Greetings From Vacation

Thu, Jun 27, 2013 - 10:48am

Desperate times call for desperate getting up early to write a post, even while technically "on vacation".

First of all, watching the sun rise is a tonic that I would recommend for just about everyone during this current period of metal strife. There is no better reminder of the long-term view than taking a moment to appreciate the beauty and the majesty of a sunrise. The planet was here for billions of years before us and it will remain for billions of years after we're gone. Though the stress of each day can be great, in the grand scheme of things, daily events are nothing but the tick of an infinite clock.

I mention this not because I'm trying to be philosophic. I do so as a reminder of The Big Picture. Below are the reasons I hold physical precious metal:

  • Physical gold and silver are my "monetary insurance" against the eventual collapse of the current global, fiat money economic economic scheme.
  • Physical gold and silver will provide me a tool for barter should some type of natural or man-made disaster render paper money useless or unavailable.
  • Physical gold and silver are stores of wealth and true money, recognized as such for millenia before the current system arose and they will be recognized as such after the current system fails.

With this as my mental basis, why on earth would I be selling now?

And just who is selling now? Is there any physical metal for sale? Andy confirms that there are no physical sales in London. Just paper sales and physical purchases. Walk down to your local coin shop and ask the proprietor if there are more sellers or more buyers. My suspicion is that the buyers still greatly outnumber the sellers.

So why has price fallen this far? It's quite simple, really. The paper markets and, specifically, the HFT WOPRs which dominate them, are in control. Because of the leverage and rehypothecation, the futures markets are now fully disconnected from physical reality. This is fine. It happens from time to time and it can continue for a while but it can't continue indefinitely. Why? Read the excellent work of SRSrocco or the recent posts on ZH about the cost of production. Eventually, as producers of the physical commodity realize that continued mining is a losing proposition, they wisely halt production. Tight supply lines grow even tighter and, eventually, the laws of supply and demand reassert themselves.

Does this mean that silver will immediately head back to $49. Probably not. But it does mean that it's not headed to $8, either. (And, as an aside, I should point out here that silver was $18 in August of 2010 before rising to $49 in April of 2011 so it's not like it hasn't happened before.)

I am of the firm belief and conviction that The Price Bottom to all of this nonsense is within sight. Though gold has exceeded my low target of $1270-1290 and now rests near $1230, I'm buying it with confidence. Recall that when silver broke $22, I warned you that $18 was now likely with a possibility of an overshoot toward $16. With this in mind, why panic now? What has changed and what has been fixed? Anything? Or have the WOPRs so distorted the supply/demand fundamental that price does not currently reflect reality?

Tomorrow we will get an updated CoT report that will likely reveal Commercial positions of historic proportions. I know you're probably sick of hearing it...but I can't stress enough how critical this is to understanding the current price structure. QE∞ changed everything and, after years of fighting it and selling into rising prices and covering on dips, The Bullion Banks made the dramatic shift last fall. They began this current, counter-intuitive slide as an attempt to flatten their books and get out from under their massive naked short metal positions. As of this next CoT report, we will likely find that they have nearly accomplished just that. When they are done, price will be free to run.

As I conclude, I see that a fog has rolled in that conceals what had been a beautiful view. The locals tell me that this is a regular occurrence and that it will soon lift to reveal yet another beautiful day. Similarly, a fog has descended upon the metals markets and it is obstructing your view. I can assure you, though, that this fog too will soon lift and a new day will emerge, beautiful and bright, and when it does, your physical metal will have you prepared for all that the world has to offer.


About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 27, 2013 - 12:26pm

physical sales in london

"No physical sales in london but plenty of physical purchases"

not sure how that one works doesn't every buyer need a seller ?

Nick Elway
Jun 27, 2013 - 12:30pm

@YaMa re Islamic GSR ratio of 7:1

I am not endorsing the religious aspects of your post, appreciated the rationale of a year's frugal food supply.

