Thu, Jan 10, 2013 - 10:58am

Sometimes the answers are right in front of your face.

If you've been reading along in the comments of the past few days and/or if you're a subscriber at TTM, you know I've been watching the price of platinum and the growing OI in gold. Both were signs that the lows for the December selloff were in. In hindsight, I just wish I'd moved sooner.

Here's what I mean. If you can, you should print off all six of these charts. Take the hourly PL and hold it up to a light source with the hourly silver. Do the same the hourly gold. Then repeat this exercise with the daily charts. I know it's no longer the holiday season but "do you see what I see"?

Note how closely gold, silver and platinum tracked each other through 2012. However, suddenly on 1/3/13, they began to disconnect. Now, maybe there's some fundamental reason for this that I'm overlooking? Maybe, though, the beatdown at year-end and following the FOMC minutes was a deliberate washout attempt on gold and silver only? I'm going with the latter. And maybe now it's simply time for gold and silver to catch up?

And it's not just platinum, take a look at the broken correlation from the euro and copper, too.

Further confirming this is the change in open interest, particularly in gold.

Gold total OI bottomed on 12/27/12 at 423,459. Price that night closed at 64. Since then, though price fell as low as 26 in the wee hours of last Friday morning, total OI has risen. At the close this past Tuesday, price was 62 but the OI was UP to 441,304. (Remember the adage: "In a bull market, volume precedes price".) So, OI is up 4% while price was flat. Here's another nugget to chew on: The last time OI was this high was on 12/3/12, right after the beatdowns that commenced with Dec12 expirations. Back on 12/3/12, the total OI was 441,062 and what was price that night? 21. To me, this is a very bullish signal.

So, what can we begin to conclude? Today's action is just another sign that the very nasty selloff that began on 11/28/12 concluded on 1/4/13. Gold fell from 1755 to 1620 (7.7%). Silver fell from 34.50 to 29.25 (2X at 15.2%).

We'll know it's truly over and begin to sound the "all clear" when gold is back above 05 (currently the 50-day MA is 1700 and the 100-day is 1717) and silver is back above .50 (though the Mar13 silver 50-day is near 32.08 and the 100-day is 32.56).

As I close, I see that this morning's rallies are extending. Gold is 1675 and silver is 30.75. Very nice and a very good sign. Let's keep it rolling!


About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 10, 2013 - 11:00am



My first and last first.... I promise!

Jan 10, 2013 - 11:04am

He is...

quite literally the glue that holds it all together! Four Years, and counting. Squeeze is on John......pleeeeeze come back. We need your help!

Jan 10, 2013 - 11:06am


He just had a presentation on a proposal to track PM sales and puts the burden on the dealers. Then he referred to Roosevelt's confiscation order. The point seemed to be that the government is in trouble so they may eventually go after your stack in the basement.

Things just go downhill.

Jan 10, 2013 - 11:09am
Jan 10, 2013 - 11:09am


Been a while since the top ten!

Feels good...

Jan 10, 2013 - 11:13am

Trillion dollar coin

Trillion Dollar coin seems to keep coming back

There has been much speculation about the possible impact of the trillion dollar coin on a number of things, including the value and/or supply of platinum. However, if my understanding is correct, the US has been doing this on a smaller scale ay least since 1964. The key is the difference between the way the US creates coins and paper money. Since the Federal Reserve act, the US must sell bonds to raise cash (dollars) to fund operations - the Treasury can NOT print paper money without this mechanism.

On the other hand, the mint is authorized to coin money with authorization from Congress – which is open ended and can be expanded or contracted to meet the needs of the economy. When gold and silver were the only “lawful money” (has the Constitution been repealed? Well….) there was a limit on this method – since the value of the metal roughly approximated the face value of the coin. The gold “redemption” in 1930’s didn’t really change much (although then there was negative seigniorage!), but the big change came in 1965 when we went to CuNi clad coinage. The key is Seigniorage – definition from Wikipedia.

