The Tempest

Wed, Oct 17, 2012 - 11:36am

"What is past is prologue", -- Billy Dee Shakespeare in 1611.

One of the advantages of writing these blogs day after day after day after day and composing volumes and volumes and volumes of observations regarding the endless and seemingly-infinite level of Fed/Cartel manipulation of the metals markets is this: After a while, you start to notice a few things. For example, patterns that repeat themselves.

MrsF has designs on a trip to the pumpkin patch this morning so, in the immortal words of Inigo Montoya. "Let me explain. No, there is too much. Let me sum up"...

He's been mostly dead all day

January 2011

  • QE2 announced 7 weeks earlier.
  • $600B over approximately seven months, roughly $85B/month from 12/10 to 6/11.
  • Gold price initially rallies from $1322 a few days before the announcement to $1423 one week later.
  • Gold subsequently trades as high as $1431 in December and finishes the year at $1421. In fact, at the close of trading on 12/31/10, we celebrated a truly rare achievement. Gold closed at an alltime high on the daily, weekly, monthly and yearly charts. Needless to say, I was a little excited:
  • But then momentum began to stall in January.
  • The raids began on the Sunday Globex session of 1/2/12 and continued the entire first week of the new year:
  • On Friday, 1/7/12, we got a BLSBS report that "unexpectedly" showed a 0.4% drop in the unemployment rate:
  • The economic news "suddenly" began to improve: &
  • And just three, short weeks later, there was desperation in the air: Price had fallen all the way back to pre-QE2 levels and was threatening to head lower.
  • Even open interest in gold had declined. On 11/2/10, before the announcement of QE2, the total gold OI was 618,381. By 1/18/11, it had fallen to 587,832.
  • It was OVER. QE2 was a blessing, in fact in might even be ended early because the economy was already improving.
  • QE continued and those who saw through the fog of MOPE and SPIN continued to exchange fiat for metal.
  • Silver traded through the 30s in March and, in April, a panic developed in silver as The Forces of Darkness were forced to hurriedly cover shorts in fear of a commercial signal failure. Price soared to near $50 by 4/29/11.
  • Though silver was forcibly "corrected" over the summer, gold continued to rally as QE2 ended on schedule in June of 2011.
  • The U.S. government reached a "fiscal cliff" in August of 2011 as the contentious debt ceiling negotiations rattled markets worldwide.
  • Standard & Poor's downgraded the debt rating of the U.S. on 8/5/11 and this set off The Great Cartel Panic. Over the next four weeks, gold rallied from $1665 to $1920 as bullion banks rushed to cover their ill-begotten paper short positions.
  • So, let's stop here and sum up. Yes, gold went on to be forcibly corrected, too, and price has yet to fully recover. That's not the point. THE POINT IS THIS: From the desperation, MOPE and SPIN lows of January 2011, both metals went on historic rallies. Gold rallied from a late January low of $1308, all the way to an early-September high of $1920. This is a gain of 47%. The rally in silver was even more incredible. From a late January low of $26.50, silver climbed to $49.52 in late April. That's 87%!!

    Now, let's take a moment and contrast this with present day. Shall we?

    October 2012

    • QE∞ announced four weeks ago.
    • Though initially pegged at just $40B/month in "non-sterilized" QE, this number will most assuredly grow when Operation Twist ends later this year.
    • Operation Twist provides about $45B/month in long-term rate support for The Fed so, to fully replace it when it ends, The Fed will likely increase the size of their "non-sterilized" QE to $85B/month. Hmmm...where have we seen that number before?
    • Gold price initially rallies from $1690-1720 in the days before the QE∞ announcement to $1790 one week later.
    • Gold even traded as high as $1798 on 10/4/12, just three weeks after the announcement.
    • On Friday, 10/5/12, we got a BLSBS report that unexpectedly showed a 0.3% drop in the unemployment rate. In the days immediately following, we also saw sudden improvement in consumer confidence, initial unemployment claims and housing starts.
    • The upward momentum in the metals has stalled and prices have fallen. After peaking at $1798, gold has since traded as low as $1738. Silver is down from $35.45 to $32.57. This is compared to a pre-QE∞ level of $32.51 on 9/12/12.
    • Gold open interest has retraced, as well. On 9/12/12, total gold OI stood at 464,281. By 10/4/12, it had grown to 492,479 but, by Monday of this week, it had fallen back to 463,350.

    And here we are. So what happens next?

