Burning Down The House

Sat, Aug 25, 2012 - 3:36pm

We had an awesome week and the charts look great. More importantly, a fire has begun that will eventually consume the entire House of Lies.

At first glance yesterday, the CoT hit me like a punch to the gut. I was wrong about something and I hate being wrong. You see, as last week progressed, I became increasingly convinced that JPM's massive silver short position was coming under assault by the other "commercials". I likened this idea to a pack of hyenas sensing the weakness of the leader and turning upon him. Clearly the report, which shows positions as of last Tuesday, does not support this analogy.


Instead of attacking the leader, the pack chose to support the leader, instead. All of the buying in the 8/15-8/21 timeframe came from the specs, both large and small. All of the selling (to the tune of net short 9000+) came from The Forces of Darkness. The Evil Ones unloaded 4651 of their longs (10%) and added 4424 brand new shorts. (For those keeping score at home, that's about 22,000,000 ounces of paper "silver" created out of thin air.) Never fear, Captain Metaphor is here with a new one for you to consider.

The action last week is akin to the actions of an arrogant and drunk homeowner who foolishly built his castle along a tinderbox-dry ridge, confident that his homemade firewall would always protect him. Through the years, his house has stood firm against the elements and the homeowner has grown complacent and comfortable. Last week, the homeowner started down his usual path of preparing for the winter. He has once again begun to stockpile gasoline, liquid propane, kerosene and other accelerants. He places them within his house, confident that he can safely use and remove them at his leisure and blind to the danger a fire would present to his fiefdom.

What he apparently doesn't realize is that a conflagration will soon jump the firewall. His castle, which he thought impervious, will soon be consumed in a fire of his own making.

So, upon further review, I am not the least bit concerned about the makeup of the latest CoT. The homeowner has simply placed himself in greater peril by his actions this week. His house is burning yet he slovenly continues his business. Fat, happy and blissfully unaware of the disaster at hand.

Video unavailable

As we prepare for next week, I thought it appropriate to give you these charts. Look very closely at them and they will tell you a lot. Let's take them one by one. First, an up-close look at a weekly silver. Note that the price has apparently closed right on top of the Battle Royale II line. Might a raid come from here? Of course. However, silver closed Friday above all of its moving averages. Every single one. This is very bullish from a technical perspective and will almost certainly lead to a rally on Monday as technical-based, momentum-chasing spec money comes charging in. The next resistance point that I see is near $31.50, which would be well above the BR2 line.

The weekly chart of gold shows that is is clearly above its Battle Royale line and, like silver, gold closed Friday above its 10-day, 20-day, 50-day, 100-day and 200-day moving averages. Once it surpasses 1680, gold will move effortlessly higher toward 1700. (More on that level in a minute.)

And these next two charts should be as reassuring as a hug from an old friend. Note that, after peaking in late April of last year, silver price declined into May of this year, where it began riding higher and consolidating along the long-term trendline. If silver could not be broken down last September, last December or even this May, it ain't gonna be broken down now. Soon, The Battle Royale will be won and silver will move on toward further fights at $33 and $36. For now, though, study this chart and smile.

And while you look at this gold chart, keep in mind that ole Turd very much likes to discover patterns that no one else has yet noticed. Look closely. Gold has followed this channel, this "managed ascent", for nearly four years as part of the larger bull market that began in 2001. Now, look even closer.

Recall that, just yesterday, we discussed the significance of 1665-1675 as it related to the S&P downgrade of the U.S. and The Panic which gripped The Gold Cartel in the weeks that followed. Beginning the following week, gold began to trade uncharacteristically above and outside of its long-term channel. If you count the total amount of time between the breakout UP and the final fall back WITHIN, you get a total of 17 weeks. Fast forward to today. In early May this year, gold fell DOWN and out of its long-term channel. If you count the total amount of time between the breakout DOWN and today, you get a total of 16 weeks. Does this mean that next week is the transition week where price straddles the lower line of the channel, currently near 1700? Will the first week of September bring price action that finally places gold squarely back within the channel? Who knows. But, would you be the least bit surprised by a "candle" this week that lies upon the channel line and a "candle" next week that lies within the channel? I wouldn't be.

Well, that's all for now. Go relax and enjoy your weekend. Do not let the CoT (or anything else for that matter) bother you. Over the past eight trading sessions, silver has rallied nearly 10% and The Evil Empire has not participated. In fact, the have only impeded the rally at their future cost and peril. What is coming will truly be explosive and historic. Like me, you should just remain patient and diligent, adding to your stack whenever possible.


About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 28, 2012 - 9:00am


"How is generalizing all Arabs and all Jews not collectivism?"

Because that has nothing to do with collectivism, I told you already. We are talking about nations, ethnic groups, racial groups, religious groups, or -- peoples, in general, but COLLECTIVISM is a system of COLLECTIVE OWNERSHIP, the collective control of the means of production and distribution; see -- marxism or marx-leninism, or any dictionary in the U.S.. It came with and after the Bolshevik revolution; there was the process of collectivization, leading to the establishment of collectivism, right? Don't mix collective with collectivism, that's like mixing "national" with nationalistic or nationalism. Quite different meanings.

