Forewarned is Forearmed

354
Thu, Mar 7, 2013 - 3:31pm

Just because, as you know, I certainly don't have all the answers.

So, here's the deal. You know I'm always going to be long-term bullish and I'm always going to be intermediate-term bullish, too. I'm even almost always short-term bullish simply because the fundamentals are so overwhelmingly positive. To that end, when we get steep declines like we've had over the past four months, I'm always going to looking for The Bottom...that moment in time when it's safe to return to the water.

As you know, I'm currently:

  • Closely watching the CoT every week
  • Monitoring open interest changes daily
  • Checking not just the charts but other technical indicators such as RSI and MACD
  • Following other "commodities" for signs of bottoms and trend change
  • Trying to get to the bottom of this "is it or is it not backwardation" deal
  • Because I am a strong believer that fundamentals ultimately drive markets AND an equally strong believer that The Bullion Banks actively manipulate and suppress price on behalf of global central banks, I see the current selloff as unsustainable. The never-ending fiat currency devaluation is leading to ever-increasing, global demand for gold and silver, particularly from creditor nations with substantial dollar reserves. I know this to be true and and this belief is reinforced by almost-daily media reports of central bank gold purchases. Bullion bank price suppression has now driven price to the point where future, significant selling seems unlikely.

    It can happen, though.

    Look, I stated about 75 words ago that I am a strong believer "that The Bullion Banks actively manipulate and suppress price on behalf of global central banks". Just who am I to say that they can't take price down even farther? In a post-MFG world where open interest (market participation and liquidity) has declined well over 30% from just 2-3 years ago, who's to say that the BBs can't do just about anything they want? Again, physical demand should prevent this but the italicized, operative word there is "should". I can't say for certain that it will.

    To me, the main caution signal emanates from JSMineset. Santa has been warning for weeks that a "washout" that would "test the resolve of every bull" was coming. Heck, he's even formed this "Comet Gold Resistance Movement" in an attempt to give stackers the wherewithal to stand firm in the face of any coming volatility.

    And then you've got Santa's old friend, Trader Dan, castigating me for searching for a bottom here and criticizing my efforts to find a bottom through the use of Sandeep's gold basis methodology. Not trying to reach too far here but, if Jim senses (knows?) that a major selloff is still coming, wouldn't you think he'd share that information with his old friend, Trader Dan? By calling me out, was Dan trying to save me the embarrassment of searching for a bottom just as the rug is pulled out from underneath the market?

    And furthermore, what do you make of this? A learned and wise friend sent me this in an email earlier today. Because I haven't yet gotten permission from him to C&P and use his name, we'll just call this an "anonymous source". The wisdom and thinking here is pretty clear and must be fully considered:

    "It is a matter of basic arithmetic/economics that there is a bullish and bearish scenario for both contango and backwardation. Putting aside which scenario I find most plausible, I find it alarming when commentators show no awareness of the existence of the other argument.
    Specifically, backwardation in the current environment of falling prices is precisely what one would expect to see in a sector which is about to crash. The lower-and-falling futures price is telegraphing the collapse of the market.
    I'm not meaning to single-out you and Andrew Maguire here, as this is something I'm seeing/reading everywhere. I just happened to be listening to your clip today. However, if the bankers should be successful in engineering another Crash-of-'08 collapse in metals prices, all such commentators will lose credibility.
    Just like all the mainstream clowns in 2008, they will say they were "surprised" by the collapse of prices - despite the fact that futures prices were telegraphing that price-collapse through backwardation in a falling market.
    Note backwardation in a rising market implies the opposite. It implies precisely what you, Maguire and others have been saying -- a "tight market".
    Obviously metals prices should be going straight up given all the new-and-escalating money-printing. However, when we're telling people "what the market is saying" (these absurdly manipulated/fraudulent markets), at the very least we have to acknowledge what is being suggested: that bullion prices are about to collapse."

    So, what's the point of all this? Let's go back to where this thread began. I don't pretend to have all the answers and I'm not going to try to convince you that I do. Oh sure, I'm bullish. Long-term, I firmly believe that the metals are going to be revalued multiples higher as a new, global financial regime overtakes the current, dollar-based system. In the very short term, however, nobody knows what's going to happen. We can guess at things based off of years of experience but the future, both short and long term, will be influenced by an almost infinite number of variables. I will continue to tell you what I think...that's my job. But it is your job to fully consider not just what I think but every other information source that you perceive to be valuable. My hope is that posts such as this will serve to keep you on your toes...diligent and vigilant, yet confident in your plans for The End of The Great Keynesian Experiment.

