Come Tuesday

454
Sun, Sep 2, 2012 - 12:52pm

Summer's almost over. I hope you're enjoying your weekend but get ready. Come Tuesday, it's game on.

Jimmy Buffett "Come Monday/Changes In Latitudes/Why Don't We Get Drunk" Live

We stand at the edge. Prices have broken out but Cartel resistance is steep. The latest CoT shows their malicious intent. In gold, The Cartel net short position grew by over 32,000 contracts last week with the gross short position growing by over 10%! A huge, desperate move which has brought The Cartel net short position to its "worst" level since 2/28/12. Yikes! In fact, over the 8/14/12 - 8/28/12 time period, the price of paper gold rallied $68 and the total Gold Cartel net short position grew by 59,000 contracts. It looks like someone would very much prefer that gold not rise much further.

Though the Cartel selling in silver is just as prevalent, it is of a different stripe. For the reporting week, to supply the paper necessary to keep price in check, instead of adding shorts The Silver Cartel dumped longs. Of course the question is: Why? Are they selling into strength and booking profits? I suppose. But are they also remiss to add new shorts? Of course, it's impossible to say. What is possible to say though is that the CoT situation has only "deteriorated" in the days since, particularly Friday.

Finally, it is curious to see so much of the fresh shorting and selling that is coming from the smaller banks. Uncle Ted calls these banks the "raptors". The raptors treat the paper markets as their virtual jungle where they prey upon the specs by collusively following the moves of the bigger banks. In gold, the selling last week was almost evenly split between the big banks and the smaller banks. In silver, though, 90% of the selling came from the smaller banks, not JPM. Again, why? Is this just a one-week trend?

So next week is set up for some significant volatility.

  • All market participants are back from holiday.
  • The charts are undeniably bullish, meaning spec money should continue to roll in.
  • Prices are reaching into areas where I would expect some major Cartel short selling/resistance, i.e. $1725 and $33
  • After a week of rising prices, we get the August BLSBS on Friday. It's hard to imagine anything but a negative print being met with a major attempt to rig prices lower.

For now, here's where we sit.

And do you recall this chart from last week? Notice that gold spent 17 weeks above the range in 2011 and now it has completed 17 weeks below the range in 2012. Next week, does gold finally move back within the range?

Silver is at a similar crossroads.

So, get ready for a crazy and wild week. Though I certainly wouldn't fault a trader for booking a few profits, everyone else just needs to prepare for some volatility. Prices are truly headed much, much higher but not without the usual shenanigans.

See you Tuesday.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  454 Comments

Mr. Fix Ferd Torgerson
Sep 2, 2012 - 11:06pm

@ Ferd Torgerson

Happy Birthday!

PS:

I'm still first today.

wink

¤
Sep 2, 2012 - 11:11pm

Taiwan Signs Yuan Clearing Deal With China

Taiwan Signs Yuan Clearing Deal With China, Creates New Rate

By Andrea Wong and Argin Chang - Aug 31, 2012 4:59 AM ET

The central banks of Taiwan andChina signed a yuan clearing agreement as Asia’s biggest economy pushes the use of its currency in international trade.

Taiwan will allow interbank trading of the yuan, creating a new exchange rate for the currency, Governor Perng Fai-nan said today. The two monetary authorities are also negotiating a currency swap deal that would allow Taiwan to hold yuan assets in its foreign-exchange reserves.

“The deal will help Taiwanese companies move their yuan assets back to the mainland and lessen their exchange risks,”Perng said in Taipei. “Taiwan will have its own yuan spot rate called `CNT,’ as opposed to `CNH’ in Hong Kong.”

China has been expanding its currency relations with trade partners to promote greater use of the yuan in global trade and investment. Nations including Singapore, Japan, and Thailand have signed similar deals with the world’s second-biggest economy as part of their efforts to reduce reliance on the dollar. Exports account for more than two-thirds of Taiwan’s economy and some 30 percent of shipments are bound for China.

