (maybe S Roche and I) but this is a big part of the crooked game they play.


Aug 24, 2012 - 11:43am

Head in the Sand

Not a complete waste. These folks make great bicycle stands.

Aug 24, 2012 - 11:43am

Well, I hope you're right...

"Are you amazed at silver? You shouldn't be. The game has changed and prices are not looking back. Again, there will, of course, be brief pauses for profit-taking. There will not be, though, another drop toward 26 and new lows."

I kind-of hope it does, for a bit. Just to get more dirt-cheap!

edit: not that it's not dirt cheap in the 30's of course, it's just that ooooh, I do love an ultra-bargain!

Aug 24, 2012 - 11:49am

tmosely, re: 'free stuff' from previous thread

The US trade deficit (which it's run continuously for what, 40 years?) represents a net inflow of free stuff. Ergo, at the margin the US exports its currency and gets real stuff in return. This would be inflationary if it weren't for the fact that Europe, then China since 2001 have soaked up the dollar overhang by purchasing Treasuries.

So yes, the US has been in a unique position since about 1922, where the rest of the world agreed to hold US Debt as forex reserves. Subsequently, vast amounts of currency and currency obligations were created without any major inflationary feedback. This process seems to have ground to a halt in 2011 when China stopped expanding its dollar reserves. In the meantime Japan has stepped into the breech, but we know this position is untenable from Japan's declining current account surplus.

Once the music stops, gold launches.

Aug 24, 2012 - 11:51am

For anyone interested

I last bought phyzz on 8/16 and I just bought some more this morning.

Aug 24, 2012 - 11:54am
Aug 24, 2012 - 11:55am

What's ahead

Here is my OPINION on what is ahead:

1. Gold will be capped at 1575 or so and rangebound for a little while.

2. Volatility is increasing. Santa said that 100 point price swings are ahead. I don't think we are there yet, but now that gold is on the move, volatility will be a couple notches higher than it has been the past few months.

3. I would expect the Cartel to make a couple/few raids over the next several weeks. Price could get down to 1600 or so, but it would rebound pretty quickly.

4. Regarding Turd's predicted HEH Summer- It has started, and the bulk of it could be summer or it could be fall. It is really hard to predict the timing of these things. But it is definitely coming, it is not that far off, and it will be historic. I am expecting a pretty rapid rise to over 2000.

5. For those trading gold futures (like me) or options or silver, fasten your seat belts.

6. I am a gold person, and I stay away from silver after getting burned. But I would expect silver action to mirror gold action.

I could be proved wrong in the next ten minutes. I know how Turd feels about sticking his neck out. This is my 2 cents, FWIW.

Eric Original
Aug 24, 2012 - 11:55am


Google ads just placed an ad for me on Turds front page that says "Turn your unwanted gold and jewelry into CASH!!"

Oh, the irony...

EDIT: Hey! Top 10! Not impressed.


Aug 24, 2012 - 11:56am


... Republican platform ... study the gold standard ... One day soon ... either China ... will offer the world a new, asset-backed medium of foreign exchange.

Could the republican gold chatter just be a way to say, "Hey, we are working on an asset backed FX too!" so they can try to keep people from switching?
Aug 24, 2012 - 12:01pm

For anyone interested

I have a gambling problem, so I went in on some Nov 35SLV calls this morning. I'm going to get some scratch offs later today too.

tmosley 50sQuiff
Aug 24, 2012 - 12:01pm


Yes, but that is a different case from the US directly printing money and buying goods abroad with it. It is individuals doing the buying, and the prices are subsidized by Chinese monetary policy, with the net effect of "free" stuff for US consumers, but that is not because of any intent on the part of the Fed or the Treasury. This is light years away from buying gold with printed money.

Aug 24, 2012 - 12:02pm

re: the fun is just starting

While my stack is growing in value in terms of fiat money does give me comfort, I am having trouble enjoying the fun. I can't forget the problems that are causing the increased pricing and the resulting destruction and suffering for many that are sure to follow. Sorry to be a party pooper.

OK, time to leave work early and drink some of the altbier waiting at home in the frig.

Aug 24, 2012 - 12:03pm
Aug 24, 2012 - 12:08pm

This is the Real Deal...He's Shorting Gold

Ah, haven't read Nadler's commentaries in forever. Used to, just to get me a good laugh before doing something more important (anything). Just loved his "this is the real deal" friend of his who shorted gold at $1100. I wonder if he has accumulated some more shorts during the $600 move since.

https://www.MiningStockValuator.com -portfolio tracker & analysis of gold and silver stocks

Aug 24, 2012 - 12:09pm
50sQuiff tmosley
Aug 24, 2012 - 12:09pm


With government consumption spending so high, it most definitely is the equivalent of the US printing money and buying goods abroad. And the US Fed and Treasury have defended this 'exorbitant privilege' like their life depended on it, so I can't say I agree.

Aug 24, 2012 - 12:11pm

Another reason . . .

that gold paper prices must go to zero before we get the really big gold valuations, is the likelihood of theft. Who in their right minds would hold gold at $50,000/oz. in a brokerage account? The courts have ruled that when brokers go bankrupt, the banks that lent them money are first in line, while the customer who actually held ownership is somewhere down the line, around the corner. The lenders, like JPM, simply force bankruptcy on brokers whenever they see a nice, fat plum could fall their way.

Also, if gold becomes the money standard or even a defacto standard, as Turd says is a given, I don't see how it could be traded in a futures market. 

The question I have, is will the markets trade paper PMs down slowly, or will the trading halt entirely before the PM paper prices get the chance to peter out? My guess is that the elite would allow the paper trading to peter out, slowly sinking toward zero. They would do this to try to scare out whatever physical the ignorant/weak hands may hold, so they can get it.

