Again, This Isn't Complicated

109
Mon, Mar 24, 2014 - 5:18pm

Frustrating? Yes. Complicated? Nope.

Well, it's good to be back though the timing of my spring break turned out to be challenging for it seemingly could not have come at a worse time. More on that below but, for now, rest assured that Turd is back on the watchtower and ready to fight.

Let's start again today with where we left off Friday. In that podcast thread, I implored you to go back and review this post from 3/1/14. Even if you did so then, you should do so again today because it's extremely important that we get on the same page:

https://www.tfmetalsreport.com/blog/5530/negative-gofo-and-rising-gold-p...

To summarize, here are a few of the salient paragraphs:

"The days of Central Bank gold leasing are almost over. Whether the CBs are "out" of gold or simply unwilling to lease what they have left for fear of not getting it back (from China), the CBs are not playing the gold leasing game like they have for the past 45 years. Again, for the past 24 years, GOFO rates were negative just 7 out of 5,000 days. Since July 8, 2013, GOFO rates have been negative for 98 out of 164 days or roughly 60% of the time.

Put another way, positive GOFO means "business as usual". Central Banks are willing to lease gold to the Bullion Banks. The BBs take this gold and dump it onto the futures market, using this scheme to contain, manage and suppress price. This worked perfectly until 2003 when demand and fundamentals overwhelmed this scheme for the next nine years and price rallied from $300 to $1900. Leased gold was continually dumped from October 2012 until late June 2013 and the resulting decline took gold back from $1800 to less than $1200.

But, now, negative GOFO is the new norm. Why? Because the CBs no longer have the gold to lease to the BBs. Without this readily available physical supply, the BBs are unable to aggressively manage price on a day-to-day basis and they are forced to stand down. Instead of daily 7:00 am London time price raids, we only get one per week. Instead of "waterfall" declines on the Comex, we get gradual and steady price increases."

And I concluded that post with this:

"This leaves us with this conclusion for traders and stackers everywhere:

Buy when GOFO is negative. Be cautious, sell or hold off on new purchases, when GOFO is positive.

Could it be as simple as that? Yes! It may very well be, at least for now."

Allow me to put this another way for you...

When GOFO is negative, physical supply is scarce. Because of this, The Cartel Banks have no gold to dump into the market to raid and jam price lower. Their only option is to be on the offer. All they can do is stand ready to absorb as much of the speculative buying pressure as they can each day, hoping to contain price and manage rallies.

Once GOFO flips back to the positive, this indicates that The Banks again have the ability to freely lease gold en masse. They then can utilize this gold to aggressively raid and sell in their attempts to paint the charts and force the spec money back out. Into this spec selling, the banks can buy back and cover many of the shorts employed earlier to contain price.

The two charts below illustrate this point. First, check this daily chart of the past two months of action. Just as the pattern has been, once Comex February deliveries began in earnest, GOFO turned negative again on 2/4/14. From there, gold went on a tear. It was UP 13 of 15 days with most days seeing an unusual lack of even London Monkey attacks. GOFO "peaked" negative on 2/21/14 and began to drift back toward positive as the February delivery month concluded, turning slightly positive again on 3/6/14. However, GOFO didn't immediately jump higher. Instead, it languished near flat for over a week as tensions in Ukraine/Crimea heated up and more speculators rushed into the paper market. As of 3/14/14, GOFO was still just slightly positive at +0.0075%.

Conveniently, we had a CoT survey taken on 2/4/14 as well. That evening, The Cartel Banks (gold commercials) were NET SHORT a total of 65,782 contracts. Left with no gold to raid price, all they could do was absorb spec bids through February and into March and by the CoT of 3/18/14, The Cartel Bank NET SHORT position had grown to 145,934 contracts. It was "mission accomplished" though because they had managed to contain the price rise to just $100. Can you even imagine how price would risen without The Banks covering each bid??

But, as you now know, GOFO did turn positive last week and each day since has seen rates move even deeper into positive territory. Again, this means that leasable gold is now readily available again for The Banks to borrow and dump into the market. GOFO moved from +0.016% to +0.038% last Monday. Can there be any surprise, in retrospect, that after price jumped higher last Sunday evening it was immediately raided back down and then lower later that day? As GOFO spiked toward a Friday high of +0.102%, are you surprised that price is now another lower?

Anyway, the good news in all of this is that we are clearly onto them. The game is ending, as witnessed by the now-persistent negative GOFO and, with April Comex deliveries set to commence in a week, rates will undoubtedly slip negative again soon. In the meantime, we must expect even lower prices as a desperate Cartel attempts to paint the charts as negatively as possible while they can, hoping to avoid another spec rush in April.

