(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 ()


    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?

    Jan 21, 2015 - 11:10am

    no problem, my friend

    Just livin the dream...

    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.


    Jan 21, 2015 - 11:20am

    PSLV premiums are starting to increase.

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

    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>


    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).

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