“It’s a good development as there’s huge demand for yuan in Taiwan,” said Penny Chen, who helps oversee $160 million in yuan assets as a fund manager at Manulife Asset Management Co. in Taipei. “Taiwan’s exporters and small-to-medium enterprises will be able to reduce transaction costs.”

Taiwan has the world’s biggest trade surplus with China and foreign direct investment by the island’s companies rose 11 percent to $13 billion in 2011, according to official data...

https://www.bloomberg.com/news/2012-08-31/taiwan-signs-yuan-clearing-dea...

Louie
Sep 2, 2012 - 11:14pm
¤
Sep 2, 2012 - 11:24pm

One for the road...

PINK FLOYD - The Dark Side Of The Moon - Live In London 1974

Video unavailable
SRSrocco
Sep 2, 2012 - 11:34pm

PROBLEMS BREWING IN THE KING BASE METAL....

GLOBAL COPPER INVENTORIES TO DECLINE SUBSTANTIALLY THIS YEAR - PAT MOHR

Capital cost escalation in an uncertain economic environment has triggered delays in new mine development, setting the stage for a tighter mid-decade supply, predicts Scotiabank economist Patricia Mohr.

Author: Dorothy Kosich
Posted: Friday , 31 Aug 2012
RENO (MINEWEB) -

Substantial production losses and outages at existing copper mines will cause global copper inventories this year to fall to 47 days of consumption from 52 last year, Scotiabank economist Patricia Mohr has forecast.

While refined copper stocks average 61.1 days of consumption from 2000-2009, "LME inventories have actually declined in 2012 and overall global inventories are expected to fall to 47 days of consumption from 52 last year, despite the recent increase in bonded warehouse stocks in China," said Mohr. "This reflects substantial production losses & outages at existing mines this year-Escondida (Chile -75,000 tonnes), Collahuasi (Chile), Los Bronces (Chile -60,000 tonnes), Grasberg (Indonesia -100,000 tonnes) and Lumwana (Zambia -60,000 tonnes)."

--------------------------------

Folks... just look at amount of production losses at the big copper mines. This is nearly 300,000 metric tonnes. Freeport's Grasberg mine was down 45% the first six months of 2012 compared to last year. The largest percentage of the copper declines came from Chile. As I mentioned in my previous article.... Chile is going to face serious energy shortages unless there is Billions of dollars invested in electric generating plants and infrastructure. 

If overall copper production declines in 2012, it will also impact silver production as well. We may see another percent decline in by-product silver from copper mining in 2012.

Here is another part of the article:

"Major Canadian gold miners are also examining project expansion more critically, in part due to high capital cost inflation," she added.

Recent announcements by BHP Billiton of project delays, "reflect concern over capital-cost escalation in the face of more subdued metals prices," Mohr advised. "In copper, capital cost inflation (which normally lags metals prices) has averaged 22% per annum from 2002-2011 and is projected to increase by 15-20% this year."

-----------------------

Costs are increasing faster than the price of commodities are rising. Even though some copper miners are making decent profits, it is not enough to supply all the FUTURE CAPEX spending that these companies have in their pipelines. We must remember, the so-called forecasted increase of global silver production is based on these scheduled base metal mines becoming commercial.

UPCOMING POST ON SILVER ORE GRADES

I had a spirited debate on silver ore grades with Eric Original and Coach427. They both mentioned that silver miners were utilizing lower grade ores and waste rock to maximize profits as the price of silver increased. This is an excellent way for miners to increase profits and to mill ore that wasn't cost effective with the price of silver lower.

I have to say.... anything that makes silver miners more profitable and successful is good in my book. That being said, it still does not change the overall fact that silver ore grades are falling greater than 5% a year on average.

This chart of the silver ore grades at SilverCorp will be included in my next article-post to describe this ongoing phenomenon:

If we consider that SilverCorps overall ore grade was 456 g/t in 2007 and is estimated (by their quarterly report) to average 245 g/t in Fiscal 2013, this turns out to be a 8% annual decline rate for the 6 years.

