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 15, 2012 - 12:33pm


I don't pretend to understand the inner workings of the entire capitalist system, with its almost infinite financing possibilities through derivatives. Over a quadrillion dollars of derivatives exist, which are based on assets sold at a certain value. Those assets are now worth much less than initial value. The rules were changed so that these values could be "marked to expected value when we sell them" as opposed to "marked to market." Here is a very simple example of the fraud that is rampant:

It would be like if you bought a house for $500,000 with a $400,000 mortgage. Then, like we have seen, the value of the house goes to $325,000. However, you go to your bank and tell them you want a home-equity loan for $80,000 because according to your estimate, when you sell it it'll be worth $500,000 therefore you're good for it. And, they do it!!

This is how the Fed allows banks to value all their assets, and to exchange them for T-bonds. The Fed is taking stuff worth a few cents on the dollar from the banks, and pretending it is worth 100 cents on the dollar, or more if they need to. They then give the bank new T-bills to add to their reserves, so they can create more money to lend and still follow "the rules."

And, that is the "conservative" crap they're pulling.

In a debt-based system, wherein the money is all someone else's debt, it absolutely requires constant growth, so that new debt is big enough to service all existing debt. When things go in reverse, we get what's happening today.

That is why QE is so important. It must happen. It will happen. If not, all banks will fail, and the entire financial system will collapse. It may anyway, but without all the efforts, including rampant fraud, it definitely will collapse.

Dec 15, 2012 - 12:12pm

According to MSM, the event is all wrapped up . . .

The shooter was a lone gunman.

The shooter carried an assault rifle and two 9mm semis.

The shooter was a loner.

The shooter chose a "gun free" zone.

The shooter killed himself.

Some witnesses say there were others involved, and initially reported that way.

Later, the offical report washes out references to others.

There is no attempt to see if it was more than single, crazy man with guns.

It is immediately reported that indeed, the shooter acted alone, and a back-story provided that matches the meme now accepted by the public for a typical shooter.

Nobody verifies all this; all taken at the word.

Same exact formula as the shooter at WI temple, except the type of weapon.

Similar formula in most other shootings of the type.

I'm getting tired of watching this same old plot being played out on a periodic basis, across the U.S. in the most shocking ways possible.

Dec 15, 2012 - 12:09pm

"Igitur qui desiderat pacem, praeparet bellum."

...therefore, let the one who desires peace prepare for war.

the ancient romans knew that if you were well armed and prepared to fight, it was less likely that you would have to fight.

if you are defenseless, and even advertise that you are defenseless, it is very likely that anybody looking for a victim will choose you over someone who might put up a fight.

is it any wonder that we have school shootings? how did "going postal" enter the language? do you think there may be some correlation with schools and post offices being "gun free zones?" even with signs prominently posted advertising them as such?

imagine the next maniac (drug induced or otherwise) planning a shooting outrage. is he going to choose a place where he might expect someone to return fire? ...or is he going to choose a "gun free zone?" remember, we're talking about a maniac, not a moron.

Dec 15, 2012 - 12:01pm

Byzantium and ancientmoney

Thank you very much for your replies. They have cleared up bond pricing and selling mechanics for me.

Would one or both of you be able to help me with understanding how or if QE adds to the money supply through the fractional reserve mechanism? Or is this money just replacing bad assets on the bank balance sheet that were already fractionalized and thus can't be used further?

Would either of you have an opinion on this article by David Galland?

About halfway down he explains how the ESF is involved in controlling both ends of the bond curve through involvement in the IR swaps and I can't get my mind around it.

I've been studying this stuff for about a year and a half now and when I think I am beginning to understand it more layers of the onion are exposed. At what point will I be able to say I have a sufficient amount of knowledge to help those around me understand the dangers in the system?

I emailed Jim Sinclair with some of my questions and he replied that he doubts if anybody truly understands the complexity of the system. Yikes.

