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

About the Author

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  109 Comments

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SilverX3
Mar 25, 2014 - 9:35am

Copper

I see many articles trying to tie copper's action below $3.00 to indicate the looming possibility of the stock market tilting over to the downside. Is there any credence to this theory? What if copper rallies convincingly and stays above this critical mark? What conclusion can we draw/infer if/when this takes place?

silver66
Mar 25, 2014 - 8:20am

The scrubbing of info

just posted this on mainstreet but thought I would post here as well

Wikipedia has scrubbed Freegold

https://en.wikipedia.org/w/index.php?search=freegold&title=Special%3ASea...

I wonder why that is...Hmmm

Silver66

Pete
Mar 25, 2014 - 2:54am

April Gold 15m, Monday night

Welcome to the Babson "Profit Ladder": The pivot at a Babson 0-4 r1 line sets up subsequent r lines as both target and possible pivot point areas. When an r line is broken, price typically goes to the next r line, where it will turn or crash through. If a bar reversal happens at an r line, you exit with profits and reverse if risk is low enough, and stay in that move (adjusting the profit stop) until there is good evidence of next change in trend or a low-risk trade reversal/profit point presents itself.

Intraday swing traders are driven by the sole desire to make immediate profits, not discover a true price for gold. Any plausible technical set-up where the risk is low enough (and potential RR high enough) is sufficient reason to enter or reverse a position--often without reversal bar confirmation. At many points one can risk $1 and make $4+ on a single swing. Long or short doesn't matter to these traders and reversing positions is part of the trading plan. They do not know or care about where gold will trade tomorrow; it's about "trade location", very low risk at entry, and the chance to make profits on the current swing. This is what drives intraday gold trading.

Price patterns within the current swing, and their relation to the relevant lines derived from prior swings, shape the intraday action.

Sunday night, after price reversed higher at r1, the rally didn't get anywhere near the relevant median line. It was very weak. The 5m chart pattern revealed the unfolding vulnerability, and presented a logical $1 risk to take profits and reverse to short before the breakdown of the r1 line. Knowledge that r2 was now in the market's sights kept one short for the bigger move. As it turned out, price crashed r2, returned to it (like the return to r1), then went to r3, where another reversal happened, putting one long with a close stop. Most recently there was a low risk exit/reverse at uh (like twice before)....

I did a study once which showed that 64% of the time the daily range in gold futures was between $11.10 and $25.60. That's a lot of profit potential given the intraday swings and possible very-low-risk entries. You see what is possible trading intraday when you catch a swing that turns out to be the extreme of a day. Sunday night's trade at the 0-4 line was a perfect example of capturing such an extreme.

mac
Mar 25, 2014 - 2:47am

"if I let you go on...

you will ruin 50,000 families." Andrew Jackson, US President, speaking to the Bankers.

He wanted to"rout out" the Banksters. Thanks CPE for the quote!

- organized crime, who ya gonna call? Ghostbusters?

This will be dealt with internationally, as US sheeple ain't capable of much except weak complaining....unbelievably neutered!

Americans used to be "go to" types, they got things done. Today a cynical group of media zoombies cheers repression, doubts that truth even exists and hides in internet sites blasting anything that moves with their "games" that are simply war preparation, the women chatting away 'as if' they have friends everywhere in the internet, and many must be watching porn. While the Banksters steal the country.

Israel Embassies closing is a sign. Of what? Impending attacks likely.

RR Richard Russell. He is an older man and he stays out of the stock market and holds gold and silver physical. I think he has got it right!

SilverSurfers
Mar 24, 2014 - 6:50pm

Good News!!

"the good news in all of this is that we are clearly onto them". Turd is holding twenty leashes, with turdite blood hounds on point, after those nefarious running criminals! HOW MUCH MORE good news, ya think, we can bare? 1300 HOLD, dang it!! Just dont be fooled by cartel games, and hang tuff, with hands of steal, out of the trading land mines, as the surest way to eventually catch the rise. Get in position and ride it. Yeap, pig back under 80 and 10yrYield macd looks like its ready for another upward breakout of tweetie bird, or is that a smoke and mirror mirage, for a break down at the silver convention?

Video unavailable
AGAU
Mar 24, 2014 - 4:31pm

Wow another day another wacking

Well that closes another ring stinger of a day , everything red and no light at the end of the tunnel , riding the miners needs balls like aubergines (and a brain like a walnut I guess) !!! Thats why 90% of us will miss the big run!! If Larry Edelson is right. ( https://www.moneyandmarkets.com/dont-be-fooled-by-golds-glitter-58342) . We may have to see sub 1000 bucks AG and maybe the 17,s in silver before we see a true bottom I hate to see that but being practical and having been impressed by Edelsons work in the past I am prepared, I wont sell any of my core miners and definitely no phys but I will hold off on deploying my drypowder now There is no free market as we all know so trying to trade on technicals etc is a mugsgame maybe Turd or one of our tech gurus can comment on Edelsons work?

