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 23, 2012 - 6:27pm

All about the Benjamins

Here is a thought about the pallets of new 100 dollar bills that have never seen the light of day. If the existing hundreds are in the hands of organized crime maybe the US plans to call in those bills and replace them with the new ones? Then they could "question" those with millions of dollars of undeclared wealth that hasn't been taxed. With a window to submit them before they are deemed to no longer be legal currency it could be a multi billion dollar tax grab.

Just a thought. Good action today in gold and silver. Is there no futures trading on Monday? Kitco shows "Gold Futures
NEW YORK FUTURES MARKET IS CLOSED opens in 61 hrs. 59 mins"

Good Canadian Football action this weekend. Vanier (university) is tonight and Grey Cup (CFL) is Sunday. Look for them on the internet if you are American (on TSN here in Canada). Hope Thanksgiving was good to everyone.


old tradesman
Nov 23, 2012 - 6:34pm

and I thought our turkey was big

29 lbs brined for 2 days, cooked in oven for all the drippings, than apple smoked with onion and garlic last hour of cooking. And yes local organic as are all our game

Nov 23, 2012 - 6:34pm

boy am I glad

the US election is over! Maybe that is why you guys have Thanksgiving late - every four years you have something to be truly grateful for. My brother (who used to be so great) once remarked that the cloven hoof is never so quickly revealed as when one is on the golf course - but for Americans it is the political season that brings out the horns. Now we can argue about real stuff, and maybe get somewhere. There are so many holes in my tongue it looks like an old sheet of stamps.

(or would, if boatman's oil of oregano wasn't such a godsend)

Nov 23, 2012 - 6:48pm

Patiently Waiting....

For the Turd.

Nov 23, 2012 - 6:50pm

Turkey vs. Eagle

From 1776, the Musical:

"The Egg" from the musical 1776

Nov 23, 2012 - 6:52pm

re Canadian Football

It is actually the 100th Grey Cup, a tribute to Canadians living in denial that our weather is dreadful, and to our stubbornness. Why 110 yards? Because we will not be American, dammit. Why do we use metric? Because we will not be American. Why are we Socialists? Because we will not be American. Why is Justin Beiber the headline act at the Grey Cup? Because we wish we were American! Why do we participate in the War on Drugs? um, I seem to have lost my focus ...

This is just so embarrassing. You Americans have nothing to be ashamed of. We even gave you Pamela Anderson. But you might have given us that haircut. It really is a wash.

maravich44 George Clooney
Nov 23, 2012 - 7:06pm
Nov 23, 2012 - 7:09pm

@Cononish1314, @The Death Ceiling

Hey, forget about having to pay VAT if you want to buy silver coins in the UK.

Buy them from

Imports from there (which sell VAT-free) into the UK do not get 20% VAT added by HMRC (that's customs, to you USA/Canada etc-types reading this, if you don't know) on their arrival. This is because they are legal tender (it's only so with coins) and there is a VAT-exemption code that GM always add to the customs declaration.

All purchases of silver coins will get to you without VAT being added. It's totally legal. Not a lot of people know about this, I've found.

Which raises the question of why VAT is added to silver coin sales from UK-based sellers of imported coins. These same coins are still legal tender, so the same rule should apply, surely?

But it doesn't, as you know.

I've seen letters that people have sent to HMRC questioning this. All replies are incredibly vague, nothing is clear, but they always end with something like "therefore VAT is payable on silver coins".

No, it isn't.

Another government scam? TPTB hate people knowing about the true value (as a store of wealth, it's a FIAT-killer) of silver (and gold, of course, but there's no VAT now on gold) so they'll fleece the sheep at any opportunity.

VAT is NOT payable on legal-tender silver coins. By law. That's why the VAT exemption code exists.

Buy your coins from GM and save yourself 20%.

Nov 23, 2012 - 7:14pm


Your point being??

If just a random rant, take a red pill and relax. Then come back with some constructive suggestions on how to proceed. Nobody ever said the world is a fair place, but it is, perhaps, more important to debate what to do about it?

Nov 23, 2012 - 7:15pm

Waiting for the Sun ☀

The Doors - Waiting for the sun

Nov 23, 2012 - 7:18pm

Who is/was Just In Beaver?

The Socialist comment may no longer be correct under the incumbent Socialist in chief of the United Corporatocracy??

Nov 23, 2012 - 7:18pm

It turns out we are faster, longer and wider ... well then

Canadian Football vs. Australian Rules

The Dilemma: Three football players—an American, a Canadian, and an Aussie—walk into a bar. Who has the worst limp?

People You Can Impress: manly sports enthusiasts in former British colonies

The Quick Trick: If the players don’t have padding, it’s Australian for football.

The Explanation:
Rather than rip off American football, the Canadian Football League actually started as modified English rugby, then borrowed heavily from its American counterpart until the two were almost identical. The first difference you’ll notice about Canadian football is the field. It’s huge—110 yards long (with two 50 yard lines and a center line), 65 yards wide, with end zones 20 yards deep.

Canadian play is similar to American football, with interesting differences. There are 12 players to a side. The game moves fast, as the play clock is only 20 seconds and you have to go ten yards in only three downs. The backfield can have unlimited motion before the snap, so you can have receivers and “slot backs” moving at once, even toward the line of scrimmage (so they can be at a full run when the ball is snapped). There’s an added way to score, too. On a kickoff, punt, or—get this—missed field goal, the receiving team must advance the ball out of the end zone or the kicking team gets a point (called a single, or rouge).