Dec 15, 2012 - 11:41am

Red Dawn Redux

Premise of Red Dawn, the movie, is that kids with guns protect the USA from violent takeover. Original movie produced in 1984, ironically. Liberal mag, Mother Jones tracked and mapped mass shootings since 1982. Who was VP of the USA then? None other than the former head of the CIA. Who was the shooter of POTUS, Ronald Reagan? John Hinckley. Who was the "troubled" shooter connected to through powerful family? The VP, former head of CIA. Which org started the MK Ultra project? CIA. Why are school children always chosen? Shock value, like Operation Gladio. Which country has highest use of SSRI pharma meds for children, meds designed in Connecticut? USA. Which Connecticut university has ties to CIA AND Skull & Bones AND most recent POTUS are alums? Yale. How many shooters appear disoriented and drugged and always receive light sentences in these horrible mass shootings of mostly young people? Almost all of them.

I learned a lot from my research for a work of historical faction called The Guns of Dallas (Amazon), through a former "Company" man. Connect the dots and the agenda becomes very, very clear. Nothing the PTB do surprises me. Shocks me, yes, surprise me, No.


Dec 15, 2012 - 11:41am


Looks like we had some rant symmetry there. Nice.

Dec 15, 2012 - 11:40am


Cyrillic initials of the old Soviet Union .... or .... CNN's Piers Morgan discussion group format .... three Commies and one Patriot .... shouting match ! Monedas 1929 Comedy Jihad Imported English Media Shit Head Alert World Tour

Dec 15, 2012 - 11:38am

JPM silver trouble

@ Sneakdoggiedog

HOWEVER, I have huge issue with his assessment about JPM's short position in silver, particularly when there is discussion of a silver market reset or re-price based on the Cartel being over extended.

(1)Let's assume that JPM has a concentrated silver short position in the amount that has been stated on this Board. So what? How does that signify that JPM's position is in trouble? Why would any reasonable investor not believe that this concentrated short is not hedged? If you believe in the ability of algos and large players to sweep the market and manipulate the price (which I do), then it is obvious to me that JPM would set up their Book to take advantage of weak hands.

Why wouldn't they use derivatives (especially spreads) to completely offset that short? And why wouldn't they allow a squeeze at a time of their choosing (ala 2010) to suck in weak momentum traders to fleece them later when they step back onto the price?

The missing piece for me has always been that we don't have any real insight into JPM's Book. And until we do, then all this crap about JPM being over leveraged or at risk or whatever lacks credibility, in my opinion.

The solution is position limits in the market.

So this talk about JPM's Book being in trouble, to me, is rubbish. They manipulate the price to make money. Period. And they are good at it. But I suspect the majority of this Board doesn't understand the depths of their hedged positions. I also think that Blythe is smart enough to have risk management controls. That means hedging. Lastly, the silver market is a pimple on an elephant's butt in terms of its size relative to their balance sheet. That they could be in trouble is a laugh to me.

I believe that there are the factors that contribute to JPM being in a hazardous position.

1. Supposedly they inherited a great deal of shorts from Bear sterns when they went under, and thus the baton was passed from the last manipulator to JPM. Also this. Further, I am completely convinced that they are using their weakness as a strength, clubbing people over the head with it constantly (waterfall declines), aka rinse and repeat.

2. The solution is position limits in the market. Agreed. That became even more obvious when banks lobbied the courts not to enforce the new position limits after the CFTC passed them by a narrow margin.

3. I have always assumed that JPM will win in the end by flipping their shorts, or removing them, or even declaring force majeure and then settling in worthless green paper. They are tbtf, and thus they will win, no matter what happens, as we have learned with UBS this week. Jim Sinclair's opinion.

4. If we were to change your question from 'silver' to 'xyz derivative' would you still feel that they are invulnerable? I think that all the banks are 3 bad trades from disaster on that front. (Note the london whale interest rate swap disaster for an example of how profitable can descend into calamity right quick.)

