The Week That Was

420
Sat, Sep 15, 2012 - 12:03pm

I tried to warn you that this week was going to be wild. I expected the pressure and intensity to ramp up with each successive day and it most certainly did. By Friday, everyone was ready for the weekend. That's fine but, come Monday, you'd better be ready.

What a fantastic week we had. Made even more special by the fact that we were set up for a disaster. Recall that I had been warning you for about 10 days that a Cartel Raid seemed on the horizon. They looked like they were once again setting everyone up for a massive beatdown. By the looks of the CoT yesterday, I was exactly right.

The situation, as it turned out, was eerily similar. Let's take a look:

December 2011: The price of gold bottomed late in December 2011 at $1525. The CoT also "bottomed" at a total gross Cartel short position of 325,960 and a net short ratio (gross shorts divided by gross longs) of 1.98:1. The price of silver bottomed at $26.40. The silver CoT bottomed with 55,356 gross shorts and a net short ratio of 1.34:1.

Jan-Feb 2012: The metals then took off on a two month rally, peaking on Tuesday, February 28. Gold reached $1790 (+17%) and silver made it to $37.50 (+34%). The CoT taken that afternoon showed a complete reversal from December. Now the total gross short position in gold was 390,412 with a net short ratio of 2.69:1. The total gross short position in silver had reached 78,395 and a net short ratio of 2.32:1.

And what happened the next day, 2/29/12? Using The Bernank's Capitol Hill testimony as cover, the bid side of the metals was overwhelmed by Cartel manipulation and a 3-month, short-covering beatdown ensued. https://www.tfmetalsreport.com/blog/3465/csi-comex-gold-and-silver-massacre

Gold bottomed again almost exactly three months later on Wednesday, May 30, 2012 at $1537. Two days later, the employment report for May was released and QE has been on everyone's lips since. On Tuesday, May 29, the CoT once again looked like this:

May 2012: On 5/29/12, the total gross short position of The Gold Cartel stood at 300,917 and the net short ratio had fallen all the way to 1.77:1. In silver, the gross short position was back to 60,151 and the net short ratio had fallen back to 1.31:1.

It had all been a set-up. From the lows in December, spec money flowed into the metals and The Cartels welcomed every dollar. At the peak, The Bernank was rolled out in front of the cameras to put off QE and The Cartels attacked. Over the next 90 days, they covered all of their fresh shorts and then waited all summer to play the game again.

August-September 2011: The final bottom for gold occurred on June 28 at $1552 and silver reached $26.21. The CoT on June 26 was once again at a "bottom", too. On Tuesday, July 10, the total gross short position of The Gold Cartel was 316,165 and the net short ratio was 1.93:1. The total gross silver short position was 62,478 and the ratio was 1.29:1.

As of this past Tuesday, September 11, look how things had changed again. Prices had risen considerably. Gold closed on Tuesday at $1735 (+12%) and silver closed at $33.56 (+28%). The total Gold Cartel gross short position was once again 380,239 and the net short ratio was 2.66:1. The total Cartel gross silver short position was 79,478 and the net short ratio was 2.47:1.

The Cartels had set us up again. The point is this: If the Fed had "disappointed, if The Bernank had put off all new QE until after the election, there can be zero doubt that we would have, once again, seen a massive, manipulative raid on gold and silver.

In hindsight, do you recall the very sharp and brief spike down that occurred about 10 minutes before the Fedlines were released on Thursday? This was almost certainly someone or something with foreknowledge of the raid, attempting to front-run The Cartels. By now, we all know what happened, instead. Rather than being "saved" by The Bernank and using "no QE" as cover to screw everyone once more, QE~ was announced and now The Cartels are trapped!

We'll use the days ahead to go into greater detail on the implications of this but rest assured for today that sharply higher prices are coming. QE~ only serves to increase the global demand for physical metal. This demand will underpin any attempts by The Cartels to start a selloff. Over time, they will be forced to cover at an accelerating pace, similar to April 2011 in silver and August 2011 in gold. There will be panics and you can count on every dirty trick imaginable being thrown at the "markets". This time, however, it's not going to work. With QE~ as a backdrop, every dip will be bought, each successive low will be higher. The overconfident and greedy fools could/should have used this time to draw flat and perhaps even go net long. Instead they arrogantly chose to play their games one more time. This time, however, they will lose. The game is over and the fireworks have begun, even if the players seemingly haven't yet heard the final whistle.

