Some Charts

283
Thu, Dec 20, 2012 - 12:15pm

I've received several requests to "do what I do". So, here you go. (Keeping in mind that you should probably do the opposite.)

First of all, these hourly charts are astonishing. Just six, short trading days ago, The Fed confirmed QE∞ at a minimum of $85B/month, all needed to fund the ongoing U.S. federal deficit. Instead of rallying, the metals have been slaughtered. Why? Hmmm...We've seen this phenomenon in crude before (https://www.zerohedge.com/news/curious-case-post-qe-oil-hangovers) & (https://www.zerohedge.com/news/2012-10-09/why-oils-post-qe-plunge-may-be-over) and apparently it's worked so well there that The Fed and Their Cartel have decided to give it a go in the metals, too.

And now, mainly, I'm just mad at myself because I didn't see this coming. Of course The Fed is going to instruct their minions to crush the PMs. The Fed had no choice but to initiate QE∞ and the last thing they needed was an immediate, perceived quid pro quo with rising metals prices. The metals had to be crushed. It's all a part of their ongoing strategy of MOPE and SPIN. Duh! (Jeez, the more I type the more stoo-stoo-stoopid I feel. Better stop here.)

All that said, there is no reason to think that it's over, that the 12-year PM rally is kaput. I'm sure that the metals will stop and reverse, just like last year. The only question is, where? Since nothing has changed and the fundos are, in fact, even stronger than last year at this time, why would we expect prices to break any lower than they did a year ago? (Keeping in mind that the last sentence was typed by a guy who didn't see this selloff coming.) Sometime soon, the metals will reverse with a sharp, short-covering rally. That rally will likely stall and the momo-shorts will be emboldened to take another stab at the downside. Then, after failing to take things markedly lower, a bottom will form and price will begin to recover. If compelled to trade paper in this environment, here are some charts that show a striking similarity to the action of a year ago.

Hang in there. Good luck.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  283 Comments

  Refresh
ivars
Dec 21, 2012 - 4:26am

GSR shot over 54 faster then

GSR shot over 54 and 55 faster then I expected yesterday as both silver and gold moved below their 200 day MA in wake of fiscal cliff stalemate.

All Fiats got a little stronger yesterday at different speeds as USA austerity would mark decline in speed of generation of strong powered new money (USD) which forms the basis for all convertible and pegged world currencies. via USG debt sales, so future potential growth of PMs could slow. That is the scenario that keeps PM prices suppressed right now. Does not mean they will not continue to grow even after fiscal cliff, but there might be new exponential bottom line established during bull market pullback.

Of course, if solved in a manner that does not reduce USG debt generation speed and future debt growth projections, PMs will jump right back to 34-35, and move on, so this is quite volatile and exciting time, difficult to trade.

We may see a slight move down in GSR and up in metals today even if fiscal cliff is not resolved yet. However, if its not resolved also on Monday the move up in GSR and down in metals may continue, and, if its not resolved at 26-28th, the move up in GSR and down in metals is guaranteed. As mentioned earlier, the ultimate bottoms seem to be 26 in silver and 1510 in gold IF fiscal cliff is not resolved this year, with GSR back into 58-59 region.

Concerning manipulation, if there is not enough big buyers for physical gold at these prices, which was seen at yesterdays London p.m. fix- no price movement up- It seems that smart money is staying away from purchases right now.

As to pitchfork, the one that was valid since Dec 12th is clearly broken, but the escape line below not crossed and now we have to wait and see if pitchfork bottom line (100) gets hit form the bottom today, and recoil- then there is new fork with downtrend to be found. If it reenters old fork- so far fine as long as it does not cross the median. If it does- new uptrend fork can be looked after:

In general i think today will be a small upday for metals, silver may be back into low 30- ties.

Byzantium
Dec 21, 2012 - 3:42am

Chains of command

If we use armies and war as an analogy, then soldiers often do what soldiers do, regardless their own sentiment. They will participate in crackdowns against their own tribe, because instructed to.

