Patiently Waiting

Wed, Nov 21, 2012 - 10:27am

I'm expecting a big December and an historic 2013. First things first, though, as we wait out December option expiration and the concurrent "Iron Dome" capping.

So, we sit. And wait. And wait some more. Who knows, maybe your Local Coin Shop will offer some Black Friday premium discounts? If so, take him up on it. Keep stacking and accumulating as much, much fun lies ahead.

For now, it's all about capping and controlling price through December option expiration day next Tuesday. Here are the two, major forces in play:

  1. Open interest in the Dec12 call options is enormous. As "StevenBHorse" kindly pointed out for us yesterday, there are currently 61,523 open contracts between 1735 and 1800. As Ruprecht would say: That's a lot. Of particular interest to The Gold Cartel is the startling 32,537 calls at the $1800 level. I would venture a guess that most of these positions were opened back in late September as nearly everyone (including yours truly) felt assured that, with the onset of QE∞, gold would be somewhere north of $1800 by Thanksgiving. Considering that every dollar above $1800 means $3,250,000 in option payout, the October beatdown from $1795 to $1690 seems rather predictable in hindsight.
  2. Both gold and silver are currently trading above every single one of their moving averages except one...the critical 50-day. The 5-day and 10-day are important, don't get me wrong. And the 200-day will almost always provide predictable support or resistance. The 50-day, however, is the biggie. Having price above or below the 50-day is one of the major determining factors as to whether or not the momo-chasing, HFT algos will be in buy mode or sell mode. At this juncture, a move UP and through the 50-day MAs will provide the final impetus for rallies back to $35-36 in silver and $1800 in gold. As I type, the 50-day MA in the Dec12 gold contract is at $1743.30 and the 50-day in the Dec12 silver is at $33.24.

So, what happens the rest of today and Friday? Probably not much. Just more of the same. HFTs are trolling for stops to harvest on either side so we'll likely continue to see trading in a very tight range.

The only possibility for "fun" might come early next week. Recall how those who are short calls or puts are often manipulated and gamed ahead of option expiry. For next week, the most likely possibility would be a squeeze of those who are short the $1750 calls...if there are a significant amount...and it's impossible to tell. If this happens, though, we'd see a quick spike toward $1750, followed by a further rally through $1750 as those who are short the 1750 calls panic and are forced to buy a futures contract in order to hedge. After a move to $1755 or so, gold would then revert back toward $1740-45 with the sheep having been successfully shorn. The open interest at 1750 may not be sufficient enough for this happen but we'll see. Keep an eye out, anyway.

Here are two current charts. Outside of another "Swiss Stair" accumulation pattern in silver, there's not a lot going on. That will soon change.

And, finally, it's the day before the Thanksgiving holiday here in the U.S. This means it is once again time to reprint one of my favorite posts, "Absolute Advice For Relatives". I wrote this two years ago, right after the onset of QE2. Though we've yet to see the extreme price inflation I was expecting, there can be no argument that the advice is still solid. (I mean, seriously, have you done your Thanksgiving grocery shopping yet? Sheesh!!)

Happy Thanksgiving, everyone. Be sure to check back later today for a very important guest post update.


Absolute Advice For Relatives
If you're like The Turd, you will most likely get peppered tomorrow with questions from pseudo-intellectual relatives regarding the current world/market environment. Your over-educated yet under-informed cousin or brother-in-law will seek out your current "wisdom" on investing, politics, etc. He or she will then feign interest while you speak but you will feel certain that, in the end, they just don't "get it" as your absolute conviction overwhelms their status quo mindset. You could probably talk for hours about the failure of Keynesianism, Quantitative Easing, the criminal political class, the fallacy of TBTF, POMO and the PDs, the infallibility of gold, etc...but why even try? Your cousin's husband doesn't understand any of this anyway and your show of intellect will only make him feel threatened. He'll quickly tune you out and run off to the family room to watch the Cowboys.