Only one reading assignment this weekend and it's this piece from Brandon Smith at Alt-Market. This is one that you need to read carefully and then print it off and keep for posterity.

https://www.alt-market.com/articles/1034-get-ready-for-an-epic-fiat-currency-avalanche

Lastly, once again I beg everyone to recognize that this main thread is for the discussion of precious metals and issues affecting such. It is OK to reference events in the MENA as the current situation there clearly has an impact on the global economy, the price of oil and the equity markets. It is not OK to get into pissing matches regarding "radical Islam", "Zionism", "American Imperialism" and the like. There are forums for that and I've even gone to the trouble of setting one up for you: https://www.tfmetalsreport.com/forum/4188/radical-islam. Going forward, I am simply going to delete and remove comments from this main thread that I feel are set to hijack the discussion and turn people away from the education that this site provides. No exceptions. Got it?

OK, with that, I wish everyone a fantastic and restful weekend. Come back on Monday prepared for another wild and crazy week.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  420 Comments

alphamorph
Sep 15, 2012 - 3:31pm

Turd - jitters or jubilation?

Turd, you were so certain that the Fed was going to disappoint and that the Cartel was going to do it to us again that a lot of people got scared off.
I don't think the shorting hedgefunds (as per Norcini) or the Cartel (as per almost everybody here) are quite so naive that they were totally taken unawares of the impending Fed decision. James Rickards flat out declared the day before (or more) that the Fed was going to ease. Several other notables hinted something similar. Even I commented during the morning prior to the announcement (when PM prices were plunging), that the action was akin to a Rothschild headfake (supporting rumors that Napoleon had been victorious at Waterloo). I was busy buying and believe me, I'm not great at timing this or any other market!
My point, there is no way that the bullion banks were unaware of the possibility of Fed easing and its consequences to them. But seemingly, their response.... SO WHAT - just pile on more shorts!
Clearly, these guys aren't done yet and this wild ride is far from done.

TexasStacker
Sep 15, 2012 - 3:37pm

mod request

please move dagney's offensive and profane opinion to the forum turd set up for that topic. thanks.

¤
Sep 15, 2012 - 3:44pm

Stuck In The Middle With You

Video unavailable
SIlverbee
Sep 15, 2012 - 3:45pm

I think JPM's entrapment was unintended consequences

The banks will benefit in many ways, it would be hard to find a binary decision that would have been a win win in all circumstances for the banks. Overall they gain; downside JPM is trapped by the short and curlies.

Collateral damage!

Swineflogger
Sep 15, 2012 - 3:47pm
TruthBuster
Sep 15, 2012 - 3:53pm

Petrodollar and WW3 - interesting video

I think the only way Russia and China can stop the US petrodollar is to prevent Iran being attacked, and to convert their USD into tangible assets such gold, silver, commodities, mines, oil fields in Africa and elsewhere. Then once they have enough gold, they will float an international settlement currency backed by gold. This will eventually unseat the USD.

Video:

https://www.crisishq.com/why-prepare/world-war-3-preserving-petrodollar/

Dagney Taggart
Sep 15, 2012 - 3:54pm

@Swineflogger

That's offensive to Mormons.

Swineflogger
Sep 15, 2012 - 3:56pm

One more for the road

Any Turdite that is not a member of Turd Talks Metals is really missing something special. It is not just the keen insight based upon years of experience and a priceless stable of investment community connections that is valuable, it is the passion and intensity with which that information is shared. Anyone wondering WTF I am talking about should just join up and listen to Friday's podcast. It was nothing short of EPIC.

EDIT: Turd I tried to find a YT embed of the stuttering grandpa in the bar with Tourettes Syndrome from the first Boondock Saints movie to assuage your potty mouth concerns but was not able to find one. Rat Puke!

Jager06 TexasStacker
Sep 15, 2012 - 4:01pm

Boo Hoo!

I can't stand to look away when someone posts something I disagree with!

Please someone, save me! Someone with some authority, someone with some real power!

Save me from my inability to tolerate others and leave them alone to their ideas!

Save me from the potential of having to use logic to justify my opinions!

Please save me from having to listen to others express themselves! Only I should be able to do that, cause only MY ideas are the really reallly REALLLLLLLYYYY good ones!

Somebody?

<crybaby/off>

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