SamSchlepps
Mar 24, 2014 - 3:50pm

Israeli diplomats on strike - doesn't meet the smell test

Sorry if this a DOTS post, but this one just doesn't sit right and perhaps a foretelling of more crap to come.

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.The industrial action has already threatened to postpone a visit by Pope Francis to Israel planned for May - one of 25 trips by foreign officials affected by a work slowdown the diplomats began on March 5 when wage talks broke down.By escalating the action to a full strike - the first by the diplomatic corps since the country's establishment in 1948 - the diplomats will close all of Israel's 102 missions abroad, paralyzing most diplomatic work with other countries and the United Nations. https://www.reuters.com/article/2014/03/23/us-israel-diplomacy-idUSBREA2...

Wouldn't you strike during before AIPAC to cause the most disruption if you were a disgruntled diplomat? Wouldn't you want to be "open" for business when your citizens in other countries may be most in harms way? Would this a time for more diplomacy not less unless things were already decided? If something wicked comes this way that you might be a part of would you close shop? Are jobs so plentiful in Israel and for diplomats right now? Did you really take the posting for the money? More questions than answers for this little mind or perhaps to make it more inline with the thread - this uncomplicated mind

metalsbyamile
Mar 24, 2014 - 3:09pm

Santas up

Chair Yellen To Get A Shock Of A Lifetime In The Next Few Months

Posted March 24th, 2014 at 11:49 AM (CST) by Jim Sinclair & filed under General Editorial.

My Dear Friends,

Chair Yellen has placed herself between the rock of recession and the hard place of playing the hawk. A global recession cannot produce an isolated USA, but rather underscore the heart of the recent US economic figures as a reflection of an insular American economy following the world back into recession, not entirely extremely cold weather related. You might note that China has not had as much of a weather problem yet and is experiencing degrees of contraction in the spectacular rate of growth previously present.

The idea that stimulation, even if only in form but not reality, can be withdrawn without draconian economic results is simply false. Chair Yellen is truly dedicated to full employment and is going to go into shock over the next few short months at the divergence between her economic modeling, the behavioral economic projections and the degree of economic contraction in the US. She will revert to her long standing dovish viewpoint of the mandate of the Federal Reserve and move this hyper stimulation (4 trillion) into a higher gear than before.

Both the stock market and the gold market will reflect this in substantively higher prices. One should never forget that the wheels of the equity markets and gold is liquidity, which represents debt presently and nothing more.

I am presently 13 hours ahead of you in Hong Kong looking out of my window in contemplation of mainland China where nothing has changed. China may look like a free enterprise exercise, but it is far from it. This is a Maoist country that will handle a contraction of its economic activity in a much different way than the hoards of Ivy League analysts populating Wall Street, the City and the Bahnhofstrasse believe. There will be a unified pulling together of the economic function to prevent the dire circumstances the uninformed love to paint China with and have been for the better part of a generation now.

The only asset to survive and appreciate in the period of the great leveling now in progress in the West is Gold. That is understood at a level of POLICY here in the East. Gold is not being bought here in the physical market as an investment decision but rather as a policy decision. It is clearly understood that gold is for saving and not for speculation as the eventual failure of the paper gold market will prove.

As we move out of the Great Leveling 2016 into the Great Reset of 2020 gold will have preserved the buying power of those courageous enough to hold and when possible add to their positions. Companies holding gold free of the tentacles of the West will prosper accordingly.

The developments in Crimea are a well timed stratagem to prevent the adoption of the TITT Treaty that no one wants which has the ability to turn Euroland into a dollar dependent trading area. The Baroness and Mr. O’Sullivan have more to do with ongoing events in the Crimea than the organized and false demonstrations are blamed for.

The US dollar knows this and can be seen to have lost its snap back mojo from below the .80 level of the USDX to the mid .80s. It is even struggling today as the stratagem to bring down the Euro has been trumped by the ongoing move of Putin.

Stay the course in gold and you will benefit mightily.

Sincerely,
Jim

tmosley
Mar 24, 2014 - 3:07pm

Not that I know of

Just yours truly.

On that note...just as I sent the original March 1 post over to GATA, I'll send this one tomorrow.

lrod3166
Mar 24, 2014 - 3:07pm

Do you mean selling their paper or phys?

I doubt it. This is just plain old spec sheep shearing and Cartel positioning.

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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
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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
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9/25 8:30 ET Durable Goods
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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
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9/16 8:30 ET Retail Sales
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Key Economic Events Week of 9/7

9/9 10:00 ET JOLTS job openings
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9/11 8:30 ET CPI
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Key Economic Events Week of 8/31

9/1 9:45 ET Markit Manu Index
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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
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Key Economic Events Week of 8/17

8/17 8:30 ET Empire State Manu Idx
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8/19 2:00 pm ET July FOMC minutes
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Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
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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
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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
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8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
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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
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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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