On The Chopping Block

Tue, Oct 9, 2012 - 11:32am

While it seems that "everybody and their brother" is now expecting a sharp pullback, I'm not on that bandwagon.

Please don't accuse me of having my head in the sand. I mean, seriously, if anyone knows about The Cartels, the CoTs, the charts and the lease rates...it's me. I know all about it and you, as a Turdite, likely learned a few things from me. And who knows, maybe all this short-term bearishness will turn into a sort of self-fulfilling prophecy? If enough people pull their bids (especially for physical) because they expect a pullback, a pullback will then develop. However, there's also potential for quite a few people to get caught flat-footed and if a breakout rally develops, many will be left chasing.

Again, what I see is this:

  • As stated here often as of late, all reports are that physical demand in London remains robust, regardless of dips or rallies in paper price
  • Gold priced in euro and Swissie just made new all-time highs last week and have been preceding gold priced in dollars by about 4-6 weeks.
  • The desperate move by The Cartels, particularly JPM in silver, to add shorts and contain price creates a condition of extreme UPside potential if longs don't capitulate and are, instead, emboldened.
  • RSI levels in both gold and silver have worked off excesses built up during the 4-week rally from mid-August to mid-September.
  • The silver smash of 5/11 and the gold smash of 9/11 both came during periods of ending or non-existent QE. The Fed just announced QE∞ last month and those $ are just beginning to slosh around. Give it time. Additionally, QE∞ only adds to and increases global demand to exchange fiat for hard assets.

So, call me crazy but I'm a contrarian here. (Even though, as I type, I see gold being smashed down to 1766 and silver well under $34.) The dollar has rallied and reversed from its head-and-shoulder top of last week. This has surprised many (including me). The algos then use this $ strength to game the metals and any weak hands with sell-stops. The Forces of Darkness might throw on some new shorts, too. Again, though, I do not expect any serious downside momentum to develop. I suppose you could get a dip toward $1750 but that's about it. As long as the QE∞-inspired physcial demand remains strong, prices will ultimately reverse and head back higher.

Anyway, here are two charts of The Pig showing the surprise reversal:

Here are some gold and silver charts that, because of this current raid, seem a bit obsolete. Oh well, I'm posting them anyway. Take them for what they're worth.

And here are daily charts with RSIs printed below. Most of the "overboughtness" has been worked off and this current selloff has only served to work off even more.

And a just a few words about crude, too. The chart below certainly doesn't look too scary but, if I were short, I'd sure be nervous about a move back up through $92 and then $93. Especially after reviewing headlines like these: https://www.zerohedge.com/news/2012-10-09/turkey-deploys-25-f-16s-syria-border & https://www.debka.com/article/22422/US-sources-US-Israel-plan-October-Surprise-Others-Israel-can-do-it-alone

So, I'm going to go ahead and hit send on this post, even though I currently look rather foolish with gold down $14 and silver at $33.60. By later today, I could be completely wrong and maybe the newsletters writers will have been proven correct. We'll see. But this is my story and I'm sticking to it. C'mon, baby! Daddy needs an FUBM!!

Have a great day!


About the Author

turd [at] tfmetalsreport [dot] com ()


csquared13 · Oct 9, 2012 - 11:33am



HAHAAHHAAHHA YES!!! Finally, I get to say it!

Okay...that was fun

Mr. Fix · Oct 9, 2012 - 11:36am


That was fun........

Off to work I go now!


Enjoy the glory, you earned it.

Capt. Willard · Oct 9, 2012 - 11:37am

Santa 1764


Silver Alert · Oct 9, 2012 - 11:39am

You are putting an aweful lot

You are putting an aweful lot of faith in the longs. They've always turned tail and run when barked at by Blythe. What makes you think they will stand their ground this time?

ReachWest · Oct 9, 2012 - 11:39am

Rabbit Hole.

And so begins another week in the rabbit-hole that is the manipulated-fake-bogus-BS Silver market.

This post QE∞ sideways grinding is growing old. We do need a rather large FUBM

Thanks Turd.

Zoltan · Oct 9, 2012 - 11:40am

Thanks Turd

Thank you for the update and the wonderful site.


PS Started reading "Atlas Shrugged" last week. Going to be a long haul (well over 1,000 pages) but already see where it is going. Meanwhile I am "gone Galt".

SV · Oct 9, 2012 - 11:41am

Next step of manipulation

This jerky manipulation model seems to be new: keep the metal rangebound until its breakout, then keep it rangebound again, for weeks. The same remains true, though - The Cartel is Undermined.


SIlverbee · Oct 9, 2012 - 11:42am

Where is the short covering for the those put on last week?

Do they not care anymore. I guess we would have had to go back to $34.50 at least to make a difference and that takes away almost any advantage gained.

silverwood · Oct 9, 2012 - 11:42am


oh shit! I will be so happy when the totally BS elections are over with.

Beastly Stack · Oct 9, 2012 - 11:45am


I'm with You 1000%.I hope you bought OIL today my friend!

Mantis · Oct 9, 2012 - 11:47am

would love to see an FUBM about now

It really feels like a game of chicken between the shorts and longs just now, trouble is those shorts have an endless supply of fiat. However despite that I was starting to feel confident we'd ride through this selling pressure but then I log back in and see this latest dip. 

To hell with all these dips are a blessing, I want to see a serious price rise. 