The USA uses the deceit model, they convince their soldiers that bombing Iraqis, and whoever else, is safeguarding the lives of Americans. By contrast, Saddam Hussein (as an example) and former President Assad of Syria (the current incumbent's late father) presided over very diverse, tribal communities, the majority of whom did not offer heartfelt support. However, any one party who failed to show enthusiastic compliance, was brutally punished (and I mean brutally), and in fact, by other victims forced to do so. This was violent, abusive, nasty, but extremely tightly controlled hierarchy. The chaos in Syria today, is what happens when that model breaks down, and master is finally attacked. JPM does not want to experience this fate, so they are tightening their grip on the hyenas.

The silver market recently had its uprising against master, as we raced to $35, but the insurgents are now being brutally punished. Revisiting the Iraq analogy, Iraq showed that when an uprising is squashed (the Shia, the Kurds), then sentiment for further uprisings diminish, and people just knuckle down. When the US invaded in 2003, ostensibly as the liberators of the Iraqi Shia, they found that their toughest battles were with those same Iraqi Shia, who often fought to the death. Hierarchy can be a very strong force, and so I believe that what we are seeing might be the Fed restoring the hierarchy. For the hyenas to have gone long against the Fed in the silver market, is from the Fed's point of view, treason. A market whipping might only be the start; perhaps some of the ringleaders will be tragically 'suicided' in light of their inability to cope with losses associated with their bad decisions.

On the plus side, the hyenas were seeing something coming down the line, and decided to go AWOL. Whatever they saw coming, is still coming.

Einherjar
Dec 21, 2012 - 3:29am

Brazil Doubles Gold Reserves

Brazil Doubles Gold Reserves as Central Banks Buy Bullion

By Glenys Sim - Dec 21, 2012 9:10 AM GMT+0100

Brazil boosted gold reserves for a third month in November to double the country’s holdings since August as central banks from Russia to Belarus and South Korea add the metal to diversify their assets.

Brazilian holdings expanded 14.7 metric tons in November to 67.2 tons, the most since November 2000, according to data on the International Monetary Fund’s website. The country bought 17.2 tons in October after adding 1.7 tons in September, the first increase since 2008. Russia’s holdings increased 2.9 tons last month and Belarus’s reserves expanded 1.4 tons, the data show. Turkey pared holdings 5.9 tons and Mexico sold 0.1 ton.

Central banks have been expanding reserves as the metal heads for a 12th annual gain and investors hold a record amount in bullion-backed exchange-traded products. Nations bought 373.9 tons in the first nine months of the year and full-year additions will probably be at the bottom end of a range from 450 to 500 tons, the London-based World Gold Council estimates.

“Central banks, particularly in the emerging economies, are looking to increase the proportion of gold in their reserve assets,” Alexandra Knight, an analyst at National Australia Bank Ltd., said from Melbourne. “That will drive prices of gold because they can be quite significant purchases.”

Gold for immediate delivery traded at $1,647.41 an ounce at 4:09 p.m. in Singapore, up 5.4 percent this year. Still, the metal slumped to $1,635.70 yesterday, the cheapest since Aug. 22, as data showed the U.S. economy is improving.

Total Reserves

The proportion of gold as a share of total reserves is much smaller in emerging economies than advanced countries, and there’s probably going to be a continued push to increase the amount of metal held, Knight said.

The U.S., Germany, Italy and France hold more than 70 percent of their reserves in gold, according to data from the producer-funded WGC. The share in Brazil, the largest emerging economy after China, is 0.8 percent, the data show.

In October, Iraq sold 1 ton of bullion after buying 2.3 tons in September and 23.9 tons in August, according to the IMF data. The acquisition in August was the first by the country since at least 2004. There was no figure for last month.

In Asia, the Bank of Korea increased gold reserves 20 percent last month to diversify investments, boosting holdings for the fourth time since June 2011, according to a statement Dec. 5. Gold is a physical, safe asset, the Bank of Korea said.

