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 - 12:30pm

To our American friends

Time to go outside & do some gardening since it's a wonderful - but most unusual for Nov - sunny day here in southern Ontario.

Happy Thanksgiving to all our American friends.

Nov 21, 2012 - 12:32pm

To our canadian friends

Happy thanksgiving to you as well! Tomorrow is going to be even nicer!

Nov 21, 2012 - 12:36pm

Que Sera

I'm thankful that I was awakened a long time ago, friends and family not so much. Really not at all. Oh well, the time to try and talk sense to them is over, it's quiet time now, no more talking or suggesting, kind of like the calm before the storm. After that? well...

Doris Day - Que Sera Sera
Nov 21, 2012 - 12:37pm

Planting Seeds - Convincing Others to Stack

...nice to read how the members of the Turd community try to spread the wisdom of stacking.

I've carried around a Morgan Silver Dollar in my pocket and showed it to friends and work colleagues. At holiday get-togethers I take it out and show it to the children - they are always impressed by the size & weight of a silver dollar! And it NEVER fails - when you lay a dollar bill on the table next to the Silver Dollar and ask the little ones which one they would prefer to have - guess which one they choose 100% of the time?

This last trick is a good way to 'plant the seed' in the impressionable minds of those who will be in charge in a few decades...might make a difference if it isn't too late by then.

The Green Manalishi
Nov 21, 2012 - 12:38pm

Latest from Mike Malony

Hunt brothers sacrificed to save the US dollar says Mike Maloney
Davebowski The Watchman
Nov 21, 2012 - 12:38pm

@The Watchman

I've thought that myself as the GLD is increasing it's holdings! I've wondered that if the markets are tight perhaps it's going to Sprott, he tells all when there's been a delay for delivery and they could do without those statements I'm sure!

The Watchman
Nov 21, 2012 - 12:40pm
Nigel Black
Nov 21, 2012 - 12:47pm
BagOfGold punchbowl
Nov 21, 2012 - 12:50pm

Happy Thanksgiving to everyone in the US...

& please be's dangerous out there!!!...

Bag Of Gold
Nov 21, 2012 - 12:50pm

My sister in the jewlry biz gets it

I have been ridiculed a lot( gold $2000 WTF?), some listened maybe, not one of my friends took action in physical I believe. Now when asked about my precious with that smirk I simply state I'm doing fine around 10% per year, they act surprised. I have a worn out peace dollar, you can barely see the impression, I pull from my wallet and tell them the value is $30, they do not comprehend at first and say suddenly oh it's because it's made of silver! Yeah silver...People around here think coins have value only for numismatic...

Irksome Nigel Black
Nov 21, 2012 - 12:51pm

re: Nice Chart!

yeah, I was watching live on NetDania and was shocked. It was a very sudden spike, quickly beaten down a bit, but it was shocking how fast it rose with no news that I can see.

I like those kind of shocks... ;)

Nov 21, 2012 - 12:54pm

Silver open interest

Over 150k now, highest since 08/2010. This is not going to be pretty.

Nov 21, 2012 - 12:56pm
Nov 21, 2012 - 12:56pm

Break out!

Common lets get going!

Nov 21, 2012 - 12:59pm

Gold and the Yen

Often we see stronger gold on a stronger yen ... but now we have the opposite as the yen is in the middle (or early stages to be more specific) of an implosion. The yen has gone from 77.5 at Oct 1, to 79.5 on Nov 12 to 82.45 right now. Get ready for some swings as the delicate balance is unraveling. We can already see this with silver today.

Nov 21, 2012 - 1:03pm

Sprint for 33.50

Go, go, go!

Nov 21, 2012 - 1:06pm

Happy Thanksgiving

Happy Thanksgiving to Turd and everyone in Turdville. Thanks for all the great info throughout the year. Sorry if I loose my head on occasion, after all my name is Robespierre LOL.

Italian and Scotch Irish, some combo, what do you expect. Anyway have a great day everyone!!!!!

Nov 21, 2012 - 1:11pm

Ok, tomorrow GSR will be even

Ok, tomorrow GSR will be even beter (down).

Nov 21, 2012 - 1:32pm

Days like today...