    • Unlike QE2, this latest program has no stated end date. It is open-ended and the amount of non-sterilized, freshly-printed fiat will soon reach as high as $85B/month.
    • The U.S is once again staring at a fiscal cliff. After the elections, Congress will return for contentious debates regarding the looming, massive tax increases of 1/1/13 as well as once again extending the debt ceiling. Could another credit rating downgrade be on the way?
    • Physical demand for precious metal continues unabated. In fact, global investors and central banks have even less confidence in Western fiat currency than they had back in early 2011. Back then, there was still hope that the current system would recover. Now, in the face of overwhelming debt both in the U.S. and Europe, the movement to convert fiat reserves into hard assets is accelerating.

    I would imagine that, at this point, you are beginning to see the rationale behind this exercise. If not, let me state this clearly for you: JUST LIKE JANUARY 2011, YOU ARE BEING PRESENTED WITH AN EXTRAORDINARY OPPORTUNITY TO BUY AND ACCUMULATE GOLD AND SILVER AT PRICE LEVELS THAT WILL SOON BE SEEN AS BARGAINS. Do not be misled by the SPIN and the MOPE.

    Precious metal prices will soon recover and resume their UPtrends. If price rallies in a similar fashion to 2011, we should expect the following:

    Gold today is $1750. Add 47% over the next seven months and you get $2572 by May of 2013.

    Silver today is $33.00. Add 87% and you get a 2013 rally that sees price surpass $60.

    Of course, simple extrapolation is never accurate and the numbers above should not be used as a forecast or a prediction. Too many variables can intercede. It's always possible that prices may rally but not reach the same percentage gains as 2011. Conversely, though, prices may greatly exceed the gains of 2011 as physical demand may not relent as QE continues to infinity. It's anyone's guess. What is clear, however, is that YOU ARE BEING PRESENTED WITH AN EXTRAORDINARY OPPORTUNITY TO BUY AND ACCUMULATE GOLD AND SILVER AT PRICE LEVELS THAT WILL SOON BE SEEN AS BARGAINS.

    Observe. Think. Act. Prepare.

    What is past is prologue.


    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Oct 17, 2012 - 11:38am

    top 10 ????

    had to try :)

    Oct 17, 2012 - 11:39am



    edit, I guess not 

    Oct 17, 2012 - 11:40am


    tempest is such an underused word!

    Dr G
    Oct 17, 2012 - 11:42am

    Turd, a wonderful post that

    Turd, a wonderful post that is spot-on. Well laid-out facts and a great conclusion. Thank you!

    Hoping to learn
    Oct 17, 2012 - 11:43am

    When will start

    I'm tired of waiting for the rocket to go.

    I keep stacking and wonder when, I'm getting me

    Mr. Fix
    Oct 17, 2012 - 11:47am
    Oct 17, 2012 - 11:49am

    Turd just scared the crap out of the shorts!

    Metals are shooting up!

    Keep up the good work

    Oct 17, 2012 - 11:50am

    when will we see the uptrend

    when will we see the uptrend start? before xmas?

    Oct 17, 2012 - 11:52am

    Observe. Think. Act.

    Observe. Think. Act. Prepare.

    Four very good words. I would add "advise". Just as you have been doing for many here. ;)

    Oct 17, 2012 - 11:52am

    Cup & Handle Forming for Gold

    Cup and handle will be confirmed with a maximum retrace of 20% to $1730, but not more than 50% at $1665.

    The upside minimum on the breakout above $1810 will be to $2050 and possibly short term to $2300.

    Why $1810? This is where the shorts have their stops placed, and will forced to cover.

    This situation with gold is now so tightly coiled, considering the lack of physical supply, that the time is growing very short indeed for those that want to add to their positions. Turd's post is right on. All aboard the train - or get left behind, chasing a quickly rising price.

    The EE are having a helluva time, trying to keep a cap on not only gold, but silver to until after the election.

    Oct 17, 2012 - 11:52am


    Just look at a gold price chart for the last 5 years...

    I started when it was $535, and it keeps on climbing, in spite of the push downs and manipulation. The best analogy I have heard is "it's like a beach ball being held under water". Be patient, stand firm, and keep prepping in other areas as well. I think we will see some real fireworks after the election.... These fireworks may be good for gold investors, but I think they will be anything but good for a whole lot of people. Keep the faith and come back to Turd's place frequently. Good luck!

    Oct 17, 2012 - 11:53am

    go Wynton!

    I do not care if he/it/they is/are some spotty kid sitting in mums basement in his undies.

    Silver is climbing.


    Edit: Or USD falling?

    Oct 17, 2012 - 11:55am

    Extrordinary Opportunity

     I guess i should just say thank you. My mamma taught me to have gratitude.