Weaker Dollar

Gold has advanced as central banks from the U.S. to Europe and Japan ramp up stimulus to boost their economies, stoking concern that currencies will be debased and inflation may accelerate. The Dollar Index, a gauge against six counterparts has lost 1 percent this year, set for the first drop since 2009.

The U.S. Federal Reserve said Dec. 12 it would buy $45 billion of Treasury securities a month from January, adding to $40 billion a month of existing mortgage-debt purchases. The Bank of Japan expanded an asset-purchase program for the third time in four months yesterday.

Gold will probably peak in 2013 and keep declining the following year as U.S. growth accelerates, Goldman Sachs Group Inc. said in a report on Dec. 5. Immediate-delivery metal reached a record $1,921.15 an ounce in September 2011.

The metal is Morgan Stanley’s top commodity pick for 2013 on buying by central banks, geopolitical uncertainty and low so- called real interest rates, analysts including Peter Richardson and Hussein Allidina wrote in a Dec. 6 report. The bank expects bullion to average $1,853 an ounce next year.

Prices have been supported by so-called official-sector buying, David Gornall, chairman of the London Bullion Market Association, told a conference last month. China may add more to reserves as the metal accounts for a lower share of total holdings compared with the U.S., he said in Hong Kong. Official- sector buying was 439.7 tons in 2011, the highest since 1964.

Holdings in gold-backed ETPs reached a record 2,632.516 tons yesterday, and are 12 percent higher this year, data compiled by Bloomberg show.

Zoltan
Dec 21, 2012 - 3:21am

Silver Lease Rates (Double)

Dec 21 2012 Change
1M -1.4093% -0.8400
2M -2.7860% -1.6300
3M -4.1000% -2.3600
6M -8.2597% -4.6200
1Y -14.9570%

-9.8600

1 m -0.1353% +0.0020
2 m -0.1100% +0.0045
3 m -0.0780% +0.0080
6 m 0.0603% +0.0085
1 y 0.3530% +0.0020

Earlier the one year rate was -9%. Price is holding up remarkably well considering.

Z

Zoltan
Dec 21, 2012 - 3:17am

Silver Lease Rates

Silver Lease Rates
Dec 21 2012 Change
1M -1.4093% -0.8400
2M -2.7860% -1.6300
3M -4.1000% -2.3600
6M -8.2597% -4.6200
1Y -14.9570%

-9.8600

Should have dragged my ass out of bed to post the previous update as they were not quite this crazy but I was too lazy.

This is fucking ridiculous.

For comparison here is gold.

Gold Lease Rates

December 20, 2012
1 m -0.1353% +0.0020
2 m -0.1100% +0.0045
3 m -0.0780% +0.0080
6 m 0.0603% +0.0085
1 y 0.3530% +0.0020

Source is Kitco (Iknow I know)

Byzantium
Dec 21, 2012 - 3:10am

The real target of the raids....?

Let's wind back to even the recent past, and the set-up that Andrew Maguire himself had described when a whistleblower.

JPM (being the operating arm of the Fed) was king of the silver jungle, the head of the food-chain.

The hyenas (the second tier of market players) accepted the hierarchy, and were the foot-soldiers. Collectively, they dominated the market.

When JPM signaled a price smash, these hyenas would front run it, and basically implement it. They not only did the heavy lifting (acting in concert, and finding strength therein) but provided JPM with the alibi of not having to get their own hands too dirty; 'it was the market wot done it.'

We heard recently, that the hyenas turned against their master, and started betting against him (her?), and that JPM was now the only short left in the market. JPM (read the FED) was facing the market alone.

Part of the reason for the discontent, was possibly that JPM had begun skimming, or even devouring the profits of some of these hyenas, and they were getting tetchy. So they turned on master. (Masters?)

Big mistake!

They are being shown who is boss. They are being shown that their choice is that of the relative (though abusive) safety of the former hierarchy, else severe market beatings. They are being shown that they are not even needed, but are simply useful.

