Strange Days, Indeed

Sat, Feb 9, 2013 - 12:28pm

Most peculiar, mama...

There's so much weird stuff going on, some days it's nearly impossible to know where to start. The Fed and other central banks have so gummed-up the system with their money printing, that almost all traditional methods of analysis, both technical and fundamental, are useless. The financial media, which is either completely uninformed/uneducated or complicit (or both!), SPINs and MOPEs nearly every headline into something it's not, adding significance to the unsignificant and downplaying or outright misreporting those items which truly are important. The result is this current state of bewilderment, a house of mirrors where nothing is as it appears to be.

I just wrote a lengthy essay about this back in October ( so it's not productive to plow that same territory again today. However, I have found some very strange divergences for you to ponder and I need you to consider them within this context.

Below is a table of data taken from various silver CoT reports over the last two years. I've tried to pinpoint information from six, different periods of either price tops or price bottoms. You'll note that, though this is not an exact science, we'll nonetheless be able to draw a few conclusions at the end.


12/31/12 38,291 9,104 4.2:1 45,415 90,751 2.00:1 $29--> ?

8/14/12 32,317 16,730 1.93:1 47,797 71,199 1.49:1 28-->35

12/27/11 24,026 17,171 1.40:1 41,224 55,356 1.34:1 27-->37

10/4/11 23,859 11,959 1.99:1 39,584 58,507 1.48:1 28-->35

6/28/11 27,439 11,441 2.40:1 36,894 66,060 1.79:1 33-->44

1/25/11 38,699 10,473 3.70:1 29,818 72,964 2.45:1 28-->49

So, what deductions, if any, can we draw from this relatively small sample size?

  • First of all, don't get too sidetracked by the gross numbers as they are relative to the total open interest. This is why I've calculated the net long ratio of the specs and the net short ratio of the Cartel.
  • If you throw out the 1/25/11 data, which preceded the HUGE move from 28-49, you see that the average net long ratio of the specs at the bottoms is around 2:1. Additionally, the net short ratio of The Cartel at the bottoms is generally around 1.5:1.
  • Note the gradual increase in the gross long position of The Cartel versus the variance of the gross short position.
  • OK, now let's look at some data from price tops.


    11/27/12 51,804 12,351 4.14:1 42,525 99,317 2.34:1 34-->29

    9/18/12 43,205 10,650 4.06:1 31,884 82,358 2.58:1 35-->30

    2/28/12 38,012 8,009 4.75:1 33,802 78,395 2.32:1 37-->27

    10/25/11 23,660 12,638 1.87:1 38,176 61,692 1.62:1 35-->26

    8/23/11 38,756 11,745 3.30:1 34,281 81,380 2.37:1 44-->28

    4/26/11 43,078 18,083 2.38:1 35,763 78,297 2.19:1 49-->33

  • Note that all three price peaks of 2012 coincided with spec long ratios exceeding 4:1.
  • Outside of 4/26/11 (when they made a pile of $$$), the spec shorts are almost always near 11,000 or so.
  • With the exception of the 10/25/11 top (right before the MFG liquidations), all five other tops occurred when the Cartel net short ratio was in the 2.30:1 area.
  • Excluding the 11/27/12 top, The Cartel gross long position averages about 40,000 at the tops.
  • Now, what kind of general statements can we make, again given this somewhat small sample size?

    • The gross amount of large spec long contracts has grown over time.
    • Regardless of tops or bottoms, the large spec short position remains relatively constant, generally in the 12,000-14,000 area.
    • Though clearly larger in size at bottoms rather than tops, note how The Cartel gross long position has grown over time.
    • Similarly, note the steady growth of The Cartel gross short position.
    • Again, with the exception of the top that occurred with the failure and liquidation of MFG in early November of 2011, the most consistent indicator of tops and bottoms is The Cartel net short ratio. Anywhere near 1.5:1 is a clear buy signal and anything near 2.3:1 is a sell signal.

    Now lets's look at the data released yesterday, based off the closing positions of last Tuesday, the 5th.


    42,449 6,588 6.45:1 46,293 98,239 1.99:1

    So what in the world do we make of this? Can you see where this is all so confusing?

    • At 42,449, the Large Spec gross long position looks more toppy than bottomy.
    • And 6,588 gross shorts is an amazingly low number. The only number even close is the 8,009 from the highs of 2/28/12. Additionally, this puts the spec net long ratio is all the way up 6.44:1.
    • But, before you conclude that the data is indicating a major top, look at the Cartel gross long position. At 46,293 it's just below the high of 47,797 that we saw at the price lows of August, right before the announcement of QE∞ and a price rally from $28 to $35.
    • And the overall Cartel net short ratio is neutral at just under 2:1.

