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

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turd [at] tfmetalsreport [dot] com ()

  283 Comments

Patrancus
Dec 21, 2012 - 7:54am

Fiscal Ciff = Clinton Tax Rates

If you peel back the onion and let the Bush era Tax Cuts expire and go head first over the Fiscal Cliff you are left with Clinton era Tax Rates, and what could be better than that?

The reason Mr. Bohner is losing this battle over the fiscal cliff BS is simply that he has not framed the debate in a way that most of the ignorant American people can understand what is really going on.

silver foil hat
Dec 21, 2012 - 8:10am
billwilson
Dec 21, 2012 - 8:18am

Interesting set up

Okay so it has been a weird manipulated market ... but that also tells you charts don't matter as much (note - not that they don't matter at all, just not as much).

1. Of late PMs have lost their tick for tick correlation to the Euro ... a big deal.

2. PMs of late have shown a tendency to do poorly;y when the market is going higher. The Sept rally came as the markets were weak.

3. Last night the double bottom was KEY. Market gets pummeled and what happens? The PMs fall to exactly their lows of the day (EXACTLY) despite a waterfall in S&P futures. Pretty amazing and good evidence of manipulation. .... and probably that the downtrend is over ... otherwise they would really let it go.

4. With money flowing out of stocks ... where will it go ... hmmmm ... PMs look cheap.

TheYeomanFarmer Patrancus
Dec 21, 2012 - 8:18am

Clinton Tax Rates

Patrancus -

I (and, I suspect, many Republicans) would be happy to return to the Clinton-era tax rates...if we could also return to the Clinton-era levels of spending and Federal regulation.

AuStan Dard Anonymous
Dec 21, 2012 - 8:20am

As much as your right about JPM

these guys are simply out to make money, and they do it in the most despicable manner. however, they are NOT dumb (if you think they are, then you'd be). They know what's coming, probably better than any of us, since they paint the tape. They operate from a position of strength, backed by the goverment/Fed/regulators, and before this is all over, they will be on the right side of the trade. If it's covering whatever number of short contracts they have with free cash from the FED, they'll do it. AND, the paper contracts only show part of their book. How much physical do they have indeed? How many mining shares have they accumulated? I've said it before, as much as I'd like to see them go "poof", realistically I don't think that's going to happen, they'll paper it over, even a Comex default, should it ever get that far. They'll milk all the weak hands, flush 'em down the toilet, and shake off all weak hand paper players. And THEN, when things will look as if the sky's really falling down on the PMs, THEN the tide will turn. Let's see what'll happen next, I expect a continued bumpy road to London-town. Phyzz holders will, ultimately, be vindicated.

God luck to all and have a great festive holiday. CHX

PS. I DID give ya a hat tip :-)

koan
Dec 21, 2012 - 8:26am

Seemingly at the whim of

Seemingly at the whim of central planners and manipulating hounds - so today, are they going to pound away some more or maybe fleece some shorts? [sigh] Probably the latter then the former.

Either way, another day closer to the end of these shenanigans, giddy up...

Mr. Fix rtabit
Dec 21, 2012 - 8:41am

RE, @Mr. Fix Charts Submitted by rtabit :


Thank you for appointing yourself “defender of the charts”.
After reading your reply to my post several times, I still have questions, in fact your reply actually raised a few.
I was sincerely trying to grasp how charts could be used to determine price movements in obviously manipulated market, one that is now trading at a complete polar opposite of any fundamentals.
You said:
"Charts have nothing to do with fundamentals anyway, mixing the two together in my limited experience has led to disastrous results."

A okay, if charts are not supposed to reflect fundamentals, and are simply a compilation of history, then would not it be a fair argument to say that in a manipulated market, the manipulators themselves would have their own sets of charts, and would be using them to inflict as much pain on their adversaries as possible, since this would naturally create the most profit for them by taking the other side of that trade?

