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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  109 Comments

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Mantis
Mar 25, 2014 - 12:21pm

Ivars for guest post

Thanks for the new post Turd, will study it later when i get time.

Interesting to see Palladium analysis too. Hmm .... might feel a bit of a metal swap coming on. Goldmoney does paladium.

Mar 25, 2014 - 11:43am

Ivars

Have you checked your email lately?

Coin Explorer
Mar 25, 2014 - 11:04am

Re: Russia and Palladium

Russia produces 41% of the world's palladium, and South Africa produces 38%. The thing about Russia is, it's been selling the old Soviet Strategic Palladium Stockpile, (Yes, this is a real thing), so we aren't *really* sure how much annual domestic palladium production they actually have.

Three things to note:

1) Johnson Matthey estimated last year that Russia had sold most/all of the old Soviet palladium stockpile.

2) Russia exports of palladium have been dropping

3) What they are exporting, is mostly semi-worked, *not* the powder/sponge form that they have been selling.

Russia may no longer have as big a palladium stick as many think.

buzlightening
Mar 25, 2014 - 10:37am

One thing certain for those who follow web bots.

Cliff Highs stating china defaults will not go away: https://news.goldseek.com/GoldSeek/1395756240.php

First bank runs in China reported today may signal the start of an old fashioned banking crisis

There have been runs on two small banks in China with depositors fighting to get through the doors to make withdrawals when they opened. Is this the first crack in the great wall of Chinese credit?

Reuters reported local news about queues outside the Sheyang Rural Commercial Bank in Yancheng yesterday and the Rural Commercial Bank of Huanghai faced similar rushes by depositors today after rumors of insolvency at Sheyang. Officials say it is impossible for a Chinese bank to go bankrupt.

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Something about officials and the impossible not happening which makes it happen. Should shut up about the global fiat deceit and just let the implosion pass naturally without being so arrogant as to say impossible.

ivars
Mar 25, 2014 - 10:35am

For someone who wants to

For someone who wants to study relationship between Roman Empire ruled by Military Emperors and today's Debt Empire Ruled by banker Emperors, here are two charts:

I have been reading a bit more in detail and have established a bit better timeline analogies; basically, when You read Roman history through the crisis of Third century (at the end of which we are now and which was solver by establishing by Diocletian 2 Emperor rule ( Dicletian 285 - Maximian ) and later in 293, even Tetrarchy with two more Caesars of little lower rank ( in 293) ), here are the correspondences by years:

Roman Empire Crisis of the Third Century

235- start of Third Century Crisis= 1968
270-275- Rule of Aurelian - unification of Empire =2003-2008 ( it does not mean Bush was emperor, but behind the Bush bankers had 1 Emperor for 5 years which is very long compared to average 25 emperors per 50 years of 3rd century crisis and its analog in modern days- should have been 25 banker Emperors since 1968). The 2008 crisis ended the rule of This whoever it was banker emperor, and we can may be figure it out by looking at which banks ( Lehman!) went under as aftermath, which we allowed to go under. The only glimpses we can get of banking Emperors are the changes in financial institution ownership and fortunes.
284- Diocletian = 1968+49= 2017
285 - Diocletian + Maximian = 2018 so soon the Empire will have 2 capitals- Western and Chinese ( BANKING EMPIRE, THE ONE THAT MATTERS).
285-305= 2018-2038 - co rule of 2 Emperors and also change in value systems , dramatic ( most likely towards more autocratic, in the West mostly) .

293=( 2026) Tetrarchy-305 (2038) 2 more Sub debt EMPERORS ( not quite clear which todays geographic places will be able to issue and control DEBT in parallel with the USA and China- one could be Europe as further fragmentation of Western debt Empire, but the other? Latin America? Saudi? Central Asia? Will they have enough capital or control over territories to LEND?).

325- ONE EMPEROR Constantine and New religion= 2058 Chinese take over fully , but debt cycle end is close, and religion changes..to what?

Today, we are in year 281-282 of Roman Empire. For interest, one can make analogy between Russia and Persia, Ukraine and Mesopotamia ( rich lands!) and see what happens ( what happened to Mesopotamia in fights between Persia and Roman Empire around 281-285) . Very interesting things.

Conclusion short term is: West will lose last fight in Ukraine, Ukraine will more back to Russian sphere within one two years, but more importantly, Rothschilds will succeed in returning to the shared throne of debt EMPIRE, shared with the West , which will be visible in 2D shadows from 2017-2018 latest ( one shadow will be the new USA president) . The key event will be of course- as a result of Western ( USA) debt Empire loss globally - the move of Russia in CHINESE debt EMPIRE sphere of influence. That means that China ( Hong Kong) based Debt Empire will have the privilege to issue and expand and control debt Russia, Central Asia, East Asia, may be also Africa, Latin America.

Clearly it will be This part of divided banking EMPIRE that will grow and quite fast eat into former One Emperor Western Banking Empires spheres.

Most importantly, the appearance of second debt EMPIRE will change values , political systems, geopolitics and politics, state boundaries at will. Think how well UK delivered Hong Kong to China with 50 years of one country, 2 systems deal, and how happily China already in 1984( !) agreed to have capitalist system under PLA protection in Hong Kong ( so not accessible by USA armed forces representing Western Banker Empire). These guys who know how debt cycles work are able to plan things quite fast in the future.