...make me so happy knowing that I have bought silver at $5, $12, $15, $18, $22, $26, ....

Oh my god silver is so volatile I am never gonna make any money, they took it down another dollar, wah wah wah ~sarc~

Stacking is definitely the only way to go

Nov 21, 2012 - 1:57pm
Nov 21, 2012 - 2:04pm

Almost 4 years ago, I took

Almost 4 years ago, I took the time to individually discuss to some of my family and friends about the EE and their plans for a new world order and the process it would take to achieve that. (Fractional banking, market manipulation,Federal Reserve, 911, GMO food, etc.) I did not get anyone convinced but the seed was planted. EVERYONE did know that I own physical PMs.

My batting average was 0% then.

Today, I can count more than a dozen that has fully realized the scheme! Amazing thing is some of them have learned about this through others.

Also, while you are prepping for the inevitable collapse, live your live like you would as if nothing is going to happen. Your friends and family members will judge you by your behavior to see if you are a nut job. I still run my business even though it has slowed down quite a bit, take vacations with family when possible, party with friends, (football, poker) and laugh more. I only bring it up to them when they ask.

My batting average is now .300 over the years. Point is folks are just starting to put things together. Just hang in there and keep things in balance. Enjoy life as each day is a blessing!

Nov 21, 2012 - 2:06pm

Thanksgiving with my great aunt (100 years old)

5 years ago when I started stacking I talked about it with her, and she remember taking "some" of their gold coins to the bank for cash. They were farmers, so they probably didn't have too many to begin with.

She also remembers the "beer garden" where they would drink during the Prohibition. If you were born in 1912, you would have seen a lot.

BTW, she drinks a beer a day and plays Euchre to stay sharp.

Nov 21, 2012 - 2:06pm

Before advocating gold, silver...

Regarding that turkey dinner family gathering, or the casual meeting on the city streets... before introducing peeps to the EE, TPTB, Fed creatures, false flags, fiat debasement, gold and silver, be sure you really know who you're talking to.

Best get some sunglasses too.

"They Live" - Truth Sunglasses
Nov 21, 2012 - 2:20pm

Studying the inverted sphere....

I don't believe that no one wants to know!

My favourite (sp.= Br. Colony dweller) Thanksgiving Song that some may benefit from while enduring a quest to save some souls

Kris Kristofferson Lyrics- To Beat the Devil

It is my belief you will rise from darkness and defeat those who now struggle to hide the light.

Thank you, America. Please heal.

A Northern Admirer.

Jason Foster
Nov 21, 2012 - 2:25pm

About time

for another MFing Global?

Big Buffalo
Nov 21, 2012 - 2:46pm

Just stacked me one is these.


Ultra Crimson Carry II

Gold Buffalo
Nov 21, 2012 - 2:47pm

Are We in Denial?

More Silver Doom and Gloom from Erik Swarts. Anybody follow this guy? He has been spot on since the blow-off top of April/May 2011. If he is correct there is much more pain to come.

Nov 21, 2012 - 3:03pm


LOL, Thanks for the laugh!

I mean for bartering later on, keep stocking up now before the prices go up. Those Items will be in big demand......

thurd aye Nana
Nov 21, 2012 - 3:05pm

I suggest you don't use baby

I suggest you don't use baby wipes instead of toilet paper.It just clogs up the system,costing millions extra to clear. FYI. :O)) Old phone book pages would be better than nothing.

Nov 21, 2012 - 3:07pm

Federal Reserve Banksters will Never Raise Interest Rates

The federal reserve banksters will NEVER raise interest rates or allow them to go up. That would blow up the entire banking system and the USA government up with it.

They will keep printing money until we get a big jump in inflation from 2% straight to 8 or 10%, like Jim Rickards just said here today:

I will add that if inflation ever goes up beyond these levels to say TRIPLE DIGIT INFLATION, the banksters will simply impose a new international currency regime like SDR on the people. Folks must understand in this scenario all their existing saved dollars will be rendered worthless.

They will not tolerate hyperinflation either, as this would also end their grip on power. It's better for them just to wipe out all savers either through a cyber war or issuing a new currency.


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