Back From Break

Fri, Dec 14, 2012 - 10:09am

You may have noticed that I was gone all day yesterday. Eleven, full hours with no phone and no internet and it WAS GREAT! So, what did I miss? Silver is all the way back to....where it was a month ago. Oh, no! The sky is falling!!

Seriously. I haven't even bothered to look over the comments to the previous thread as I'm sure they're full of despondent traders and gleeful trolls. Whatever. As I said yesterday, no one is going to stop me from doing what I do because I know, in the long term, that I am correct. Global central banks are going to print and print in their efforts to manage their way out of this debt crisis. They will fail and, with them, fiat currency will fail, too. In the end, a new international trade settlement system will emerge with a gold-backed unit of exchange at its heart. The only protection that I have against this wealth destruction is my stash of physical metal, which currently resides in a heavily-guarded vault at the bottom of the Marianas Trench.

So what do you do today? You buy the freaking dip, that's what you do. If The Bullion Bank Cartel is going to insist upon giving us all more time to accumulate metal at deeply-discounted prices, I strongly urge you to take them up on it. Lord knows the Chinese, the Russians, the Indians and the Turks are doing so. You should be doing the same. Namely, convert your rapidly-devaluing dollar reserves into hard assets, primarily gold and silver. Forget the goons in the media and the water-carrying shills for The Cartel, gold and silver are NOT in bubbles. That is complete nonsense! Since when does an asset that is currently owned by just 1% of global investors considered a "bubble"? Since The Cartel shills in the media declared it so, that's when. Ridiculous.

And while, we're at it...How come no one besides ole Turd can dare say that QE is all about funding the federal deficit? The "dots" are all there yet no one seems to want be able to make the connection. Countless articles have been written about The Fed essentially owning the entire Treasury issuance past 7 years. The fiscal 2013 deficit is already tracking 20% ahead of 2012 and on pace for $1.7T and suddenly the Fed announces that they're supplying $85B/month ($1T+/yr) in new money...yet no one can see that this is direct monetization of the deficit and debt? It's surreal. It's the real life equivalent of the old fable about the emperor having no clothes. I look around and its as if no one else can see what I see. Bizarre.

Oh, well, I for one choose NOT to bury my head in the sand and hope for the best. I will use my God-given observation and reasoning skills and think for myself, instead. This leads me to the financial protection of gold and silver and nothing The Cartels does can shake me from my positions.

To that end, yesterday was a classic. The lack of follow-through buying on the latest QE announcement emboldened The Bad Guys to raid price early Wednesday evening. Once they tripped some stops by moving price below 1705, it was on. The raid was particularly grotesque in silver where the OI remains dangerously high for JPM. In fact, on Wednesday, the total silver OI surged once again to 144,066. This long-standing and growing open interest undoubtedly frightens The Big Shorts and they knew a raid must be initiated. Thus, the pounding in gold wasn't nearly as substantial as the pounding silver took yesterday. I wait with great interest for yesterday's OI totals. They should be released, as usual, by about 2:00 EST today. In Harvey parlance, how many silver leaves were shaken from the tree yesterday? I can't wait to find out.

Along with the OI numbers, we'll also get another CoT later today. It won't be nearly as dramatic as last week simply because the reporting period saw very small changes in both OI and price. Nonetheless, you never know how the internals may change from week-to-week so be sure to check back later today. I'll have another podcast to release and we'll surely be discussing this latest CoT.

And, finally, just a few more words about price as we head into the final days of 2012. Let's summarize a few things:

  1. Though the inaction behind-the-scenes is infuriating, I still expect vindication for all of us in 2013.
  2. I had thought that gold and silver would finish the year at or near the top of their 2012 ranges with gold near 1800 and silver near 35. This is certainly looking less likely but I would remind all of the trolls that there are still quite a few trading days left in the year.
  3. And as recently as a week ago I laid out why I felt December would be a solid month. Namely, given the overriding fundamentals, there is no reason to think that the metals would close 2012 by trending downward toward the bottom of the ranges. This makes no sense. If you look at 2012 as a year of price consolidation during a time of little unsterilized Fed action, price should be trending higher into 2013, a year which is quite obviously going to see substantial unsterilized Fed action.

In 2012, Gold has traded in a range roughly bounded by 1550 at the bottom and 1800 at the top. The median line for this range is 1675. Note that the recent selloff has not broken price down below this level and I do not expect any further selling to breach this level, either. Instead, I expect gold to rally over the remainder of the year. Will me make it to 1780-1800? Who knows? Does it matter? Really? With all that's set to happen in 2013, a year-end close of 1730 vs 1780 matters very little.

The same could be said for silver. For 2012, it has also been rangebound in a trade between 26 and 36, with a median line of 31. Again, given the fiat currency situation for 2013, the continuance of extremely tight physical supplies...and...other factors..., why would we expect silver to break down through $31 and head toward the low end of the range? Exactly. There is no reason to expect this and, therefore, I don't. Silver should/will continue to consolidate here and finish the year somewhere between 33 and 35.'s on. 2013 is going to be a doozy.