Read the full

btw, the Aussie's win, no contest.

Nov 23, 2012 - 7:28pm

@Katie Rose RE: Neutering criminals

I agree, this would likely help, however, enough of their behavior is purely psychological that I don't think simple neutering would solve it all. Men with low testosterone do become rather couch-potato-like, but still retain the desires of all men. If those psychological desires are strong enough, I don't think neutering is going to "fix" the criminal. They would be less aggresive, but may still act in a criminal manner.

For certain criminals, I suggest we supplement the neutering with a bullet to the brain. It's a sure cure for such criminal behavior. I have no sympathy for those who willfully commit sex crimes, especially against children. No punishment is too severe, in my opinion.

Nov 23, 2012 - 7:32pm

100 Dollar Bills

Could it be because the USD is becoming worthless? They would introduce a 500 bill if not for the laundering aspect now the domain of the EUR 500??

maravich44 George Clooney
Nov 23, 2012 - 7:41pm

america has...

a deep bench, and can bring these guys in on a moments notice.

Nov 23, 2012 - 7:47pm

What do the Banksters do now?

The move in PM's was clearly driven by an outlier move down in USD. If the move continues, things could get interesting as the December contract point approaches Tuesday? Wouldn't it be nice to see JPM get a haircut on all those new naked shorts??!

Nov 23, 2012 - 7:48pm

oh man, strong suit

yikes, Maravich. That is hard to Trump!

I was trying to be polite.

Nov 23, 2012 - 7:50pm

A Deep bench

To support its big butts??

Nov 23, 2012 - 7:51pm

New $100's

My guess would be that they'll be out next year on the Fed's 100th anniversary and lots of them will be released and in circulation at some point as the Treasury/Fed, banks, corporate America etc. start to open the spigots on some of that 'sat upon' cash.

A new credit/debt cycle is well under way imho. and they'll suck as many people in at ZIRP to 9.9% as much as they can by lowering the credit standards again. Without people spending like crazy and first time consumers (i.e.-our kids) going into debt the economy will remain stagnate.

Nov 23, 2012 - 8:18pm

I'll have a new post in the

I'll have a new post in the morning.

old tradesman pourty
Nov 23, 2012 - 8:32pm

@ katie rose o/t sorry but I was discusted

Tv breeds the very problem, I dont watch tv but thankgiving and all, had to whatch football. foot ball was a nice distraction but the commercials got my blood boiling, This commercial was beyond me not speaking my mind. Found out by searching that someone feels the same way? But as I read into it they give it a since of that it is ok.

Nov 23, 2012 - 8:35pm

Money, Banking and the Federal Reserve

Thomas Jefferson and Andrew Jackson understood "The Monster". But to most Americans today, "Federal Reserve" is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and business cycles that the Fed generates.

Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary documentary is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority.

Alan Greenspan was not, we're told, happy about this 1996 blockbuster. Watch it, and you'll understand why. This is economics and history as they are meant to be: fascinating, informative, and motivating. This movie is changing America.

Money, Banking and the Federal Reserve
القراع عصفور
Nov 23, 2012 - 8:36pm

i just have discovered another periodicity

Justin Bieber looks like George Michael did 20 years ago. and i'm old enough to remember, young enough to trust my memory:-) just glad these guys keep hitting me towards the bottom of my music wave function!!!

XTY - everything you ever need to know about sports, can be learned by watching old footage of the Green Bay Packers, under the leadership of Vince Lombardi:-)

also, our weather in WI is even worse than yours. its just that you get it first. thanks for sending the latest "love" :-)

Nov 23, 2012 - 8:53pm


That movie is playing well in Beijing.

maravich44 القراع عصفور
Nov 23, 2012 - 8:54pm

what in the hell.....

are we doing; drinkin and drivin on main? Pileated Woodpecker, have you parked your bike? We shall meet someday.

Nov 23, 2012 - 9:00pm

Richard Russell asks:

"Help, I'm alone. Where are my fellow newsletter writers: Stan Weinstein, Garfield Drew, Sir Harry Schultz, Marty Zweig, Chuck Almon, Bob Farrell? They all flew the coop while poor old Richard Russell is still carrying on. Maybe it's because the stock market has become impossible or irrational. I think at any given time, the stock market seems increasingly difficult to figure out.”

Personally speaking, I miss these guys. They were my mentors many years ago.

Questions go unanswered. Turd helps keep me calm. I look forward to that.

Nov 23, 2012 - 9:03pm


Please , do not post justin brieber pics , tfmetalsreport seemed like the few sites I can relax that I wont see this kind of bs while reading .thanks

The Death Ceiling
Nov 23, 2012 - 9:45pm


Cheers. I'd found in the past that I could still get Philharmonicas cheaper in Germany as the Guernsey Mint's mark-up was a little steep. But I see they are fractionally cheaper there now and Britannias are way lower, so thanks for the heads up.

Nov 23, 2012 - 9:58pm


LOL! I had to go back and find what I posted. My comment was based on my own conjecture that the monkeys were not working today and if Ag and Au were for a day to be freely traded, today is what it would look like.

Nov 23, 2012 - 10:06pm


It was a jump in the EUR. Unsustainable but even the monkeys can't manipulate the currency markets, they are just too big. IF the EUR rally holds for a few days, will JPM cover their new naked shorts before the December contract closes on Tuesday? Might be an interesting few days??

Prior post, ;-) only!!


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