Commodity Collapse

Tue, Jul 7, 2015 - 12:21pm

There are times when all of the fundamentals, technicals and CoT structure simply don't matter. Unfortunately, we seem to be entering another one of those periods.

As we discussed just yesterday, the performance of metals in the face of steeply falling copper, crude and other "commodities" was almost sort of impressive. Today, however, the pressure became too much to bear for gold and silver. On the bright side, gold is still holding above the $1150 "physical floor" area that we first identified back in November of 2014. However, silver has crashed through $15.50 and is currently trading in the 14s. As a reminder, silver actually made an intraday low near $14 back on November 30 so it's not making "new lows" just yet. But...

Again, this is all very disappointing and if you haven't perused all of the comments from yesterday's podcast thread, please let me just say this again...I'm very frustrated and sorry that this current episode has turned out the way it has. By every traditional measure, silver and gold are deeply oversold and positioned for a steep rally, not a steep decline. That they are, in fact, declining should tell you a lot about the state of the "markets", the global economy and global liquidity/risk. Perhaps, if we are to continue this endeavor, ole Turd needs to re-learn and adapt to a whole new paradigm. We keep repeating the mantra "there are no markets, just interventions" and, if that's the case, maybe all of my old tried-and-true methods are now obsolete. More on that in the days ahead, I suppose.

For today, let's start with gold. As I type, the August gold is down $13 or 1.1% at $1154. IT IS SIGNIFICANT that gold has yet to plummet through the $1150 floor. IT IS ALSO SIGNIFICANT that the old lows are $1142 on March 17 and $1130 back on November 7. Until and unless price closes below that 11/7/14 low, all is not lost. In fact, you should really consider for a moment that, as dark as this looks and feels, price was lower back in March than it is this morning. Of course, no one can be certain of what will happen tomorrow but perhaps some perspective needs to be maintained.

Again, we identified what looked to be a clear physical floor to the paper market near $1150 last November. Unless something has dramatically changed and The Bullion Banks have suddenly found a new source of readily-deliverable gold, price won't be going much lower from here. That doesn't mean it can't...BUT...I firmly believe that this is the reason gold is holding above $1150 even this morning.

And though silver has decisively broken through the $15.50 area that we thought was its physical floor, it's still important to note that the actual lows of this latest period were made in the overnight hours of November 30 when price actually tapped $14.10. Regardless, the damage this morning is significant and silver will need to close back above $15.50 by Friday to mitigate it. Can that be accomplished? Of course! Keep in mind that this is only Tuesday.

And since this is a Tuesday, the CoT report generated from this afternoon's survey should be quite interesting when it's finally released on Friday. The lowest NET LONG position I've ever seen the silver Large Specs hold was just 800 contracts back in late June of 2013, when silver was making what was, at the time, a washout low near $18.20. From there, price rallied to $24+ over the next 60 days. Just keep that in mind, for what it's worth.

Again, though, all of this today is clearly related to a near complete washout in almost every asset class. There's a real "flight to fiat safety" and liquidation going on and the only things rising are US bonds and the US Pig. As mentioned above, the carnage actually began yesterday and, with the continued selling in China overnight, it has accelerated today. As I type, the two crucial commodity indicators for silver...copper and crude..are both getting smoked. Copper is 3¢ off its lows but still down 4.25%. Crude is $1.65 off its lows but still down 1.5%. When these two were at their lows earlier was when silver git completely run and washed out. If these two can continue to recover, silver will bounce back, too. However, and this is important, if copper is only seeing a Calvin Bounce and is instead headed below $2.40, then look out below. There's not much chart support until the 2008 lows near $1.40! And, as you might imagine, IF copper heads that low, it's dragging silver down with it.

It's critically important, however, that you keep in mind a few very important points:

  1. The supply/demand picture for physical silver is quite different from 2008. For price to go back to $12 or $8, physical deliveries must be made at those prices. I'd suggest to you that making those deliveries in 2015 is an entirely different animal than it was in 2008.
  2. Copper, crude, the Chinese stock market, the BDI and other indeces are signalling a collapsing global economy. Not only does this indefinitely postpone/cancel all of the nonsense about a US rate hike, it actually ensures more money-printing, debt and QE.
  3. In the end, IF YOU STILL BELIEVE THAT THE ENTIRE GLOBAL MARKET STRUCTURE IS A FRAUD WITH LIMITED LIFESPAN, then the ability to convert fiat and stack physical metal at these depressed paper prices is a gift, not a disaster. On the way back from the DMV this morning, even LT#2 was reminding me that I should be excited that prices are so low. At $15, I can buy three times the amount of silver for the same amount of fiat as I could four years ago. "From the mouths of babes..."

So, hang in there. As I go to hit send, I see that the recovery from the earlier washout continues. Gold is back to $1556 and silver is back above $15. Maybe all is not lost. Yet. Let's see what the rest of the day and week brings us.

