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 22, 2012 - 8:57am

Today's Comedy from Rothschild and Goldman...

How to fix the banks, and what next?

Jeremy Paxman asks how the banks could be fixed, and what might be the next crisis to hit the financial industry.

With him were Sir Evelyn de Rothschild, of the famous banking family, Jon Moulton of Better Capital, and Jennifer Moses, former executive at Goldman Sachs who has also been director of Agent Provocateur and an adviser to Gordon Brown.

6 min interview here:

Nov 22, 2012 - 9:00am

Dyna mo hum/dismissals

i am not sure which way to be on this issue. we know that bengazi just doesn't add up. to say that we couldn't do anything before they were killed seems to imply that they knew how long it would be before they were going to be killed, (7 hours). this seems like an issue/question that i never heard on any media. " Would you have been able to rescue them if they could have held out for 10 or 12 or 16 hours? and what were your plans?" i do not think this will be swept under the rug. the kettle is on the burner.

sorry about the late reply i just couldn't get the page to load/refresh last night.

Nov 22, 2012 - 9:11am

Remember the WPA

they gave us the grassy knoll. 6th floor window is in the upper right.

Nov 22, 2012 - 9:12am

Happy Thanksgiving from the UK

Just wanted to wish it to Turd and all you US turdites from this side of the pond :-)

Nov 22, 2012 - 9:12am

Happy Thanksgiving from the UK

Just wanted to wish it to Turd and all you US turdites from this side of the pond :-)

Nov 22, 2012 - 9:21am

Happy Turkey Day

Enjoy this day with family and friends. Laugh lots and relax

Frank Caliendo Bush
SIlverbee jolidacrown
Nov 22, 2012 - 9:27am
Nov 22, 2012 - 10:01am

Happy Thanksgiving!

Video unavailable

Summary: Illustration shows a large turkey, a jug of alcohol, and a pie with their feet locked in stocks and a long line of pilgrims dancing around them.

Title: Thanksgiving Puck / L.M. Glackens.

Illus. in: Puck, v. 74, no. 1916 (1913 November 19), cover.

Nov 22, 2012 - 10:09am

SS America

A visual history of one ship. A metaphor for our country?

It's a long page . . . keep scrolling. Even the comments at the bottom are worthwhile.

Nov 22, 2012 - 10:17am

Even in thin market, we may

Even in thin market, we may see a move like yesterday in silver after /around 12 NYT.

If not, than Friday will have to do some catching up with EUR USD.

ballyale Mr. Fix
Nov 22, 2012 - 10:29am

That looks like a whole lot of wishful thinking.

So true, so true. I never listen to Krudlow.

I just had to get it out of my system.

Nov 22, 2012 - 10:35am

300,000 in gold ore


12 mason jars of what atb gold ore. Certainly not 'dust'.

Dyna mo hum
Nov 22, 2012 - 10:37am


All I know is one of the former Seals was painting an active mortar position with a hand held laser when he was killed by said mortar.. That act in its self made the former seal a target. I believe he heard a C130 gun ship above and thought help was on the way. Painting a mortar position with a laser for any length of time is suicide. Almost immediately after 2 admirals were reassigned. Did the brass send help? Was help ordered to stand down (noisy C130 over target)? The former seal most likely had a secure "sat phone" Conversations probably were recorded? The whole damn thing stinks to high heaven. What would I have done? My actions would have probably forced me into the unemployment line but with a clear conscience.

Nov 22, 2012 - 10:48am

Anyone read Harvey?

He is calling for a smack down in silver next week. At least he said they will try, how well they do, wait and see with contract expirations due.

I am still amazed they lowered margins on both gold and silver by a lot..

What do you think it means? doesnt make sense?