    Do I have to have patience too? I look forward to a major uptrend

    Oct 17, 2012 - 11:56am
    Daedalus Mugged
    Oct 17, 2012 - 11:57am

    Fundamentals vs TA Patterns


    You make a compelling case on the historical price pattern similarities between the early parts of QE2 and QE3+ to draw inferences on where prices go. Any chance of you doing a similar encyclopedic review of the way to think about the fundamental side of things? 

    I think it would reinforce similar points and confidence in moves from what I have seen elsewhere, but would be interested in your take. Thank you for all you do.


    cashbash Hoping to learn
    Oct 17, 2012 - 11:57am

    It's not a rocket.

    Rockets run out of gas quick, we want an airplane with a slow ascent.

    Oct 17, 2012 - 11:59am

    Teach you are spot on!

    don't you sleep easy at night, part of me can't believe all of the blind peeps out there.


    Oct 17, 2012 - 12:01pm

    hammerman brother

    bobby gets on da bus... now dis gold and silver train leaving... wake up and stop believin big bizz and da gubmint gonna help you...

    Oct 17, 2012 - 12:03pm

    Very encouraging

    Brilliant analysis, sir.

    As of Monday (10/15), the federal debt subject to limit is only $242 billion below the statutory limit. So the debt limit will likely have to be raised before the end of 2012.

    Oct 17, 2012 - 12:04pm
    Oct 17, 2012 - 12:09pm

    Why is Gold Going To The Moon?

    Check out this short video (just 5 minutes or so) that was posted on youtube this past March.

    Oct 17, 2012 - 12:10pm

    @ Turd

    Good for you! You're noticing these patterns. AND you seem to be coming around to my prediction of intermediate-term price projections for the next run up-and-down. May of 13, huh? Where did I hear that before? Go look at the 10-year chart on silver over at kitco, and you'll see how each peak up and back down is fairly uniform, seemingly growing exponentially in size of the amounts and volatility (though the volatility you see is probably roughly the same, percentage-wise). Notice how it's about 2-3 years apart.

    If it doesn't surpass $50 by May of 13, it ought to do it the following year in June-July at the latest.

    @ 4406pack - I believe that it's possible that we might get out of the $35 range, but not until the end of the year at the earliest, more likely during late winter in Jan-March.

    Oct 17, 2012 - 12:20pm


    Kudos to Ivars for helping dig into this. I appreciate your response to what i've posted. 

    The Basel 3 regs (and all surrounding bank info) is very obscure to me when referencing golds value vs cash. I PERSONALLY THINK THIS IS BY DESIGN.. but maybe i'm paranoid, who knows. What i do know is determining the answer is critical.... Ivars posted this in the last thread and it is worth re-posting. I think all Turdites should help get to the bottom of this.... it could absolutely be a game-changer.

    Ivars posted:

    LCH - gold as collateral has been accepted only on August 28, 2012 ( 3 years after CME in the US, but CME Europe starts to accept gold as collateral also only in August 2012) :

    Company Circular No: LCH.Clearnet Ltd Circular No 3189
    Date: 21 August 2012
    To: All Clearing Members
    Gold as Collateral Acceptable for Margin Cover Purposes

    From 28 August 2012 unallocated Gold (Loco London) will be accepted by LCH.Clearnet Limited (LCH.Clearnet) as collateral for margin cover purposes. 

    This addition to acceptable margin collateral will be subject to the following criteria;

    • Available for members clearing OTC precious metals forwards (LCH EnClear Precious Metals division) or precious metals contracts on the Hong Kong Mercantile Exchange. Acceptable to cover margin requirements for all markets cleared on both House and ‘Segregated’ omnibus Client accounts.

    • Daily valuation, with an initial haircut of 14% applied.

    • Concentration limits will be applied as follows;

      • lodgement not to represent more than 40% of total margin requirement of participating members across all products, including for contingent variation margin (but not realised variation margin), applied at a legal entity sub account level.
      • maximum lodgement limit per member group of USD 200m (currently approximately 130,000 troy ounces).

    • LCH.Clearnet will make an accommodation charge of 20 basis points (bps) on utilised collateral amounts based upon member defined usage ordering rules. Costs incurred from the custodian will be passed on to clearing members on a pro rata basis and based on the value of the collateral lodged. 

    • Members who are eligible and wish to lodge gold for margin cover purposes will be required to submit an executed Gold as collateral ‘charge’ document for the ‘House’ and/or ‘Client’ accounts together with supporting paperwork. Please contact the Membership Team to request the relevant legal documentation needed for approval to lodge gold as collateral.

    • Procedures and account details can be found in at the link below prior to the live date and thereafter in Section 4 – Collateral, of the LCH.Clearnet Ltd Rulebook.