In gold, this means at least a drop to the lower end of the 2014 channel, currently near 05. However, I doubt that price will stop there. The Cartel goal almost has to be to break the 2014 channel. Why would they want to leave that channel and bull trend intact for when GOFO slips negative again next month? No, they'll almost certainly keep raiding until that channel is broken. Also, if they can break price down and out of the channel, they'll also try to knock price back below the 50-day and 200-day moving averages, currently near 02. In the end, absent any geo-political dramatics over the next 5-10 days, I think price is headed to 80 or so and the 100-day MA. Yes, that stinks but it is what it is.

And silver, now that it's convincingly back below .60 and all of its moving averages, is likely headed to at least .50. I'd love to see a third "higher low" by having it stop there but we can't rule out , either. Yes, that sucks. But, again, recognize it for what it is and prepare to take advantage of this current dip.

I have a lot more to say but I'd better get this posted. I'll try to cover this and other topics in more detail in today's podcast so please be sure to check back later.

Again, hang in there. Recognize what is going on and use this knowledge to your advantage.

TF

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tfmetalsreport [at] gmail [dot] com ()

  109 Comments

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Mantis
Mar 25, 2014 - 7:46pm

'new world order' craptocurrency

Auroracooin in Iceland seems to be the testbed. It has been launched today.

https://auroracoin.org/

Auroracoin is a cryptocurrency for Iceland. It is based on litecoin and is 50% premined. The premined coins will be distributed to the entire population of Iceland, commencing on midnight 25th of March 2014

There is also Scotcoin for Scotland which appears to be heading in a similar path https://scotcoin.org/

If the powers that be want these, they will be pumped, is it wrong to profit by getting in early then plough that profit into physical gold and silver ?

Verus nemo
Mar 25, 2014 - 7:42pm

Whitecastle123

I cannot and will not pretend to speak for anyone else, but this particular American does not recognize Executive Order as law and I will not comply. Period. If the rule of law in this nation is now history and our US Constitution is to be ignored, then it is every man for himself from this time forward. But, as they say, "your mileage may vary."

Whitecastle123thesandbox
Mar 25, 2014 - 7:15pm

Water source

That's already sealed and done by Executive Order if there is a national emergency along with,

All forms of transportation

Forced labor and relocation

Forced Military induction

Control of all farmland

This has all been done by E.O. and if we have a National Emergency declared, better put your depends on or crap your pants.

As the great Frank Zappa used to say; Ain't this boogie a mess.

thesandbox
Mar 25, 2014 - 6:56pm
DeaconBenjamin
Mar 25, 2014 - 6:45pm
DeaconBenjamin
Mar 25, 2014 - 6:29pm

Iraq buys $1.56bn of gold in biggest purchase in 3 years

Iraq bought 36 metric tons of gold this month valued at about $1.56 billion in the largest purchase by a nation in three years.

The Central Bank of Iraq acquired the metal to help stabilize the Iraqi dinar against foreign currencies, it said in an e-mailed statement. The country held about 29.8 tons of bullion as of August, according to data on the International Monetary Fund’s website. The latest addition was the biggest since Mexico bought 78.5 tons in March 2011.

While nations purchased about 544 tons in 2012 in the largest accumulation in about five decades, acquisitions slowed to 369 tons last year, according to the London-based World Gold Council. Countries will continue buying amounts in the “hundreds” of tons, the producer-funded council said in February. Bullion prices rebounded 9.2 percent since December, after slumping the most since 1981 last year as demand for a store of value waned.

“Gold is quite attractive to central bankers,” Mark O’Byrne, a director in Dublin at brokerage GoldCore Ltd., which has more than $200 million in bullion under management, said today by phone. “They see it as an important asset diversification and a safe-haven element within foreign-exchange reserves.”

Gold for immediate delivery traded at $1,316.15 an ounce in London, after sliding 28 percent last year. It reached a record $1,921.15 in September 2011. Prices averaged $1,344.78 so far this month, valuing Iraq’s purchase at about $1.56 billion.

Iraq’s Reserves

Adding the amount Iraq said it bought in March to its reported holding in August would make it the 40th-largest holder by country, according to the WGC. The nation has no plans to sell metal from its reserves, Muneer Omran, director general of investments at the central bank, said in an interview in Dubai in January.

Bullion had accounted for less than 2 percent of the nation’s total reserves, compared with about 70 percent for the U.S. and Germany, the biggest holders.

“Demand from the likes of Iraq is important,” GoldCore’s O’Byrne said. “It doesn’t necessarily mean it will lead to higher gold prices per se, but it definitely means that there’s an ongoing demand from central banks that is likely to continue” and should support prices, he said.

Mexico owns about 123 tons of the metal, according to the WGC. Turkey’s reserves, at about 488.6 tons now, expanded as much as 44.7 tons in July 2012. Bullion has been added to its balance sheet as a result of accepting gold in its reserve requirements from commercial banks.

https://www.mineweb.com/mineweb/content/en/mineweb-fast-news?oid=234357&...

Bollocks
Mar 25, 2014 - 5:49pm

atarangi - bitcon

Dead right.

