Well, Here We Go

Mon, Sep 14, 2015 - 11:29am

We're off and running in what will surely be a week not for the faint of heart. If you like volatility and uncertainty, this week is right up your alley. Fortunes will be made and lost while my cute little stack of gold shines in the sun, indifferent to all of the Keynesian madness.

As this pertains to gold and silver, here's what you must remember. The only reason there is a TFMR is because of our recognition that the precious metal "markets" are wholly manipulated by the trading desks of The Bullion Banks, often acting as agents for the devious Central Banks. So, as you look at the charts, you must always remember to look at them through this prism. Ask yourself, what kind of picture is being painted in order to "trick" the other market participants (Specs) into taking the position that the Bullion Bank desks would like them to be in?

With this in mind, let's examine the charts below....and let's be clear about this...they are undeniably bearish. Though gold is up a couple of bucks today and clinging above $1105, this is mainly due to a mildly strong yen. Nothing more. As sentiment ebbs and flows through the week, gold will slip back below $1100 as the yen trades back lower. The intraday breakdown below $1100 back on Friday nearly assures this. Below $1100 and only gold almost certainly tests the $1080 area where it had found support back in July. It is very hard to imagine that gold won't come close to testing $1080 sometime before Friday morning.

And silver's no picnic, either. The action Friday and today almost certainly projects a test of the 8/26 lows of $13.95:

So, again, here's what I'm driving at...

Think of how many times just this year that gold (and silver) were set up right at key technical levels just before some major economic news (like the BLSBS or GDP) was due to be released. And here we are, three days from the "most important FOMC Fedlines in years" and gold (and silver) is being walked down toward critical support again. The undeniable conclusion is the the BB desks are positioning gold (and silver) for a major smash at 2:00 pm EDT on Thursday.

And what kind of Fedlines would cause a sharp gold and silver smash (into which the BBs would be buying and covering)? A rate hike.

Again, this makes no sense from a traditional, Keynesian point of view. The U.S. economy is in shambles so there's no need to "tap the brakes" and try to achieve a "soft landing". That's all bullshit. Instead, the primary reason that The Fed might hike rates can be seen below:

As we've discussed for weeks, the fate of the U.S. stock market is now inexorably tied to the USDJPY. Knowing this, The Fed must realized that the only way to keep the stock market afloat is to raise rates. Why? Higher rates make the HFTs buy the dollar. A higher dollar weakens the yen. And a weaker yen pushes the stock market back up.

Look, I hope I'm wrong about this. The day is coming when the Central Bankers will finally be exposed as the liars, bluffers, spinners and mopers that they are...AND I'D LIKE THAT DAY TO BE THURSDAY. However, in their arrogance and their desperate attempts to keep the plates spinning as long as possible, here's how I expect this to play out:

Option 1

The FOMC does nothing. The market assumes that rate hikes are indefinitely postponed due to market volatility, deflation, China devaluation, etc etc etc. The dollar weakens vs the yen despite all of the BoJ efforts to beat the yen back. The stock market declines on the news as HFTs sell index futures vs the falling USDJPY. Gold rallies with the rising yen.

Option 2

And this is what I think is going to happen. The FOMC raise the fed funds rate by 15 or 25 basis points. The stock market soars as the USDJPY ralliess with the dollar strengthening against the yen (a happy BoJ, too.) Gold, silver and all commodities get taken to the woodshed. However, all of the market hysteria soon fades as we move into late September and October due to:

  1. The rising dollar forces even more yuan devaluation from China
  2. This intensifies global currency wars
  3. Fed rate hike exacerbating commodity plunge deepens fears of global deflation/disinflation
  4. Serious stress in companies like Glencore and nearly all emerging markets
  5. Global liquidity crisis resumes/deepens causing liquidations and global margin calls
  6. Fed forced to quickly react and "dovish" talk begins about FOMC cuts and even renewed QE to stem #5 above
  7. After re-testing 80ish bottom, yen begins to soar as dollar melts down in anticipation of renewed QE etc to "save the global financial system"
  8. After failing from somewhere back near S&P 2050, S&P begins collapsing just as "Death Candle" predicted it would
  9. Chaos and panic set in
  10. FOMC cuts rates and promises QE or "whatever measures necessary to restore calm and order to markets".

And the world finally sees that the emperors have no clothes.

Sounds like it's going to be an interesting couple of weeks, doesn't it? The point is...The Fed, the ECB, the SNB and the BoJ are doomed either way. All remaining credibility will be lost as the world finally recognizes that there is no plan and there is no normalcy. Quantitative Easing and unlimited currency creation and devaluation is all that they have.