So, relax or, better yet, do what the LTs say to do: Chillax. This is a combination of "chill" and "relax". Take some time away like I did yesterday. Enjoy the season and search for joy in things unrelated to money and finance. Be at peace knowing that you are doing the right thing.

As I mentioned above, please check back later today or tomorrow for another exciting TFMR podcast as well as some commentary on the CoT.

Have a great day and a great weekend!


About the Author

turd [at] tfmetalsreport [dot] com ()


Dec 14, 2012 - 10:50am

QE and the drop in PMs right after.

Everyone posits that with new QE then that increases the money supply and that, therefore, it dilutes the Dollar. Thus, the PM's must rise, only right after any new QE, mostly doesn't. Why is this?

Let's take a look at what QE really is? It is the Fed buying Bank bonds at full value, when they are worth about 30% of their original price. Though, it doesn't change their mark to "Fed" value, it does free up a huge amount of cash that was tied up in those mortgages.

Guess where that money could have gone. It wasn't into creating new loans and expanding the economy. My guess is that it was getting out of long equities and/or shorting the PM's and PM equities.

It then takes a number of weeks for this to consolidate on the downside before resuming the bull market in PM's.

FWIW, just my guess. It's just that I haven't heard this thesis on the board.


Dec 14, 2012 - 10:52am


Whenever QE infinity (I can't see the sideways-8 infinity symbol on my keyboard) was announced and silver went up 5% or whatever I was jubilant, and went out and bought my father a new dining table and chairs and gave him a thousand bucks out of my savings account as I though we were hitting $40+ for sure.

Is there any, ANY chance that if I write to santa he'll refund me for the dining set and money?

Dec 14, 2012 - 10:56am


bet some goes into pockets of those running the banks for a job well done

Dec 14, 2012 - 10:57am

"Why defend the $35.00 line so hard?"

i seem to remember some noise (from the wynter benton crew?) some time back that if silver stayed above $36.00 for a certain number of days, it would trigger some ugly derivative consequences for jpm. if there was anything to that, $35 may be a first line of defense for $36. ...or maybe the derivative threshold may have moved down in the interim?

since this line of speculation is based on wynter benton, it might be best to keep a grain or two of salt on hand.

Nigel Black
Dec 14, 2012 - 10:58am


You should have asked Santa 5 weeks, 6 days ago (when you joined) that question.

Turd - you have so many new people who have joined recently and it is great to see them participate in our discussions. I am curious, however, why they've all decided to join the site and come out now?

Dec 14, 2012 - 11:00am

Better Late Than Never


My bride and I were so intrigued by your recipe (posted 12/3/2012) that we made our first batch a couple of days ago. OMG! There are no words to describe the wonder of your concoction. We saved a couple of jars and gave the rest away as Christmas gifts. You just can't beat putting two favorite things in the same jar. Thanks again for the suggestion. Merry Christmas to all. In closing, I have been focusing lately on my blessings and trying to put the worries and frustrations at arms length. It helps.



Just A Regular Guy
Dec 14, 2012 - 11:04am

From KWN

Hey boys and girls,

Obviously I am bullish on the metals (like a fair few of you). I listened to the Steve Leeb interview on KWN a few weeks back and did some follow up on the "Homesteak" mine in Dakota (as owned my Mr.George Hearst - please someone post a Deadwood clip! ).

Check it out


I am bullish on the miners too obviously. Anyway take care boys and girls!


Dec 14, 2012 - 11:06am

Every Once in Awhile

The Fundamentals are a good thing to bring to the top.

And No I do not Sell Precious Metals

  1. No purely fiat currency in all of human history

has ever survived…. EVER

2. The average life span of a purely fiat currency is between 10 and 30 years.

3. The U.S. Dollar has been a purely fiat currency since August 15th 1971…..41 Years.

And Fundamental 2.

Dec 14, 2012 - 11:07am

@ tyberious re $35

Dan Norcini reckons there isn't much resistance between $35 and the low forties. Couple that with the fuel in place for the mother of all short squeezes, and you get the picture. Alistair Macleod also recently discussed the exceptional short interest in silver, that could get things 'disorderly to the upside' if triggered.

The problem with a silver surge of course, would be the risk of inspiring its bigger brother to surge too.

Dec 14, 2012 - 11:09am

BBC thinks we should keep our old socks

This is off topic, but worth a mention, I think.

There was a story on the BBC News website a few days ago, regarding silver in clothes. The story was basically about whether silver posed any risk to humans when it was ‘washed’ into the water supply. That wasn’t the interesting part though. Right at the end of the piece was the following comment …

“Silver is rare - Some estimates suggest that our global resources may be depleted within 30 years.

It makes recycling silver a smart thing to do.”

I know the 30 year depletion estimate will be contentious here in Turdville, but look at the first three words of the quote … ‘Silver is rare’.

It was the first time that I had seen MSM pointing out that ‘there aint that much of it left’.

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