So what do you talk about tomorrow when someone asks? What kind of simple advice can give someone to prepare them for what is certain to be a very challenging year ahead? I plan to dial it back a bit and talk about one thing...inflation. And not just any old, run-of-the mill 3% inflation but serious inflation. I'm talking 20-30% inflation. Milk to $5/gallon kind of stuff. That is what's coming and its a topic most folks can actually get their arms around. Even the fuzzy-headed new boyfriend of your divorcee sister understands inflation and he might even be able to understand why its coming if you explain it well. (This is a chance for you to show off some of your worldly knowledge, too.)

Most folks with a high school-level understanding of economics (this includes your Fed governors) only understand and recognize demand-pull inflation. This is the classic demand side, Phillips Curve inflation that says rising wages, employment and wealth cause economic expansion which leads to more money chasing a static amount of goods. New, excess demand "pulls" prices up and the result is price inflation. Pretty simple stuff. What is coming in 2011, however, is the forgotten beast of cost-push inflation. This type of price inflation is caused by producers and merchants being forced to pass along through higher prices the rising cost of inputs to their products. Consumers, particularly the lower-and-middle income, bear the brunt of the pain. Your income isn't rising to keep pace with rising expenses and you get squeezed. Hard. And its not luxury items that are going up in price, its the staples. Bread, milk, gasoline, clothes, eggs, meat...the basics that no one can realistically live without. It's going to hurt and 2011 is going to be a mean year.

Why will input costs go up? Simple, they are all dollar-dominated and with our Fed now engaging in their final policy option, "QE to Infinity", all dollar-dominated assets are going up in price. Significantly. Your crazy uncle Henry may never take your advice to sell his stocks and buy precious metals but he just might take your advice to stock up now on essentials, before the prices skyrocket. Tell him that if he's going out to buy a new pair of pants, he should buy two. Tell your sister that instead of just buying her kids' winter coats for this year, she should buy coats for next year, too. Tell your cousin that instead of buying groceries every week to, instead, buy a whole dressed-out cow and put it in the freezer along with all the other dried and canned goods she can store.

Still, most crazy relatives won't listen but at least, come next Thanksgiving, they'll remember that you were right. One down side, however. Because you'll end up being the only member of the family that will have prepared and, most likely, the only one with affordable food to eat, you'll probably have to host everyone at your house next Thanksgiving. Oh well, there's a cure for that, too. Wine. Lots and lots of wine. Keep a couple of good Pinots on reserve and you'll be able to handle just about anybody.

About the Author

turd [at] tfmetalsreport [dot] com ()


Nov 21, 2012 - 11:43am

I have stopped

trying to convince my sisters, they all have their heads in the sand, oh well, I will eventually enjoy the laugh.

Then I will help them.

Nov 21, 2012 - 11:43am

Gold and Silver Markets Are Quite Small

On A Small Battle Field, A Small Contingent of dedicated individuals can have an enormous impact.

Every Soldier knows this instinctively.

In reference to the impact that the Turd Army can have.

Nov 21, 2012 - 11:44am

greece must sell gold

longer term gold positive

Nov 21, 2012 - 11:46am


Oops double post

Nov 21, 2012 - 11:47am
Nov 21, 2012 - 11:48am

In the same boat

@ Carib .. I feel the same. Doesn't matter who got ahead in the race, what matters is who ultimately won. Keep the faith..keep stacking!

Nov 21, 2012 - 11:50am

I gave up trying to convince people to... uncle this summer said "man I wish I bought gold when you and your mom were buying it for $200 dollars an ounce" and that is about the closest I have come to convincing anyone in my family. And it took him ten years to realize I was right, only now he thinks the bubble is over and it has no more room to run. Most people are so clueless it hurts, and it double hurts when the uber clueless are blood related. In time, they will learn...unfortunately it will be much harder for them then for me. But I guess people like me fit into the "that's what family is for" group yes, I will help you when you need it but when that moment comes I am going to have my "told you so" moment and enjoy every minute of it. Happy thanksgiving!

Nov 21, 2012 - 11:52am

Re: Greece must sell gold

No problem. China is on the phone placing its order for 100% of it.

The real fun starts when Italy needs to sell its gold.

Nov 21, 2012 - 11:52am


1) medicare 2013 premiums for low income folks up 5%-more for hi income with the add on "penalty" for success.

