(Currency) Wars and Rumors of (Currency) Wars

Wed, Jan 21, 2015 - 11:01am

Back in Friday's podcast, I warned you to expect extreme volatility this week and a "sell the news" type of reaction to the ECBQE announcement. Well, it's only Wednesday and things are already shaking around the globe with more craziness to come.

Earlier today, we were quietly humming along with highs of $1305 and $18.50. Pretty sweet. And then, WHAMMO! The "leaks" hit from the ECB, via ZH: https://www.zerohedge.com/news/2015-01-21/ecbs-qe-leaked-board-proposses...

"And so with less than 24 hours to go, the ECB has decided to leak its deliberations not only to Merkel and Hollande, but Dow Jones. To wit:

  • More as we see it, but if indeed this will be a program without risk-mutualization and conditional and limited burden-sharing, where the hope was that Draghi would "shock and awe" the world with the size of the bond purchasing program instead, €600 billion per year looks decidedly on the low side of any "surprise" announcement where the whisper number was for €1 trillion per year, and if indeed this is the final formulation may result in a substantial disappointment for stocks after the initial kneejerk reaction."

    To the surprise of no one in Turdville, gold and silver were immediately sent reeling. This first wave of selling was almost certainly a sudden rush to the exits by some of the momo-chasing algos that had plunged into the Feb15 in recent days.

    Then, from The Great White North, came a surprise rate cut announcement. This was completely unexpected and it put a bid back under gold and silver: https://www.zerohedge.com/news/2015-01-21/bank-canada-cuts-rates-fears-f...

    Wait a second, now. This is suddenly NOT going according to Cartel plans. So what happened next? More selling of course! And I have a last as I type of $1288 and $18.08. Not good but not horrific, either. On the one-minute chart it looked like this:

    Again, NONE OF THIS was unexpected and, as Pining astutely noted in the podcast thread, gold had gotten way ahead of itself with an RSI well above 70. It was due for a breather.

    However, we must expect more selling now, inspired by The Cartel as they hope to chase out the spec momos and crash price back down. To where?

    • Well, their first target is to get gold back down and under the always-important $1280 level.
    • IF they can really get things going today, a close back below $1272 would paint a very nasty bearish engulfing candle on the daily chart.
    • Eventually, they'd LOVE to get price back below the 200-day MA near $1257.
    • They'd also like to slow the ascent in order to forestall a "golden cross" of the 50-day MA ($1205) UPward through the 100-day MA ($1216).
    • Finally, we'd mentioned last week a clear option "sweet spot" near $1250 for both puts and calls. However, there are also 13,118 Feb $1300 calls outstanding as of yesterday. There is NO WAY that The Banks want to allow a price above $1300 at option expiry next Tuesday as every $1 above $1300 costs them $1.3MM.

    In the end, I'm not too worked up over any of this. It was all expected and none of this deflates my enthusiasm for how 2015 has begun. These daily fluctuations and Cartel shenanigans do not impact the ongoing events of currency wars and central bank defections. They also do nothing to lessen the ongoing, robust demand for physical metal that seems to be taking on a life of its own.

    Therefore, enjoy the theater and keep stacking. The paper games are simply the paper games. Unless you're willing to walk that tightrope, as WOPR says "your only winning move is not to play".

    Keep an eye on the headlines and keep an eye on price. The only thing that we really want to avoid today is an ORD and a close below $1272. Everything else is just noise.


    About the Author

    turd [at] tfmetalsreport [dot] com ()
    Does Feb19 Comex gold close above $1250 on Friday?
    Total votes: 185


    WingsofGold · Jan 21, 2015 - 11:04am

    Thanks Turd

    Thanks Turd for the education in Metals . The group here has helped me learn quite a few things since the spring of 2011. Love this community you have brought together.

    · Jan 21, 2015 - 11:09am

    This is how they do it, part 2

    How do you levitate the Dow by 80 points in minutes?

    WingsofGold · Jan 21, 2015 - 11:10am

    no problem, my friend

    Just livin the dream...

    crylandjr · Jan 21, 2015 - 11:13am


    For another great post Turd!

    Crap is getting real, an there are sure a lot of plates for the monkeys to keep spinning. 