Urban Roman · Oct 9, 2012 - 11:47am

$33 is the new $28

in silver -- not a parabolic/asymptotic move but it still makes a better investment than FB.

Mr. Fix · Oct 9, 2012 - 11:50am

To our fearless leader...

Dear Turd, Today, I completely agree with your blog post. All of this “bearishness” is contrived. I don't think it makes you a “contrarian" for simply recognizing that. Of course, the paper price could drop drastically if all confidence in paper gets lost, but if that's the case, then honest price discovery will shoot the precious metals into orbit. Wishing you a nice day.

Istack · Oct 9, 2012 - 11:54am
Mr. Fix · Oct 9, 2012 - 11:54am
Groaner · Oct 9, 2012 - 11:54am

Here is Clilve Maund celebrating his call?

Steve Martin as RUPRECHT

Go 5:16 in!

SIlverbee TF · Oct 9, 2012 - 11:57am

It is only very interesting if the findings are that the

prices have been made artificially high. Then it fits with the PTB's agenda to crack down on the market. However, if it was to make the price artificially low well that's another matter; no LIBOR gate here move along.

This will not role out to silver as it does not suit the PTB. 

· Oct 9, 2012 - 11:59am


Maybe it's just this simple? In a world dominated by HFT, maybe it is. Note the action since mid Friday.

bnick · Oct 9, 2012 - 12:00pm

The Story of Today's Raid

Distribution at 1775-80, with some bid-hitting and stop running just below.

Comicus · Oct 9, 2012 - 12:03pm

Jim Sinclair & Silver

I emailed Jim Sinclair seeking clarification concerning his remarks about silver.

This is what I wrote:

You recently stated, "Gold will protect you in this transition. Silver will give you a cheap thrill followed by a spiritual experience devoid of a teacher." I am unsure of what this means. Could you explain it further?

5 minutes later, I received his response:

Silver will go ballistic, and then fall as fast. 


foscotanner Urban Roman · Oct 9, 2012 - 12:04pm

Im with Turd


I am with you. I see strength. The fact everyone is calling for a crash is exactly the wall of worry we want.

Tops in Au and Ag are not formed this way. They do not have a wide topping formation. They get bl00dy hammered. This does not feel like a top.

I had today or weds as the end of the Ag correction. So i would not be shocked to see a reversal as we progress today.

The take down was timed with the PM fix. Surely someone wanted some cheap Phys?

My gut says a weekly close between 34.6 and 34.9. Then the break up next week. Could actually be sooner.

SIlverbee · Oct 9, 2012 - 12:07pm

What is sprott going to do

with the rest of his offering? is it 700Bn left. Does it not make sense to buy low?

Maximillion · Oct 9, 2012 - 12:09pm

Well said Turd

There's so many things different this time around, not least the amount of time the lease rates have been this negative (ie they're still playing the doubling down gamble as per the COT). The big problem for them IMO is that there are simply no players other than JPM who'll take the short side, and today there's 40Billion pieces of extra so called monetary paper IOU's floating around over that from only 4 weeks ago.

Eventually even the thickest person will realize value is based on supply and demand, not paper IOU's, especially when the IOU supplier just keeps printing more of them. I'm still not selling my stack, especially in order to convert it to something that's value can only decrease as more are produced, so any smack down is just another opportunity to get a bit more before the less well informed work it out.

SIlverbee · Oct 9, 2012 - 12:10pm

is there a way

I can see how many hat tips I have received in total?

Fr. Bill · Oct 9, 2012 - 12:11pm

Waiting eagerly for the rent check ...

... which the tenant is hand-delivering this morning.

Then off to the bank to deposit it.

Then off to the wire window in the bank to send it flying to BV.


Hoping [fingers crossed tightly; knocking on every bit of wood here in the office] that I can add to my recent mad-money stack at or below $33.75.

Be Prepared · Oct 9, 2012 - 12:18pm

The U.S. Wage Timeline....

1950's - one wage earner for a four-person family. Mortgage paid off in 25/30years. Comfortable retirement.

1960's - one wage earner (plus overtime) for a four-person family. Mortgage paid off in 25/30years. Comfortable retirement.

1970's - two wage earners (plus overtime) for a four-person family. Mortgage paid off in 25/30years. Modest retirement in own home.

1980's - two wage earners (plus overtime) for a four-person family. Mortgage not paid off - has to be rolled. Sell home on retirement for a modest retirement experience in a retirement home.

1990's - two wage earners (plus overtime) for a four-person family. Mortgage interst-only basis. Sell home on retirement for a modest retirement experience.

2000's - two wage earners (plus overtime) for a four-person family. Mortgage interest-only basis plus necessity to make repeated "equity" drawdowns from housing value in order to enjoy life and send the kids to college. Sell home on "retirement" from main job. Continue working in deadbeat store/Mc-job until drop dead in harness.

Victory · Oct 9, 2012 - 12:18pm

....nice post!

it's nothing special to make the same call everyone else is making...this post right here is why I read your analysis every day. No one has a crystal ball but at least I know Turd has the stones to put out his analysis real time when most would wait for the post game show

Nana · Oct 9, 2012 - 12:18pm

Find Out Why and You Will Have the Answer

The question to ask/think about is why do TPTB absolutely hate silver with such an undeniable passion?

Groaner · Oct 9, 2012 - 12:20pm


Silver just zoomed up!

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