Can you just imagine Blythe Masters and Jamie Dimon having a strategy meeting, and picking out the points on the charts where they would like to insert their next “market clobbering raid”?
They have become very adept at finding their slam downs to inflict as much damage as possible of the people that are trading the silver and gold futures.
Now I'm trying to grasp your explanation, when you said that the charts are not in any way tied to fundamentals, that would be disastrous.
Does that explain why the markets are now trading completely opposite of the fundamentals?
Let me explain one thing here, I believe the entire pricing mechanism in both gold and silver is nothing but a scam.
Any market that is this far removed from its fundamentals, was designed to be a fraud from day one.
Any market whereby you can just create paper representations of a commodity,
and then flood the market with as many of these pieces of paper as you would like, is a mechanism for market destruction,
and is the exact opposite of a legitimate “price discovery mechanism”.
Just these past few pages of this thread are reporting massive physical demand by both sovereigns and banks, combined with shortages at many local coin shops.
Combined with current news events, it is a fairly safe assumption that precious metals are at least as much in demand right now as they have ever been,
and yet the price keeps going down.
My original post on this subject stated in as many words that some “Chartist” has drawn an erroneous conclusion that money was pouring out of silver and gold and into stocks.
He also said this meant that the economy was all okay, and that nothing bad was foreseeable on the horizon. He is looking at a reality that is 180° out of whack, and using his charts to justify his opinion.

Your example of how someone predicted negative natural gas prices due to market fundamentals makes even less sense, since the natural gas could easily be stored underground simply by turning off the valve at the top of the well, and waiting for more aboveground storage to become available. No for-profit company would ever voluntarily pay somebody to take their product away, especially one that is in high demand.

On the previous thread, I had postulated the possibility that an “endgame scenario” might include a steadily falling paper price of metals, although I did say they could “approach zero,”
even I would admit that this is unlikely, as I think we are already at the point (or very close to it) where nobody that is in possession of actual physical metal is willing to unload it at anywhere near the paper price.
The paper price does not need to go very much lower before all trade at the “official price” ceases to exist.

At that point, all of these “futures paper contracts” (which currently defines the price) becomes completely irrelevant.
Can such a scenario be painted on a chart?

Full disclosure: a couple years ago, I solicited a silver futures broker, who told me that for a $12,000 stake, he could create enough wealth that I would be able to retire on it. He claimed that he was a life long Chartist, and had a track record of making a fortune in the silver futures market, using a highly leveraged position. Due to nothing more than my own ignorance, greed, and sheer stupidity, I agreed to open a contract.
In a year (mid-2010 up to mid-2011) where silver basically doubled in price, I managed to lose that investment. And it was all in the numbers.
Obviously, I could scream that I was ripped off, but I tend to take responsibility for my own actions, and as I just stated, my own ignorance cost me a lot of money.

When I see how the current market is behaving, I am very painfully aware of the fact that thousands of people are losing billions of dollars through fraud and manipulation in this particular market.
I have obviously instituted a “physical only” policy, (wish I had thought of that sooner), and I spent a substantial amount of the past year working my butt off trying to undo the damage inflicted on my personal finances by this market.

Too much information! Simple question:

Let's try again, “in a highly manipulated market, what good are the charts!?”. As someone who has been trying very hard to discover a relevant answer to this question, it still eludes me.

Any takers?

Groaner
Dec 21, 2012 - 8:42am

Nice day ,,,if you are short.

Coghlan says step aside until the new year..

180 points drop in the dow so far.. ouch..

someone needs a physical,,, cliff.

ivars
Dec 21, 2012 - 8:42am

@Groaner

Coghlan is right.

Orange
Dec 21, 2012 - 9:10am

From Harvey

very bullish signs. when silver goes parabolic you need to be in or you will miss the ride.

It is interesting that Jim Sinclair has stated that he believes that the end game is being played out right now and his bet is that Goldman Sachs will be net long in gold. If confirmed load the boat on gold/silver as probably we will have a plethora of buyers and no sellers.

and .....

The total silver complex fell by a tiny 281 contracts despite the fact that we had a big downfall in price in silver. The OI silver complex rests tonight at 141,142 with yesterday's OI reading at 141,423. The active December contract strangely saw this active delivery month gaining in OI to the tune of 6 contracts, despite the fact that we had 154 delivery notices filed yesterday. So in essence we gained another monstrous 160 contracts or 800,000 oz of additional silver standing for delivery in December. The number of silver oz standing has increased from about the 4th day after lst day notice and this includes today. Something big is going on inside the silver vaults.

https://harveyorgan.blogspot.com/

agNau
Dec 21, 2012 - 9:10am

Someone has as a caveat after his technical analysis......

paraphrased: "It is only a windsock.".