Recent decades' mining numbers seem to be running 6 ounces of silver mined for every 1 ounce of gold (means less now as mines are shut down due to low prices)

Tonnes of silver above ground seems to be getting slightly smaller each year, and tonnes of gold above ground is increasing each year. This pushes the ratio of above ground ounces of silver to gold smaller. As of the end of 2012 we estimated 4.5 ounces of silver above ground for each ounce of gold above ground.

Perhaps we'll live long enough to see GSR ( trade value) in single digits..

Urban Roman
Jun 27, 2013 - 12:34pm


Being a sociopath means never having to say you're sorry.

And a +1 hat tip for your shout out to the watchers/listeners.

Jun 27, 2013 - 12:36pm


I am speculating, but I don't think that buyers of size just turn up with a chequebook and a truck; I think that they 'apply' for a purchase at a given price, subject to delays and availability.

Yes I know, it is a sham market.

bullion only
Jun 27, 2013 - 12:39pm

From Pierre Lassonde at King World

Below is a great interview with Pierre Lassonde.

He and Louise Yamada are the only ones there that are not cheer leaders and both have been spot on in their predictions in gold.

Pierre says we are within %5 of the bottom. $1200 give or take $30.



Jun 27, 2013 - 12:42pm

At long last I sit here

At long last I sit here looking out over the mesa's and I feel as if a calm is settling over me. Yes, yes I know I should be panicking and wringing my hands over the "losses" I have endured the last few years, but to be honest I can't. I try to worry, I really do try to allow myself to fall into that trap but I just can't seem to manage it. You see, as I pull back the layers I know that had I to do it all over again, I would have done it the same way. With the information I had at the time, the amount sold in the upper 40's was appropriate. I look out over the financial horizon and I understand that as the bond yields rise in abrupt fashion, it is telling me a tale. It is whispering, well heck, screaming at me that the Fed must stay at the trough because others are stepping away. If they stopped QE altogether (LOL) what does any sane person think the rates would do? They would begin to explode imo- leading people to know that the cat is out of the bag and that unfunded liabilities and national debt would be the mill stone pulling the nation down down down into the abyss. When the big banks get all of their positions long and feel as though they have wrung all of the juice from the silver lemon- well then we will see the same type of action to the upside. This is my opinion and I will continue to work in that paradigm. I honestly feel for those hurting and liquidating due to money constraints and debt pressures. I know this is going to hurt so many as time goes by, but as for me and mine we will farm- stack- and pray. Good luck all

Jun 27, 2013 - 12:46pm

Word from Switzerland that

Word from Switzerland that Marc Rich was found dead hit the front page of the NY Times... Marc Rich, Financier and Famous Fugitive, Dies at 78 I have recommended that anyone invested in any kind of commodity should read a book called "Metal Men". You can buy it here: This is the only book I know of that explains the seedier side of physical commodity trading and market rigging. Not electronic price rigging but Rich dealt in the actual physical commodity realm. President Clinton hired him to help with his market rigging program called "The Strong Dollar Policy". Marc Rich was in charge of finding and delivering the REAL stuff when the paper markets starting getting stressed. Clinton pardoned Marc Rich for his criminal conduct. Here's one of my latest Private Road postings related to Marc Rich: Banking Cabal Consolidating Real Wealth So seeing Marc Rich leave this earth is a happy day for anyone investing in commodities and expecting that some day we will return to a free market system. I will be taking a bit of vacation over the next two weeks but will check in on occasion. May the Road you choose be the Right Road. Bix Weir

Strongsidejedi tyberious
Jun 27, 2013 - 12:53pm

@Tyberious - Marc Rich=financier?


New York Times... Marc Rich = "Financier"


New York Times probably also parroted Jim Carney's mischaracterization of "Edward Snowden" as an "international fugitive", "Felon", and "spy".

Without Bill Clinton's pardon all three would have applied to Rich more than Snowden.