Nov 22, 2012 - 10:50am

Dyna mo hum/dismissals

for sure. my understanding is for a seal to 'paint' a target the laser needs to be synced to the weapons system. this implies that there were defense systems in place. i dont know if firing the military personnel will quiet this down. there are plenty in congress who will not sacrifice the military for politics. imo

ps STACK we are getting close to HEH

Nov 22, 2012 - 11:03am

Happy Thanksgiving To Everyone

May your day be blessed as you gather around those you love and remember those you love that are absent.

Come gather at our table.

Dyna mo hum Groaner
Nov 22, 2012 - 11:15am

Beat down next week?

Christmas sale = buying opportunity! Get as much as you can while you can!

Nov 22, 2012 - 11:21am

lower margins

Groaner -- A strategic move? Lower margins give them greater fire-power when they decide to take the prices down.

They can't do 5 increases in a week unless they have the headroom. When they lots of headroom, they can perform miracles disasters.

Nov 22, 2012 - 11:23am
So It Goes
Nov 22, 2012 - 11:26am


OK - I'll play.

1. Oppo BDP 103

2. Benchmark DAC1 HDR

3. ATI 6012

4. Linkwitz Labs Orion 3.4

5. Sony KDL55HX800 - for viewing

I am thankful this Thanksgiving.

Groaner FleetFeet
Nov 22, 2012 - 11:36am


Yeah,, they must have an Evil plan because they are Evil.. make it easier to smash with more shorts and increase margins to really start a waterfall event.. why else?

So It Goes
Nov 22, 2012 - 11:41am

One way to stack

One way to stack - would not be confiscated. Spot + 20%. And you get a free watch and heirloom piece.

Thankful today and keep stacking.

Nov 22, 2012 - 11:45am

Happy Thanksgiving from the UK

Nah, only joking.

Dyna mo hum
Nov 22, 2012 - 11:54am


Your former king or kings sent a bunch of pilgrims over here and just look at what they fathered! Is all that good work melting away into darkness? It seems that those who seek freedom their work is never ending. Thank you!

Big Buffalo
Nov 22, 2012 - 11:57am


Q: What sound does a turkey's phone make?
A: Wing! Wing!
Vernon Wormer
Nov 22, 2012 - 12:04pm

Happy Thanksgiving

I have a lot to be thankful for this holiday. My wife and I still have jobs, a roof over our heads, healthy and happy children, and this year my father beat cancer so he will be carving the turkey for another year. If the world holds together for another couple of years, we will have our farm land in a community we love. If TSHTF, we have a bug out place fully stocked and surrounded by like minded people. Thank you Turd for allowing us to play in your yard so to speak and all of the neighborhood kids out there that come here to play. This is by far the best online community around. If you are prepping, please remember to stock a few supplies for some of the people you have not met yet. Happy Thanksgiving!

Nov 22, 2012 - 12:14pm

Hilary Tripped??

The biggest insult in Islam is to throw shoes at someone.

Nov 22, 2012 - 12:17pm

Dyna mo hum

Nothing to do with me .

Nov 22, 2012 - 12:30pm

Thanks to this board, for everything!

So much to be thankful for, even with waterfall declines, attacks on the price if our shiny, stress on all sides, and battles of all types: despite it all, I'm thankful I can come here for good music videos, lively and thought-provoking metals analysis, and a fellow-traveller I've never met who calls himself Turd holding it all together. thanks for this virtual oasis.

Nov 22, 2012 - 12:51pm

Thankful for...


I am thankful for the TURD community, for enabling us to gather here. What a terrific group of commenters - all with their own individual point of view.

As for Thanksgiving in the Mammoth household... my Mother passed away in April. I encouraged my sister - who was the executor of her estate - to bring her 1950's-era silverware set to one of those 'We buy your Gold & Silver!' outfits just to see what they would pay. Of course, this was an insulting figure, so I offered to buy the Silver set at spot.

Today, we will break out Mom's Silverware and use it for Thanksgiving dinner - what a fitting way to honor & remember a family member who is no longer here. (And years from now, this set of silverware will make a wonder wedding gift for our daughter, who is presently in first grade.)

Now - log off of your computer and spend the day with your loved ones.



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