    So, I'm not even going to attempt to draw conclusions from this...because I don't think you can! The main items that I think are significant are these, however:

    1. Currently there's hardly any spec interest in being short. Therefore, very little fuel for a spec short squeeze.
    2. Though there is some fuel for a long liquidation, at $31 how many can be forced out on a dip?
    3. An even if they did, would other "commercial" buying inhibit the ability of JPM et al to cover extensively?
    4. In the end, the single most intriguing aspect of the current reports is the brewing/ongoing Civil War between JPM and everyone else. Uncle Ted has proclaimed that this current data shows that JPM has become the "seller of last resort" and the only remaining "fresh shorter". I think he's right and the stage is set for a massive squeeze, not of the specs but of JPM. We simply need a spark.

    The charts would seem to confirm this stagnation, too. Though I was hoping that the pennants on the hourly charts would close and propel prices higher, instead prices broke down and out back on Thursday. So now we await the closing of the pennants on the daily charts, instead. March, it would appear, is going to be a very interesting month. Until then, it looks like more sideways churn.

    Just a couple of other items you might like before we call it a weekend. First, several folks found this presentation yesterday and emailed it to me. Basically chart porn but fun to look through anyway:

    One of our sponsors, JMBullion, sent me this handy link. Please take a moment to check it out. You'll likely find it helpful.

    And I'd like to close with this. There has been lots of debate here over the past few days over what information is important on "Main St" and what should be taken to the forums. Frankly, since I can't police the site 24 hours a day, you all have quite a bit of latitude. The number one thing that we all must keep in mind is this: I built this site to help and to educate. Though prepping and conspiratorial topics are sometimes interesting and enlightening, the main focus must remain on metals and investing. To that end, please consider this email that I received late yesterday. My goal is not to be some type of draconian czar who rules content with an iron fist, however we must remain relatively on-point at all times if we are to do the greatest good. I ask you to always use discretion when posting and to consider whether or not your are helping the site to succeed in its overall mission.

    Hi Turd
    I've been a member of this site for a year and 4 months and a reader for a while before that. I am not typical of those who make up the vast majority of membership. I am female, unmarried and make under $40k a year. I am just an average person who, by a most fortunate turn of events, found your site and it changed my life. Blinders came off and I began to see the world for what it really was. My very small stack is held by very strong female hands. Thank you for helping me see ways to save my financial future. I suspect the creation of this site was to reach as many people like myself..former sheeple.
    I live on Mainstreet...I read every post, every day and am energized by the thoughtful and insightful posts...even the provocative ones..however..
    I am in the camp of common sense. This is a metals blog and all things relating to it, and I accept and appreciate the ancillary topics that get brought up and the subsequent discussions that result. What I am really really REALLY finding difficult these days is the proliferation of all these posts that you have repeatedly asked folks to take to the forums, ESPECIALLY the political wing nuts. The "you must have issue with my smarmy, irrelevant and arrogant posts which push my own agenda and bring nothing of value to this blog because you're a liberal bastard" kinds of thing going on. I adore Dr. J, Ivars, Steve, Green Lantern, Cal Lawyer and of course..DPH! Many others too...Mainstreet is FILLED with wonderful minds and I am in awe of these folks. I know you make requests periodically to us members to keep Mainstreet "clean", but these same individuals will behave for a short while then decide to vomit all over this forum yet again.
    I have an ignore button and yes, I do know how to use it, but it's the discourse that those posts create that I find particularly distressing. I can only speak for myself, but I suspect there are many many more like me who have fled in silence rather than deal with the muckrakers. So I respectfully someone who truly loves this site and visits every day and listens to your message..can something be done to keep Mainstreet focused?
    Thank you for all you do, **********

    Have a great weekend. See you Monday and be prepared for volatility as the Chinese New Year holidays begin.


    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Feb 9, 2013 - 12:31pm

    Every Day

    Is a strange day....

    Mr. Fix
    Feb 9, 2013 - 12:34pm

    It is always worth a try.......

    Still digging, but sometimes it's nice to come into the warmth and take a break.

    Be back later, I just couldn't resist.

    El Gordo
    Feb 9, 2013 - 12:38pm

    If you can't be first...

    ...then go ahead and read the article. Nobody remembers who came in second.

    Feb 9, 2013 - 12:41pm

    Had to give it a try ...


    edit: Of course not. First loser. Nicely done, Nana.

    As long as I'm here, I might as well weigh in on the ongoing discussion from the last couple threads. Personally, I don't have a problem with the varied discourse found here. PMs all the time, every time would make my eyes glaze over. If things start to get a bit OCD on a particular topic, it's easy to scroll past additional posts that add nothing. Flip side, I've learned valuable ideas about gardening and recipes, stacking and canoe management, life in other parts of the world and see an endless supply of stories about important social and economic news I would never have the time or patience to locate.