Hunt brother
Jun 27, 2013 - 12:53pm

Silver, 21 to 9 to 49 to 18.5 to 150

Nietzsche was right: adversity makes you stronger

It is the quote used by many to bolster resilience in the face of adversity. But the words “what does not kill me, makes me stronger”, by the German philosopher Friedrich Nietzsche, could have scientific merit too, according to research.

Jun 27, 2013 - 12:57pm

Are you really that dense or

Are you really that dense or are you just a pain in the ass?

Physical buyers in London acquire metal by purchase delivered through LBMA clearing members. This metal comes from the Bullion Banks vaults, if they have it, or it is otherwise sourced to be delivered. What Andy is stating is that physical sellers are not appearing through the same process.

Additionally, I always find it funny when one anonymous poster claims that I, as an anonymous poster, am "losing credibility" when I cite a website whose politics the first poster disagrees with. Pretty funny, indeed.

Jun 27, 2013 - 12:58pm

The Commodity Investor: How Hedge Funds Influence Gold Markets

The Commodity Investor: How Hedge Funds Influence Gold Markets

While it’s difficult to quantify the amount that capital hedge funds account for in the gold markets, suffice it to say that gold has become such a prominent asset class for the industry that some of the world’s biggest hedge funds have launched dedicated gold funds specifically to trade the yellow metal. John Paulson’s hedge fund Paulson & Co. has sponsored a separate and fully dedicated gold fund it launched soon after 2008. At one point, Paulson & Co.’s gold fund had close to $1 billion under management.

Jun 27, 2013 - 12:59pm
bullion only
Jun 27, 2013 - 1:01pm


Regarding the GSR :

I believe that there are other factors regarding the GSR other than amount of gold mined vs silver mined or above ground supply.

Silver is not held by central bankers. It is just too bulky to store. Bullion storage vaults are being built in HK and Singapore to acomodate people that no longer trust others to hold their gold. Even Sinclair is saying to transfer some of your gold there. There is not enough room to store silver. How do you store a million dollars of silver at home? A million dollars in gold is not that big. Maybe a shoebox or two.

Silver is not seen as much as a store of wealth to Indians and Chinese and middle easterners.

Yes it may be the poor mans gold but all my Indian, Chinese and middle eastern friends would all rather hold gold.

They all would rather have 1/10th ounce of gold rather than the equivilent in silver.

When I asked why they said partially was the ability to transport and hide a small amount of gold vs silver.

The other was the intrinsic beauty. It's in their DNA they said.

Anyway it's all good but if we do have a worldwide slowdown silver will be looked at as an industrial metal.


As a disclaimer I have both. 90% gold 10% silver.

The Watchman
Jun 27, 2013 - 1:04pm

India Silver Demand Way Up

From Goldcore:

Attempts to prevent Indians from buying gold are contributing to them buying poor man’s gold, or silver. There has been a massive increase in silver demand in India in recent months and the government's meddling and controls in the gold market will likely led to even more demand for silver.

While India imported 1,900 tonnes of silver in 2012, in the first five months of 2013 alone, imports have touched 2,400 tonnes.

Jun 27, 2013 - 1:13pm
Jun 27, 2013 - 1:18pm

What really hurts the most in

What really hurts the most in this smack down in PM's, is that stocks continue to hold on to already strong gains. Even bonds, despite the recent sell off have done decent the last few years.

Oil is strong at 97, and now the gold/oil ratio trades at 12.6, not good, I was hoping for 20 and higher at this point.

Brain dead investors with a mix of stock and bonds have kicked our asses, it will take years just to break even with these zombie investors, so much for being proactive and involved in the world around us. I don't even want to thing about the loss from inflation, compounded with the real losses.

Jun 27, 2013 - 1:18pm

@The Watchman

That's odd as it conflicts with what Jeff Neilson said just the other day.