As this pertains to the metals, any new paper price low found over the next few days or weeks will be The Final Low. What that price will be and when it occurs hardly matters. What does matter is that...if this all plays out as outlined above...you're about to live through some unprecedented and historic times. I hope you're ready. It all begins on Thursday at 2:00 p.m. EDT.


About the Author

turd [at] tfmetalsreport [dot] com ()


Sep 14, 2015 - 11:35am


furst furst

Sep 14, 2015 - 11:37am


great time to be alive

enjoy the ride


arch stanton
Sep 14, 2015 - 11:40am

this Shemitha

thing is killing me. Make mine a fifth.

TF Metals fan
Sep 14, 2015 - 11:40am


first? Really?

Making my day! Now off to reading the article!

Sep 14, 2015 - 11:41am


JPM: "Both rate hike or delay... would be bullish for stocks"

Anti-JPM-person (me): "No matter what... would be bearish for gold".

Sep 14, 2015 - 11:42am

Coveted thurd again

Lets go reverse algos. Japanese yen up big time against US dollar. Common gold, silver and HUI! No rate increase possible. I hope Turd is wrong this time.

Sep 14, 2015 - 11:44am

New Thread!

Sweet, thanks TF!

Sep 14, 2015 - 11:45am

87th EDIT: 7th. Too much coffee warden

7-ish. Back in the saddle again.

Sep 14, 2015 - 11:46am

Great analysis

Turd, you might want to consider making this public before the FOMC

Sep 14, 2015 - 11:48am

Turd, are you predicting a

Turd, are you predicting a smash in spite of a "no rate hike" decision come Thursday, which will undoubtedly drive the algos to sell usd/jpy, which will in turn provide bidding support to gold?

While the Cartel may/will be successful in creating a divergence between the Yen-Gold relationship in the short term, this will not last as "reason" will return to the paper markets next week, if this predicted smash unfolds as per your forecast.

Sep 14, 2015 - 11:51am

Princess Bride

Have you ever seen the movie, Princess Bride? There is a seen where Wesley argues with the "mastermind" in a game of wits. Classic bit of humor.

That scene is how I am starting to see this whole argument about the rate hike. Just poison both glasses and have the antidote.

Turd, thanks for the in depth and analysis. I would be going crazy without it.

Sep 14, 2015 - 11:52am

and FWIW

This was recorded last week:

aomegaa SilverX3
Sep 14, 2015 - 11:52am

George Carlin

As my favorite prophet once said " This is all bullshit folks and it's no good for ya".

Going to buy another $100.00 face today. Got another good price..$1330.00!

Sep 14, 2015 - 11:57am

Hat Contest

Don't forget that the latest contest winners will be determined by the close on Friday. You can review your guesses here: https://www.tfmetalsreport.com/blog/7073/time-another-hat-contest

Sep 14, 2015 - 12:02pm


Great summary. If we had a Regulator, I would suggest you send it to them in advance to highlight the premeditated corruption. The only one I am aware of that is active is Animal Control...not sure they would act on it either.

Sep 14, 2015 - 12:04pm

Saw this at ZH


Mr. Thorogood is right about a rate hike but he fails to connect the rest of the dots.

Sep 14, 2015 - 12:06pm

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Sep 14, 2015 - 12:09pm
Sep 14, 2015 - 12:14pm

An Occasional Monday morning Musing 9/14/15

Some thoughts continued from the previous thread with regard to retail silver demand....

The size of annual Silver production is 877.5 million ounces last year. According to David Morgan, there is a retail backlog of 5 million ounces of silver. Last time I talked to my wholesaler, they had a backlog of roughly 300K ounces, so I could see there being a total of 5 Million ounces out there that have been bought, but not delivered. Word on the street according to an associate of mine is that many retailers have orders booked out until at least December, at which point they anticipate the wave will subside and supply will be stable again. I am skeptical of this due to systemic risk factors, which is why I have been advising my clients and in fact have been buying gold myself because of the shorter delivery times, though they are still somewhat extended because of the run on silver.

In terms of flow, however, one has to consider that this run has been going on for some weeks, now, and doesn't appear to be letting up. It is attracting the attention of newcomers and might grow because of that factor. So, when all is said and done, the statistics might show a substantial spike in retail silver demand for the year. Even if it doubled from last year, while a significant portion of the market, it would still fail to seriously strain commercially available stockpiles. I'm assuming here that Morgan is off by a factor of 10 and there is really 50 Million ounces of new retail demand out there. Still, that is less than a month's supply.

The thing that is going to break this market isn't necessarily retail demand. Though, that may add a "straw on the camel's back" sort of effect. The artifically low prices are going to cause producers to stop producing and mothball their mines. That's what's going to break the market. Unless the retail market (in terms of percentage of the population stacking) explodes by 10 or more times, to 5% or 10% of the public putting money into retail silver, we're a drop in the bucket, and simply don't have the numbers in terms of dollars to compete with the industrial demand side of the equation.