"Also funny that your little video there is from the CHRISTIAN BROADCASTING NETWORK, which is a propaganda arm of Israel."

What's wrong with the Christian Broadcasting Network? LOL

"You have been BRAINWASHED."

Yes, I know. And believe me, it feels great!

Aug 27, 2012 - 3:01pm


Are you an American? Just curious. I'm guessing not.

I think you're way off base interpreting what I've written. Implying I'd be supporting Hitler based on my current views makes the rest of your arguments seem much less serious.

Your view of the Paleo - Israeli conflict is just plain backwards. Sorry but there is no excuse for advocating Israeli/Jewish genocide on the part of the 'Palestinians' or the rest of the islamic world for that matter. You portray the Nazis as evil but seem to see the reasons behind the islamic supported next genocide of the Jews as reasonable. I'm having a hard time seeing how you would reconcile that.

As someone posted earlier if the muslims disarmed there would be peace - if the Israelis disarmed there would be genocide. It's as close to a truism as you will every find in politics.

I think we agree that there is a lot of evil going on in the central bankster world - but that seems to be about it.

I'm afraid we are so far apart there is no reason to take up more bandwidth.

(edited for spelling and a slight clarification)

Aug 27, 2012 - 1:16pm

If you want to reject

If you want to reject reality, feel free. There are plenty of sheep out there waiting to be slaughtered. Get in line. If you want to close your eyes and cover your ears, then do so, but you must know that your opinions will thus be ill informed and likely wrong.

The US supplied the chemical weapons which were used to gas the Kurds and the Iranians (remember that Sadaam was installed by the CIA, and was best buddies with Rumsfeld and Co). From the Firebombing of Tokyo to the insane invasion of Iraq, the US has had its hands in a lot of murder. But the history books are written by the victors, so that was all "collateral damage" rather than "genocide".

But that isn't even what I was talking about. I was talking about the genocidal policies of the Federal Reserve and other central banks. The victims of those policies will include US, not just vague foreigners that we can't or choose not to sympathize with.

Your stirring of more hatred supports the sociopath's planned invasion of Syria and Iran. "Reject" that all you want, but that blood will be on your hands.

Go read "The Lucifer Effect". Good people turn evil due to poorly designed social institutions. That is exactly what is going on here. If you were a German citizen in 1935 you would have been chanting "Heil Hitler" with the rest of them, just like you would probably be lobbing rockets at Israel if you had been born in Palestine. At the very least, you would understand why others fight, when you have lost your job because of Israeli roadblocks, and your wife died in childbirth because you were denied access to medical facilities, or when your 1000 year old olive plantation was stolen from you by Israeli "settlers", or when the power is cut off because there is a blockade on, and your government has to preserve what little diesel it has for fire trucks and ambulances. Yes, I think if you bothered to put yourself in someone else's shoes for a little while, you might understand the difference between right and wrong, or self defense and aggression.

Aug 27, 2012 - 12:57pm

@Dagney - SLV spread

Before the May Day Massacre, the spread between SLV and spot was $1.20 and higher. I don't think the current spread means much.

Aug 27, 2012 - 12:31pm



Aug 27, 2012 - 12:29pm

Message or memorial

A crescent moon and a single star? Maybe it's just me.........

Aug 27, 2012 - 11:56am

And it's at thrityoneteen

Is that a number? LOL....

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Aug 27, 2012 - 11:47am


Let's get back to them.

Aug 27, 2012 - 11:46am


I agree as well that the West also has significant INTERNAL enemies. I do not think believing the external enemies exist denies the internal ones exist as well. In the short run the internal enemies of the west who are destroying the economic and social freedoms and structures are a bigger threat than those who openly wish the West's destruction. But that does not discount there is a significant and obvious external threat as well.

I will also agree most people aren't bad but there are social constructs that are bad which are supported directly through action or indirectly through inaction by a large populations. I think I choose to draw a larger circle than you because the single sociopaths cannot have a great impact on society without the support of many. That many can be an industry of banker middle managers with no political thoughts or populations of uneducated fundamentalists who are taught hate from the nursery.

I reject the premise that the West - the US in particular - are genocidal. The West may have been more damaging in it's colonial times but still not to the degree that many of the West's enemies were - or still are.

I also reject your accusation of me participating in the plans of the sociopaths. I have removed as much financial support as I can from the banking industry and am politically active and support folks I think will do the best to preserve freedom and prosperity. I can do no more until the shooting starts. And if it does I will not be quiet.

I want to make one more point - I think your collectivism view has its flaws - as I said earlier single sociopaths are relatively powerless without the broad support of the folks you seem to be labelling as innocent - I'd submit that many of those folks (in general and on both sides) are more responsible for the problems we are discussing than you think.

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