There is a third player today, represented by the USA military and other security services and people like Soros who are trying to use debt Empire weakness to establish own position. They will lose. We can see how NSA, USA military etc. are clearly decimated in concerted action, and same will happen with Soros backed presidential candidates. All in all, Democrats won only because Lehman crisis was engineered. Obviously, Lehman crisis in internal fight of bankers for EMPEROR title was more important then who gets the presidency. The changes in Banking EMPERORS since then are the reason of inconsistency of the USA foreign policies during Obama term as he is being directed in various directions every 2 or even every other direction.

Summary: There is still ONE ( A PERSON) WESTERN DEBT EMPEROR in this world today, but this position has been very unstable since 1968, with roughly 25 WESTERN DEBT EMPERORS changing over last 50 years, and as soon as 2017 -2018 there will be officially TWO DEBT EMPERORS- ONE WESTERN ( USA based) , and ONE CHINESE( but not by nationality, most likely Rothschilds). This double system will mean that Chinese values will be forced on the world same way as American were and will overtake American ones in Eurasia , eastern part, and more. 2017-2037 will see fundamental changes in values systems, not in favor of democracy, naturally. The fight over Central Eurasia (Zbigniew Brzezinski) will be lost by USA DEBT EMPEROR to the old former EMPERORS- Rothschilds in Hong Kong as fight over Ukraine is lost and resource rich Russia will become debtor to CHINA DEBT EMPIRE.

mac
Mar 25, 2014 - 10:27am

financial TV

Imagine the talking heads at CNBC and Bloomberg all arrested and charged with deliberate subversion against the public's interest!

But when does anything happen in america? They moved in all the racial groups to divide and rule the established US citizens.

All these nationalities, ethnic backgrounds. Who can organize anything here?

You've been done. It is over, you are of the 1% or you are not....

'Fracking' will destroy the environment but this is unheard of on MSM.

The News is such lies, propaganda, and so many understand this now...BUT....

metalsbyamile
Mar 25, 2014 - 10:25am

buz

Thanks for posting that link. It always facinates me when my opinions align with one of the greats. RR is some one i follow since my original stack purchase back in the day.

I must admit i swing trade and hold a core in paper pm stocks so I suppose we are not aligned exactly yet I think my game is a dangerous one.

buzlightening
Mar 25, 2014 - 10:11am

Here's to Richard Russell and peace of mind

In my almost 90 years of living on this earth, I've learned a few things. One of the least appreciated aspects of living is peace of mind. As I've said many times before, fear is the curse of mankind. Look at the shelves of any large drugstore, and you will see dozens of bottles of preparations and pills to cure anxiety, sleeplessness, fear, headaches and pains of every type. Mankind is awash in fears. Peace of mind is a rare gift.

In the investment world, of course, peace of mind is a particularly rare commodity. The rise in the stock market since its 2009 low has now exceeded five years. Common sense tells us that the longer an advance continues, the nearer it is to its conclusion. In the low area of 2009, fear was the dominant emotion. As the advance pushes into its sixth year, fear has given way to boldness and greed. On this thesis alone, I have elected to move out of common stocks. After long consideration, I have concluded that the area I prefer to be in is pure wealth.

By pure wealth, I mean physical silver and gold. That's my best advice for subscribers today. There are a number of metrics that suggest that this market is expensive, extended overloved, and long in the tooth. Margin debt on the NYSE is at a record high. When investors are extremely bullish and greedy, they borrow money.

Thus new market highs and record margin debt suggest an extreme in greed and bullishness. Aside from that, insider selling is high. There are currently seven distribution days on the NASDAQ and three on the S&P. These items alone are enough to place me on the sidelines. You might do the same. By being out of the market and on the sidelines, my subscribers should obtain that elusive state, peace of mind. Read full commentary here: https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/25_R...

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I've been on the sidelines of the paper chase since 6/13/09. I agree with Russell as I just stack when appropriate. Could be big changes coming after end of quarter window dressing. Russell sees it also!

metalsbyamile
Mar 25, 2014 - 9:58am

Nice to see gold holding

major support at $1310. Moving up now $1315. Silver above $20. If we recapture $1320 solidly I'm in with both trucks.

buzlightening
Mar 25, 2014 - 9:41am

Nothing geopolitical happens by coincidence.

Purely a ramp up for conflict! Israel closes embassies around the world as diplomats strike (Reuters) - Israeli diplomats launched an unprecedented strike on Sunday, forcing the complete closure of embassies around the world as they escalated a dispute over pay, officials said. https://www.reuters.com/article/2014/03/23/us-israel-diplomacy-idUSBREA2...

................................................................................................................................................................

More like get your arse out of harms way. This weekend could show escalation for war in all the hot spots and maybe some new spots going hot. After the quarter end window dressing for wall street, physical blood in the streets. We'll see how oil; gold react going into the weekend with any telegraphing. Always have deep inside global power brokers front running. The greed factor makes it nearly impossible for the markets to cloak regular list of suspect power brokers pushing the pinocchio lying noses under the market tents; assets of substance getting high volume. Price maybe capped but volume the tell.

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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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7/21 8:30 ET Chicago Fed
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7/22 10:00 ET Existing home sales
7/23 8:30 ET Jobless claims
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7/24 9:45 ET Markit flash PMIs for July

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