“Seigniorage (pron.: /ˈsnjərɪ/, also spelled seignorage or seigneurage) is the difference between the value of money and the cost to produce it. The term can be applied in the following ways:

  • Seigniorage derived from specie—metal coins—is a tax, added to the total price of a coin (metal content and production costs), that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.[1]

Some time prior to 1964, the value of silver in small change exceeded the face value of the dime quarter, half and dollar coin. The change to clad significantly decreased the cost of metal versus the face value – resulting is a substantial “profit” to the mint. The mint books this as “revenue” – which a I understand it goes into the income for the government and is spent. Note that the cent and nickel now have negative seigniorage as the cost exceeds the face value. From Wikipedia:

“Ordinarily seigniorage is only an interest-free loan (for instance of gold) to the issuer of the coin or paper money. When the currency is worn out, the issuer buys it back at face value, thereby balancing exactly the revenue received when it was put into circulation, without any additional amount for the interest value of what the issuer received.”

However, since coins have a circulating life of 25+ years, and in many cases end up in piggy banks or other accumulations, the redemption rate in the US is fairly low. An example of the “profit” from Wikipedia:

“The "50 State" series of quarters (25-cent coins) was launched in the U.S. in 1999. The U.S. government planned on a large number of people collecting each new quarter as it rolled out of the U.S. Mint, thus taking the pieces out of circulation [citation needed]. Each set of quarters is worth $14.00 (a complete set includes quarters for all fifty states, the five U.S. territories, and the District of Columbia). Since it costs the Mint about five cents for each 25-cent piece it produces, the government made a profit whenever someone "bought" a coin and chose not to spend it.[4] The U.S. Treasury estimates that it has earned about US$6.3 billion in seigniorage from the quarters over the course of the entire program.[5]

In some cases, national mints report the amount of seigniorage provided to their respective governments; for example, the Royal Canadian Mint reported that in 2006 it generated $C93 million in seigniorage for the Government of Canada.[6] The US government, the largest beneficiary of seignorage, earned approximately $25 billion annually as of 2000.[7]”

So the trillion dollar coin is not unprecedented in the US monetary system – it is just a (il)logical extension of the lunatic monetary policies currently in place for the paper money. The amount of platinum is irrelevant. The practical impact on platinum price is nonexistent. The government mints a proof “commemorative” one ounce platinum coin with a face value of one trillion, the Federal Reserve “buys “ the coin, and the Government books seigniorage of $1,000,000,000,000 - $1650 (the cost of one ounce of platinum). It appears to be perfectly “legal”, if Congress authorizes the “coin program”. In fact, it may already have since there is legislation for a platinum commemorative coin program. It just has a little more premium than the current torrent of commemorative coin programs that raise funds for someone or other’s favorite cause - the premium just goes to fund the Government.

Do I think this is a good idea – absolutely NOT, But at least the coin id worth $1650, which is a great deal more than the value of the electrons in the billions of dollars in $1000 bonds that the Fed “buys”. The real impact would be on the residual “credibility” the US has in world currency markets. This is such blatant manipulation of values that I can not see it passing even the most superficial laugh test?

Note that the seigniorage on the clad coins did not cause the price of Cu or Ni to rise, therefore, why would it alone cause the price of platinum to rise? The answer of course is CONFIDENCE (game). This could be “the straw that breaks the camels back” in the monetary shell game – there is no pea. And ignore the man behind the FOMC minutes

Jan 10, 2013 - 11:15am

slow witted response to bogus

slow witted response to bogus confiscation noise ..

those with out a clue rush forward to mouth platitudes about what some some said .. lol

that non existence stash in your basement is safe

but why get your pants in a knot over something that has not happened .

even in the Roosevelt era who turned in gold but a couple of suckers...

the cry confiscation just gives excuse for not doing anything ..

Jan 10, 2013 - 11:16am

slow witted response to bogus

the cry confiscation just gives excuse for not doing anything ..

Jan 10, 2013 - 11:17am

Will this little pop

Be able to withstand fed comment later in the day?

Or will it be an excuse to smash???

Jan 10, 2013 - 11:22am

Head and shoulders in GSR ?

Been watching this for a little while now, this is the Gold Silver Ratio over the last 2 years, is it just me or is that a head and shoulders formation nearly completed ?

Also I think silver is sitting on very solid long term support now (I predicted a bounce yesterday) :o)

Now to read the article.

ps MrFix and AncientMoney sorry couldn't continue the conversation the other night about possible civil war, appreciated your comments. I hope personally that we can beat them by making them irrelevent, stop voting, stop paying tax (if we all did it, what could they do?) and resist everything non-violently. Ghandi shows the way.

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

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Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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