    Thank you Turd and Turdites! This is a resource unavailable anywhere else. And that, my friends, is a big statement considering the combined resources of the interweb.

    wax off

    Feb 9, 2013 - 12:51pm

    top 10

    my lucky day


    Feb 9, 2013 - 1:02pm

    The only thing we have

    The only thing we have to fear, is fear itself and remember to be fearless with your stackin.

    Stack'em High
    Feb 9, 2013 - 1:03pm

    Thanks Turd...

    I was just getting ready to label you a COT tease...

    Feb 9, 2013 - 1:11pm

    Top Ten-ish

    Dr. Benjamin Carson's Amazing Speech at the National Prayer Breakfast with Obama Present
    Feb 9, 2013 - 1:25pm

    @waxybilldupp - Well Stated

    While I respect what the gentle lady had to say in her email, the ever-changing currents on this blog led me and my family to the Whiskey Bacon Jam recipe in 2012 and what that has to do with precious metals and the world of Benank fiat plunder is beyond explanation.

    P.S. Does anyone have the number of Whiskey Bacon Jamoholics Anonymous?

    Feb 9, 2013 - 1:29pm

    I read the article first, then posted.

    But since I have been first once or twice and have enjoyed the benefits of Pinings "First Club" it is not so important to me as it once was.

    My sincere thanks to all who have provided some perspective for me in the past few days with my questions about houses, selling silver, and 401K investing. THAT is why I am addicted to this site.


    Just because I am sick of grading paper and looking for something else to do...

    The Preppers Prayer: "Oh Lord, send, I pray Thee, aggressive buyers with strong hands to break the power of evil people in their despicable manipulation of our money. Lord, deliver our stacks from this vile suppression before our society crumbles that we might better care for and help others in their dire need as your wrath is visited upon the usurpers of our nations and economies. Let Thy justice be swift upon the bloodthirsty thieves and thy compassion generous to those with an upright heart!""


    Hope nobody minds a bit of spirituality today!

    waxybilldupp Swineflogger
    Feb 9, 2013 - 1:33pm

    WB Jam

    My point precisely, Swineflogger. WBJ has a continued presence in my refrigerator. 6 half-pint jars per batch. When the last one is opened, a new batch is sure to follow soon. We can all thank Xty for opening that door. Where else can one find such valuable, perhaps, ... dare I say it? .... life changing information.

    wax off

    Feb 9, 2013 - 1:35pm

    Here's To XTY!!!!!!!!!!!!!!!!

    wbu you did not forward the phone number . . . . .

    Feb 9, 2013 - 1:36pm

    With apologies to the on-topic gods

    This recipe was from the same episode as the jam, and we made it the other day, using cinnamon (because the suggestion surprised me) and way more bacon than he calls for. It was fabulous.

    This beautiful pork tenderloin is wrapped in bacon and sprinkled with herbs. A quick, easy and incredibly delicious dish.

    Preparation time:
    Cooking time:
    Yield: 2

    1 pound pork tenderloin
    3-4 slices of bacon
    1/2 teaspoon salt
    1 tablespoon brown sugar (or your favourite sweet)
    1 teaspoon herb or spice, dried thyme, fresh rosemary or ground cinnamon
    1 tablespoon any mustard
    lots of freshly cracked black pepper

    Directions ...

    Feb 9, 2013 - 1:41pm

    Great Post.

    Thanks Turd. Great insights and much appreciated. The data does seem to be darned confusing. I guess that's what happens when everything is so dramatically disconnected from true market (and price discovery) fundamentals.

    This sideways chop is tiring, to say the least. But, we are on the right side of this mess as we prepare and stack ever on. I've said it before and I feel a fool to say it again (my wife reminds me of this weekly) .. But, I just get this feeling in the pit of my stomach that things are drawing to a head. March does look to be an interesting month, indeed.

    And - thanks for posting that letter from the lady Turdite. I have to say that I am pretty much 100% on side with the thoughts conveyed in that letter.

    Feb 9, 2013 - 1:42pm

    Saturday Morning Market News (late edition)