    Mr. Fix · Jan 21, 2015 - 11:17am

    1st So much for the long slow decline of civilization…

    So you want to know who is winning the currency war? I'll give you a hint:

     A currency war is a race to the bottom. Those who can devalue their currency the fastest win the war.

     So how is the dollar doing lately?

     I offer this as undeniable proof that the United States Federal Reserve has lost control.

     This will be the death knell of all American industry. 

    The price of oil is out of control. The dollars relative position to other worthless paper is also out of control.

     The ability to create “naked shorts” is quickly losing its impact, we are on the cusp of another market losing any pretense of credibility. (We've known it's a farce for quite some time).

     Everything is breaking at an accelerated pace, with the predictable outcome of a global economic Armageddon whereby the wealth of the entire planet will evaporate.

     The call for war is nothing but a diversionary tactic, something the banks can use to blame the collapse on.

     Our precious metals will be quite handy when this all blows over,

     but make sure you will be able to eat, and defend what is yours.

     With that in mind, keep stacking. 

    4 oz · Jan 21, 2015 - 11:17am


    Today...going to be a fine day to add.

    Keep thinking...it's all about availability....and it's available to me, still, today.


    ArtL · Jan 21, 2015 - 11:20am

    PSLV premiums are starting to increase.


    JNUG is looking like a V bottom. and Silver is bouncing back up.

    luv2stak · Jan 21, 2015 - 11:29am

    Reserve Bank of India resets rates

    India's [ the ' I ' in BRICS...] Central Bank has just cut interest rates:

    <snip> Last week, the RBI cut interest rates for the first time in nearly two years. The unexpected move ahead of the scheduled monetary policy announcement has been cheered up by the Indian industry. Burdened with high interest rates, the industry was eagerly waiting for such a step, particularly with industrial production struggling to pick up its pace.

    The RBI governor has said that the decision is based on easing inflation pressure, driven by fall in prices of vegetables and global crude oil prices <emphasis added> as well as on the reiteration of the Centre of its "commitment to adhering to its fiscal deficit target". Recently, the finance minister publicly criticized the RBI for sticking to a tight monetary policy, terming it as the "singular factor" responsible for the manufacturing slowdown. <end snip>


    infometron · Jan 21, 2015 - 11:39am

    @ Turd Re: This is how they do it...

    Interestingly, the S&P 500 zoomed up from 2029.53 at 10:50 to 2034.13 at 10:51. Hmmm, someone front-running, perchance?

    Mr. Fix · Jan 21, 2015 - 11:43am

    Did anyone bother to watch this last night?

    You would be hard-pressed to find even one truthful statement. An entire empire built on lies, in a state of free fall, and most people have not yet noticed.

     It's always fun when Associated Press goes to the trouble to “fact check” an Obama speech.

    Fact-Checking Obama's State Of The Union Speech

    Submitted by Tyler Durden on 01/21/2015 - 11:17

    We already did our post-mortem of last night's teleprompted annual evangelizing of Barack Obama's "straight to folks" propaganda that would make both Goebbels and Dzerzhinsky blush. So instead of repeating ourselves, here is AP with its own fact check of what can only be dubbed lie after lie, courtesy of the president of the "free world" and the head of the "most transparent administration ever."


     Don't get your hopes up too much, it's nothing but spin and propaganda.

    I watched the speech last night on Info Wars, where they went to the trouble to set the record straight line by line. Putting Obama's agenda in proper perspective may be required for survival.

     Any proper analysis leads to the conclusion that this man is intent on killing America.

    The analysis in this story is far more factual, and sobering:https://www.zerohedge.com/news/2015-01-20/everything-awesome-sotu-post-mortem-its-not-governments-job-make-everybody-rich

    (It comes with lots of pretty charts). wink

    DeaconBenjamin · Jan 21, 2015 - 11:46am

    And other wars

    India, Russia to fast track joint military projects

    NEW DELHI: India and Russia today decided to "fast track" the ongoing joint military projects including the Fifth Generation Fighter Aircraft deal as Defence Minister Manohar Parrikar invited Russian companies to exploit the 'Make in India' initiative. The two sides also decided to hold interactions at regular intervals to conform to project deadlines.