Edit 1: CFTC position limits article, Ted butler revelation

Edit 2: Sinclair, grammar.

Dec 15, 2012 - 11:37am

Why? What happened in Libya?

I will enter the in-law family Christmas celebration today, and be surrounded by choked up red-eyed sheeple upset about yesterday's shootings.

I will bite my tongue in between chewing on whiskey melted ice cubes.

After a few rounds of ice cubes I'll say something like, "Yeah, I'm horrified and my heart aches for everyone affected. But my heart aches even more for the people in Libya."

The loudest bleater will ask, "Why, what happened in Libya?"

And I shall say, "WE, as members of NATO, killed about 30,000 people there."

She will look stunned and confused. I will remind her that Canadian taxpayers are directly responsible for those deaths, and that we should mind our own business instead of calling for changes to the US Constitution... look in the mirror instead of CNN. Then, it will occur to me that she isn't really much of a tax payer anyway, and I'll resume melting ice.

Amazing how the person with the genuine conscience comes off looking like an asshole.

Wish me luck Turdville. I'm goin' in!

... note to self: in addition to not talking about PM's with the zombies, don't call them mass murderers (who cares about Libya anyway?). Don't talk about the hockey lockout... nor the teacher strike... or the wind farms... or the fact that our mayor billed his son's wedding to the federal government. Or the debt.. cripes, not the debt. They'll all be talking about the Walking Dead... perhaps I should bone up on that stuff a bit. Hey! Common ground - we're all fascinated by zombies!

Dec 15, 2012 - 11:35am

Ebay Silver

It's hard to use eBay as a gauge of the disconnect between physical / paper price, or of the well drying up, because the sellers' fees are responsible for part of those inflated selling prices. Also, if free shipping is offered, that tends to drive the selling price up. Lots of variables to juggle, track, and control for.

A better gauge, IMO, is the total cost over spot (including premium and shipping) charged by the major online dealers who ship immediately, and the variety of common products they currently have in stock at any price.

I still remember the fall of 2008, when I first began stacking, and was shocked at the disconnect between spot and physical prices. And the waiting time required to get physical metal at all. Much worse than what we see today.

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Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
4/21 10:00 ET Existing home sales
4/23 8:30 ET Weekly jobless claims
4/23 9:45 ET Markit flash PMIs
4/24 8:30 ET Durable Goods

Key Economic Events Week of 4/6

4/8 2:00 ET March FOMC minutes
4/9 8:30 ET Producer Price Index
4/10 8:30 ET Consumer Price Index

Key Economic Events Week of 3/30

3/31 9:45 ET Chicago PMI
4/1 8:15 ET ADP Employment
4/1 9:45 ET Markit manu PMI
4/1 10:00 ET ISM manu PMI
4/2 10:00 ET Factory Orders
4/3 8:30 ET BLSBS
4/3 9:45 ET Market service PMI
4/3 10:00 ET ISM service PMI

Key Economic Events Week of 3/23

3/24 9:45 ET Markit flash PMIs
3/25 8:30 ET Durable Goods
3/26 8:30 ET Weekly jobless claims
3/27 8:30 ET Personal Inc and Spending

Key Economic Events Week of 3/9

(as if these actually matter)
3/11 8:30 ET CPI
3/12 8:30 ET weekly jobless claims
3/12 8:30 ET PPI
3/13 8:30 ET Import Price Index

Key Economic Events Week of 3/2

3/2 9:45 ET Markit Manu PMI
3/2 10:00 ET ISM Manu PMI
3/2 10:00 ET Construction Spending
3/4 8:15 ET ADP employment
3/4 9:45 ET Markit Service PMI
3/4 10:00 ET ISM Services PMI
3/5 8:30 ET Productivity & Unit Labor Costs
3/5 10:00 ET Factory Orders
3/6 8:30 ET BLSBS
3/6 10:00 ET Wholesale Inventories

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