The 'new world order' currency will be a crypto-currency after fiat collapses. I'm sure this is coming. Every transaction is recorded, there's no anonymity whatsoever. Paper fiat and coins offer anonymity - something tptb need to remove to have complete control over everyone's finances. Well, nearly*.

Tptb will offer a govt backed (yeah, right) crypto to replace all the current ones (including bitcon) which will have been forced into oblivion by making it illegal to transact with them.

*gold and silver are looking better every day.

Nana
Mar 25, 2014 - 5:46pm

Bollocks

I Wanna Be A Pirate
Mantis
Mar 25, 2014 - 5:18pm

IRS

(If i was a-merican) I'd love to pay IRS if my usb stick hadn't tragically exploded. I thought I had a backup but it turns out I threw that computer out into a landfill. Luckily i'd be able to offset the losses on the tax.

Bollocks
Mar 25, 2014 - 5:17pm

Oooh-aarr



where is xty, by the way?

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Key Economic Events Week of 9/21

9/21 8:00 ET Goon Kaplan
9/21 10:00 ET Goon Evans
9/21 Noon ET Goon Brainard
9/21 6:00 pm ET Goon Williams & Goon Bostic
9/22 10:30 ET Chief Goon Powell on Capitol Hill
9/22 Noon ET Goon Barkin
9/22 3:00 pm ET Goon Bostic again
9/23 9:00 ET Goon Mester
9/23 9:45 ET Markit flash PMIs for September
9/23 10:00 ET Chief Goon Powell on Capitol Hill
9/23 11:00 ET Goon Evans again
9/23 Noon ET Goon Rosengren
9/24 1:00 pm ET Goon Bostic #3
9/24 2:00 pm ET Goon Quarles
9/24 10:00 ET Chief Goon Powell on Capitol Hill
9/24 Noon ET Goon Bullard
9/24 1:00 pm ET Goon Barkin again & Goon Evans #3
9/24 2:00 pm ET Goon Bostic #4
9/25 8:30 ET Durable Goods
9/25 11:00 ET Goon Evans #4
9/25 3:00 pm ET Goon Williams again

Key Economic Events Week of 9/14

9/15 8:30 ET Empire State and Import Price Idx
9/15 9:15 ET Cap Ute and Ind Prod
9/16 8:30 ET Retail Sales
9/16 10:00 ET Business Inventories
9/16 2:00 ET FOMC Fedlines
9/16 2:30 ET Powell Presser
9/17 8:30 ET Philly Fed
9/18 8:30 ET Current Acct Deficit

Key Economic Events Week of 9/7

9/9 10:00 ET JOLTS job openings
9/10 8:30 ET Initial jobless claims
9/10 8:30 ET PPI
9/10 10:00 ET Wholesale Inventories
9/11 8:30 ET CPI
9/11 9:45 ET Core CPI

Key Economic Events Week of 8/31

9/1 9:45 ET Markit Manu Index
9/1 10:00 ET ISM Manu Index
9/1 10:00 ET Construction Spending
9/2 8:15 ET ADP employment
9/2 10:00 ET Goon Williams
9/2 10:00 ET Factory Orders
9/3 8:30 ET Initial jobless claims
9/3 8:30 ET Trade Deficit
9/3 12:30 ET Goon Evans
9/4 8:30 ET BLSBS

Key Economic Events Week of 8/24

8/24 8:30 ET Chicago Fed Idx
8/25 10:00 ET Consumer Confidence
8/26 8:30 ET Durable Goods
8/27 8:30 ET Q2 GDP 2nd guess
8/27 9:10 ET Chief Goon Powell Jackson Hole
8/28 8:30 ET Pers Inc and Consumer Spend
8/28 8:30 ET Core Inflation
8/28 9:45 ET Chicago PMI

Key Economic Events Week of 8/17

8/17 8:30 ET Empire State Manu Idx
8/17 Noon ET Goon Bostic
8/18 8:30 ET Housing Starts
8/19 2:00 pm ET July FOMC minutes
8/20 8:30 ET Jobless claims
8/20 8:30 ET Philly Fed
8/20 10:00 ET LEIII
8/21 9:45 ET Markit flash PMIs July

Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Key Economic Events Week of 8/3

8/3 9:45 ET Markit Manu PMI July
8/3 10:00 ET ISM Manu PMI July
8/3 10:00 ET Construction Spending
8/4 10:00 ET Factory Orders
8/5 8:15 ET ADP employment July
8/5 9:45 ET Markit Service PMI
8/5 10:00 ET ISM Service PMI
8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
8/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 7/27

7/27 8:30 ET Durable Goods
7/28 9:00 ET Case-Shiller home prices
7/29 8:30 ET Advance trade in goods
7/29 2:00 ET FOMC Fedlines
7/29 2:30 ET CGP presser
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Key Economic Events Week of 7/20

7/21 8:30 ET Chicago Fed
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7/24 9:45 ET Markit flash PMIs for July

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