Cartel Copycats

Wed, Oct 10, 2012 - 11:14am

Remember when BTFD was exclusively our mantra? Now it seems that everyone is getting in on the act.

Just what the heck is going on here? From all traditional accounts, the table is set for another, cruel selloff. Cartel short positions are high. Lease rates are low. The dollar has been rallying. However, since Friday, gold is only down $25 or so and silver isn't even down a buck. What gives? A couple of very important things:

  1. Overt QE. Think about it...the 30% silver smashes of 2011 both occurred when QE2 was either ending or had ended. Same with gold. After the Great Cartel Panic of August 2011, gold was driven lower because the only current QE was the "sterilized" Operation Twist. Lack of overt QE had lessened physical demand to the point where paper price could easily be driven lower without significant consequences for The Cartels.
  2. Robust current demand for physical. Every London fix is being attended by "Eastern" central banks, sovereign funds and large investors. Every single one. Even last week when China was "closed", demand continued unabated, regardless of price action. Bids are moved up and bids are moved down but orders are being filled at each Fix.

The has resulted in a very curious and rare dichotomy. Upon seeing the slowing momentum and reading the CoT "tealeaves", the NY-based smaller commercials and the momo-chasing hedgies have been selling paper gold and attempting to start the usual cascades. Doesn't it surprise you that it hasn't been working? Gold dips but recovers. Silver dips even less. What the devil is going on here?

So I rang up my pal, Andy Maguire, earlier and he clued me in. Remember, in his role as 5-star General in the fight against The Cartels, Andy is on the ground, near London, and is very close to the LBMA, physical scene. Here's his take:

{The smaller commercials and the hedgies try to run price but, since unrelenting demand comes at every Fix, the Bullion Banks in London are being forced to buy the dips, just like us! They require physical (the dip earlier today saw HUGE demand as Andy personally knows of 7.5 tonnes of physical gold orders being filled). To meet this demand, instead of jumping aboard and slamming price even lower, The Cartel is working against the smaller comms, buying paper and sliding some of the paper short burden onto them.}

Well, this ain't gonna last very long! Soon, those fresh shorts will realize that they are quite vulnerable to a squeeze and begin to cover. They don't want to fight the bigger Bullion Banks any more than you and I do. What we'll likely soon see is a rally off of today's lows. It will probably begin slowly but accelerate as higher highs are made in the recovery process and technical resistance levels are bested. We'll see. I'm still about the only TA guy who isn't calling for a price smash so, I could be dead wrong but I don't think so. Not this time.

Here are hourly charts that show the resilient paper price:

And why is 33.80-34.00 so supportive in silver? Here's a chart from two weeks ago showing why. Note that price is still refusing to break down and retrench to the previous "stair":

I should mention crude here, too, though I was reminded recently by someone that "I suck" at crude. Well, I think that's a little harsh and not entirely accurate. Frankly, in crude, I'm guessing just like everyone else. For my latest "guess", I'm getting increasingly bullish. Take a look at this chart. After being jammed lower in waves of selling, price reversed near $98 and has now made a higher low, followed by a higher high. IF WE CAN GET ONE MORE DIP, back toward $90, I think I'll take a stab at some calls.

And, for your listening pleasure, I present the podcast below. I spoke with Kerry Lutz yesterday about a variety of subjects. You may or may not find it interesting but here it is, anyway:

Have a great day. Keep the faith. Follow The Cartel and buy the dip.


p.s. Yesterday, I was contacted by a Turdite who has 60 Krugs he'd like to sell. He's willing to move them at price $30 under the current Apmex bank wire offer, whatever that might be on any particular day. Anyone interested in taking the entire lot should email me at turdistheman at gmail dot com and I'll hook the two of you together.

About the Author

turd [at] tfmetalsreport [dot] com ()


Oct 10, 2012 - 11:15am


That is all.

Oct 10, 2012 - 11:16am

Hope it works today

First thing I thought of.

Oct 10, 2012 - 11:17am

immitation is flattery

or flagellation or something like that

Oct 10, 2012 - 11:17am



Three ain't bad.

Oct 10, 2012 - 11:17am



Oct 10, 2012 - 11:20am

The paper game

Don't pay attention to it. When it's time to sell, the demand and the focus will be on physical. If you're in the paper, your time window had better be measured in hours or minutes.

Expect volatility. All past hyperinflations had it and there were periods when the dying currency would roar back to life for a while before dying even more again.

When they lose control of the paper, you'll know it. Nobody here will have to tell you, except that you and I won't be surprised about it and the rest of the world out there, will.

Oct 10, 2012 - 11:25am


Yippee Edit: 7th... Geeze you folks are fast. Did you even read the post? :-)

Oct 10, 2012 - 11:26am
Oct 10, 2012 - 11:27am


"Did you even read the post?"


Oct 10, 2012 - 11:28am

Reading Material

Just started reading The Big Short by Michael Lewis last night. Couldn't put it down! Great book and thank you Turd for making me aware of it.

I want to be the next Scion Capital.


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