Silver Drops 10%. No One Cares.

283
Mon, May 20, 2013 - 11:15am

Can you imagine if the ES or treasuries fell 10% on the Sunday evening Globex open? Good heavens! Ole Thunderlips might have a heart attack!

But I suppose that if you can bomb silver for 15% on a Sunday evening two years ago and not be punished, why couldn't you bomb it for 10% last night? Again, if the ES had suddenly dropped 10%, there would already be another worthless congressional hearing scheduled. Silver drops 10% and all you get is a video of some fool chewing on his hat.

And that same idiot now stands ready to make yet another bold proclamation:

SILVER (and gold) IS MUCH CLOSER TO THE BOTTOM THAN THE TOP.

Ya like that one? Really going out in a limb, huh? I regret that I only have but one hat to eat for TurdNation.

In all seriousness, I'm quite encouraged by the number of readers who are unfazed by all of this. Why? They obviously get it. Though it's fun to buy anything and see it's fiat-conversion value increase with time, that never has been nor will it be the primary reason we own and stack metal. These instruments are your insurance. As stated early and often...Gold protects your net worth and silver protects your purchasing power against the ongoing, never-ending devaluation of fiat currency.

"But Turd, but Turd! You dumb shit! How is my wealth being protected when the fiat-conversion price has fallen from $1920 to $1320?" Good question. The answer is, of course, a question: Why do you care what the fiat-conversion value is today? This "price" only matters to you if you are selling today. And who, in their right mind, is selling today? Oh sure, I read the occasional comment here from someone who apparently is in need of cash and...apparently...only has silver to sell. Look, if you only have silver to sell when you are in a liquidity crunch and you need to pay some bills...that's your problem and that's a pretty big problem. I mean, seriously! If physical metal is insurance and protection but yet you have to sell some to pay bills...what that heck do you actually have to insure and protect in the first place?? Sounds to me that you thought precious metal was instead some kind of get-rich-quick scheme and a ticket out of the poor house. Though for some long-term holders it might be, the rest of you who bought with this in mind are no different from those who thought that the pets.com IPO was the deal of the century.

I buy precious metal. (I used to trade for fiat accumulation purposes but, after the outright theft of my account at MFingGlobal, I gave that game up entirely.) I take delivery and I add to my stack. I bought silver all the way up to $49 and I've bought it all the way back down. I've been accumulating gold in the same way. AND I'M NOT SELLING. Why would I? What has fundamentally changed about the rationale for buying in the first place? And by selling, I'm converting my physical metal back into paper money!! I may be stoo-stoo-stoopid but I'm not crazy.

And I need to make this point again: All of the data indicates that the sellers here are the specs, both large and small. This has been documented ad nauseam on this site. But never forget, for every seller there is a buyer! And just whom is buying? The banks! Every time a speculator sells a long or initiates a new short, a Cartel bank is on the other side as the willing buyer. So I ask you again: With whom are you going to side here? The Specs who, from time immemorial, have been led by the nose from the field to the fleecing shed? Or The Cartel banks, who have dominated the metals trade for centuries?

Along those lines, I have this to share from our pal Andrew Maguire. After reviewing the CoT data, the GLD and SLV positioning and making some reasonable assumptions about current OTC positions, Andy has concluded that the Cartel Banks are now NET LONG GOLD AND SILVER. NET LONG! If he's right...and I certainly have no reason to doubt him...then we're done. Sure, price might continue to drift lower. Maybe even spike lower again. But, on balance, we're done. Again, QE∞ changed the game. It officially began the countdown to the end of dollar hegemony. Therefore, instead of an immediate moonshot, the metals were jammed lower against the overriding fundamentals. WHY? Because the Cartel Banks weren't ready. They were heavily short and covering into rising prices almost knocked them out in 2011. Instead, all of the price action over the past 8 months was initiated in order to create an environment where the Cartels could cover. And cover they have!! On just the Comex alone, they've reduced their net short liability in gold and silver by nearly 70%!

So, back to my bold proclamation. I can state with 100% confidence that we are very close to a dollar price bottom here. Again, could we go lower? Sure. Does that matter in the grand scheme of things? No.

For some additional perspective, here are some charts. First, here are two traditional, linear charts showing the price action for the past decade plus.

And just the other day, someone posted a logarithmic chart in the comments. Good idea. Sometimes log charts can be particularly helpful in that they allow the viewer to more easily understand the scale of the price movements being shown. See this: https://en.wikipedia.org/wiki/Logarithmic_scale. Anyway, when we look at the 25-year log charts for the metals, a different picture emerges...one where the current bull markets are clearly still intact.

