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

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turd [at] tfmetalsreport [dot] com ()

  420 Comments

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redwood
Sep 16, 2012 - 9:24pm

from the corner

The Gnome having respectfully gained notoriety for dirty poker has been sadistically teasing the public all year with QE3. Instead with every FOMC there has been nothing but a series of lame tactics to pacify, sultry promises, and meaningless reiterations such as keeping low interest rates.

Now some pundits called for no QE3, others were vociferous about its inevitability, but nobody called for unlimited QE3. I have yet to read anyone questioning the meaning of this distinct and important qualifier. (If anybody has please let me know; this is a different version of Santa's unlimited in that it is officially stated).

Unlimited? What does that mean? Like an infinite universe? A black hole? An asymptotic graph line? You know its quite a grave statement. Are we all going to fall off a cliff? In which case unlimited won't be enough for anybody. Does it mean that unlimited is necessary to rescue a few and the rest be damned.

Ivars, bless his genius, is calling for a drop in the market after the elections. Since his graphs predict events logarithmically based on previous crash events, it challenges the reader to explain the data post hoc.

Today Netanyahu is demanding that the US come to Israel's aid sooner rather than later. I understand he is even trying to interfere with electoral process. I guess he does not trust Obama's loyalty.

https://www.realclearpolitics.com/video/2012/09/16/netanyahu_irans_nuclea...

Netanyahu has said that Iran is 6 months away from having the full nuclear capacity to threaten Israel. Hmmm......that is conveniently close to post election dates. It also brings the ME to non monsoon months when a ME war would be most propitious. I have to wonder if that is what unlimited means? More obfuscation under the guise of good news this past week. We may be relieved but I remain perplexed and concerned.

**************************************

I just checked main and realized I didn't read Ivars' own response to the above observation. It appears he is considering same. That's good but bad.

redwood
Sep 16, 2012 - 9:20pm

DPH

Long time no talk. I see you have your identity back. Thanks for those nice pictorial representations. It really helps to visualize a world away. Also helps with learning one's geography.

I Run Bartertown
Sep 16, 2012 - 9:04pm

IRB

It's a matter of definition. I define capitalism as a system defined by private property and free markets. By that definition, since we have neither, we don't have capitalism. To me, what you describe is closer to mercantilism: as system defined by government management of trade and economic activity for the benefit of certain favored enterprises. In the past it was mainly manufacturing that benefited from mercantile policies. Since the US isn't really a manufacturing economy any more the focus now appears to be on the financial sector.

But as I said, it's all in the definition. I think we pretty much agree across the board--we're just using different words to describe it.

TexasStackerZoltan
Sep 16, 2012 - 8:58pm

I am hard-core conservative,

I am hard-core conservative, but I love me some Jackson Browne. His music touches me. Thanks for the vid.

I Run Bartertown
Sep 16, 2012 - 8:45pm

Puck

Glad we agree on the Democracy part.

Not far apart on the Capitalism either. But, in conjunction with Democracy, and lacking a 'firm hand' to prevent a government (and a people) for sale, it will be for sale. I don't like the Fed, and I agree that it destroys Free Markets. However, in a pure Capitalist sense, 1913 makes perfect sense. Capitalists use capital all around the world to make investments that will yield the greatest return. To buy a Nation of serfs is probably the wisest investment a Capitalist (in the International Capital flow sense - not the entrepreneurial sense) could make. And it's proven to be a good investment for them, indeed.

In essence, though, I think we agree, or are close to it.

¤
Sep 16, 2012 - 8:23pm
ClinkinKY
Sep 16, 2012 - 8:15pm

"Math Is Hard" or "For The Kids", take your pick.

Breaking: Chicago teachers’ union strike to continue this week

“Our members are not happy,” Lewis said. “They want to know if there is anything more they can get.”

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

Because working 9 months out of the year with an average salary of $76,000 a year PLUS full benefits, and a guaranteed 16% raise over the next 4 years with no accountability isn’t enough.

I'm all for GOOD teachers but this is ridiculous. And 40% of these "teachers" send their kids to "private/charter" schools.

karen‑lewis‑640_s640x427.jpg

https://hosted.ap.org/dynamic/stories/U/US_CHICAGO_SCHOOLS_STRIKE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-09-16-19-02-10

Darth Smoker
Sep 16, 2012 - 8:03pm
fertzeltwist
Sep 16, 2012 - 7:56pm

White Knuckle Madness

Can't concentrate on football today- Raiders lost anyhoo (Cue Raidernation Gangster Jokes) Actually I pre-date the Raidernation Gangster B.S.

That being said, there is so much madness going on that I am glued to my computer. Early Globex charts are VERY volatile and strange. World geo-political situation is bordering on total madness!

Hope for the best- Prepare for the worst- Good luck Turdanistas!

Dr G
Sep 16, 2012 - 6:46pm

@Zoltan, good call.

@Zoltan,

good call. Interesting stuff. We still don't know (do we!?) where Netdania gets their "volume" from, but it is interesting that the volume is as active in electronic trading now as it was in electronic trading last week. Usually the opener is a snooze fest (unless they capture Bin Laden and decide to rape silver for $$).

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