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 .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 .10. Regardless, the damage this morning is significant and silver will need to close back above .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 .20. From there, price rallied to + 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 .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 .40, then look out below. There's not much chart support until the 2008 lows near .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 ()


Safety Dantyberious
Jul 8, 2015 - 12:09am

@ Tyberious

This will come back upon them in unintended consequences somewhere, sometime down the line. Western Medicine no longer has the prestige or power it commanded from the rest of the world a decade ago.

In fact when my wife had cancer 4 years ago, the oncologist used a treatment that was illegal in the States but legal in Italy. She stated it had much better long term results.

I suspect that blow back, or similar is the future.

Jul 7, 2015 - 11:59pm

@Pfizer Vice President Blows

One of the reason I no longer work in Oncology research!

US non-preventive medicine has become scam, a revolving door for academia, industry and government and kickbacks for all!

Safety Dan
Jul 7, 2015 - 10:56pm

Pfizer Vice President Blows

Pfizer Vice President Blows The Whistle & Tells The Truth About The Pharmaceutical Industry

Iron Sheik 07/07/2015 HEALTH & WELLNESS

(Arjun Walia) Below is a clip taken from the “One More Girl” documentary, a film regarding the Gardasil vaccine, which was designed to prevent Human Papillomavirus. In it, Dr. Peter Rost, MD, a former vice president of one of the largest pharmaceutical companies in the world (Pfizer), shares the truth about the ties between the medical and pharmaceutical industry.

Rost is a former vice president of Pfizer, and a whistleblower of the entire pharmaceutical industry in general. He is the author of “The Whistleblower, Confessions of a Healthcare Hitman.” Considering his work experience, it would be an understatement to say that he is an insider expert on big pharma marketing.

Below are a couple of quotes from both a former and a current editor-in-chief of the two largest, and what are considered to be the most credible, medical journals in the world. It’s only fitting to include them into the article as they are directly related to what Dr. Rost hints at in the video.

“It is simply no longer possible to believe much of the clinical research that is published, or to rely on the judgment of trusted physicians or authoritative medical guidelines. I take no pleasure in this conclusion, which I reached slowly and reluctantly over my two decades as an editor of the New England Journal of Medicine.” – Dr. Marcia Angell, a physician and longtime editor-in-chief of the New England Medical Journal (NEMJ) (source)

“The case against science is straightforward: much of the scientific literature, perhaps half, may simply be untrue. Afflicted by studies with small sample sizes, tiny effects, invalid exploratory analyses, and flagrant conflicts of interest, together with an obsession for pursuing fashionable trends of dubious importance, science has taken a turn towards darkness.” – Dr. Richard Horton, the current editor-in-chief of the Lancet – considered to be one of the most well respected peer-reviewed medical journals in the world. (source)

It’s Time To Re-Think Current Medical Research & See The Bigger Picture

In 2005 Dr. John P.A. Ioannidis, currently a professor in disease prevention at Stanford University, published the most widely accessed article in the history of the Public Library of Science (PLoS) entitled Why Most Published Research Findings Are False. In the report he states:

“There is increasing concern that most current published research findings are false.”



There is increasing concern that most current published research findings are false. The probability that a research claim is true may depend on study power and bias, the number of other studies on the same question, and, importantly, the ratio of true to no relationships among the relationships probed in each scientific field. In this framework, a research finding is less likely to be true when the studies conducted in a field are smaller; when effect sizes are smaller; when there is a greater number and lesser preselection of tested relationships; where there is greater flexibility in designs, definitions, outcomes, and analytical modes; when there is greater financial and other interest and prejudice; and when more teams are involved in a scientific field in chase of statistical significance. Simulations show that for most study designs and settings, it is more likely for a research claim to be false than true. Moreover, for many current scientific fields, claimed research findings may often be simply accurate measures of the prevailing bias. In this essay, I discuss the implications of these problems for the conduct and interpretation of research.

Jul 7, 2015 - 10:16pm

Louie has a dream

You people are actually freaking me out with all the dream. But if we can talk about shit-eating dogs, and Jim Willie, "Eating a yard of excrement", you can out up with two of mine.

Last night, I woke up from a dream about 1:40 a.m. I dreamed that I was dying, and my youngest Little Louie came to my bedside. I was telling her all the things you want to tell one of your children when you are on your death bed. It was a pretty sobering dream. Talk about wanting to be a better dad/husband after that.

Here is a second dream/hope that I have. I hope that when I die, all my PMs are still safely tucked away in their hidey-holes. That all my guns are still in the cabinet polished up and shiny with oil. That my generators and water filters are gathering dust out in the shed, and that all I will have never had to use all these preparations that I am making for TEOTWAWKI.

Jul 7, 2015 - 9:32pm

Apropos ZH comment

Save_America1st's always a buying opportunity, it's just that you should continue to only buy in small amounts according to how much dry powder you have.

Phyzz supply is not going to last much longer as mines are producing less and phyzz is getting scooped up all over the place.

So no, don't sell the house and back up the truck and use all your fiat in one massive purchase. I've seen several people do that and yeah, they're super fucking bummed out, but lesson learned.

So buy 20, 40, or 60 ounces big deal. You're just cost averaging down. And it's smart to do while premiums are still low and delivery is not delayed.

Then wait and we'll see if these scumbags push the paper price down into the 14's again and then buy another 20, 40, or whatever fits your budget.

There's no right or wrong about it as long as you can handle whatever you have purchased in your budget and aren't going to be a fucking cry baby if the price drops a dollar. Who more.

Remember, you haven't lost anything unless you sell...and phyzz is for stacking long term, not just for a some days or weeks.

In the long the years to come all phyzz will become the ultimate insurance against the death of the dollar and all fiat currency and stackers will be doing very well if we can live through the great monetary reset and make it through to the other side.

Jul 7, 2015 - 8:49pm

howz that workin out??

Last I heard, he took one in the ear. His condition remains "stable".

Jul 7, 2015 - 8:05pm

George Gilder

I posted this audio last week. It is one of the best I have heard in a long time

If you liked the Forbes article, then you will love this audio


Jul 7, 2015 - 5:21pm

Forbes - Positive Piece on Gold

Gilder's book is available free in PDF format at the end of of the article.

Excerpt from the last 2 pages (note the reference to "bitgold"):

Gold is a critical source of information for all the new coin,
currency, and payment schemes proliferating among the new
social networks in Silicon Valley and China. In sorting out
currencies, gold will transmit a valuable signal. It remains the

monetary Polaris, adapted to a world of inexorably declining
prices anchored in the abundances of goods and the scarcity
of time. Countries that tie their money to gold will always
tend to outperform those who submit it to the currency
Bitcoin began with an algorithmic commitment to not exceed
its target of 21 million coins. With a planned granularity of
up to eight decimal places, enabling some ten to the 14th or
100 trillion units, there is no danger of the 21 million cap
suppressing economic activity. Controlling Bitcoin, like gold
and all other currencies, will be its users, in the frequency
domain, locked into a specific algorithm of time.
The likely path of Bitcoin’s advance begins on the Internet
and only later moves to the domains of government
currencies. As it gains momentum, its price will converge
with the price of gold, and Bitcoin will become bitgold. It will
establish the gold standard on the Internet as gold extends its
monetary sway through the world economy. This movement
increases the likelihood that currencies of liberty and
creativity—low entropy carriers for a future of learning and

opportunity—will survive and thrive.

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Jul 7, 2015 - 5:11pm
Jul 7, 2015 - 5:06pm

We are all doomed

This from one of the world's foremost experts---Trust me, I have never lied to you before, why would I start now?

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