    TF

    About the Author

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    turd [at] tfmetalsreport [dot] com ()

      354 Comments

    csquared13
    Mar 7, 2013 - 3:39pm

    good stuff Turd...i think

    good stuff Turd...i think being open-minded about direction (in all markets) is key to preserving capital and being successful.

    stackers should probably look to buy a smackdown if one materializes, while traders may want to step aside and wait for their systems to give them an entry signal before getting back in.

    different strokes for different folks.

    Outfitter
    Mar 7, 2013 - 3:44pm

    The sky is falling

    The sky is falling or it's not.

    Got it!

    dannyhaha
    Mar 7, 2013 - 3:46pm
    Fr. Bill
    Mar 7, 2013 - 3:48pm

    Furth

    Not so good as Furst, Secund, or Thurd, but I'll take what I can get.

    Grigeo csquared13
    Mar 7, 2013 - 3:51pm

    US National Debt Clock

    Anyone take a look at the US National Debt the last few weeks? Disorderly rise, even by US Debt standards. The CBO forecast came out on February 5, projecting a $845 billion deficit, see below:

    "CBO forecast that the deficit for fiscal 2013, which ends September 30, will shrink slightly to $845 billion after four straight years above $1 trillion. The reason is an improving economy and higher taxes paid by wealthy Americans.

    The CBO analysis, which will feed into Congress’ bitter debate over how to tame deficits, assumes that $85 billion in automatic spending cuts will launch as scheduled on March 1. … It forecast a $616 billion deficit in fiscal 2014 and a $430 billion deficit in fiscal 2015, equivalent to 2.4 percent of U.S. gross domestic product at that time, a level that many economists view as sustainable."

    Well, in fiscal year 2013 it has now gone from $16,159,487,013,300 on October 1 to $16,692,238,790,019 on March 6. An increase which projects to a $1.25 trillion deficit in fiscal year 2013. Not a sign of good forecasting when your projection is pretty much mathematically impossible within weeks of the forecast.

    prius_driver
    Mar 7, 2013 - 3:51pm

    Would you like it here or there?

    I would not like it here or there. I would not like it anywhere. I do not like green eggs and ham. I do not like them, Sam I Am!

    Mr. Fix
    Mar 7, 2013 - 3:56pm

    Thank you for the new thread,

     too much "bullying" going on in the last one.wink

    Outfitter
    Mar 7, 2013 - 3:58pm

    Just sayin

    Anything could happen at this point.

    Though I know that significant efforts are being made to end the manipulation and naked shorting, nothing would surprise me at this point.

    I find funny, too, that every single website and newsletter proudly proclaims that they know exactly wtf is going to happen next, and, apparently, that's just fine and dandy. But when I concede that we are at a dangerous point where everything is on the table, some will undoubtedly accuse me of being wishy-washy and trying to have it both ways.

    Whatever.

    Mr. Fix
    Mar 7, 2013 - 4:00pm

    Agreed

    Though much appreciated, it was time to shift the focus back to the task at hand.

    Mudsharkbytes
    Mar 7, 2013 - 4:00pm

    Top ten?

    Maybe..

    The Vet
    Mar 7, 2013 - 4:01pm

    Turd, to make the following statement,

    "Specifically, backwardation in the current environment of falling prices is precisely what one would expect to see in a sector which is about to crash"  you have to assume that "the market" (i.e. the combination of all the participants who make the market) can accurately foretell the future. That is only possible in a fully manipulated market where the major players are all of like mind and have virtually unlimited funding.

    If they know the market is "about to crash" why are they fiddling around with a few pennies they can make trading "backwardation" in the futures market. There are much easier and surer ways to profit if you know of a market collapse well in advance?

    I Run Bartertown
    Mar 7, 2013 - 4:05pm

    The core answer

    The core answer is the one you've preached consistently since you started your blog.

    Physical metals will offer you some protection against the fallout of TEOTGKE, so buy them.

    I personally see the coming economic implosion and wars as but a small part of a complete societal breakdown and restructuring, but that might just be wishful thinking. Always the optimist yes.