rtabit
Dec 21, 2012 - 9:31am

@Mr. Fix

No problem, I will perform to the best of my ability as the “defender of the charts”, I take this honor with the utmost regard. Answers short in sweet, hard to trade, work, and reply to post all at the same time. My original post on this subject stated in as many words that some “Chartist” has drawn an erroneous conclusion that money was pouring out of silver and gold and into stocks.
  • I read that and do not agree with him, he’s mixing charts with fundamentals, they do not mix well.
Your example of how someone predicted negative natural gas prices due to market fundamentals makes even less sense.
  • I agree it made no sense, I guess is on par with your example of chartist example above.
At that point, all of these “futures paper contracts” (which currently defines the price) becomes completely irrelevant. Can such a scenario be painted on a chart?
  • Nope, but it’ll only happen once, in the meantime I’ll trade paper to buy physical.
Fundamentals are for longer term investments where charts don’t matter much, as a long term investment who cares what happened yesterday or for the last month, fundamentals are for stacking. Charts are for shorter term trades, for playing with paper. That’s the way I use them anyway. EDIT: Long SI @29.76, stop @29.60 this morning, lets see if my charts make me some paper today.
lakedweller2
Dec 21, 2012 - 9:33am

Congress With A Plan

Clinton Tax Increases for everyone coupled with hyperinflation. The Serfs will be reduced to paupers. Today the Banksters will attack the market to show us peons that we better be happy with them stealing everything we have. Let's rejoice that corruption is alive and well and living in Washington. Quick...send a donation to reelect your favorite crony.

Urban Roman
Dec 21, 2012 - 9:39am

Did you feel that?

It's as if thousands of LCS's cried out "We are out of silver!" and then went silent.

¤
Dec 21, 2012 - 9:43am

What Happened to the Credit Default & Insolvency?

If You Bought Greek Bonds in January You Earned 80%: Euro Credit

By Marcus Bensasson & Lucy Meakin - Dec 21, 2012 5:56 AM ET

Investors bold enough to buy junk-rated Greek bonds in January have earned twenty times more than owners of top-rated German debt this year even after the biggest ever sovereign restructuring.

Greek government bonds returned 80 percent this year, compared with 3.7 percent for German bunds and 6.1 percent for Spanish securities, Bank of America Merrill Lynch indexes show. It’s the first year since 2009 that investors made money on Greek securities, with 2012 providing the biggest advance since Merrill began compiling the data in 1998, according to figures that don’t reflect this month’s debt buyback by the government....

https://www.bloomberg.com/news/2012-12-20/if-you-bought-greek-bonds-in-j...

ballyale
Dec 21, 2012 - 9:44am

I think I've just gone color blind.

I'm actually seeing green on my screen.

Bill of Rights
Dec 21, 2012 - 9:44am

Red is the NEW green...sweet.

Red is the NEW green...sweet.

¤
Dec 21, 2012 - 9:47am

The game within the game...

BlackRock Sees Distortions in Country Ratings Seeking S&P Change

By Sebastian Boyd & Ye Xie - Dec 20, 2012 5:37 PM ET

Credit rating companies are distorting capital markets by assigning the same debt ranking to countries from Italy to Thailand and Kazakhstan, according to BlackRock Inc. (BLK), the world’s biggest money manager.

While 23 countries share the BBB+ to BBB- levels assessed by Standard & Poor’s, the lowest investment grades, up from 15 in 2008 at the beginning of the financial crisis, their debt to gross domestic product ratios range from 12 percent for Kazakhstan to 44 percent for Thailand and 126 percent for Italy, International Monetary Fund estimates show. The cost of insuring against a default by Italy, ranked BBB+, over the next five years is almost triple that for Thailand, which has the same rating.

For BlackRock, which oversees $3.7 trillion in assets, the measures are so untrustworthy that the firm is setting up its own system to gauge the risk of investing in government bonds. This year, the market moved in the opposite direction suggested by changes to levels and outlooks 53 percent of the time, data compiled by Bloomberg show.

“The rating agencies were very, very slow to the game,” Benjamin Brodsky, a managing director at BlackRock International Ltd., said in a Nov. 23 interview from London. “They all came after the fact. For us, this is not good enough.”

Since S&P cut the U.S. to AA+ from AAA on Aug. 5, 2011, yields on the benchmark 10-year Treasury note have fallen to 1.79 percent from 2.56 percent. After France was downgraded on Jan. 13, 10-year yields fell to 2 percent from 3.08 percent.

Australian Verdict

Ratings companies, the arbiters of creditworthiness and the likelihood of default by governments and companies in the $46 trillion global debt market, are coming under more scrutiny from regulators and investors.