    "We have discussed all the issues including the FGFA. We have decided to fast track many of the issues," Parrikar said after holding meeting with his Russian counterpart Sergei Shoygu. Parrikar told reporters here that there were "some apprehension" about the slow pace in execution of the projects. "And the first thing we have decided is that this slow speed has to be overtaken and a fast track approach has to be initiated in the arrangement", Parrikar said.

    Asked about his offer to the Russian defence firms to exploit 'Make in India' initiative of the new government, Parrikar said the country uses a substantial quantum of Russian equipment. "We invited them to come to India with joint ventures and manufacture here including spare parts for various platforms we are already using...they (Russian side) were positive about it," he said. Even though Defence officials remained tight lipped, sources said the issue of BrahMos mini-missile was also raised.


    DeaconBenjamin · Jan 21, 2015 - 11:50am

    OPEC, oil companies clash at Davos over price collapse

    DAVOS, Switzerland (Reuters) - OPEC defended on Wednesday its decision not to intervene to halt the oil price collapse, shrugging off warnings by top energy firms that the cartel's policy could lead to a huge supply shortage as investments dry up.

    Speaking at the World Economic Forum in Davos, Switzerland, the heads of two of the world's largest oil firms warned that the decline in investments in future production could lead to a supply shortage and a dramatic price increase. Claudio Descalzi, the head of Italian energy company Eni Spa, said that unless OPEC acts to restore stability in oil prices, these could overshoot to $200 per barrel several years down the line. "What we need is stability... OPEC is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way," Descalzi told Reuters Television. He expected prices to stay low for 12-18 months but then start a gradual recovery as U.S. shale oil production began falling.

    But both OPEC and Saudi Arabia, the group's largest producer, stuck to their guns. "If we had cut in November we would have to cut again and again as non-OPEC would be increasing production," OPEC Secretary General Abdullah al-Badri said in Davos. "Everyone tells us to cut. But I want to ask you, do we produce at higher cost or lower costs? Let's produce the lower cost oil first and then produce the higher cost," Badri said. "Prices will rebound. I saw this 3-4 times in my life." Al-Badri said the policy was not directed at Russia, Iran or the United States. State-run oil company Saudi Aramco Chief Executive Khalid al-Falih also appeared unfazed, saying that although it could take some time, the oil market will eventually balance itself.


    DeaconBenjamin · Jan 21, 2015 - 11:56am

    Orban-Putin summit to test meaning of EU sanctions

    Hungary’s Viktor Orban will host Russian leader Vladimir Putin in Budapest next month despite an EU decision to “not hold bilateral regular summits”.

    The Hungarian foreign minister, Peter Szijjarto, announced the visit, to take place on 17 February, on Hungarian radio on Wednesday (21 January). "We will have bilateral and geopolitical issues on the agenda, including the energy security of central Europe. Energy issues have become more urgent with the shelving of the South Stream pipeline”, he said. “Ukraine will be on the agenda too”, he added. "It’s clear that the European sanctions and the Russian measures in response have hampered trade and economic ties between the EU and Russia, and it's true for Hungary and Russia as well”.

    The event is being billed as a “working visit” rather than a fully-fledged state visit, meaning less fancy protocol. But it is proving controversial, with at least one Facebook page launched the same day calling for anti-Putin protests when he arrives. Meanwhile, EU leaders, including Orban, at a summit last March said in their conclusions that “member states will not hold bilateral regular summits [with Russia] for the time being”.

    Orban has publicly criticised EU sanctions on Russia. He also tried to defy EU legal objections to building South Stream, a Russian gas pipeline bypassing Ukraine, before Putin abruptly cancelled the project in December.

    EU sanctions on Russia will begin to expire from March onward unless there is a consensus to extend them. EU diplomatic sources earlier told this website that Russia is targeting Hungary, Cyprus, and Italy as potential veto-wielders. But Szijjarto, at a foreign ministers’ meeting in Brussels on Monday, toed the German line, telling press “there can be no positive change” unless Russia abides by the so-called Minsk ceasefire accords. He added on the radio on Tuesday: “It’s in Hungary's interest to have a strong and stable neighbour, and for the conflict to be resolved through negotiations as soon as possible. For that to happen, all sides must respect the Minsk agreement”.