I will provide additional data to prove that Silvercorp has a LOM PRODUCTION PLAN until 2019 showing a continually declining average ore grade. This is not because they are mining waste rock or selecting lower grade ores... its because of its planned declining ore reserve.

Again... we must remember the KISS --- KEEP IT SIMPLE STUPID understanding of my concerns. The lower the ore grade... the more energy is needed to produce the same or less silver.

achmachat
Sep 3, 2012 - 12:04am

CHINA. boots on the ground report...

This month I had to pass through some of the major Chinese cities (in Beijing right now) and, boy, would most of you guys have a field day! I have never seen this much gold! Huge fancy shop after shop after shop selling 999 gold either as intricate jewelry or bars etc. for the daily per gramme price which isn't too far from spot price. How sadly ironic that in western countries the population is giving away their gold to cash-for-gold places while here everybody who has any amount of savings converts it to gold! Yes, these shops are full of customers, even if some can only afford 1gramme earrings, the convert-your-money-into-something-real sentiment is very present!

Strongsidejedi
Sep 3, 2012 - 12:07am

who's running this market anyway?

Are we running this market or are we continuing to let some committee decide what the definition of money is?

Its up to us anyway people!

The more gold and silver coins there are in circulation, the more the monetary value of the coinage increases.

Monedas
Sep 3, 2012 - 12:07am

Mr. Fix !

"I like the cut of your jib ! Wouldest thou like to hook up ?"....Gay Pilgrim Cod Fisherman "Pick Up Line" cerca 1626 Just kidding ! I see Bluesman145 has made his debut at TFMR ! I think he's the guy that got me banned for life at Kitco Forums for my corny, faux racist humour .... such as: "I think all inner city children should be sent to North Korea for two years of extreme potty training .... a Potty Corp, if you will ?" Monedas 1929 Comedy Jihad Help I Think I'm Being Stalked devil

Strongsidejedi achmachat
Sep 3, 2012 - 12:09am

question for @achmachat

I've wondered what the average gold store in China sells.

Do they sell Pandas? US Buffalo / Eagle? Canadian maple leaf?

Swiss gold bars?

What's the gold like that they are selling?

Mr. Fix
Sep 3, 2012 - 12:13am

Monedas !

Just wanted to say HI!

on ZH this aftrenoon.

I enjoy the good humor.

achmachat
Sep 3, 2012 - 12:16am

Jedi

Typical store: As you enter, you see "today's gold price" in RMB per gram of 999 gold. That price includes the work that went into making the decorative pieces and jewelry. It is surprisingly close to spot price though. So basically everything has its weight on a little tag and you pay per gram. I think you need to go to a branch of Bank of China to buy pandas. But most of the banks also sell you gold in most shapes and sizes.

Nigel Black
Sep 3, 2012 - 12:19am

@achmachat

I was also in China a few months ago in several major cities. You are right about the gold shops - I too was blown away by all of the non-jewellery gold (i.e. bullion - bars of all shapes and weights) that was being sold to the general public. And yes, I saw many people buying. 

It is sad what is happening in America and in Europe - trading your gold for dirt cheap prices to survive whilst a lot of the Chinese are converting their fiat into gold.

Quisp
Sep 3, 2012 - 12:36am

Hello

I just wanted to say hello Turdville! I just joined..... been a lurker on/off for several months. I have a small stack..... looking to add as funds permit. I wish I had been on this wagon a few years ago. Late to the party......... story of my life. 

Regards,

Dagney Taggart
Sep 3, 2012 - 12:46am

@benque

The graph doesn't show flash moves.

Top-left corner: https://www.kitcosilver.com/ Was 32.00 for yesterday. Showing 31.96 for 3 September now.

Mickey
Sep 3, 2012 - 12:47am

Apples, Corn and Coke

On the apple issue--an article yesterday in the Chicago newspapers discussed how light the apple crop is in this part of the midwest.