    Bretton Woods III? - Sanjeev Sanyal, Project Syndicate

    Our Fear Of Debt Is Misplaced - Zachary Karabell, Washington Post

    Mess With the Bull, You Get the Horns - Peter Schiff, Euro Pacific

    Something Smells Fishy in S&P Case - Paul Sperry, Investor's Business Daily

    China GDP, S&P Ratings: Who Can You Trust? - Bruce Bartlett, FiscalTimes

    Markets Primed for Surprise Decline - Michael Gayed, MarketWatch

    Three Reasons We Are Not in a Stock Bubble - Jeff Macke, Breakout

    Put Europe Back on Your Radar Screen - Jim Cramer, TheStreet

    Why the Herd of Bulls Missed Apple's Fall - James Stewart, New York Times

    A Red Light for Cupertino from Einhorn's Greenlight - The Economist

    Einhorn's a Hustler and Is Clueless About Apple - Rocco Pendola, TheStreet

    How You Can Profit From Global Currency War - Jim Jubak, MSN Money

    Fortunes to Be Made in Asteroid Mining? - Josh Wolonick, Minyanville

    The 3 Scariest Letters for Bondholders: L-B-O - Matt Egan, Fox Business

    Why Municipal Pension Systems Are Terrible - Josh Barro, Bloomberg

    States Push Back Against Obama's Tax Addiction - Rex Sinquefield, Forbes

    Big Coal's Big Problems Are Getting Bleaker - Brooke Jarvis, Rolling Stone

    America's Great Oil Revival - William Tucker, The American Spectator

    Stop Whining and Learn To Love the Sequester - Laurson & Pieler, Forbes

    The Worst Five Years Since the Great Depression - Peter Ferrara, Forbes

    Kick the Spending Can Down the Road - Paul Krugman, New York Times

    Why the Markets Ignore CBO Forecasts - Elizabeth MacDonald, Fox Business

    A Hollow Case for Too Big to Fail Banks - Simon Johnson, New York Times

    The Fed's Global Unintended Consequence - Rebecca Patterson, CNBC

    Monetarists Don't Seem to Get "Monetizing" - Jeff Snider, RealClearMarkets

    Erasing Ronald Reagan's Pro-Growth Record - Mark Hendrickson, Forbes

    A Debt-Ceiling Strategy Courtesy of Warren Buffett - Steve Conover, AEI

    B&N Getting Out of Bookstore Business - Megan McArdle, The Daily Beast

    Amazon's Plan to Create Its Own Currency - Matthew Yglesias, Slate

    Has China Quietly Joined the Currency War? - Dhara Ranasinghe, CNBC

    China's Cheap Workers Disappearing - A. Evans-Pritchard, The Telegraph

    Is Michael Dell Stealing Dell? - Michael Comeau, Minyanville

    Dell Buyout a Test for Private Equity - Suzanne McGee, The Fiscal Times

    Restored Payroll Tax Pinches Working Poor - Nelson Schwartz, NY Times

    No One Remembers The Last Bond Bear - Roben Farzad, BusinessWeek

    Are Junk Bonds Ready For A Fall? - John Waggoner, USA Today

    Uh Oh, Americans Are Tapping Home Equity Again - Diana Olick, CNBC

    Why Do Banks Get Away With Murder? - Daniel Gross, The Daily Beast

    The Value Of The "i" Ecosystem - Vitaliy Katsenelson, Institutional Investor

    Cash Is Still King & He Lives In Cupertino - Jim Cramer, MSNBC

    Could Microsoft Be The Next Dell? - Brett Arends, MarketWatch

    Should The Fed Pop Bubbles? - Neil Irwin, Wonkblog

    Feb 9, 2013 - 1:45pm

    main street focused?

    i like it just fine unfocused.................i do not want to be focused.

    and anyone who pushes a 'liberal' aganda here can do it all they want to.............i will take exception to their 'ideas' not their 'parentage'.

    and i will NEVER ask turd to 'clean the place up' so i can read freely without reading something political i dissagree with.

    when i get tired of 'taking exception'.......i'll stop.

    but this is his house he can run it as he sees fit.............and then i can make my choices.

    Feb 9, 2013 - 1:47pm

    Outstanding post, TF

    A ton of work went into that one, thank you for the excellent information. A few things that stood out to me:

    1. At every top but the MFG liquidation, the number of Spec longs exceeded the number of Cartel longs every time... and that condition isn't present right now.

    2. In the last five months, Cartel longs have increased by 15,000 contracts... that isn't chump change.

    3. If JPM DID want to get out from under their short position (rumored in the neighborhood of 33-35,000 contracts), their ability to do so is really limited. The last beatdown from 34-29 harvested around 15,000 Spec longs who were forced to sell... that is a 5 dollar move and they would not even be half done covering that position. It's actually worse than that for them, because others (spec shorts covering, and raptors in the cartel adding longs) ate up most of those Spec long liquidations in that move... So JPM didn't wind up covering much of anything, despite a five buck drop. And since we are at 30.44, a five dollar move to below 26 would surely result in a massive flood of people buying the crap out of that number... myself included.

    So they are well and truly trapped. No wonder they just keep doing what they've been doing... they have no other choice. Bail faster Mr. Dimon!!!

    Feb 9, 2013 - 1:48pm

    The Buy Eagles link...

    I posted on Thursday that I wouldn't be buying ASEs going forward due to counterfeiting concerns and then I went out on Friday and bought one when I realized I had one tube with only 19 in it... yes, those types of things bother me.