2) breakpoint for 2013 social security wages up 3.7%.

3) Social security 2013 benefit payment up 1.7%

where is the disconnect here. And Seniors are paying dearly with low interest rates. No more safety of bonds and nice income.

When the govt screws with economy this is what we get.

Next up after QE to infinity? No more debt ceiling-goes hand in hand.

we are in a whole lot of trouble.

The realization of the true value of gold and silver comes soon. Then we see the spectacular bull market really start.

Still-insofar as buying physical--at age 66 I have sufficient amount and need fiat to live on (anybody know of widespread use of real money to pay bills) . So not much more to buy.

Nov 21, 2012 - 11:54am

While Shopping Last Week

I ran across 4 people (strangers) who knows what is going on, all in the same day at separate times. A few years ago that would have been unheard of. Anyway my point is more and more people are waking up.

People will always be placed in your life at the exact moment in time that they need to be, this is not by chance but by Divine Providence. So keep your ears open and your eyes on the prize, run the good race, fight the good fight.....

Just don't give up on someone, it's just not their time yet.........keep planting those seeds...

Fred Hayek
Nov 21, 2012 - 11:56am

Sometimes a bit of the socratic method works

I've gotten through to one friend but he's a pretty libertarian minded sort of conservative so he was totally susceptible to the idea that the gov't is casually screwing over almost every american. The other inroad I made was with my mother. She's a pretty diehard lefty but not so in the bag that she won't acknowledge new information. I tried not to be overbearing but I kept up a pretty steady drumbeat of questions, "Where's the good economic news that justifies this stock market move?" and some queries about what the dollar price of gold and silver would have to be to match the inflation adjusted numbers from 1980. She was shocked when it worked out that silver would have to be over $300 per ounce. I think I finally got her over the edge to making a purchase when I put it in terms that the government is putting things on sale. It's a 90% off sale on silver right now. But some people think this is the normal price or that it's even going to go down from here. Why not buy it while it's on sale before the special is over?

I can't claim this is magical. I haven't gotten anywhere with a bunch of other folks but sometimes making people go at least part of the distance to coming up with the answer to a question is more effective than laying answers on them.

Happy Thanksgiving to Turd and all the Turdites!

Mr. Fix
Nov 21, 2012 - 11:56am

Not very thankful......

I for one am not at all looking forward to tomorrow. I gave up several years ago trying to convince family members of anything. As the years have gone by, it seems like more and more subjects have become “off-limits”. Between sibling rivalries, many multiple divorces, widely divergent politics, even a bunch of different religious beliefs, my wife and I came to this conclusion just last night that we really had nothing to talk about at all. Remind me next year to make other plans. As for family reunions, my family sucks to the point where I never want to reunite with any of them. I do not discuss gold and silver with anyone, and I refuse to mention Obama or the economy, or anything else having to do with politics, or even future trends. My plan is to show up, stuff my face, and go home. What could go wrong? Thanks Turd

Nov 21, 2012 - 12:01pm

Re: Unfortunately, after expressing Turds advice 2 years ago...

Unfortunately your problem is that you give a sh-t what other people think of you. That affliction usually dissipates in males after age 35. If not, you will have a serious problem.

My suggestion is that you walk in the mall on Friday and watch people buying "stuff and things" that will be worthless within 3 seconds to 3 years. It is good therapy for me when I have self doubt about my mission.

Of course, after you get past the age of 35 you also realize that your health is more important than your stack.

Nov 21, 2012 - 12:03pm

Guest post up with Andy M.

Guest post up with Andy M.

Nov 21, 2012 - 12:04pm

Re: While shopping last week

Nana, I have noticed that to! Many times I have been walking around my work plant and I will pass by two people walking together and as I walk by I will hear things like....this bernanke what now they are just going to print money....over half of my neighborhood is in hear about this bullshit bill obama pa..... just little bits and pieces of conversations that would tell me that people are starting to realize that things ARE NOT okay but they don't know why or what to do about it quite yet...all in good time, Rome didn't collapse overnight

Nov 21, 2012 - 12:07pm


Clarke and Dawe - Quantitative Easing
Nov 21, 2012 - 12:08pm

Central banks still stacking...