OK, that's enough for now so I think I'll stop here. As I close, I see that the metals have continued to rebound, even after the London PM fix. This is a welcome change and perhaps portends a short-term bottom. Watch $22 in silver and look for a daily close sometime this week back above the Thursday-Friday highs near $22.75. That would be a very good sign. In gold, look at the daily chart and notice that, once again, significant buying emerged sub-1350. This is a very good sign but I won't get too excited until I see it convincingly back above $1390 and then $1400.

Have a great day!

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  283 Comments

May 20, 2013 - 11:24am
Strongsidejedi
May 20, 2013 - 11:29am

Jim Sinclair talk was yesterday

That $1.00 silver drop correlates to the time of Jim Sinclair's talk in Los Angeles.

For some reason, there's a hit on pm's every time Mr. Sinclair talks.

May 20, 2013 - 11:29am

Turd !

Could you put Gold Dog's big raffle post on a sticky yellow thread all by itself? Turdites need to know what cool prizes there are, and be sure to sign up by feeding the Turd in the next few days- a little PR to give Dog the boost his hard work deserves! Gracias amigo!

deadcatbounce67
May 20, 2013 - 11:29am

Sorry so long...

Posted already at the end of the last thread, but important to me.

So, I'm deadcatbouce67, who was also deadcatbounce until I forgot my password and lost my notes during my divorce. I comment only seldomly, because I have so much more to learn here than to offer. I am an American living in Germany for over twenty years. Six years ago, I was helping a friend renovate a house that he had bought here, and realized that among other things, I was removing wallpaper in a closet that was once billions and billions of Weimar Reichsmarks. It started me on a journey that has led me here. I learned in the years since that my own forefather's survived the great hyperinflation in the Weimar Republic, only to immigrate to America wealthy, and lose it all in the great depression. One day, I'll write a little something from the entries I have been able to decipher from my great-great grandfather's diaries from those days.

There has been quite a lot of posts regarding "freegold", or "reference point gold". I find FOFOA to be thought provoking, and read his writings as often as I can (it's hard to be a single dad and still have the time to read a FOFOA article). Personally, my definition differs somewhat from FOFOA's. But like my dad says, "Opinions are like assholes, everybody has one." I thought I would take the time to express my own.

I live in Germany, and so if someone were to ask me to measure something I would grab my meter stick and measure it. Most people measure gold with a "dollar stick", or a "Euro stick" or what have you. My definition of "freegold" means that gold is free from such measurements. To me, "freegold", or "reference point gold" means not that gold is measured by currencies but that currencies are measured by gold. There is no measuring stick for gold, the measuring stick "is" gold. It takes some time to accept in thought, and does not necessarily mean that gold has to have a "fixed" price. I feel that one day soon, the new gold standard might just "float".

I believe that if you were to back your currency with oil (as an example), and then raise the value of oil to cover your debts or simply improve your balance sheet, it would be exorbitantly inflationary because oil has utilities required in everything we do. Maybe that is why "freegolders" are so prolific about silver (I love silver by the way), not playing a part in our new financial system. I do not believe that silver is not worthy of a monetary role, I just believe that it has "outgrown" that role, which makes me even more bullish on silver. But gold has only one dominant utility in my view, and that is a "store of value" utility. Would it be inflationary to allow the value of a simple "store of value" to rise? Maybe initially if at all, but I can imagine worse things happening.

This is important. Allowing the price of gold to rise exponentially would be inflationary if everybody had some - but at the moment I would venture to say that more sheeple have APPL stocks than physical gold... care to differ? How inflationary was that historic rise? Just as Turd tries with diligence to spread the word, TPTB try to silence it. They try to make the metals look too volatile to invest in. I see it as a crap shoot at best. But one thing is for sure, we will eventually have a new system, and this system will inevitably have the proverbial "debtors and savers" - and it certainly won't be perfect.

I envision the coming of a system of international trade where trade imbalances will be settled in gold due to lack of trust amongst nations. Because of this, there will be ever present incentives to export as much as you can and import as little as you must. What better way to create jobs in your country, huh?

To me, our new system will eventually turn into a financial balancing act for each nation in respect to international trade. The role of central bankers (sorry, we'll never get rid of them), will be tantamount. They will manage the balancing act between import/export and between gold reserves/currency supply. More import - less gold in reserve, more export - more gold in reserve. More currency to gold - cheaper currency, more gold to currency - more valuable currency. People like us could sell gold when our faith in the system is high, or buy gold when our faith in the system wanes. Kind of like it is now, except that gold will be the only AAA still standing at prices multiples higher than today.

