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 - 2:21pm

Silvio Gesell-Natural Economic Order-suggest to read the preface

Proudhon asked: Why are we short of houses, machinery and ships ? And he also gave the correct answer: Because money limits the building of them. Or, to use his own words: "Because money is a sentinel posted at the entrance to the markets, with orders to let no one pass. Money, you imagine, is the key that opens the gates of the market (by which term is meant the exchange of products), that is not true-money is the bolt that bars them."

Nov 22, 2012 - 2:58pm

re SS America

Fleetfeet - those were great pictures. I was a lucky kid and got to cross the Atlantic three times by ship, the first time when I was six. We took the Empress of Canada from Montreal. Those pictures totally jogged my memory (I was six a long time ago) and I went and looked for a photo:

Postcard of Empress of Canada passing the Cloch Lighthouse on the Clyde.

Thanks for the post and Happy (Damn Yankee Imperialist) Thanksgiving!

Nov 22, 2012 - 3:06pm

giving thanks

Yes Xty, I made that crossing also in one of those ships, a long time ago.

and today I give thanks with all of you for this wonderful gathering place here in Turdtown, for we, the people ,

Nov 22, 2012 - 3:21pm

Just dropping in

to wish each and everyone of you comrades a very Happy Thanksgiving. cool

Thankful for this wonderful community and for grand Turd and his family and all they do as well.

Dagney Taggart
Nov 22, 2012 - 3:49pm

Open Interest

First off, Happy Thanksgiving to my American friends.

While I'm here, there is something that's of moderate concern: The huge Open Interest. Has anybody done a current analysis? Could this open interest be favoring the long side or is it some sort of twisted suicide pact by the big bullion banks, "trickle-down wealth" to PM holders?

History says we see a coordinated attack on prices forthcoming. But how/why would that happen considering the Comex is supposedly bleeding from all holes, the Dollar has to die to manage the US debt, and the US has a looming debt showdown?

Is anybody confused by these near-term signs? We already know what the long-term outcome is so save any long-term remarks for the children. I'm speaking near-term.

Nov 22, 2012 - 3:51pm

I am thankful

for the fact that I can see what is coming, and am therefore able to do what I can to "prepare accordingly". I am thankful that everyone here sees reality clearly and is doing the same, to the best of their abilities.

I am thankful for people like Turd, Ned, Santa, Max, Bill, Jim, Rick, and many other brilliant and talented people who take their time to try and let people know what is going on. There will be many, many ordinary folks who are in their debt, when all is said and done.

I am thankful for Au and Ag. And my family. In that order (kidding).

I am thankful for my friends here- those I have met in person, and those I know through this wonderful website. Your comradeship is the most valued thing of all I get from this place.

That about does it, time for turkey. All the best, everyone.

Bongo Jim
Nov 22, 2012 - 3:55pm

The SS United States

Sister ship of SS America is looking to be saved...

Nov 22, 2012 - 5:14pm

Keep stacking...

We're definitely f*cked.

A proportional graphic that should be self-explanatory. This is from 2009. The area at the bottom is a fair bit bigger now.

Nov 22, 2012 - 5:43pm

Ships & XTY . . .

Glad the pictures triggered your memory. That was/is some beautiful ship you sailed on.

And thanks for reminding me that a great number of people on this board are not living in "our country." I apologize for being so USA-centric.

What's ridiculously funny and ironic is that at this moment, I am on a different continent applying for a permanent residency visa in a country I've never visited before. Wish me luck!

Nov 22, 2012 - 5:49pm
Nov 22, 2012 - 6:10pm

Tax reform

tax expenditures deductions

This fantastic chart from Credit Suisse's Neal Soss is the answer. It shows the top 20 biggest "Tax Expenditures" which cost the government over $900 billion in the 2012 fiscal year.

Read more:

Nov 22, 2012 - 6:22pm

That Stupid

glass ceiling, is looking a lot like plexiglass. The glass around hockey rinks should be this tough! Unflipping believable.

Nov 22, 2012 - 6:31pm

4.2 tonnes of coins

Bundesbank Sold Gold "Just for Commemorative Coins", Silver Industrial Demand Forecast to Rebound in 2013

THE U.S. DOLLAR gold price traded close to $1730 an ounce during Thursday morning's London session, holding onto gains made a day earlier, as European stock markets edged higher, with US markets closed today for Thanksgiving.

"We believe that the German Bundesbank's sale of 4.2 tonnes of gold was intended solely for producing commemorative coins," says today's commodities note from Commerzbank, referring to International Monetary Fund figures published Wednesday showing October's buying and selling of gold by central banks.

"By its own account, the Bundesbank keeps 7 tonnes of gold ready each year for the production of coins, gold which it sells to Germany's Federal Ministry of Finance. In October 2011, the Bundesbank had sold 4.7 tonnes of gold for this purpose."

Silver hovered below $33.50 an ounce this morning, like gold holding gains from Wednesday, as oil prices ticked lower and copped gained.

Industrial demand for silver is forecast to rebound next year following an estimated 6% drop in 2012, according to a report by precious metals consultancy Thomson Reuters GFMS published by the Silver Institute.

"This will owe much to a new peak in China," the report says, "while a jump in the Indian market will see the country post its second highest total on record."

Industrial demand accounted for more than half of total silver demand last year, with that share projected to grow to around 60% in 2014, according to GFMS.


Nov 22, 2012 - 7:09pm

UK News

There is serious flooding going on in the UK. Check out the link to the vid at the bottom to see and hear what people are saying. This is unprecedented.
2 1/2 min clip.