    DeaconBenjamin · Jan 21, 2015 - 11:58am

    Russia to pick which EU states can export food

    The European Commission has agreed to let Russia pick and choose which EU states can be exempt from its food ban.

    The deal was struck in Berlin last week between Ladislav Miko, a top EU health and safety official, and Sergey Dankvert, his Russian counterpart. According to a letter from Miko to Dankvert dated 16 January, and seen by EUobserver, the mechanism for lifting the Russian ban involves the EU issuing health certificates and Russia deciding which member states meet them following inspections. “In order to come back to the situation before the ban, our understanding is that trade could resume based on EU-wide veterinary certificates and inspection by importing country [Russia]”, it says.

    With EU and US diplomats this week fretting over Russia’s escalation of its war on Ukraine, Miko described his meeting with Dankvert as “fruitful”. EU farmers and exporters lost hundreds of millions of euros after Russia imposed the food ban last August in retaliation against EU economic sanctions.

    But some capitals are concerned Moscow will exploit the new arrangements to reward Russia-friendly EU states and to punish its adversaries. “This is bad news. We have decided ourselves to give up on EU solidarity”, an EU diplomat said. “The Russia sanctions were imposed on all member states, so they should be lifted in the same way, but we’ve given Moscow the right to pick and choose”.


    jaw777 · Jan 21, 2015 - 11:59am

    ECBQE - whisper

    I anticipate that the ECB will exceed the $50B/month. Why? Because they leaked something. Half the charm of QE is the surprise and inflation of assets. If the ECB disappoints then they don't get the desired effect. Markets started to get ahead of what the ECB anticipated doing so what do they do, they leak something less than planned to lower expectations. That way they still get to shock the market and have their announcement. Expect bigger things. Maybe more QE, maybe a rate cut or even NIRP.

    Unfortunately for the cartel this is catching them off guard. They didn't expect Canada to cut rates on the same day this was leaked. They are about to tell the CBs to go to hell because they can't suppress the price of gold in an environment where every CB on the planet is printing or threatening to print and there is no more gold to sell.

    I still remember Turd's post after QE to infinite was announced. I think it started with "Wahoooo!" Expect that again.

    DeaconBenjamin · Jan 21, 2015 - 12:00pm

    Merkel says ECB should avoid sending wrong signals with QE

    Jan 21 (Reuters) - German Chancellor Angela Merkel reiterated on Wednesday that the ECB is independent in its decision-making but said it is important nevertheless for the central bank to avoid sending any signals that could undermine the need for structural reforms.

    "The ECB hasn't made any decisions yet," Merkel said at a news conference in Berlin, asked about expectations the European Central Bank will announce a government bond-buying programme on Thursday. "There's been a lot of speculation (about that).

    "Secondly, the ECB is independent. I can only repeat what I said on Monday evening that ... it's important for me, as a politician, that all signals have to be avoided that could be perceived as weakening the necessity for structural changes and closer economic-political cooperation in euro zone countries. That definitely has to be countered. We'll have to wait and see about everything else," she said.


    · Jan 21, 2015 - 12:08pm

    Max pain for options next Tuesday

    I am using GLD as a proxy to figure this so it may not be exactly right, but as near as I can tell max pain for options for Gold works out to a price around 1250$. That might be a target/magnet for any downwards price action for the next few days. Just FYI. Maybe a nice chance to add to longs around that level if you are so inclined, at some point Monday through Wednesday.

    Great work and analysis, TF- you have been killing it !

    infometron · Jan 21, 2015 - 12:21pm

    Latest from Jim Rickards

    Seems appropriate to post this here, given the title of the thread ;^)


    DeaconBenjamin · Jan 21, 2015 - 12:22pm

    Royal Mint sells gold bars directly for the first time

    For the first time in 47 years, the Royal Mint is manufacturing gold and silver bars which are available for everyone to invest in. 

    The Royal Mint has begun selling gold and silver bars directly to the British public today for the first time. The bars, which were last produced by Royal Mint 47 years ago, are available to buy in several weights ranging from 1g to 100g. Each bar bears the historic marque of the Royal Mint Refinery “RMR”. The price of the bars fluctuates as it is linked to the constantly changing price of gold and silver. Currently, a 100g bar made of 999.9 gold costs £2,871.39 while a 1g gold bar costs £49.65. 