Aug 24, 2012 - 12:11pm

Not yet viral

"Banks raiding allocated gold" 6820 hits on Google.

The Vet tmosley
Aug 24, 2012 - 12:11pm

This is light years away from buying gold with printed money.

Why? What other sort of money is there for buying gold? You can even buy gold with counterfeit money, providing nobody spots the counterfeit. I wasn't ever suggesting that any country prints a couple of trillion and then dumps it all into long gold options or spot contracts. Just a constant flow of of appropriately "sterilized" freshly printed cash would do the trick of reducing the currency value and building up "real money" (gold) at the same time. I actually believe the Russians are doing this and maybe even the Chinese. It would be a wonderful play for the Japanese, who desperately need to diversify out of USD treasuries and into something real, and also need a weaker currency to support their export industries.

Aug 24, 2012 - 12:13pm


Peru suspends Newmont's Minas Conga copper-gold project

With the suspension and likely cancellation of the Minas Conga project, Newmont is about to lose its goal of achieving 7 million ounces of annual gold production by 2017.

Author: Dorothy Kosich
Posted: Friday , 24 Aug 2012

even the Peruvian government appears to have thrown in the towel on Newmont Mining's controversial Minas Conga Project as the nation's prime minister announced Thursday the project is now on the "back burner."

A recent poll conducted by Peru's most respected polling firm, Ipsos, found 78% of the 250 people polled in the province of Cajamarca are opposed to the proposed gold mine.

Mining analysts are now suggesting that the official collapse of the $5 billion Minas Conga copper and gold mine means the project is effectively dead. The joint venture between Newmont and Peru's Buenaventura and the World Bank would have been one of the largest investments in Peru's history and the loss of the project may seriously impair Peru's reputation as a pro-mining nation.


Harmony Gold posts surprise fourth-quarter loss

The gold miner slipped to a surprise Q4 loss on Thursday despite a 14% increase in production, significantly lower than the average 110.4 cents profit forecast in a Reuters poll of 5 analysts.

Author: Reuters
Posted: Thursday , 16 Aug 2012

Harmony Gold, South Africa's third-largest gold producer, slid to a surprise fourth-quarter loss on Thursday despite a 14 percent increase in production.

A headline loss per share of 20 cents was reported for the three months to end-June, down from a profit of 234 cents the previous quarter.

The shock decline is significantly lower than the average 110.4 cents profit forecast in a Reuters poll of 5 analysts.

Gold production, including discontinued operations, climbed to 320,351 ounces on higher tonnage and improved grade but cash operating costs rose 5 percent to nearly 280,000 rand per kilogramme, mainly due to an increase in electricity tariffs.


Well, it now looks like the GIANT CONGA MINE in Peru is now dead, which would have added 600-650,000 oz of gold a year to Newmont's future production. This now puts forth a negative precedent for future projects in Peru and the region.

Furthermore, Harmony gold had an increase of 14% in gold production but had a $11 million net income loss. This goes to show you that the price of gold is not going lower as costs are eating into the balance sheet of the gold miners.

Ben Davis spoke about this when he mentioned Nick Holland's 35 page presentation on how the large gold miners have been not WALKING THE TALK. I sent Ben Davis a few of my charts which I was surprised he responded. Anyhow, costs are going up from here... so will the price of gold.

Lastly, I noticed someone had posted a link to one of Dorothy Kosich's articles on US Silver production being down 65% compared to last year. I emailed Dorothy to let her know she was comparing the first 5 months of 2012 to the full years production of 2011. She made the change.

We all make mistakes... me even more.

Good to see gold and silver finally make a nice move higher

Aloha from the Big Island, Hawaii........

Aug 24, 2012 - 12:14pm

Remember Santa's 1764 from last year

According to JS once the 1764 level is tested for the third time ( 3 taps and your out) accompanied by volume and 3 straight days of closes above the 1764 there is no looking back. The next test of 1764 will be the 3rd major test of this level since he mentioned this last year. Thought this is a good time to bring up this pivotal level once again. It's off to the races if and when this level is confirmed.

Nigel Black
Aug 24, 2012 - 12:16pm

Dufus Gartman

The dufus/schill, Dennis F/Gartman, has announced he is getting out of the stock market:


Given that he is usually wrong with his public statements, I wonder what is up?

Aug 24, 2012 - 12:20pm

Silver open interest

Interesting that Spanish has the most non English articles.

Translated foreign pages
Translated results for silver open interest - My language: English ▼
Language   Translated query    
Spanish   interés abierto de plata - Edit   237,000 results
French   argent open interest - Edit   110,000 results
German   Silber Open Interest - Edit   17,300 results
Italian   argento open interest - Edit   11,000 results
Chinese (Traditional)   白銀未平倉合約 - Edit   170,000 results
Automatically select languages to search
Aug 24, 2012 - 12:26pm

(No subject)

BILL MURPHY of GATA: Major Move Up in Gold/Silver is Imminent!
BagOfGold SRSrocco
Aug 24, 2012 - 12:28pm


Miners in Canada will pay a higher premium...more so than most other places in the world...because of their safer jurisdiction!...I have a lot of these on "the list"!...

Thanks for everything you do!!!...

Bag Of Gold

Barth Vader thedukes
Aug 24, 2012 - 12:30pm

santas angel @ $1764

with respect but i don't recall him mentioning the first time that it would take three times

Aug 24, 2012 - 12:34pm

already getting vast amounts

goob is already lapping up vast amounts of melt and most folks who are scrounging for their next particular, are bringing it into only one of many 1000's of gold /silver shops that have sprung up almost over night around the republic and the world for that matter. before its over every oz in safe kept precious will be accounted for, keep stacking precious for your safe keep.

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