    Kuchek
    Mar 7, 2013 - 4:09pm

    Rock 'N" Roll

    Too the Bankers who look to enslave me through their currency scams and kill me with their agricultural and pharmaceutical poisons looking for my surrender I say to you this.....

    NUTS!

    Feed the Turd and hang on!

    The Vet
    Mar 7, 2013 - 4:10pm

    Sure

    Excellent point.

    At first glance (and my belief), no one is willing to part with their physical because they don't trust The System to give it back to them in 45 days.

    Maybe, instead, the backwardation is indeed caused by physical holders unwillingness to give up their metal but...concerned about lower prices...are actively hedging short paper to protect against a coming plunge?

    Again...I can't give you an answer with any certainty.

    AlexCojones
    Mar 7, 2013 - 4:11pm

    A Learned & Wise Friend - Yellow Hat of Course

    Sometimes, Mr. Ferguson, a few of us readers must seem like a bunch of curious yet troublesome monkeys. So be of good cheer, young man, and have courage, even as the winged monkeys do us dirty. Pull that bold golden hat down and carry on! We monkeys will either smile or fly!

    Alex

    Stock_Canines
    Mar 7, 2013 - 4:15pm

    Perhaps

    The coming plunge will begin tomorrow when BLS report smokes estimates.

    koan
    Mar 7, 2013 - 4:20pm

    Turd, I recall (in the last

    Turd, I recall (in the last week or so I think) Santa clarifying his 'on the way by his birthday later this month' call saying (to paraphrase) the bottom might already be in for all he knows - so not sure he's claiming a washout is coming before the upleg starts. Though certainly agree its possible!

    But, being an eternal optimist, I'm going with we're done and the bottom (or as good as) is in. Who cares if I'm wrong, not like anyone dies etc!

    Tabberto
    Mar 7, 2013 - 4:24pm

    Turd

    Fair enough, but with all/almost all weak hands washed at this point for me the only way we crash is with the overall market from here in a rush to Dollars, although even in said scenario I think many more investors would be buyers of Gold than was the case in 08, as noone feared currency/sov bond collapse back then. If the above comment made sense wouldn't all commodities be showing signs of backwardation and being likely to crash? And we've been seeing this for 3 months, even a year on and off, not just a few days as the floor disappears. I just don't think this reads right - you definitely aren't trying to have it both ways though, and I see this as an interesting and worthy thought - it just doesn't make sense to me on balance.

    Fwiw I met a very well known absolute return quant-oriented fund manager today who has a team of 16 analysts/market engineers working for him (many billions under mgmt), and he is adamant that the equity market goes higher for a while yet - he claims he sees ALL the pertinent data (yes I am sceptical but I also know he does have a great deal of extra quant/data filtering that gives him an edge) and he is bullish of gold and silver at these levels (albeit only in a small way within a big absolute return fund) - but what was really interesting was as follows: I asked him what he couldn't risk model, what could fall outside his var/nash equilibrium variables, what could upset the applecart? .... (he doesnt know my views on markets at all) and he said 'well, perhaps if the BoE stop printing the Gold Fixes for some reason that could cause everyone to struggle to understand currency values'. At this point, as you might expect, I pointed out that the BoE have nothing to do with the fixes (he looked suitably chastened) and we had a little chat about the lbma etc but my take away was that:

    a. He knows there is something badly wrong with the Gold market - didn't argue at all when i told him the fixes were just like libor and managed for the same reasons.

    b. He knows an extraordinarily limited amount about 'our' market for someone who is extremely sophisticated about risk modelling, asset allocation and valuing equities.

    c. Someone he respects (having listened to him for nearly an hour I doubt there are many of those) has been bending his ear on this subject in the background

    Anyway, just a little update from the coalface which may or may not be of interest/value to Turdites but also bear in mind that if you step back from the noise short term what we are seeing is really the long-predicted divergence between paper and physical gold and silver markets - Santelli, big absolute return managers etc are mentioning unspeakable subjects that only crazy goldbugs adhere to....the price may not chime yet but I see these as very positive changes at the margin.

    Mr. Fix
    Mar 7, 2013 - 4:24pm

    Everybody is doing the same thing, Turd.

    • Closely watching the CoT every week
    • Monitoring open interest changes daily
    • Checking not just the charts but other technical indicators such as RSI and MACD
    • Following other "commodities" for signs of bottoms and trend change
    • Trying to get to the bottom of this "is it or is it not backwardation" deal.