    The biggest thing I am reminded of by reading that article is something that I had thought of in the past... How much "junk silver" has actually been melted down at this point? And more importantly, and certainly almost impossible to ascertain would be, what coins may have been made more valuable in a numismatic sense from all of this melting down that has occurred through the years. In speaking with a dealer who was in business during the Hunt brother $50 oz run up, he concurred what I initially suspected, there was never any time to even briefly glance through the coins that were passing through his store on the way back out immediately before he ended up taking any kind of chance on losing money. Bags, boxes, and bucket fulls were being pushed through this hectic period with no regard to their numismatic value... premiums on the melt values were outpacing the collectors value on a daily basis. We know how many were minted, and there is a general assumption about how many coins would have simply been lost as a percentage of the total minted but what really makes me wonder is if any types, dates, etc were turned in at an accelerated rate as opposed to others? You would think that any coin that already had a numismatic premium would have been left out of what was being turned in but was that really the case? One would think that more modern and plentiful coins would have been the ones that were being sold more often and if that is true then why do coin collectors consider them more common? Perhaps only a very small percentage of the coins that were sold were actually ever melted? I guess the point would be that if you are mainly a buyer of junk silver you may actually have some added value in your stack but how that will ever be determined seems to be a hurdle that will never be cleared, at least I can not think of a way to ever figure that out.

    Something to consider any ways... perhaps another reason to choose junk over ASEs??

    Have a great weekend! For all of those shoveling... I feel your pain...

    waxybilldupp George Clooney
    Feb 9, 2013 - 1:49pm

    No apology required, Xty

    I saw your post and proceeded directly to the freezer to take out a pork tenderloin that was just hanging out in there. I now know what's for dinner. Just happen to have some butternut squash in the garage, left from the garden. It should go nicely with the tenderloin. I love this place! Off topic? NOT!

    wax off

    Feb 9, 2013 - 2:05pm

    Saturday Morning World News (late edition)