More later with a full podcast summary and review.


About the Author

turd [at] tfmetalsreport [dot] com ()


ArtL · Jul 7, 2015 - 12:24pm


time to load up?

just for fun I bought some USLV this morning.

Maestro · Jul 7, 2015 - 12:29pm


achieve 2nd!

silverflower · Jul 7, 2015 - 12:29pm


we never should forget that something VERY BIG is going on: The implosion of the world monetary system as we have known it for a long time. So if we see huge developments in that regard we should expect the same for precious metals. Yes, we need to re-think old (trading) patterns with regard to the metals. Nothing seems to follow any logic anymore. At least until a new financial system is launched. 

TF Metals fan · Jul 7, 2015 - 12:30pm

and second?

Any good news is appreciated today; OK a third spot is great news as well.

Doople · Jul 7, 2015 - 12:34pm

You can bet....

That the commercials are covering shorts and buying long positions today.

cashonly · Jul 7, 2015 - 12:36pm


I have never seen GOLD as a commodity, nor with Silver. They are money, the only real money on planet earth. Everything else is just DEBT.

Wall St. and its banking minions have relegate real money to the commodity bin but I think very soon they will take their rightful spot on the throne once again.

Owtovit · Jul 7, 2015 - 12:37pm


Bought the f*cking Dip!

Got into work, opened the charts...blow me its smash down time, I'll have some of that $14.83 silver thanks very much, with premium got it for $17.59 from HAA

One monster box on the way into the kiddo's college fund

Thanks very much Bwanksters!

Maestro · Jul 7, 2015 - 12:41pm

Time for a Vote?

A billion dollar flush into the open this morning can be only one of three things in my mind. I've listed them and would be interested in Turdvilles best thoughts / choice.

1) lack of concern in achieving appropriate "best price" discovery leads me to believe in cartel smash.

2) bank derivative explosion with forced immediate liquidation 

3) continued economic war specifically against China....hit them when they're down. Any thoughts of backing a currency with pm becomes more difficult if it is ultra volatile.

4) theory of my own.....please detail.

Mr. Fix · Jul 7, 2015 - 12:41pm

Normally I would take the fifth,

But in this case, I respectfully assert my opinion that the floor for paper silver and gold is zero.

These markets are never coming back, and all paper promises will be null and void.

The only viable strategy is to keep stacking all the way down, and then prepare to defend your position with your life.

This is going to get nasty.

Mickey · Jul 7, 2015 - 12:42pm

citicorps increase in position

how do we know if its long or short?

jezfry · Jul 7, 2015 - 12:42pm

Maybe we should admit

We've been dead wrong these last four years, this has been the worst bear market in recent memory - and we've been pretty much bullish the whole way down. There is a sense of imminent capitulation (hopefully) but these are markets and they will do what they want - manipulated or otherwise. We can only hope the capitulation phase is close at hand and that it won't be too severe.

· Jul 7, 2015 - 12:45pm

Rumors that the US Mint has suspended ASE sales

From Bill H via Miles Franklin.

Attempting to confirm.

jaw777 · Jul 7, 2015 - 12:45pm

Turd - So hypothetically

If I legged into AGQ calls with July and August expirations on the way down over the past two weeks, would you buy another at the new low or lick your wounds and collect whatever meager fiat is remaining to play another day?

Thx. JAW

simondai777 · Jul 7, 2015 - 12:46pm

They just want to confuse you

Hi Turd

it is still early to say you are wrong. It might be a final washout. let's see what happens later this week.

CPE · Jul 7, 2015 - 12:48pm


What does capitulation have to do with anything in a "market" that shows complete disconnect between paper pricing and physical demand.

I will repeat an axiom yet again. Selling metal only extends the manipulation as it reloads the paper pushers Achilles heal.

In a normal market capitulation marks a bottom, in this "market" capitulation = extension of the alchemy

TF · Jul 7, 2015 - 12:52pm


I fired off an email to The Doc. He sent me back a link to this new post at his site.

The Mint is SOLD OUT of ASEs and will not even take any more orders until August.

Kokanee · Jul 7, 2015 - 12:58pm


IMO - Citicorp is being set up to be the garbage can.

· Jul 7, 2015 - 12:58pm


TFMR rounds from Scottsdale Silver ALWAYS just $1.99 over spot:


Steve Silver · Jul 7, 2015 - 1:02pm

Massive stops run today !! game on!!

If the metals were ready for a squeeze before then its game on now!! Massive sell stops below 1150 gold and 1550 silver. Backwardation was showing some big increases during the drop. Its calmed down some but backwardation shows there is very strong physical demand at these price levels. The cartel is bleeding some serious amounts of physical to pull off this current selloff. With all the stops run the commercials are better prepared for a run in gold than ever. 