Also my wife came home with locally grown corn this weekend and it was crispy and sweet--I think it was $1 per ear.

Finally I was at a grocery store today--I used to buy 2 liter bottles of Coke for around a dollar as recently as last year--the price had moved up to close to $2 but today it was $2.19. The funny part is that pepsi products can stil be bought for $1 for 2 liter. Is Coke experimenting with higher prices. If so will pepsi not joining them cost coke market share?

In any event, I see prices increasing but not causing inflation--we wil do without coke or apples or corn. Substitute water for coke thus driving down cost of food.

things are getting crazy.

Quisp
Sep 3, 2012 - 12:57am

Hello - first post

I just wanted to say "Hello Turdville!" I just joined and have been a lurker on/off for several months. I have a small stack and would like to add as funds allow. I know... I know.... I'm late to the party..... Story of my life. Anyway, Hi! 

Q

Monedas
Sep 3, 2012 - 12:58am

Dagney, Baby !

I love your new Avatar foto .... I call it "Hair Inflation" ! Will you have my children .... I mean will you adopt them .... and take them off my hands ? They love our Tijuana slum .... but, I'm sure they'll get used to your Royal Suite in Banff in no time ! They are out house trained ! Monedas 1929 Comedy Jihad Dreams Of A Real Father devil https://www.obamasrealfather.com

leeson_was_framed
Sep 3, 2012 - 1:18am

Federal Debt priced in gold

That chart of US debt is really cool. So money printing does work! I guess if they take the value of the dollar to zero they can pay off the debt with a gold eagle and still have change for dinner and a movie.

The problem is, that there should be more wealth in the US than its debt. If it takes all the dollars in the US to pay the debt, people will have nothing. No property, no savings, dick. 

Not good.

But since things are headed that way, I will put a gold eagle aside, I bags Florida.

L-W-F

Nigel Black
Sep 3, 2012 - 1:39am

no nuthin...

"The problem is, that there should be more wealth in the US than its debt. If it takes all the dollars in the US to pay the debt, people will have nothing. No property, no savings, dick. 

Not good."

I think that is exactly what the banksters want - they own everything, we own nuthin...

Strongsidejedi Dagney Taggart
Sep 3, 2012 - 1:46am

@Dagney Taggart - what's your problem?

The silver chart at Kitco clearly says Silver high of 31.9+

Boswell
Sep 3, 2012 - 1:58am

Re: Kitco Charts...

I'm convinced the price of Silver would have hit $32 on Friday if that pesky box of lettering wasn't in the way! ;-)

Kitco Chart Blocking Price?

Glad they moved it, maybe they should move it a skosh higher?

swefred
Sep 3, 2012 - 2:04am

Silver high was at 03:00 am CEST

with a price of 31,884. Last tine we saw 32 was April 12

MainMan
Sep 3, 2012 - 2:18am

Grass Root Miners Draw the Line

Recent shootings and arrests of miners in South Africa will affect the production and pricing of gold. This could be the turning point of no return and nothing else will matter from now onwards. Looks like the most oppressed in regard to wage and working conditions have had enough. The PTB made a big mistake in dealing with the situation and are getting no sympathy. Price of gold will rise from now onwards in my opinion.

Mudsharkbytes
Sep 3, 2012 - 2:30am

Deciduous Fruits…

Our cherry tree produced nada this year, but that's because it got jumped the gun and flowered too early - lots of flowers which got us excited, but sadly, the bees were still asleep so no pollination!

On the other hand, for the first time we're going to taste some of the apples off our trees. Not that they haven't produced in the past, but we finally figured out how to keep the squirrels away from them. Little bastards used to pluck the apples before they were ripe, eat a few bites out of them, then leave the half-eaten unripe fruit on a branch for us to admire. What kept 'em away was hanging bags of mothballs from the lower branches. The squirrels gave wide berth to the trees and now, for the first time since we planted them, we're going to enjoy some fresh apples! Hooray!