    The Coming War in the Middle East - Joel Rayburn, Defining Ideas

    Drone Warfare Is Right and Moral - Mark McKinnon, Daily Beast

    Drones Can't Solve All of Our Problems - David Rohde, The Atlantic

    Obama and the American Drone Awakening - Michael Hastings, BuzzFeed

    Drones Better than Boots on the Ground - Con Coughlin, The Telegraph

    U.S. Media Complicit in Obama's Drone Doctrine - Neil Macdonald, CBC

    The World George H. W. Bush Built - Robert Kaplan, Stratfor

    Soviet Lessons for the Arab World - Anne Applebaum, National Post

    Tunisia No Longer a Revolutionary Poster-Child - Rachel Shabi, Guardian

    7 Reasons China and Japan Won't Go to War - Trefor Moss, The Diplomat

    Can Social Media Disarm Syria's Chemical Arsenal? - Eli Lake, Daily Beast

    Rand Paul's Very Conventional Foreign Policy - Robert Kagan, Wash Post

    Why Paul Can't Go Bold on Iran - Daniel Larison, American Conservative

    The End of the Latin American Left - Alvaro Vargas Llosa, Foreign Policy

    Is Chavez More Powerful than Ever? - Carlos Mendez, America Economia

    Global Fertility Will Determine U.S. Immigration - Jonathan Last, LAT

    The Future of Global Cities - Brian Lee Crowley, Ottawa Citizen

    Digging Up the Buried Beer at Hotel Timbuktu - Thomas Fessy, BBC News

    We'll Thank Bush for Shaking Up Mideast - Nadim Shehadi, World Today

    Britain Is Completely Dysfunctional - Matthew Norman, Daily Telegraph

    Why North Korea Is Testing Nukes Now - Andrew Natsios, World Report

    Obama, Your Iran Policy Is Failing - James Traub, Foreign Policy

    Obama's License to Kill - Patrick Buchanan, American Conservative

    China, Japan Dispute Gets Increasingly Dangerous - The Economist

    5 Myths About Obama's Drone War - Mark Jacobson, Washington Post

    Germany Begins Its Own Drone Debate - Thomas Darnstaedt, Der Spiegel

    Morsi's Hamas Connection - Jonathan Tobin, Commentary

    Britain's Vaunted Health Service a Shambles - Ross Clark, The Spectator

    EU Approach to Asia Makes No Sense - Paul Gillespie, Irish Times

    Pushing the Chavez Era Toward Its End - Federico Delgado, RealClearWorld

    Assessing Israel's Strike on Syria - Michael Weiss, World Affairs Journal

    Russia's Odd 'Gay Propaganda' Ban - Julia Ioffe, The New Republic

    A New Golden Age of Irish Whiskey - Clifford May, American Spectator

    The Ayatollah Always Says No - Wall Street Journal

    Korea Must Unite Over Threat from the North - Chosun Ilbo

    When Beef Lasagna Is Really Horse Lasagna - The Scotsman

    A Good Night's Work in Brussels - The Independent

    America in Strategic Retreat from the Mideast - INEGMA

    State of the Global Jihad Online - Washington Institute

    North Korea's Bad Nuclear Investment - Chatham House

    America Needs a Fresh Policy on Cuba - Hoover Institution

    Why I Turned on Julian Assange - Jemima Khan, New Statesman

    While U.S. Pivots East, China Is 'Marching West' - Yun Sun, Foreign Policy

    Rebels Prepare to Take a Province from Assad - Rania Abouzeid, Time

    Mr. Obama, Stop Supporting Morsi Regime - Bahieddin Hassan, Al-Ahram

    Egypt's Corruption Problem - Sahar Aziz & Derek Clinger, CNN

    The Uneasy Egypt-Iran Courtship - Alan Philps, The National

    Rand Paul's Seminal Speech - Robert Merry, The National Interest

    Scottish Independence a Road to Nowhere - Adam Tomkins, The Scotsman

    10 Russian Myths About U.S. Adoptions - Michael Bohm, Moscow Times

    Can Vietnam Reform? - Steve Finch, The Diplomat

    Stack'em High
    Feb 9, 2013 - 2:10pm

    90% coins AKA junk...

    Isn't accepted at the Citadel...

    Step Two: Fill out the Application Form and submit the application/reservation fee. If your application is not accepted, your application/reservation fee will be refunded (minus a $33 administrative fee). If you are offered residence, the full deposit will apply to your lease! The application/reservation fee is $208 and may be paid via PayPal, FRNs (check or Money Order) or a combination of Gold and/or Silver US Eagles (Silver or Gold Eagles ONLY -- no 90% coins). guess I won't be a resident there... They accept FRN's but NOT 90%???
    Feb 9, 2013 - 2:17pm

    I think a little thread drift is OK on weekends

    If Boatman and I can get the word out about a few cheap minerals solving pr0blems big Pharma wants you to spend $200/month on, that is a good use of weekend time, because after TGKE, those expensive drugs won't be available.

    Bacon seems to be a precious metal. Ba is already taken by barium, but Bc and Bn haven't, IIRC. Ergo, BcO2 is crispy bacon, and BcC2H5 is what is left in the pan afterwards.

    Last post on previous thread. My greyhound ate a bunch of raw bacon last night. What's left of it may be in the back yard now. Is trichinosis still a big deal?

    And, don't let you cat drink chlorinated/fluorinated water!

    Feb 9, 2013 - 2:20pm

    Excellent Work!

    Thanks for all the hard work Turd. Clearly a lot of time to put the data together. It is very interesting and one can only wonder who the LS are? In spite of the continual beat downs in the price of silver off the last run at $35 it seems that the cartel just hasn't been able to milk those LS longs like they have traditionally done in the past. Combine that with the dramatic drop in LS short positions and again one has to wonder, as many are beginning to, whether these current LS are not very strong handed, very deep pocketed entities not swayed to puke up their positions on the orchestrated waterfall takedowns and are more than willing to take on JPM. How many times recently have we seen OI rise on the waterfall take downs and a CoT report showing JPM's inability to cover on them? One would like to think the JPM wouldn't be dumb enough to keep doubling down, but then, they've shown very recently that they are (London Whale). How many reports are coming out of KWN recently about a massive short squeeze in silver. Are they all wrong or do they really know more then the average Joe? And it is beyond reason how in the world the CFTC can continue to look the other way when the evidence between the CoT and BPR shows the JPM is short at least 35% of the entire Comex silver short position which clearly violates current commodity laws. If that was a long position (Hunt Brother's) is there any doubt in anyone's mind as to just how long it would take the same regulator to step in and put a stop to it. Interesting to that one of the biggest gold/silver bull websites that daily puts forth pertinent information telling of the foreboding and imminent collapse of the current system and where gold and silver are headed get viciously hacked and shut down. Strange days indeed. I'll take these prices as long as I can to continue to stack.

    Feb 9, 2013 - 2:22pm

    90 %

    Turd cracks down just after I completed my 27 page post on chemtrails!

    90%- Lowest premium

    Halves, quarters, and dimes are fractional/divisable

    Price will have to go really, really, really high for them to start counterfeiting dimes

    Easily recognized

    IF we do hit massive deflation, you can spend it at face

    Picky Nicky
    Feb 9, 2013 - 2:26pm

    Yes - Keep It Focused!

    I'm another "average person" who follows this site, and want to give a strong second to that email. I'm also perfectly capable of hitting the "ignore" button myself. But I'd like to be able to refer others to the site, and all it takes is a couple of those "political wing nut" comments to blow both the site's credibility and my own. Thanks Turd, both for the work you do and for the concern about keeping things focused.

