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

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  481 Comments

I Run Bartertown
Sep 22, 2012 - 9:32pm

Actual Quotes

These are Brilliant!

Gloria Steinem, vs. Oswald Spengler
Julius Evola vs. Christopher Hitchens

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

And Foggyroad - that was strangely fascinating. I like how it keeps 'coming back around'. Thanks!

argent rampant
Sep 22, 2012 - 9:40pm

Interest, usury, etc.

@FoggyRoad, DayStar, et al:

Some of us can remember when there were actually usury laws in the states. I recall 12% as the max a lender could legally charge. These laws - along with those restricting banks from operating in multiple states, and of course Glass-Steagall, which placed a wall between investment banking and retail consumer banking, - all fell before the insinuous banking "lobby" (perhaps better called the incestuous banker-politician relationship). All of this is fairly recent, happening in the last 40 years or so.

reefman
Sep 22, 2012 - 10:00pm

How much interest is "ok" to charge?

How much interest is "ok" to charge someone on a loan created out of nothing? I say anything above 0% is infinitely too much. In the Bible times they didn't rehypothecate their depositors money - that would be called stealing (You shall not steal).

Remember that for many banks in the United States there is ZERO RESERVE REQUIREMENTS. All banks in Canada have ZERO RESERVE REQUIREMENTS. That fancy "10:1" ratio was pre 2011.

USA:

A depository institution's reserve requirements vary by the dollar amount of net transaction accounts held at that institution. Effective December 29, 2011, institutions with net transactions accounts:

  • Of less than $11.5 million have no minimum reserve requirement;
  • Between $11.5 million and $71.0 million must have a liquidity ratio of 3%;
  • Exceeding $71.0 million must have a liquidity ratio of 10%.

https://en.wikipedia.org/wiki/Reserve_requirement#United_States

kingboo
Sep 22, 2012 - 10:13pm

Ahhhh......Saturday nights, and Stevie

why do all the good ones die on us......

Stevie Ray Vaughan - Life Without You - LIVE
kingboo
Sep 22, 2012 - 10:29pm

@Kcap

you said.....

2017. Never happen.

2016. No way.

2015. Odds are not with you.

2014. Well, they could do it if they had to.

2013. Looks most probable due to many non-economic reasons.

Best,

Kcap

i would agree with you, but....then again......i would have bet my life in 2008 that it wouldn't last this long......remember one thing....... they dont use math, they use "fuzzy math" and they make and break the laws as they go. And one more thing........."their" idea of disaster and "our" idea of disaster are 2 different things............if you ask me? we are already witnessing a global disaster........the history books will show it as having started in 2007.......(if they show it at all).

Sep 22, 2012 - 10:43pm

Geeze, guys

If you can't address what someone says without resorting to name calling you are kind of implying they are right, or at least that you can't refute them.

I'd say play nice, but it's Saturday night in Turdville; what should I expect?

Kcapkingboo
Sep 22, 2012 - 10:44pm

@kingboo

Yes, this is indeed my point.

Since 2007 we have been "in it".

Even with fuzzy math, they are out of weapons and time is the only thing they have going. So, they can let it go when it goes or they can implode it to keep some semblance of control. The thing is....it will only appear they have control but the illusion will be seen through by everyone in the financial world.

I think between war, the looming metals fiascos and international trade settlement continuing to bypass the dollar and increasing exponentially everyday, they is no way they can stave this off or postpone their implosion of it past early 2015. But, in my gut, I think/feel no later than July 2013. In fact, just like the NIA video showed, perhaps even by Dec. of 2012. Really....I sincerely mean that.

But, all that could be is dollar devaluation and metals revaluation. And then we go on.....until we don't.

Kcap

Hang10-Hawaii
Sep 22, 2012 - 10:52pm

Dead corn, beans and Judge Napolitano

Somewhat random observations from today. I had the opportunity to drive through western Illinois and into Iowa on a 7 hour round trip affair by myself. I downloaded Judge Andrew Napolitano's audiobook "Lies the Government Told You" and headed off. During the drive, I came to two very clear conclusions. 1 - the corn and soybean crop in Illinois and eastern Iowa is TOAST. I mean brown and dead. I saw several farmers simply cutting the stuff down. The beans looked worse than the corn. I saw very few head of cattle. 2 - Judge Napolitano is a national treasure. He systematically dismantled the MSM, congress and the american populace as it relates to constitutional law. His treatment of the first, second and fourth amendments is crisp, clear, concise and unequivocal. No wonder he got flushed from FOX (MSM). His treatise on the Federal Reserve is outstanding - both in terms of the history of the Federal Reserve act, as well as the impact of uncontrolled inflation on the middle class and those on fixed incomes. Very well done. His insights into the second amendment were equally compelling. For instance, he pointed out that there was considerable debate during the drafting of the bill of rights as to whether the right to keep and bear arms even needed to be included in the the bill of rights since it was so obvious as to be self-evident. The natural right to self defense almost didn't merit being written down, but when it was, it was the SECOND amendment behind the right to free speech in the order of the bill of rights. Hmmm. He then went on to explain how gun control began as a back door taxation/revenue mechanism. Fascinating. My takeaways: 1 - pick up some more MOO, and 2 - order another 1,000 rounds of 5.56 form Freedom Munitions (hat tip - another Turdite turned me on to Freedom Munitions,and I HIGHLY recommend you check them out). Their ammo is top notch and cheap. I've been really happy with their "Blaster" practice ammo. Have used several hundred rounds of the stuff at the range and it works like a champ, and is very clean in my AR.

coatrackbox
Sep 22, 2012 - 10:58pm

Apple ios6

I'm thinking that the new iOS 6 is so terrible and the iPhone 5 so unimpressive that it is getting close to the time to sell short on apple stock. FYI I own the 4s and loved it until the iOS 6 was put on it and I see no value in upgrading to the i5. That being said the only thing going for the iPhone now is the screen resolution but the s3 is close enough now that I think the iPhone has peaked and its stock value will drop.

Mr. Fix
Sep 22, 2012 - 11:10pm

@ Kcap:

" perhaps even by Dec. of 2012. "

Bingo.

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Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
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10/24 10:00 ET New home sales
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Key Economic Events Week of 10/14

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10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
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10/2 8:15 ET ADP jobs report
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Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
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Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
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9/18 2:00 ET Fedlines
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Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
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9/13 8:30 ET Retail Sales
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8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
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