Flood warnings as more rains batter UK

Heavy rain and winds reported as high as 100mph are battering parts of the UK, causing floods and disrupting travel.

Homes and businesses were evacuated and hundreds have been left without power.

More than 80 flood warnings are in place, mainly in south-west England and the Midlands, with nearly 200 flood alerts across England and Wales

Nov 22, 2012 - 7:21pm

re USA-centric, and ships, and off topic blathering

I love you guys, in all seriousness. We all have national blinkers to some extent, but if I needed rescuing I would take a Navy Seal or a Marine any day. Nice to be a Canadian - we can rib you and live under your shelter. It is easy to adopt moral relativism, but I see much good in our neighbour to the south. You can't spell, but that's just sort of cute. And we invented hockey, and have excellent bacon, which is hard to argue against. But you at least speak of freedom and that is unfortunately rare.

On a lighter note, I also sailed on the Stefan Batory:

It was a Polish liner, and this was before the Iron Curtain came down. There were Polish passengers we never saw on lower decks. I remember one item from the menu that just didn't translate well, and stood out as a first world moment, "Noodles and Lard". On the way home from England (I was 16) we gained an hour every other night - on a ten day trip. But the crew were so interesting (except for perpetually hitting on me) - young and had never been out of Poland before - they could see that there was something else out there, and wanted it, but didn't know what it was. I really felt for them. And then the passengers who weren't allowed to mingle. Eye-opening.

Nov 22, 2012 - 7:48pm


Your "noodles and lard" was probably "smalec" - a very popular (and yummy) polish spread.,22.html

In the example above, made with plain ol' pork lard, but bacon is usually used (I think they left out a key ingredient there..!)

I'm a brit-born pole wink.

Nov 22, 2012 - 7:58pm

noodles and lard

Yes, and we eat spaghetti carbonara all the time, which is essentially noodles with bacon. I also had my first martini. What a gross disappointment that was. But the young lad who was determined to smoke his ounce before we made it to England on the way out was a great surprise. He was off to the American school in Paris. I was the child of professors off for a sabbatical in London. I realize this is all off topic, but somehow the American holiday seems to give us the opportunity.

Just to be on topic, I keep getting spidey senses about Citibank. Hard to ever find news, they are in deep trouble, the rats are leaving the ship (oh, that should have been my segue) and one long weekend, down they will go. Just a feeling, but we are due for a feeding frenzy.

Nov 22, 2012 - 8:00pm


i could care less what my relatives think of least i am not part of the sheep herd.when obama nationalizes all there pensions then we shall see.GOD help us all.

Nov 22, 2012 - 8:02pm

thanks to all

who make coming here a worthwhile experience

Nov 22, 2012 - 8:08pm

tryptophan overdose


Nov 22, 2012 - 8:22pm

Well I may be late

but I'd like to wish all of you living South of the 49th parallel and our friends in Alaska and Hawaii a happy Thanksgiving. I hope that by now most of you are well and truly satiated.

For me it feels like a Sunday with 3 NFL games on tap. For those who are going to sit back and watch the Patriots-Jets (probably includes Turd himself) I think they are giving the Jets too many (7) points and that over 48 is a better bet.

In other news SLW gained 0.66% in Toronto so I think PM trading will be fairly flat tomorrow with a possible smash next week.

maravich44 George Clooney
Nov 22, 2012 - 9:04pm

off topic...

Grateful Dead - Wharf Rat 7-7-89
silver slug
Nov 22, 2012 - 9:13pm

Tv commercial

Such a heart warm commercial by JP Morgan. If everyone could only see through the lies!

Nov 22, 2012 - 9:27pm

Nov 22, 2012 - 9:27pm

seems like an off topic night

Open mic (mike? speaking of spelling) and there are about 5 of us here.

Here is one of my favourite sailing songs, speaking of ships. Written be Stephen Stills, but somehow performed best by Jimmy Buffett:

Jimmy Buffett - Southern Cross

(and hello M44)

Nov 22, 2012 - 9:30pm
maravich44 George Clooney
Nov 22, 2012 - 9:33pm
Nov 22, 2012 - 9:41pm

New prez memo

Is Obama concerned “insiders” are planning a coup d’état? Presidential Memorandum 11-21-12

Presidential Memorandum — National Insider Threat Policy and Minimum Standards for Executive Branch Insider Threat Programs

SUBJECT: National Insider Threat Policy and Minimum Standards for Executive Branch Insider Threat Programs

This Presidential Memorandum transmits the National Insider Threat Policy and Minimum Standards for Executive Branch Insider Threat Programs (Minimum Standards) to provide direction and guidance to promote the development of effective insider threat programs within departments and agencies to deter, detect, and mitigate actions by employees who may represent a threat to national security. These threats encompass potential espionage, violent acts against the Government or the Nation, and unauthorized disclosure of classified information, including the vast amounts of classified data available on interconnected United States Government computer networks and systems.

The Minimum Standards provide departments and agencies with the minimum elements necessary to establish effective insider threat programs. These elements include the capability to gather, integrate, and centrally analyze and respond to key threat-related information; monitor employee use of classified networks; provide the workforce with insider threat awareness training; and protect the civil liberties and privacy of all personnel.

The resulting insider threat capabilities will strengthen the protection of classified information across the executive branch and reinforce our defenses against both adversaries and insiders who misuse their access and endanger our national security.



ATB authentic

Nov 22, 2012 - 9:46pm


World War 3 Scenario: The Day the World Ended

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Part 2 (can't embed)

Nov 22, 2012 - 9:53pm

Wooden ships

i couldn't find a video with the creaking tall ship that my mind pictures...but hey it is all good


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