When S&P downgraded the U.S., a Treasury official said the company had made a $2 trillion error. France’s top central banker said Moody’s Investors Service’s ranking is wrong. Russia’s deputy finance minister said S&P and Fitch Ratings exaggerated its weaknesses relative to higher-rated countries....

https://www.bloomberg.com/news/2012-12-20/blackrock-sees-distortions-in-...

¤
Dec 21, 2012 - 9:51am

Another JPM wrist slap?

Dec. 21, 2012, 5:44 a.m. EST

London trading fiasco ripple to hit J.P. Morgan

MADRID (MarketWatch) -- U.S. regulators are expected to soon take action against J.P. Morgan Chase & Co. over its role in allowing a group of London-based traders to rack up losses of more than $6 billion this year, The Wall Street Journal reported in its online edition on Friday. J.P. Morgan isn't expected to be fined, but the Office of the Comptroller of the Currency, led by Comptroller Thomas Curry, is due to take enforcement action, the WSJ said, citing people familiar with the investment bank's talks with regulators. The OCC wants the bank to fill in holes in its risk control in relation to outsize bets taken by Bruno Iksil, a trader who was nicknamed "The Whale", and others in the London branch of J.P. Morgan's Chief Investment Office. A spokesman from J.P. Morgan declined to offer comment to the WSJ. The report, citing people close to the company, also said that Chief Executive Officer Jamie Dimon is still expected to get a bonus despite the London loss.

https://www.marketwatch.com/story/london-trading-fiasco-ripple-to-hit-jp...

Zoltan
Dec 21, 2012 - 9:51am

Silver Lease Rate Spike (Down the Memory Hole)

Dec 21 2012 Change
1M -0.5693% +0.0000
2M -1.1660% -0.0100
3M -1.7600% -0.0200
6M -3.6697% -0.0300
1Y -5.1370% -0.0400

And before anyone blames a fat fingered intern at Kitco I am pretty sure in this day and age that the data is streamed from somewhere else. Not saying it isn't possible it is an error.

Z

Edit: PS Glad the world didn't end. I'd have missed you guys.

tpbeta
Dec 21, 2012 - 9:53am

Puzzled by the negative lease rates

Mr Maguire seems to think it is a bullish indicator, and I recall that it has been so in the past. Could more knowledgeable folk here pronounce? Turd?

tmosley Zoltan
Dec 21, 2012 - 9:53am

Zoltan: They make mistakes

Zoltan:

They make mistakes ALL THE TIME. Don't trust their numbers. They are worthless. Need to find a reliable source if you are going to track lease rates.


Dec 21, 2012 - 9:59am

Zoltan

Where are you getting that info? Did you subscribe to the data feed?


Dec 21, 2012 - 10:01am

Stolen from Santa

I like this a lot:

Zoltan
Dec 21, 2012 - 10:08am

Data Source from Kitco

Data was just copied/pasted off the Kitco silver page.

My point with the "fat fingered intern" post was that the data is streamed from somewhere else. Not saying it isn't wonky but there has been a pattern for three years with "spikes" and subsequent scrubbing of the charts to no longer show it (search my name on the Kitco forum and you'll see posts about it from three years ago). Since then have been trying to document it here.

Z

¤
Dec 21, 2012 - 10:08am
ancientmoney
Dec 21, 2012 - 10:10am

A snippet from Hubbart's latest . . .

"On this chart, RSI for silver has declined to 30 area, seven times. Six big rallies have occurred after each of those events. Will this time be “lucky number 7”? I think so, and my target for this rally is $44."

-------------------------------------------------------------------------------------------------------

We'll see. Will JPM try to defeat the charts and keep silver down? Will there be enough good delivery silver to keep the COMEX trading?

Rui
Dec 21, 2012 - 10:13am

Silver OI actually grew yesterday

It grew by 1755 contracts despite silver down by 4%. This is scary. Whoever holding that many longs didn't bat an eye. I wonder what more shenanigan EE would come out next to shake this big OI away. Maybe 20 straight margin hikes to 100% full-margin? I don't know.

Mr. Fix rtabit
Dec 21, 2012 - 10:16am

RE , @Mr. Fix Submitted by rtabit

Thank you, thank you, thank you. your explanations actually made sense. We both have the same goals, just entirely different approaches on how to achieve them, and they are both valid.

I forgot to mention in my previous post, that my “Chartist” Silver futures broker was an ass hole.

Mr. Fix
Dec 21, 2012 - 10:19am

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