Forewarned is Forearmed

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.


    About the Author

    tfmetalsreport [at] gmail [dot] com ()

    Subscribe or login to read all comments.

    Support TFMR

    Donate Buy Silver

    Access Subscriber Benefits

    Listen to TFMR on the go in your favorite podcast app, and join our member-only forum discussions!

    Key Economic Events Week of 10/3

    10/3 9:45 ET S&P Manu PMI
    10/3 10:00 ET ISM Manu PMI
    10/3 3:10 ET Goon Williams
    10/4 10:00 ET JOLTS
    10/4 10:00 ET Factory Orders
    10/5 8:15 ET ADP jobs report
    10/5 9:45 ET S&P Services PMI
    10/5 10:00 ET ISM Services PMI
    10/6 8:50 ET Goon Mester
    10/7 8:30 ET BLSBS
    10/7 10:00 ET Goon Williams
    10/7 11:25 ET Goon Kashnkari

    Forum Discussion

    by ag1969, Oct 3, 2022 - 7:25pm
    by argentus maximus, Oct 3, 2022 - 12:16pm
    by argentus maximus, Oct 3, 2022 - 8:32am
    by Fish, Oct 1, 2022 - 8:36pm