"In 2011 as the silver market was spiking to its short-term peak; total silver demand in India spiked along with it – all the way up to over 4,400 tonnes. When the silver market sagged in 2012 following the banksters’ great silver massacre; Indian demand naturally fell with it; declining to a little over 3,200 tonnes in 2012.

Indian silver demand in 2011 was about 40% higher than in 2012. But where the numbers get very interesting is when we look at India’s silver imports:

While total demand for silver was 3,234 tonne in 2012 as against 4,437 tonne in 2011, import was 1,900 tonne, against 4,087 tonne in 2012.

In other words, when sentiment in the Indian silver market took off, not only did demand spike, but silver imports went absolutely ballistic. When India was consuming 4,400 tonnes of silver in 2011; more than 90% of that silver was imported silver – i.e. coming out of global inventories. Even at short-term highs in price; Indians were hoarding not selling their own silver.

Conversely, when silver sentiment fell in India; not only did demand fall by about 30%, but silver imports plummeted by roughly double that amount. This is where we are at the moment. Sentiment in general, and Indian sentiment in particular is at a trough in the silver market, resulting in sub-par demand."

Not I really care what the Indians are doing!

Jun 27, 2013 - 1:18pm


Here we go again, another smash down. Mid afternoon too. Double faaaaaaaaaak.

Jun 27, 2013 - 1:19pm


that was quick...Silver pretty resilient so far..Gold beaten Black & Blue...$1214

Jun 27, 2013 - 1:21pm

@ YaMasuta on June 27, 2013 - 11:30am

Thank you for that really fascinating perspective and analysis.

There is so much about the honesty and morality of a people that is embedded in the 'elixir' they use for trade with one another. Maybe that's what draws us so strongly to AU and AG.

Jun 27, 2013 - 1:22pm


Once upon a time there was a small town with a small town square. One one side of the square was a pizza parlor. On the other side of the square was a Taco Stand.

Every evening after work the townspeople would go into the town square for dinner. Those who loved pizza would go to the pizza parlor, while those who favored tacos would go to the taco stand. and they would eat their meals and talk about the day's events until it was time to go home to bed.

Then one day, a stranger appeared at the door of the pizza parlor. He looked in, then stepped into the middle of the floor and proclaimed, "My goodness; what a disgusting looking food! It looks like someone just spilled the pantry onto the floor, swept the mess onto some bread, and you idiots are paying to eat that!" The pizza lovers looked up in shock at the rudeness being displayed!

"You know what your problem is?" the man continued, "You are all racists! You think you are too good to eat at the Taco stand. You think Taco eaters are socially inferior and don't want to be seen with them, do you? Well, I am not a racist and I am a Taco lover, so I am going!""

Then the stranger walked out.

Some of the Pizza lovers were suddenly worried. They did not want to be seen as racist. A few even suggested maybe they should quit the pizza parlor and eat at the Taco stand, until one of the town's elders spoke up.

"Does it make any sense?" he said.

Everyone scratched their heads and replied, "Does what make sense?"

"That a professed taco lover would bother to waste his time coming into an establishment whose food he professes to despise, to hurl insults at everyone? If he is merely a taco lover, why isn't he spending his time eating at the Taco Stand? Why is he here at all? Is his life so totally empty and devoid of all meaning that he can only find purpose screaming at people whose lives are not equally pontless and lacking substance?"

The pizza lovers were all looking at each other in puzzlement when the town elder spoke again. "Would you behave that rudely? Would you take time away from eating your pizza to go stand in the taco shop shouting insults at people?"

The pizza lovers all shook their heads.

The town elder continued, "I know that man. He is the nephew of the owner of the Taco Stand, and he came in here to trick you into taking your business to the Taco Stand while pretending to be just an ordinary town citizen."

Enlightenment began to dawn on the faces of the pizza lovers!

The elder smiled, "When you see someone come into your social circle, screaming and ranting and raving against the things you love and support, you need to ask yourself why is that person willing to come into a hostile group, attacking that which is loved and supported. You have to ask yourself if it makes sense that an ordinary person with no ulterior motives would behave like that. Have they nothing better to do than intrude into other peoples' affairs and offend them? No, not without some hidden purpose. Not without something they personally will gain at your expense!"

