Weekend Review

481
Sat, Sep 22, 2012 - 12:16pm

What an interesting week. Instead of volatility, we got containment and flatlines. Something tells me next week won't be the same.

Ponder this for a moment, QE∞ is announced as official Fed policy last Thursday. That day gold, the only alternative currency to steadily-debasing fiat, responds with a $38 move. Frankly, I would have expected more but, given the Cartel propensity for containing daily moves at either the +1% or +2% levels, $38 seemed about right. However, over the next five days, would you have expected this?

  • Friday, 9/14: net change +$0.60
  • Monday, 9/17: -$2.10
  • Tuesday, 9/18: +$0.60
  • Wednesday 9/19: +$0.50
  • Thursday 9/20: -$1.50

So, cumulatively over the next five days trading in gold, immediately following the long-awaited announcement of QE∞, the total change was down $1.90. Huh?? And, again, it's not like we saw the +$20, -$22, +$31 kind of volatility you would have expected. Very strange and, once again, subtle evidence of the outright blatant and ongoing manipulation and "managed ascent" of the paper price by The Gold Bullion Banking Cartel.

To no one's surprise, this week's CoT continued the trend of Cartel naked short issuance to contain price. Again, I'm not really sure who wrote the mandate that JPM, DB et al have to act as market makers in the metals but, for some reason, that is the role they allege to play. Spec money comes into the pit and the banks issue the highly-leveraged paper. Not content to see price bid up as the spec bids search for willing sellers of existing contracts, The Cartel, instead, simply issues brand new contracts to satisfy demand.

In doing so, The Gold Cartel added another 18,196 short contracts this week and brought their net short ratio back up to an astonishingly dangerous (to them) 2.68:1. Why is this so dangerous, you ask? Because they are continuing to play this game as if none of the fundamentals have changed. This is no longer 2002 or 2008. It's not even 2011. We are near The End Game for fiat currency and the "creditor nations" around the globe recognize this. The are readily exchanging their rapidly-devaluing fiat for hard assets, gold in particular. This insatiable physical demand underpins the paper market and makes precipitous, short-covering drops, like we've seen The Cartel execute in the past, all but impossible. Oh sure, there will still be selloffs and beatdowns...Heck, we saw one yesterday...but incessant physical demand forces The Cartel to quickly turn tail and buy in order to cover and secure the metal required to meet the allocations sought at every London fix.

So, again, look to buy the dips. Not every $5 dip, mind you, but any substantial dip the pushes price back to obvious support points. Right now, the obvious area is around $1755-1760. IF a dip develops early next week, I'll be all over it. Gold looks certain to soon blast through $1780 and then $1800. From there, I expect a rapid move toward the old all-time highs of $1920. At that point, gold could, once again, get disorderly to the upside, similar to what we saw in August of 2011. It will likely break out and UP through the long-term channel again and head toward and through $2000.

And here is a long-term chart of gold priced in euros. Recall that we've been discussing for weeks how euro/gold was getting well ahead of dollar/gold and that dollar gold would eventually catch up. A month ago, euro/gold was showing that $1800 gold was coming. Now, euro gold makes it look like $1920 gold is only about a month away. (Chart courtesy Trader Dan: https://www.traderdannorcini.blogspot.com/2012/09/euro-gold-on-track-for-all-time-high.html)

And JPM and their pals continue to play games with silver, blissfully unaware that their dynasty has ended. Just last week, they added another 2,880 short contracts in a vain attempt to pin price below $35 and protect the vulnerable buy-stops near $35.50 that, if tripped, would send silver quickly toward $37.50. Oh well, screw 'em. So they "won" this week. Whatever. They're just going to lose eventually so what's another week of waiting. Now at a total gross short position of 82,358 contracts and a net short ratio of 2.58:1, The Silver Cartel is sitting on a powderkeg of their making. Boy is it ever going to be fun to watch it explode right under them.