    Feb 9, 2013 - 2:28pm

    A few tidbits

    An emerging markets hedge fund manager had an interesting outlook...said we are moving from Goldilocks to Delusion in the markets....right now the market is pricing in the end of QE and improvement in jobs and the economy. He said over the next 2-3 months this will be proven to be ridiculous of course and was very bearish on China and Europe and that the U.S. is the best house in a bad neighborhood. Ultimately he sees a breakup of the Eurozone with Greece exiting first perhaps followed by a big name like Spain. Obviously this would be bullish for gold as people would move to protect cash from devaluations that would occur from leaving the Euro.

    Another consultant that I respect was also bearish because of the can kicking and debt and thinks that inflation is the only way out. He doesn't like gold but thought the miners had good value here.

    Feb 9, 2013 - 2:32pm

    Only a matter of time...

    Across Europe, economic growth is faltering and in many Eurozone countries, sovereign debt yields are dangerously high.

    The World Gold Council has been exploring ways that Eurozone Member States could use their gold reserves to help bring down the cost of borrowing.

    We believe that using a portion of a nation's gold reserves to back sovereign debt would lower sovereign debt yields and give some of the Eurozone's most distressed countries time to work on economic reform and recovery.

    The following video explores why such a measure could offer an alternative to austerity for the Eurozone.

    Gold-Backed Bonds: An Alternative to Austerity

    Gold as collateral

    Gold is increasingly being used in the financial system as a source of high-quality collateral. Its lack of credit risk and countercyclical behaviour make it ideal for this purpose. The European Market Infrastructure Regulation (EMIR) now permits Central Counterparty Clearing Houses (CCP) throughout Europe to accept gold as collateral. Gold’s use as collateral at commercial banks is also growing. Gold could also serve this function in the public sector, enhancing the credit quality of government bonds and lowering bond yields

    Gold-backed sovereign debt

    As Eurozone policymakers continue to seek out a comprehensive and lasting solution to the Euro crisis, the key questions remain: how to stem the unsustainable borrowing costs now facing the most challenged Eurozone countries, stimulate the growth required to pay down debt and emerge as self-sustaining robust economies. Numerous potential solutions to this dilemma have been proposed, some of which have focused on how to get the most out of the substantial gold reserves currently held by European Central Banks.

    The Eurozone’s gold reserves stand at over 10,000 tonnes, and it is well known that some of the countries worst affected by the crisis, including Portugal and Italy, are responsible for a significant proportion of these assets. These reserves have served those countries well over the years, not least over the last decade, thanks in part to gold’s unique wealth preservation characteristics. Nevertheless, the question is rightly being asked as to the role that these gold reserves can, and should, play to help alleviate the problems now facing the Eurozone and the individual member states within it.

    Most agree that outright sales of gold are not the answer. Aside from the obvious problem that the outstanding debt level of the struggling European countries far surpasses the value of their gold reserves, existing EU laws prohibit such a move to finance governments, as do the provisions of the Central Bank Gold Agreement, which limits gold sales in order to protect the collective value of Western Europe’s reserves. To illustrate this point, the gold holdings of the crisis-hit Eurozone countries (Portugal, Spain, Greece, Ireland and Italy) represent only 3.3% of the combined outstanding debt of their central governments. A one-time sale of all of their gold reserves would probably not cover even one year’s worth of their debt service costs. This would be akin to an individual selling everything they owned in order to make one month’s mortgage payment.

    If we exclude gold sales therefore, what contribution can gold make to a comprehensive and robust solution? We believe that gold could be leveraged in the short term to allow Europe the much needed time to arrive at longer term corrective measures. In particular, this could be done by partly collateralising new government debt, which we estimate could be issued at substantially lower yields than existing debt.

    The European Central Bank (ECB) intends, with its proposed third round of secondary bond market purchases called Outright Monetary Transactions (OMT), to reduce bond yields in the most distressed Eurozone countries. It is trying to fix the “monetary policy transmission mechanism”. In other words, it is trying to bring sovereign debt yields closer to the official Refinancing Rate set by the ECB which currently stands at just 75 basis points.

    The OMT and the ECB’s other bond buying programmes have undoubtedly been controversial. While the purchase of government debt in the secondary bond market is not expressly prohibited, for many it has been tantamount to government financing. It has other perceived shortcomings too. Some have argued that by buying back debt, the ECB reduces the incentives for distressed countries to pursue structural reforms. There is also a perceived threat of inflation if the ECB’s purchases are not fully sterilized.