The pizza lovers nodded agreement at the wisdom of their town elder and happily went back to eating their pizzas and talking about the day's events until it was time to go home to bed. Across the town square, the owner of the Taco Stand waited in vain for the expected surge of former pizza lovers to enter his taco stand, and eventually decided that his nephew's time was better spent washing dishes and sweeping the floors.

Of course, we no longer congregate in the town square to discuss the days' events. We meet on Facebook, and Twitter, and MySpace, and dozens of other social networking sites that make the entire nation into a convivial town square for people to meet and talk about the day's events until it is time to go home to bed. But the same wisdom applies. If you are meeting with a group of friends who share a common interest or a common perspective on those day's events, does it make any sense when strangers barge into your circle of friends, and hurl insults at you and what you believe? Not unless they have a secret agenda and a secret purpose. Not unless they, like the taco stand owner's nephew, are there to trick you into abandoning your own choices and freedoms and onto a path they personally will profit from.

Jun 27, 2013 - 1:23pm


I am an Indian..Indians rarely sell their Gold or for that matter sister has Gold Bangles & Necklace which belong to my Grandmother......I am a hoarder myself

Jun 27, 2013 - 1:24pm

Gold - 4hr Chart

Good Afternoon,

Yesterday's continued downtrend provided a "golden" opportunity to short spot gold. So for my second trade on gold I decided to use the 4hr timeframe. As the daily trend is so bearish I risked 3% of my account on this trade and have taken full profit this morning. I'm still trying to digest TF's blog post from today. Much of his writing is way above the comprehension of my simple brain and I stick to just trading the charts. I'm beginning to see that investors buy coins as insurance against monetary collapse - I just don't understand what collapse they keep referring to. I hope to learn more.

Big Buffalo
Jun 27, 2013 - 1:24pm

Oh Boy

An 11 handle on gold, coming soon.

Eric Original
Jun 27, 2013 - 1:27pm

hey, zman!

brain dead zombie? I'm kinda taking that personally. My stock market gains have been nicely offsetting my losses in physical. That's what hedging/insurance is all about isn't it? Goes both ways.

btw, I hat tipped every one of your posts on the prior thread. Getting called a scummy troll by tmosely is a badge of honor. Kind of like Snowden being called a traitor by Dick Cheney.

Jun 27, 2013 - 1:29pm


silver just disconnected from gold!

silver's current support held while gold just pierced thru!

gotta open up the G/S ratio chart from now on.

Jun 27, 2013 - 1:30pm

@ CoachFX

Do you even own physical or are you just trading paper? If you are doing the latter you have really missed the point of this entire site.

Jun 27, 2013 - 1:31pm

zman, zman zman

Ok, I'll try and hope you see things my way. It is general understood that a excellent savings rate is around 10-20%. Now supposed you had savings of 10,000. Now you have the option of splinting it between several investment vehicles, along with, and I cant stop laughing, putting it in the bank! LOL

1) CD or money markets accounts, feel free to earn 1.00%

2) The market, P/E ratios are out of wack!

3) treasures and munis, don't get me started

4) real estate, not gonna touch it

So, for my money and knowing what I know, I'll keep my hard earned money in hard money!

Jun 27, 2013 - 1:32pm


silver bottoms here but gold still has a little farther to go? Either way, we are definitely near a major long term bottom. The sentiment on these boards the past few days definitely confirms it. The only word that comes to mind is.... CAPITULATION.

Jun 27, 2013 - 1:34pm

Bulls, Bears, and Pigs

They say bulls make money, bears make money and pigs get slaughtered. Aren't we well past the bears being pigs at this point? I guess when the market is broken this theory gets tossed. In the blink of an eye we go from $1,230 to $1,208. F OFF!

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