It will be like a system of checks and balances, intended to keep central bankers and governments honest and transparent, maybe not perfect but infinitely better than the mess we have now. My version of freegold is with us now, it's here today and has been here for thousands of years - it's just being skewed and hidden at the moment behind a wall of deception and manipulation and printed paper. My vision of freegold does not show its real face when trust between nations are at their highest, it comes automatically when trust is at its lowest, and that day is coming closer (John Butler, The Golden Revolution). When that wall collapses, we will have our day in the sun (I am an optimist). We can't change the world sadly, and it doesn't really matter if our new gold standard is "fixed" or "free floating" anyway, all that really matters is that our kids will have a better life than we had, and that's my job as a dad. What could be more important than that?

So for me, I'm not really a huge follower of FOFOA - just an interested observer with a few opinions that could be right or wrong, and I appreciate the articles he writes and the thinking that he provokes just like so many of you all here.

"Sorry, Ben, either way you're messing with the wrong elements and doing so on the wrong side of history..."

In a recent interview at SGTReport, Andy Hoffmann, one of my favorites - implies that the marginal cost of silver production is about $30.00 per ounce, (https://www.youtube.com/watch?feature=player_embedded&v=fRFhYT8XlDc). It is a conclusion that I do not wish to argue with. I do have one question, however. What percentage of the yearly silver supply is mined as a bye product?

I am extremely bullish on silver, as it represents some 40% of my metal holdings. I am just trying to remind myself that a certain percentage of silver will always come out of the ground as a bye product of other resources still being mined regardless of the actual silver spot price. Far too many silver bulls are talking about silver mining no longer being profitable at these prices, which may very well be true, but what would the world silver supply be if all of the primary silver miners went bust? That would be a great question for SRSRocco, as I am a huge fan of his. Do you see what I'm getting at?

I believe that silver will never be monetized, not because silver is unworthy of monetization but because silver's role in our world has simply outgrown that utility for more important things. I believe that silver should one day have a spot price at least as high a palladium, just because of its industrial utilities and its importance in the world. This is more likely to happen in a growing economy, which may come about after the shocks that we are all waiting for. Until then, silver will probably just rise with inflation in some fashion. I see the possibility of a window opening, in which gold will be re-valued many multiples higher in an effort to improve central bank balance sheets (silver wouldn't improve a central banker's balance sheet since they don't really have any), and creating an opportunity to trade for a short time at least, one oz. of gold for 200+ oz. of silver. This, would prove to be the investment of a lifetime, if silver could still be found, (which is why I presently hold 40%).

My father, who has been a gold and silver bug since the 1970's is of the belief that there is a rhyme and a reason behind every conspiracy and every manipulation. What could be the reason for the massive price declines in the last 18 months? Positioning and profit? Imagine TPTB manipulating the prices lower in an effort to force an orderly unwinding of the paper metals markets while at the same time destroying the pm mining industry so that they can buy mining stocks and physical for pennies on the dollar... When the big day comes, it will be the insiders holding the most of the physical and the mines when the dam breaks. Soros and Paulson will not be standing in line with paper promises, so much is sure... That is his thesis, and he always said that the tell-tale sign of its beginning would be the decoupling between the price of paper metal and physical premiums. Check! He was always smarter than I.

So, sorry if my thoughts are so long winded. I am not saying that this is what I want - just that I see it turning out roughly in that way. I have so much respect for all of you, and would appreciate your thoughts. I would especially appreciate the thoughts of Mr. Fix, Ivars and Tmosley, who's every comment gets read by me twice.

Thanks Turd for all that you do. Still, don't expect me to name my next child after you. I just couldn't do that.

Sandiaman
May 20, 2013 - 11:30am

2nd

First one to lose.

achmachat
May 20, 2013 - 11:30am

awesome!

double bottoms are usually a nice thing!

if you knew how long I've been waiting to read these words here:

"the Cartel Banks are now NET LONG GOLD AND SILVER"

ladies and gentlemen! This is the turning point!

(and you've heard it first at TFMR!!!)

Strongsidejedi
May 20, 2013 - 11:31am

May the Fourth be with you!

May the Fourth be with you!

And, I find your lack of faith disturbing.

nminihan
May 20, 2013 - 11:34am

Keep Stacking!

God it is tough out there! My spirit is breaking, keeping updated with all of these guys though makes it a little easier -

Howard Roark
May 20, 2013 - 11:35am

Just Buy

Top 10?

Buy as you can when you can!

Salut,

HR

Mickey
May 20, 2013 - 11:36am

we focus on PM

but everything about are free markets are screwed up.

Maybe we could create a central bank to stabilize things.

It could be owned, by say the banking concerns because you would not want the inherent conflict of interest of a central banks being part of the government.

"In Fed I trust"

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