    Our analysis shows that using gold reserves to collateralise government debt could achieve the same reduction in yields without the SMP’s associated shortcomings. Firstly, it would not represent a fiscal transfer from one country to another, as a country would use its own gold, to lower its own interest rates, to jump start its own economy. Nor would this disincentivise countries from pursuing much-needed structural reforms. Quite the opposite, the threat of losing one’s gold would surely act as a catalyst. And it would most certainly not be inflationary. Gold is as hard and real an asset as you can get. Finally, it would not affect the ECB’s balance sheet, as the gold that still remains with national central banks would, we estimate, be more than sufficient to collateralise the bonds.

    In the Eurozone, gold is held and managed by the European System of Central Banks and decisions on its use are made by the Governing Council regardless of whether or not it has been transferred to the ECB. The Governing Council could, we believe, direct a national central bank to use its gold reserves in such a manner under its secondary objective of supporting the general economic policies of the European Union. Or indeed, justify it in the same manner as it did the SMP.

    Europe faces an exceptionally challenging period and unconventional policy responses are called for. A gold-backed bond would seem to offer at least a partial solution to Europe’s woes.

    Feb 9, 2013 - 2:37pm
    Feb 9, 2013 - 2:38pm

    Gold, the renminbi and the multi-currency reserve system

    Vid at link...

    Gold, the renminbi and the multi-currency reserve system

    Demand for gold is likely to rise as the world heads towards a multi-currency reserve system under the impact of uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds.

    This is the conclusion of a wide-ranging analysis of the world monetary system by OMFIF, the Official Monetary and Financial Institutions Forum formed around a core of public sector asset and reserve holders at the heart of world finance.

    Driven by China’s desire to increase its financial influence, the Chinese renminbi is likely to emerge gradually as a genuine international currency as Beijing eases restrictions on its use in transactions and investments abroad, but is unlikely to pose any immediate threat to the dollar.

    Any setbacks to the renminbi’s rise as a reserve currency will probably benefit gold as a result of doubts about the overall strength of world monetary arrangements.

    The OMFIF report, the product of analysis of historical and contemporary data and discussions with global policy-makers and financial experts, explores the consequences for official asset management of greater dispersion of economic power around the world. It states: ‘The world is headed towards the uncharted waters of a durable multi-currency reserve system, where the dollar will share its pivotal role with a range of other currencies, including the renminbi.’

    The OMFIF report includes a foreward by Prof. Lord (Meghnad) Desai, chairman of the OMFIF Advisory Board. In reflecting on the different economic scenarios for the five years 2013-18 which the report studies, he states: ‘Whether the world moves into full crisis with the end of the euro, or whether we have a recovery, or whether we experience something in between: all paths lead to towards a multi-currency system, in which gold’s role is likely to become more significant.


    Dated but relevant and still significant...

    China should increase gold reserves to internationalize RMB

    Bankers hold gold ingots in Hong Kong. (Photo/Xinhua)

    It is imperative for China's central bank to increase its gold reserves and reduce the proportion of the US dollar in its foreign reserves if the renminbi is to become the world's dominant currency.

    Gold accounts for only 1.5% of the People's Bank of China's foreign reserves of US$3.6 trillion, a proportion lower than that of most western countries.

    This phenomenon is also seen in Japan, with gold accounting for less than 2.7% of Japan's foreign reserves, estimated at US$1.5 trillion. However, Japan faces greater challenges in its attempts to cut its dependence on the dollar, as it has to deal with pressure from Washington and the prospect of a rising yen.

    The low proportion of gold in the foreign reserves of China, Japan, Taiwan and Asian countries in general results from a lack of appreciation of the gold standard as a monetary system.

    European countries including Germany, France and Britain, which have a thorough knowledge of the gold standard, insist on maintaining a specific level of gold in their foreign reserves.

    China should now rapidly increase its gold reserves, without pushing up prices of the precious metal excessively. It could pursue this goal by mining gold in the country on a larger scale, buying gold from overseas and launching US dollar-denominated gold passbooks.

    With regard to the last measure, China could adopt the Taiwanese model of allowing the use of the US gold passbook as a non-resident account to hedge against inflation or currency fluctuation, which is sure to help the central bank increase its gold reserves while reducing its US dollar holdings.

    Feb 9, 2013 - 2:43pm

    Currency Wars: episode 743229, in which the ECB floats a balloon

    Sun, Feb 10, 2013
    Euro tumbles amid ECB inflation fears

    The euro declined the most since July versus the US dollar after European Central Bank (ECB) President Mario Draghi said a strong currency could slow the region’s economic recovery, lifting bets the bank may lower interest rates.

    The yen declined against the greenback for the first time in 13 weeks as the Bank of Japan (BOJ) governor said he will step down early, accelerating a transition that may aid the prime minister’s plan for monetary easing. The BOJ will meet on Tuesday. The euro fell against all but two of its 16 most-traded peers this week as Italian and Spanish bonds slumped amid political turmoil....


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