If we can assume that other commodity markets also use the hyena model, then these hyenas clearly had to be taught a lesson, to now support once again JPM (the Fed) in preparation for the market tumult that will be 2013, and to respond immediately to the coded signals that they receive.

If you subscribe to this view, then the smack-downs will reverse once hierarchy is restored, and hyenas have skulked back to lay at master's feet again, having taken on the chin, the losses on their long positions. If this occurs, then we can expect same-old, same-old, in 2013.

Thoughts?

philipat
Dec 21, 2012 - 3:10am

@Byzantium

This is a difficult one. I agree with your general hypothesis and that the TBTF Banks control the markets and make money on either the up or down side, whichever is easier. I also agree that these same Banks make the call when and how to reverse the trend, probably over the weekend in quiet conversations.

However, with PM's it's a little different because The Fed is so desperate to stay in control of the Fiat Ponzi so cannot allow the PM's to go parabolic at this stage, whatever the cost. And the cost is relatively small when viewing the PM markets in the context of the FX and TSY markets.

So, IMHO, this might truly be a case of don't fight The Fed.

Silverman
Dec 21, 2012 - 2:35am
rtabit
Dec 21, 2012 - 1:44am

@Mr. Fix Charts

As the self-appointed defender of charts around these parts I feel obligated to answer your questions with a little simple logic anyone can understand. Maybe some of you TA haters will see the logic of why we use TA and how it’s useful.

Could somebody tell me what the validity of using a chart to predict what is coming is when there is obviously no correlation between what is happening as compared to the fundamentals?

  • 100’s of years of data. Charts have nothing to do with fundamentals anyway, mixing the two together in my limited experience has led to disastrous results.

Do your charts tell you when we are going to hit a bottom? If so, where is it?

  • I think you mean at what price not when, but I’ll answer your question literally. After all WD Gann did say “Time is the most important factor in determining market movements because the future is a repetition of the past and each market movement is working out time in relation to some previous Time Cycle.”
  • According to guys at Gann Global, who have giant database going back to 1800's, based on data going back to 1900 we know that 52% of all corrections in gold would have been completed by Dec 3rd, and that 79% of all corrections would have been completed by Jan 7th. So we know we are in the 52% - 79% time range of when all corrections would have been completed by. This correction is from 1800 pivot.
  • It’s the same with using pitchforks that I like to post here. Dr Andrews research showed that when within a pitchfork, there is a 80% chance that the price will return to the medium line.
  • So yes, my chart tells me to a certain degree of error when and at what price we are going to hit a bottom. But it’s just a forecast, and forecast are not always correct, it doesn't work 100% of the time. That’s fine with me, you seem to think that if the forecast is not exact and correct 100% of the time, then it is either not valid or not useful, I think it’s both valid and useful.

If you took away the chart, then could you ask why there has to be a bottom?

  • I don’t understand this question. But earlier this year some guy from seeking alpha was predicting negative prices for natural gas. The fundamentals he used I think was something like since we only have so much storage, and because we were mining so much of it, that companies would pay to have it taken off their hands rather than burning it (or however you would get rid of natural gas I forget). So only using fundamentals could someone make the argument that a commodity would go into negative value, which I guess is why you ponder if there has to be a bottom since you don't use charts.
OneTime
Dec 21, 2012 - 12:41am

Ammo

Don't believe the tabloids...I found plenty of AK ammo at Wal-Mart today. I stack it right next to my 'other' stack.

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

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

Recent Comments

by SteveW, 3 min 16 sec ago
by AgstAger, 10 min 3 sec ago
by RickshawETF, 14 min 10 sec ago
by Blythesshrink, 42 min 9 sec ago
by Turd Ferguson, 44 min 58 sec ago

Forum Discussion

by Mr Michael Khan, 1 hour 58 min ago
by TexasTonto, Jul 9, 2020 - 9:53pm
by SteveW, Jul 9, 2020 - 6:23pm
by SteveW, Jul 9, 2020 - 6:20pm
by Ken, Jul 9, 2020 - 1:36pm