     So if all the numbers are a lie, then they are meaningless.

     You summed it up yourself when you said that gold silver are being manipulated.

     This manipulation would not be very effective if any of the numbers are accurate.

     It is my contention that they are trying to create the illusion that there is some way to judge this market.

     What if there isn't?

     I completely agree that the fundamentals have never been stronger,

     and by any objective measure the price of gold and silver should be many multiples higher.

     I also agree that at some point in the future they will be. That is why I stack.

     But as far as a eminent jumping the price of gold and silver? I'm just not seeing it.

     The system of Fiat currency will need to collapse first, because the gold and silver manipulation is primarily to create the illusion that the Fiat is still worth something.

     Even doing comparisons to other markets is problematic, because they are all manipulated.

     I didn't even want to contribute to yesterday's “Guest post”, because it was clearly stated that it did not apply to us “stackers”.

     The end of the great Keynesian experiment will not come with any more warning that we already have.

     And we have plenty.

     I noticed that you had a link in your previous post to a story on gold confiscation. What do you think of that possibility?

     A couple of years ago when I was posting regularly at MarketWatch, there was a story released which I only have a vague recollection of, where it was stated that gold ownership would be made illegal, and confiscated when it reached the $2000 per ounce mark.

     Does anyone else remember that story?

     This was two or three years ago, but it looked like $2000 per ounce was well in reach then.

     I don't think they will be able to do a global gold confiscation, but they are most certainly putting in place the necessary ingredients to attempt one here in the states. (along with guns)

     Just like in 1933, I suspect that we will see our massive increase in the price of gold and silver

     after it has been deemed illegal.

     By the way, I don't expect such an attempt to last for very long. It would expose all the corruption.

     I'm sure that the “Keynesians” have another insult to our intelligence awaiting us when their current one collapses.

    Xeno
    Mar 7, 2013 - 4:26pm

    Crash?

    "at the very least we have to acknowledge what is being suggested: that bullion prices are about to collapse."

    Sure, we can acknowledge the possibility. So would that be actual bullion prices, or, bullion prices as reflected by a corrupt as hell futures mkt.? Even Santa suggested that the futures mkt. will disappear when margin goes to 100% making it a physical mkt.

    Sure, some entity could sell spot and buy futures all day everyday to try and crash the mkt. but doesn't it seem that they eventually should run out of spot physical to sell? And then have to buy spot and sell futures to get right? If so isn't that what the bottoming process is all about, getting physical from the spot sellers/stackers?

    A "crashed" mkt. doesn't go away, especially a spot price physical mkt., but the corrupt will crash - or pay up.

    Stock_Canines
    Mar 7, 2013 - 4:27pm

    Turd

    isn't santa still calling for the bottom to be in and a new uptrend in tact by March 27?

    tmosley
    Mar 7, 2013 - 4:31pm

    Is there a way to tell if

    Is there a way to tell if there is hedging activity happening?

    I remain of the opinion that paper will burn, and this is evidence of that. At this point, I am now stockpiling cash (not selling silver, might sell some gold if I had it), waiting for a potential 2008 event so I can buy at a lower price, should the paper crash be reflected in the physical market (of which I am not sure).

    This has the potential to be the endgame--just like in 2008 where we came within a hairsbredth.

    rtabit
    Mar 7, 2013 - 4:35pm

    Santa

    I listened to some interview he did yesterday, not sure when was recorded, sometime this week, he thinks we have already bottomed.

    AlexCojones
    Mar 7, 2013 - 4:42pm

    How I Imagine the Yellow-hatted One in 30-40 Years

    Happy as a man who informed and helped thousands of friends and strangers to prep and prepare, to love and share.

    Strongsidejedi
    Mar 7, 2013 - 4:44pm

    The Laurel and Hardy of the US Senate

    Why in the world would Lindsay and John step out to attack Rand?

    Because Lindsay and John are funded by the neocons who own the factories that make the kevlar, bullets, and implements of war in the middle east... Rand Paul is not.

    Just who do these two think we are?

    All the White House and Congress needed to do was pass a measure to ban the drone flights over the 50 states and territories...have they done that ? Nope.


    Until Rand Paul stood up and said something, the crickets were chirping and Laurel & Hardy were having their Senate funded dinners.

