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 27, 2012 - 11:28am


Looks like quite a skirmish at 31 this morning. Looking for the breakout over 31 and a run to 31.50.

I am doing my best to stay focused on PMs and prepping on main street. I love to jump into political discussions, butt ... perhaps I shouldn't.

I can handle the political posts when they have a clear bearing on economic news, which in turns gives us clues about metal direction and the rapidity of the collapse; and I don't think it is healthy to push all political posts to the forums, but it isn't healthy to bring debate here unless its relevance to economics is clear and direct. Can we find middle ground here?


Aug 27, 2012 - 11:26am


The west did not make them. The enemy has hated apostates for 1500 years. They weren't made by the west they chose to be enemies of a west based on their rejection of principles of secular and religious freedom.

AQ is bad. And before you have to make the point I know AQ was leveraged and suppoerted by the US government during the cold war. Not all political moves work out in the long run. Leveraging AQ during the cold war filled the governments needs at the time. That monster has gotten loose.

I'll drop out of the political conversation now and leave you the last word. This is a site focused on PMs and I' like it better that way.

Aug 27, 2012 - 11:26am

Speaking of logs & scales…

…this log will make your scale tip:

Bacon explosion donuts.


Local guys - have to check this out.

Colonel Angus
Aug 27, 2012 - 11:21am

value of SLV

Doesn't the old Voltaire quote say it all???

We know that SLV will go to zero, but it will be at the time that the bigs cannot withdraw the physical metal for their massive claims. They will start to abandon, the price will go down, and small paper pushers will be left holding the (empty) bag.

It's all game theory. I highly recommend Luce and Raiffa for a thoroughly readable book that leaves the technical details to the appendices. You'll be glad you read it, and it will be incredibly easy to predict what comes...not next, but eventually.

yangsterSwift Boat Vet
Aug 27, 2012 - 11:19am


You say I don't care about politics? Actually I care DEEPLY about politics and democracy which is why I don't care who wins the US election, it has very little to do with democracy and much more to do with backroom deals, manipulation and corruption, but this is the main page of a precious metals site, so lets keep on topic or go to the forums.

Aug 27, 2012 - 11:17am


How is generalizing all Arabs and all Jews not collectivism?

Not only that, but the notion that oppressed people should lay down their arms for "peace" is utterly disgusting. Might as well say:

"If the American people were to lay down their arms, there would be no more crime,

If the American government were to lay down their arms, there would be no more America.

No thinking person can disagree with this."

Sharia law is aggressive, and not to be tolerated, nor are those who seek to impose it, but not all muslims are for Sharia, any more than all Christians (or all whites for that matter) are in favor of fundamentalism. Also funny that your little video there is from the CHRISTIAN BROADCASTING NETWORK, which is a propaganda arm of Israel.

You have been BRAINWASHED. It's time to think for ourselves here.

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Aug 27, 2012 - 11:11am

but politics TOTALLY cares about you!

That says it all. Hat tip and a thank you to the Vet.

Aug 27, 2012 - 11:09am


You imply that the West has significant EXTERNAL enemies.

I'm not sure how you can claim to understand the economy and not realize that "the West" (collectivism again) has it's own worst enemies in its own halls of power.

Collectivism and racism destroy reason, and allow the corrupt to gain ever more power. Are you happy accepting the line pushed by Fox News, and finding yourself on the same side as people like Joe "Stalin" Lieberman?

What will your grandchildren think of you when they hear that you supported "the West" in the face of their genocidal actions around the world while they destroyed the economy and stole your own freedoms? Ask any native German today what he thinks about his grandparents, and you will get your answer. Did they participate blindly, or were they the best sort of people who not only saw what was going on, but spoke out against it, and worked to fight it when the time came?

Do any of your Muslim haters even KNOW any Muslims? I do. I also know Jews. None of them are bad people. Most PEOPLE aren't bad, it is the SOCIOPATHS in power who set us against one another, and attribute the actions of a few to all, and further encourage normal people to violently avenge those acts of violence upon anyone of the same race as their oppressors. This is collectivism at its absolute worst, and it has utterly destroyed the lives of millions. Are you happy with yourself for participating in and perpetuating the plans of the sociopaths?

Dagney Taggart
Aug 27, 2012 - 11:07am


29 would be a Gift! The ataris need to fill that SLV 28 gap somehow. It would be swift. You may have to camp out in front of the LCS to get it.

On a side note, the Silver / SLV spread is now up to 95c! It has been 80-85c typically. Does this mean the SLV is bleeding physical? This is also why I'm in the "SLV goes to Zero" camp.

Aug 27, 2012 - 11:07am


Lee Ermey was good at playing at DI because he was one, at the age of 21 no less. Stanley Kubrick hired him as a technical advisor for the film, Full Metal Jacket and he was so good in the instructional video showing how a DI was supposed to act that Kubrick decided to use him in the role. Turned out to be a decent actor. All he did was play himself but that’s what a lot of them do.

Kubrick was infamous for being a stickler for details and Full Metal Jacket was the most authentic of the Vietnam films. IMHO. The Marines singing the Mouse Club song at the end of the film was because Marines in the sixties called the Corps the Mickey Mouse Club. Tapping loaded clips against the helmet so the bullets were even…Etc. It made sense to very few people but it was authentic.

R. Lee Ermey

As Tim Robbins (Remember him?) can attest, insulting half your customer base is probably not wise for your career. I’m sure Geico would like to sell insurance to lefties and righties. Geico must have known he was conservative when they hired him, but they probably thought that this nasty old ex-Marine wouldn’t speak his mind. Miscalculation on their part I guess.

So, why did Kubrick change the furniture in different scenes in The Shining?

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Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
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5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
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Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
4/21 10:00 ET Existing home sales
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Key Economic Events Week of 4/6

4/8 2:00 ET March FOMC minutes
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Key Economic Events Week of 3/30

3/31 9:45 ET Chicago PMI
4/1 8:15 ET ADP Employment
4/1 9:45 ET Markit manu PMI
4/1 10:00 ET ISM manu PMI
4/2 10:00 ET Factory Orders
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4/3 10:00 ET ISM service PMI

Key Economic Events Week of 3/23

3/24 9:45 ET Markit flash PMIs
3/25 8:30 ET Durable Goods
3/26 8:30 ET Weekly jobless claims
3/27 8:30 ET Personal Inc and Spending

Key Economic Events Week of 3/9

(as if these actually matter)
3/11 8:30 ET CPI
3/12 8:30 ET weekly jobless claims
3/12 8:30 ET PPI
3/13 8:30 ET Import Price Index

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