The greek tragedy has caused a big spike in gold demand around the world. This will only increase. The troika can't offer debt relief cause of the rest of the pigs. Tsipras cannot accept a deal without debt relief because his government will collapse. That means there will be a default with all the derivative chaos that results. 

If you can this dip should be bought hard. 

Dr. P. Metals · Jul 7, 2015 - 1:02pm

S&P green?

Amazing stuff...Let the fraud continue until it can't.

jackstar · Jul 7, 2015 - 1:03pm

U.S. Mint Silver Eagle Sales

This article from May 30, 2015 states that the U.S. Mint has suspended order limits on ASE's for its authorized purchesers. Is this perhaps what you have heard about, Craig?

4 oz · Jul 7, 2015 - 1:03pm

Best Circus Clown at the Roe-day-o!

Best Circus Clown at the Roe-day-o!

Image result for bo polny

But then there was this----from the Doc....

The US Mint has just notified Authorized Dealers that it is ENTIRELY SOLD OUT of Silver Eagles, and WILL NOT TAKE FURTHER ORDERS UNTIL AUGUST 2015!

Then from an earlier post today:

4 oz's picture Submitted by 4 oz on July 7, 2015 - 8:27am.

Latest from the US Mint---lol think anyone is buying today??

2015 Silver Eagle sales

January 5,530,000
February 3,022,000
March 3,519,000
April 2,851,500
May 2,023,500
June 4,840,000
July 1,608,000
Total 23,394,000

Making me really, Really glad I was able to come home with a tube of shiny 2007 ASE for $360 a few minutes ago.....and to think I wasn't even going to leave the house

matt_ · Jul 7, 2015 - 1:04pm

My market timing cannot be worse

I am sitting on a relatively big (for me) bonus check from work that I cannot spend. I need all of my cash, plus some additional from the sale of my mining stocks that are in the toilet. Probably the worse time possible for me to purchase a house. God has a plan for me I guess. God's plan doesn't involve me getting wealthy.

Sound Money Minnow · Jul 7, 2015 - 1:09pm

SLW is now getting smoked by canadian tax concerns

There is no one in PM's that is safe from being attacked by all Central Banks, and the other oligarchs who enable them. This is a war between tangible assets, and fiat currency. The powerful elite will go down swinging in the attempt to suck everyone dry. With HFT, no one is safe from manipulation and political decisions that can bankrupt anyone. Just ask the coal folks how this works. Fundamentals are out the window, charts are out the window. It is evil vs. good. Good is losing right now. We have reached critical mass of a virtual society.

jackstar · Jul 7, 2015 - 1:10pm


This is news as of a few minutes ago. Again, see here:

Chiron · Jul 7, 2015 - 1:12pm

Knock out blow

This morning was not about the metals.

The S&P, DOW, and NASDAQ are all at critical junctures. Just look at the Herculean effort to save the S&P, now close to green. Look at that hockey stick save on the chart. Absolutely ridiculous.

The best news of the day:

Gold and Silver just took a huge Sunday punch and are getting back up!

The price of gold and silver had been managed down and capped with all of the bad news. This was to be the knockout blow!

Proper response to the Mama Yellen and the bankers: "Still standing, bitches!"

Mickey · Jul 7, 2015 - 1:18pm

citi and JPM OCC derivative report

citi increased its exposure (not sur eif its long or short) significantly and JPM also increase its position

while we talk about citi taking over JPM short, who has proof?

BTW--just what is the form and structure of a metals derivative OTC?

and why would citi not buy listed futures derivatives if it wanted to go long, and remember even in the OTC derivatives ther is an offsetting long and short

heathbr · Jul 7, 2015 - 1:20pm

Silver Premium

Same thing happened last time silver was smashed to ~$14 ... the premiums rose and the price of physical was actually higher due to premiums than it was at $16 silver. Smashes are not always the best time to backup the truck, it's best when premiums are low :) Last week Sd Bullion had ASE's for +2.25 any quantity, now it's +4.50 and delivery in August. The physical floor is real, the paper floor is zero.

If only bitgold would start bitSilver, we could drain it by redeeming without crazy premiums!

SS121 · Jul 7, 2015 - 1:27pm

There are no Markets -OR- Interventions. Only Charts.

"Interventions" implies there is actually trading behind the chart in which somebody might possibly intervene. There isn't.

The Bullion Banks do not trade at all, other than that which is necessary to keep up appearances. Whatever trading they do conduct has no effect on the chart price or their balance sheet.

The Bullion banks do not have physical Silver and Gold hoards.

The Central Banks (esp PBOC) do not have a MassiveMegaTonnage amount of Gold that went from West to East. They have been dumping physical Gold to augment mine supply and meet public demand for decades.

The silver and gold charts are merely Control Devices

System Worldviews (paradigms) will continue to fade as Only Silver and Gold are Money Worldviews naturally come to mind. First here, and then with the masses.

Only Silver and Gold are Money


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