    • For further details of acceptable margin collateral please see the following link, which will be updated to reflect the addition of Gold Bullion from 28 August 2012.

    Oct 17, 2012 - 12:24pm

    silver stocks...

    ...having a viagra moment! slw hit $40.00 other s-stocks getting a bid too.

    Prize Fighter
    Oct 17, 2012 - 12:25pm

    Received this email from eFoodsDirect today....

    Price Increase Happens October 22!

    Dear xxxxxxx,

    We are sharing this information with you, our Preferred Customer, so you can get ahead of the coming price increase.

    We are in the final stage of negotiating our expiring contracts with our suppliers and it's no surprise that prices are increasing - significantly. The devastating drought of 2012 is directly impacting the contract price of our food ingredients for next year.

    As our current contracts expire (established on last year's prices) and our inventory of raw materials is depleted, we have no choice but to increase prices. A price increase will happen on Monday October 22. Get ahead of the increase and add to or build your supply now.

    We go to great lengths sourcing only the best ingredients - no genetically modified food, no added hydrogenated oil or trans fats, all natural and 100% vegetarian (using a clean-sourced textured vegetable protein). You can rest assured you are getting the best long-term storable food available. And the flavor is unbeatable!

    The good news: As a preferred customer we are letting you know in advance that our prices are going up on Monday October 22nd . Giving you a chance to stock up and freeze the cost of your food at our current prices.

    eFoodsDirect is committed to providing you with the best tasting and best quality food on the planet.

    Steve Shenk



    P.S. eFoodsDirect has always stayed ahead of increasing prices by contracting directly with farmers and suppliers for raw materials well in advance of rising costs and shortages. Due to expiring contracts we have no choice but to raise prices on October 22nd .

    Oct 17, 2012 - 12:30pm

    I feel good today!!!!

    Added 50 units of 100GM silver bullion!!!! 

    Oct 17, 2012 - 12:30pm

    silver stocks...

    Mine have taken bad quality viagra as it seems. surprise

    Oct 17, 2012 - 12:31pm


    My response yesterday to your request was vague.........i knew it was vague when i posted it, but it was all i could reference at the time......... that's the frustration! they do not make it clear as to gold's risk weighting vs cash. At least nothing i could find or cerebrally interpret, not that i'm some expert, far from it. I understand your response about liquidity, but if that's the case....why in God's name would they put A+ Bonds above gold in liquidity standards? They are both equally liquid! No? Makes no sense, unless of course your intent is to smear gold's role in finance.

    So, i'm dead serious when i beg other Turdites to help us determine the correct answer to this question.

    This is real rabbit hole sh-t...

    Oct 17, 2012 - 12:35pm

    Rinse and Repeat...

    Turds Comment: "For example, patterns that repeat themselves." reminded me of a chart from a few days ago that I made... it's ugly compare to other charts many posters make but thought it is worth sharing. Of course we have to wait to see if it will play out similar to 2009 but patience is a virtue many on this site seem to have in spades.

    The Doc
    Oct 17, 2012 - 12:38pm

    excellent post TF, will put a

    excellent post TF, will put a link up to it on SD. Can't agree more. Jim Willie seems to agree as well- his latest hat trick letter is up and he's expecting a move here quickly to $1900.


    Become a gold member and subscribe to Turd's Vault


    Donate  Shop

    Get Your Subscriber Benefits

    Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

    Key Economic Events Week of 1/14

    1/15 8:30 am ET Producer Price Index
    1/15 8:30 am ET Empire State Mfg. Index
    1/16 8:30 am ET Retail Sales
    1/16 8:30 am ET Import Price Index
    1/17 8:30 am ET Housing Starts
    1/17 8:30 am ET Philly Fed
    1/18 9:15 am ET Capacity Utilization and Ind. Prod.

    Key Economic Events Week of 1/7

    1/7 10:00 ET ISM Services Index
    1/7 10:00 ET Factory Orders
    1/9 2:00 ET December FOMC minutes 
    1/10 Speeches from CGP, Goons Bullard and Evans
    1/11 8:30 ET CPI

    Key Economic Events Week of 12/31

    1/2 9:45 am ET Markit Manu PMI
    1/3 10:00 am ET ISM Manu Index
    1/4 8:30 am ET BLSBS
    1/4 9:45 am ET Markit Serv PMI

    Recent Comments

    by NW VIEW, Jan 19, 2019 - 11:59pm
    by Mickey, Jan 19, 2019 - 11:46pm
    by NW VIEW, Jan 19, 2019 - 11:21pm
    by mavens, Jan 19, 2019 - 11:08pm
    by DeaconBenjamin, Jan 19, 2019 - 10:15pm