The central bank of Brazil is still stacking even though Berwacke claims gold isn't important...they haven't bought since 2005 and added 1.7 tons of shiny recently...I wonder if they took physical delivery? I planted the precious metals seed in my moms ear about four years ago...she made her first purchase recently...slowly but surely the illusion is fading away...nothing has changed...central bankers will be proven wrong again no matter how many degrees they have, no matter how many theories they understand, no matter if every damn central bank in this world act in unison, the game will end and the people that prepared will have the best odds of survival...whatever that means...good luck turdites and may we be proven right sooner than later

Nov 21, 2012 - 12:10pm

Got poo?

These are in my living room. New philly will be here by Christmas. Yeah tax credit.

Nov 21, 2012 - 12:10pm

Isn't Germany going to bid for the Greek and Italian gold ?

They're paying for the bailout .... they got stiffed by the US, Brit and Franco Bankos ? They bought all those junk bonds ? Merkel is a "Wuss Puss" ! Monedas 1929 Comedy Jihad Missin' Maggie More Every Day World Tour

Nov 21, 2012 - 12:13pm

On my discover card homepage... says "I want a discover personal loan to: Pay down debt"

I am sorry, but this just goes to show you how settled in people are with the debt is money ideals. This is one of the dumbest statement I have ever read. Let me go into debt to pay my debt.


Nov 21, 2012 - 12:14pm
Nov 21, 2012 - 12:15pm

Why Cyber War Against Israel Could Get Much Worse

We could mention the coming Cyber War as depicted on 60 minutes that would probably wipe out everyone's digital bank accounts. Just tell them to imagine when they log into their online bank account and all they see is a big 0 or worse the site is down permanently. The physical bank branches then take a permanent holiday with angry mobs lined up outside them.


Nov 21, 2012 - 12:15pm

Its pretty hard to try and

Its pretty hard to try and convince any potential stacker newbies while we're in the middle of these longwinded corrections. Still, I gave up long ago. One of my best freinds who I've tried several times to convert recently called me and said he'd finally cashed in his IRA. I was relieved. Then his next words were "I put it into a money market". :facepalm, sigh:

Even though gold has almost doubled since I tried to get this guy to park JUST SOME of his money into PMs, he wouldn't and still won't do it. I told him its not too late and that gold and silver will double and triple from here AT A MINIMUM...he won't do it. I've sent him so many email links to get him started. Done with that.

I figure when gold reaches the $5k level he'll start thinking seriously about doing it. Then he still won't.

Nov 21, 2012 - 12:16pm

Ben Bernanke Confronted on Secret Bailouts

By Luke Rudkowski

Ben Bernanke Confronted on Secret Federal Reserve Bailouts
Davebowski musicmaker99
Nov 21, 2012 - 12:19pm


"China’s industrial demand for silver has usually grown at an annual 5 percent to 7 percent in the past few years, Gao said. Demand declined in the first nine months before stabilizing and showing some recovery since the start of November, he said."

So demand has returned again this month in China whilst at the same time the CCI has also recovered.

I've noticed a lot of unclear information from the mainstream media recently.

Nov 21, 2012 - 12:20pm


We have lots to be thankful for, would you prefer this?

Nov 21, 2012 - 12:20pm

Re: Not very thankful......

People become so obsessed with price movements in the metals that they forget to be thankful merely about having the intelligence, awareness and money to buy the metals.

The Watchman
Nov 21, 2012 - 12:21pm

Wonder Where Those 6.3 Million Ounces Are Going?

Beginning on November 12th, about 6.3 million ounces of silver have been withdrawn from SLV.

That is alot of Silver-destination China?

Nov 21, 2012 - 12:23pm

Give Thanks for Low Food Prices as They’ll Rise Next Year

Even bloomberg is getting on the ball about the coming rise in food prices.


Nov 21, 2012 - 12:24pm

A zionists dream come true

Now the wholesale slaughter starts. Killing ain't just for turkeys.

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