    For years the Royal Mint has sold collectible coins commemmorating special events direct to the public. Last year it began selling "bullion" coins made for investment purposes to the public such as Sovereigns, Britannias or Lunars. Investors can buy them through a Self-Invested Personal Pension (SIPP) or Small Self-Administered Scheme (SSAS) and benefit from their marginal rate of tax on their gold purchases.


    tyberious · Jan 21, 2015 - 12:23pm


    False flag coming?

    · Jan 21, 2015 - 12:28pm

    Very nice recovery

    Gold now $7 off of lows and silver fighting to retake $18.20

    Pig full round-trip and back above 93, too. Interesting....

    tyberious · Jan 21, 2015 - 12:28pm



    tyberious · Jan 21, 2015 - 12:34pm
    simjojim · Jan 21, 2015 - 12:39pm

    Well over here

    in Aussie, GOLD has rebounded 20 bucks to almost AU1600. SILVER is going great as well in AU$ terms. I think the metals are looking good even in the face of a strong USD. Think how much both GOLD and SILVER will run when the USD comes under pressure. GOLD in Aussie dollars all time high was 1800, we are now at 1597. GOLD in USD all time high was 1920, now at 1300. I don't need to tell anyone how low the sentiment for GOLD and related stocks are, but it's the same here in Aussie, even though we are at 1500 - 1600 ish. Investors don't trust the rally and who can blame them?? There has been a shitload of psychological damage done to anyone invested in metals since they buried Usama Bin Lager at sea. I don't believe in coincidences like that. SILVER at 48, tell the world we killed Dr. Evil, bang SILVER at 35.

    tyberious · Jan 21, 2015 - 12:46pm

    Re; Hungary

    I was hypothetically suggesting that since Hungary was meeting with Putin, that there might be blow back.

    heathbr · Jan 21, 2015 - 12:50pm

    How Bout That

    Gold Price in Yenyes

    ReachWest · Jan 21, 2015 - 1:12pm

    CAD Gold

    Thanks to the Bank of Canada and it's surprise interest rate cut this morn:

    Au - DOWN USD $1.40 to 1293.80/oz 

    while North of the 49th parallel ..

    Au - UP CAD $31.79 to 1600.36/oz

    Everything is "Loonie" toons, for sure. A simple example of why we hold physical Gold.

    ivars · Jan 21, 2015 - 1:38pm

    Finally I understood why the

    Finally I understood why the Swiss depegged "unexpectedly":


    Same USA war with Russia strategy continuation, as with oil prices. Pushing to the limit. Rocks still have a say in CB decisions all over the world. 

    erewenguy · Jan 21, 2015 - 1:39pm

    Love the analysis

    Love the charting and the analysis, especially the "keeping it real" leg down. lol cheeky

    Anybody else tired of Central Bankers thinking they are rock stars and the world economies are just dancers on their stage?

    So we have a leak on what the ECB is going to do.

    If the leak mirrors tomorrow's numbers, then mere occurrence of a leak says we can't trust the CB.

    If tomorrow's numbers are different, then the markets are just being jawboned, which also says we can't trust the CB.

    What we can trust is that they will carry on with their plans until the bitter end. The goal is to discourage people from holding gold and silver.

    Since you can't trust the CB to do what is right, my only course of action is clear.

    Terabyte · Jan 21, 2015 - 2:23pm

    Turd, it's about time I added

    Turd, it's about time I added my thanks to you for all you do for us at a piddling price. Thanks! It's only because of you and all the other truly knowledgeable members posting here that I have felt prepared, along with your continued assistance, in having at least some understanding of what is happening now. Can't imagine what it would be like trying to make heads or tails out of it starting now. Thanks again to everyone.

    Now, about those two boxes of ASEs I was stressing over last Friday. Still stressing. Well, not really. So I missed the boat, not a lot lost. Given that much of my stack was put in at the mid 40's and that I've still only got it averaged down to ~38, about any price right now will look like a gift. But I'm a glutton for punishment so I'm still going to sit it out a bit longer and see which way it breaks.

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