    Meanwhile, Rand Paul finally stands up to defend us from our own government targetting us, and then Laurel and Hardy show up to argue that it's never been an issue.

    Oh Really...then why aren't we easily and legally protected from that threat?

    Second, Shep Smith on Fox News claims that there are alot of budgetary things to discuss instead. Shep, you got it wrong. The Drone flights ARE a budgetary line item to discuss!


    This all has much to do with the point of the thread. The fact that TA doesn't work is clear. It's been that way for 18 months.

    The issue is that the federal government is not in charge and knows it. They've bankrupted our nation and leave us vulnerable by their action or lack thereof. Asking for a halt to drone ops over US soil and territories is not unreasonable.

    champuga
    Mar 7, 2013 - 4:46pm

    Tomorrow

    Hard to believe that a bad NFP number is on the docket for tomorrow. However, it could be that this is the last good one for awhile. Also, I haven't seen a strong Friday close in many a day, particularly when the prior day is soft and a capping job (see $1585 spot gold) has been in effect for a few days. On the positive side, I am surprised they didn't try to rally it a bit today to suck in some fresh longs IF they were going to try and fleece us again tomorrow. Overall, I'd say it is 2/1 odds we get smacked down tomorrow given the modus operandi of the cartel for many a year now. It would be sweet if we could get a close above $1600 though on a big NFP egg laying and watch the Disney economists' world go up in smoke.

    abguy4
    Mar 7, 2013 - 4:48pm

    A wise man would not step into these waters

    A wise man would not step into these waters , but WTF;

    Specifically, backwardation in the current environment of falling prices is precisely what one would expect to see in a sector which is about to crash. The lower-and-falling futures price is telegraphing the collapse of the market.

    Pardon me in advance for this observation ;

    We are in a 100% manipulated scenario. PERIOD. This is NOT a market and it does NOT behave as any classical free market. Therefore it stands to reason that any classical analysis will not produce any useful conclusions.

    IF you were the manipulator, would you not be doing everything possible at this point to send false signals to those you wish to vanquish, control and defeat??????

    Does the CIA use every form of mis-information and send every form of internal chaos and divisive intrusion into those countries it wishes to de-stabilize?????

    YES~~!!????

    Well, there is a currency war going on here troops - and YOU and yur damn PM's are right on the front line. That COT data BS and every other BS data point you pick up has been devised and planted by the enemy. Garbage in, Garbage out.

    They must delight to the point of wetting their pants when they see the havoc, hand-wringing and capitulation that their false data produces.

    I guarantee there is a 50-50 chance the price goes up or down from this point.

    Yes, sooner or later, the fundamentals will prevail. In the interim, all's fair in luv and war.

    So, whattayahgonnado? Go buy some APPL? A Bond?

    Good luck on that.

    Luv yah all.

    Stand firm here.

    Mr. Fix
    Mar 7, 2013 - 4:50pm

    Disregard my ignorant question about gold confiscation.

    Turd, 

    I just read the article that you linked to, in short, Gold confiscation is exactly what has already happened,

     And is continuing to happen.

     When the prices finally reset to its actual value, which I would contend is after it is unavailable,

     99% of all gold will be owned by the 1% who knew what was coming. 

    SilverSurfers
    Mar 7, 2013 - 4:58pm

    Turdite Luncheon

    I had a wonderful time. Mariposa de Oro, is a very pleasant happy gal, with lots of laughs. Kisses hun. Her mom just so sweet as well. CA LAWYER is one shark we dont have to shoot. but, wwwwooooooooooooooooooo baby, and I thought I was out there.

    It was so so fun, talking metals, the kensysian experiment, the end game, and stories of our lives. In the Russian tradition, we gave Turd a long winded, "salute", with of course 1800 gold, honoring his work to all our benefit. Just tits! thank you again Mari. ;)

    forewarned?

    so, uh, hows that 2/20 28.57 bottom working out for ya all?

    dont you eyeball me mayo ....

    zman
    Mar 7, 2013 - 5:00pm

    Gold is in a long term bull

    Gold is in a long term bull market, so in the long term gold should move higher, but that is not to say that much lower prices are down the road, and new highs could be years away.

    We are 1.5 years into a correction, maybe we have another 1.5 years left, silver is almost 2 years into a correction.

    It's their market, they can do what they want.

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