As The Doc pointed out yesterday, The Forces of Darkness expended a lot of ammunition yesterday in a desperate attempt to start a cascade and keep price under $35. ( https://www.silverdoctors.com/cartel-dumped-2x-annual-us-silver-production-on-market-in-15-min-to-smash-silver-under-35/) They now find themselves in a bit of a jam as we head into Tuesday. They'll need to cover quite a few contracts before the 1:25 EDT close that day or they risk showing their footprints on next week's CoT. What will they do? Cover, of course! Now the question is, will they gamble by raiding first and hoping for a steep enough selloff that they can cover the raid "material" and more on the way back up? Maybe but I doubt it. Physical demand will easily blunt the dip again just as it did yesterday. Their only logical choice, after being thwarted yesterday, is to begin to cover yesterday's new shorts as early as Monday, otherwise they risk a significantly "Happy Tuesday" that blows out those $35.50-area buy stops and send price toward $37+. What to do, what to do. A whole lot of choices, all of them bad. HAHAHAHAHA! You did this to yourselves, you arrogant bastards, and now you're stuck. You'll get no sympathy around here.

And in case the action in crude this week left you feeling that global peace and harmony were right around the corner, I give you this to ponder: https://www.zerohedge.com/news/2012-09-22/head-irans-revolutionary-guards-war-israel-will-occur

In that same vein, I was contacted this week by a nice guy who asked me to link a few of his prepping articles. I certainly hope you are using this time to full consider these topics: https://destinysurvival.com/2012/09/03/food-storage-how-to-calculate-for-your-needs/ & https://www.emergencyfoodstorage101.com/2012/08/07/being-prepared-for-power-outages/. Of course (shameless plug coming), you can find many of these items by visiting the Turdmart, a link to which is conveniently placed at the top of each page but copied below for your convenience.

https://www.tfmetalsreport.com/preparation-store

I hope that everyone has a safe, fun and relaxing weekend. Come back on Monday and be prepared for a week that is considerably more volatile and interesting than this past one was.

TF

11:00 pm (23:00) EDT Sunday UPDATE:

So, what the hell happened at 20:58? Anyone have a guess? I do but, first, let's look at the charts:

At exactly the same time, the POSX began an uptrend that carried it 20 ticks higher over the next hour.

So, what we likely have here is another HFT algo (WOPR) run amok. True Cartel hit jobs rarely impact so many markets across the board. On a light volume Sunday night, a brainless computer "saw" the uptick in The Pig and began program selling.

Regardless of instigator or intention, it is going to be very difficult to break down paper price much further. Difficult but not impossible. That said, I will be very surprised to see the metals considerably lower in the morning as there is no reason to expect a buyers strike in London on Monday. As mentioned Friday, gold should have considerable support near $1750. Silver will continue to find bids, just as it did two hours ago, near $33.50.

Hang in there and try not to panic. If protracted selling does come in, consider it a blessing. Please consider any and all bouts of price weakness as opportunities to add to your stack.

TF

About the Author

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

  481 Comments

ferretflat
Sep 22, 2012 - 12:26pm

Win,Place,Show

I am still prepping, stacking, and long on calls for GPL!

Pegasus
Sep 22, 2012 - 12:31pm

Third

For Turd!

Sep 22, 2012 - 12:36pm

Krugman

Paul Krugman winning a Nobel prize in economics is like Barak Obama winning a Nobel peace prize.

What is wrong with this world?

It is Saturday morning and I am sitting downstairs (yes—the basement) in my office where we store our prep food and other items. The markets were encouraging this week for a short-time stacker. But my concerns are weighing on me—concerns about the presidential election, the future of the US and world economies, careers for my kids, and the scary reality of a possible life where one has to physically protect your possessions. I am comforted by the buckets filled with rice & beans, the shelves stacked with other canned goods. I am also strangely comforted by this 100 ounce bar of silver I keep on my desk. I pick it up and feel the heft. I rub it and feel the smooth surface, I see the glimmer…and suddenly I know why this stuff is valuable. Someday, someone will trade what I need for this bar of silver. Perhaps an acre of land where I can grow food. Perhaps a house for my daughter. But it is worth something! 3000 years of written human history affirms the universal value of precious metals. One man, calling gold a “barbarous relic” will not change all that.

<rant>

Oh! Also, if you had not noticed, I am really irritated by anything Paul Krugman says. I wish no ill upon any other human being, but I really wish he would keep his mouth shut and retire. Perhaps, as an academic, I am particularly goaded to anger when another academic prostitutes himself for money to serve psychopathic world rulers, contriving “scholarly” theories to justify their asinine policies that impoverish the citizens of the world.