And despite the miserable hot - dry conditions, our garden was, and is, outstanding this year. Tons of tomatoes (and they're producing again now), melons, pumpkins, okra & squash. But the REAL producer was the white habaneros. We put out nearly fifty plants - they grew waist high and into each other to the point where it now looks like a huge solid hedge of habaneros. And white habs produce a LOT of peppers anyway, so it's nothing to go out to the garden and come back in with a couple of pounds or more of these white, fire-y bullet-shaped chili's daily. Seems the drought and intense heat kicked them into overdrive - they loved it! As quick as we pick the peppers they flower up and produce more. The bees love 'em too - are all over 'em (wonder what effect all that habanero has on their honey).

Katie Rose
Sep 3, 2012 - 2:47am

GRAND CHAMPION!!!!!!!!!!!!

WHOOPEE!

This summer I traded a lovely black and white spotted 3 month old female goat (doling) for a black and white spotted Icelandic lamb. I kept her two beautiful sisters.

I just received word that the little darling took 1st place - Grand Champion - at the county fair along with lots of other awards! smiley smiley smiley

Good thing I didn't enter my little black and white spotted buckling, as the judges would have had a very hard time deciding. He's gorgeous.

Oh wait, the goats have to behave, and there is no way little sex pot buckling would have behaved for a nanosecond. wink He's bad.......................

Dagney Taggart
Sep 3, 2012 - 2:48am

@SSJ

Numbers don't matter apparently. Pretty pictures do. For the number people, I see a 32.00, 31.96, and 31.97 since 6pm.

The bots are pumping like rabbits.

Dagney Taggart
Sep 3, 2012 - 2:58am

@Mick

Pepsi has been incorporating dead fetuses. I hear they make good cheap alternative ingredients.

In other words, stop drinking that shit.

Katie Rose
Sep 3, 2012 - 3:42am

Alfalfa - My cup runneth over

smiley smiley smiley smiley smiley smiley

Since I won't be at the computer any time tomorrow, I thought I would follow up on my quest for alfalfa (farmer's gold).

Friday I received a phone call from a local farmer who I have bought alfalfa from the last two years. I had not contacted him because I had been told by others that he had pre-sold out his entire 300 acre crop of alfalfa to a large cattle rancher. He called to let me know that "yes, the crop was sold..." but he had held back three tons for me!

smiley smiley smiley

Then Mr. Uranium Springs from Turdville, who I have just met, called to let me know that his neighbor had a little alfalfa left over. Today I picked up 1 1/2 tons, with Mr Uranium Springs loading the truck and trailer for me. Oh, my, he and his family are just jewels!!!!!!!!!!!!! That meet-up is a whole future post in itself. Someone from Turdville living within 20 miles of me!!!

It's looking like I will have more than enough alfalfa for the winter, and for that I am extremely grateful.

And, yes, the alfalfa crop is sold out here. My suspicion is that lots of the "ranchers" who are buying up a farmer's entire crop are really hay dealers, buying with the intent of holding the crop until winter sets in and they can get a higher price.

And so far every farmer I have purchased from has been over 65 years old. I find that very troubling for the future of independent, non-corporate, American farms. I personally only know of one farmer under the age of 65, and I am buying organic barley from him for my redneck fodder experiment.

Boswell
Sep 3, 2012 - 3:54am

Pepsi?

The way I understand it, they use fetal cells to test the flavor ingredients (do they like it?). There are NO fetal cells in the drink. Still kind of creepy. Also there are no bunny eyes in shampoo.

benque
Sep 3, 2012 - 5:17am

Dagney

I'll believe you saw that $32 print, cause I wanna.

We've heard about these mystery spikes at Kitco before, both on the spot, and lease prices.

I'm not familiar enough with the other charting sites to get a visual of the spike, so I'll be optimistic and give you the benefit of the doubt. Can't imagine why anyone would say $32 if they didn't see it, anyhow.

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