<rant/>

I got lucky on being first. Must be "pay back" for feeding Turd this morning.

balz
Sep 22, 2012 - 12:40pm

Silver COT

What about silver COT, Turd?

Dagney Taggart
Sep 22, 2012 - 12:43pm

5th

is so dull.

Edward G
Sep 22, 2012 - 12:46pm

Nice one TF !

Nice to hear a clear summary of the predicament of these buffoons,

Good w/e to all !!

...for the sake of chat, and at the risk of advertizing my ignorance up this high... I was wondering how many ETF investors actually care if they end up getting cash settlement... if they are just speculating on the price then maybe they don't really want any metals...

e.g. 1) If it was oil, you wouldn't want to take delivery of that would you?

2) If I was invested in Kellogg's, I wouldn't want them to redeem my shares in cornflakes, I'd prefer the money.

Sep 22, 2012 - 12:46pm

Balz

Turd says above that the EE added 2880 shorts last week keeping price under 35. To me, that short count is the critical number.

Dagney--glad to see you back!

worldend666
Sep 22, 2012 - 12:51pm

@Dr Jerome

The amazing thing about Krugman is that underneath his articles the comments are all from the same mindset. People really believe this stuff. As they say you only hear what you want to.

I was in another discussion this morning and one poster commented that Krugman is akin to a porter rearranging deck chairs in the titanic and that whilst futile his activity is harmless.

Nothing could be further from the truth. Krugman would like to extend the current situation out as far as possible by printing cash. This cash will be spent indiscriminately and will inevitably mis-allocate physical capital. The longer this goes on the more capital will be wasted. Where would you rather live - in the USA in 2008 immediately following a default and where assets were still in decent condition, or in a USA of 2020 following hyperinflation during which assets were left to rot or mis-used? I live in Eastern Europe and I can tell you the aftermath of communism was not pretty.

Hagarth
Sep 22, 2012 - 12:55pm

Cat out of the Bag?

"Ladies and Gentlemen: It looks like we are going to have a "nuclear reaction" with respect to GLD and SLV especially if their inventories are not real but owning nothing but hypothecated and rehypothecated paper!!"

https://harveyorgan.blogspot.ca/

Is a 3rd party verification process going on in SLV/GLD going on right now in regards to their vaulted holdings? Or is this just another warning from harvey to stay away from these products?

Marblesonac
Sep 22, 2012 - 1:01pm

Timeline for events and No Gold backing for the USD

High inflation hits the US 1Q13

Hyperinflation hits midsummer 2014

Hyperinflation ends Sept or Oct 2015

If you wonder why the FED is now buying MBS's, it's to bail out the banks at 100cents on the dollar, PLUS:

The "New Dollar" will not backed by gold, or even a basket of currencies.

The "New Dollar" will be backed with the $3T of mortgages that the Fed will have bought plus the $7 that Fannie Mae/Freddie Mac (will) have.

https://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_germanhype...

Obviously, though the currency was worthless, Germany was still a rich country -- with mines, farms, factories, forests. The backing for the Rentenmark was mortgages on the land and bonds on the factories, but that backing was a fiction; the factories and land couldn't be turned into cash or used abroad. Nine zeros were struck from the currency; that is, one Rentenmark was equal to one billion old Marks. The Germans wanted desperately to believe in the Rentenmark, and so they did. "I remember," said one Frau Barten of East Prussia, "the feeling of having just one Rentenmark to spend. I bought a small tin bread bin. Just to buy something that had a price tag for one Mark was so exciting."

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

China WILL back their currency with either gold or a basket.

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Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
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9/5 10:00 ET Factory Orders
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Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
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8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
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8/30 8:30 ET Pers. Inc. and Cons. Spend.
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8/21 10:00 ET Existing home sales
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8/22 9:45 ET Markit Manu and Svc PMIs
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8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
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Key Economic Events Week of 8/5

8/5 9:45 ET Markit services PMI
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Key Economic Events Week of 7/22

7/23 10:00 ET Existing home sales
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