In a deflationary scenario, it is important to remember, industrial demand will contract considerably. This would serve to relieve supply pressure, even in the event of a public run. This analysis ignores systemic risk events, in which case all bets are off.

But, life is good. The day is beautiful. I have Salmon to smoke, I have 9 gallons of my old man's red grapes from this year's harvest which I anticipate will yield about 23 gallons of the best wine I've ever made, and I have papaya ripining on my trees that cries out to be picked. I'm going outside to play, now.

Keep stacking.

Sep 14, 2015 - 12:17pm

Beating that same ole dead horse

Why is the Dow down 90?

Why is gold up $4 when silver, copper, crude, platinum and palladium are all down over 1%?

Because the yen is up a half point.

Shown here as a rising JPYUSD:

Or, if you prefer, a falling USDJPY:

And USDJPY with e-mini S&P futures (ES) overlaid:

Sep 14, 2015 - 12:26pm

Sep 14, 2015 - 1:24pm

Again, please try to understand

The traditional view is that The Fed can't and won't raise rates on Thursday and it's still very likely that they won't. See here: https://www.telegraph.co.uk/finance/economics/11858952/BIS-fears-emergin...

What I'm saying is this:

  • IF the central banks are in on the scheme to manipulate all markets through things like the USDJPY and the VIX
  • And IF you believe your eyes in the clear 1:1 correlation of the USDJPY with the ES
  • THEN you must conclude that it's possible to likely that The Fed will raise rates in order to strengthen the dollar and drive (temporarily) the S&P back up through a rising USDJPY

Yes, of course I understand that the traditional view is that rising rates = falling stocks BUT THERE IS NOTHING LEFT THAT IS TRADITIONAL.

Sep 14, 2015 - 2:15pm

Simply Excellent

Analysis! A fantastic play by play.

Man you have proposed just about every outcome/scenario!

Great Work Turd!

Joseph Warren
Sep 14, 2015 - 2:35pm

Predictions anyone ?

What do you guys think will happen on Thurs ? Personally, I think there'll be big down days and/or volitility in the stock 'market' this week, which will enable the fed heads to do nothing on rates. Their current M.O. of fabricating lots of free money for them, while impoverishing everyone else & grabbing real physical assets, - seems to be working quite well for them. Of course they'll pound on the PMs before the rate announcement. It'll be interesting to see how things are going into the close.

Sep 14, 2015 - 2:38pm


According to Jim Willie, the FED is conducting "Stealth QE Infinity Squared" using the Reverse Repo Window of approximately 1 Trillion Dollars a Month to cover the derivative black hole. Logically, if the FED can create that much liquidity, why would they need to manipulate the usd / jpy to control the stock market? This ends only if and when the global players refuse to accept treasures in exchange for goods like Jim has stated.

Fred Hayek
Sep 14, 2015 - 2:39pm

What were the typical percentages of contracts that stood for

I have a question that I hope someone can answer with some data.

I've been pointing out to people how insanely geared up the leverage at the Comex has become, going from roughly 20 ounces of gold under contract per ounce of gold in the vaults to 12o:1 and now to 228:1.

And I've seen the video of Kyle Bass recounting speaking to Comex drones who assured him that it's seldom that more than 1% of contracts stand for delivery.

But I'd like to know what the average was for the percentage of contracts that eventually stood for delivery, maybe if the data is available, looking at the managed retreat period from 2001 to 2011 then the transition period from 2011 to 2013 then the full retard era from 2013 to the present.

What I'd like to show is that, the Comex will go bust if more than 1/2 of 1% of gold contracts stood for delivery just once! And yet, for X years, the average was 0.8% or 1.1% or whatever it was, to show that the present situation is not sustainable and/or that it's as fake as we're contending it is.

Thanks for any help provided.

Sep 14, 2015 - 2:46pm

Duche...a Bank

fires 25,000 or 1/4 of its work force

and thats Europe's strongest country

dig a deeper hole for your stack

Fred Hayek
Sep 14, 2015 - 2:54pm

Fred, we've discussed this quite a bit over the years

"Normally"...Anywhere from 5,000 to 10,000 gold contracts stand at expiration on the eve of FND. Typically less than half actually take "delivery"

In silver, it's usually 2,000-4,000 standing with maybe 70-80% taking delivery. July was odd in that 130% stood.

All sorts of articles on this in the archives from July.

Sep 14, 2015 - 3:09pm

@Chiron: Princess Bride

PB is well known to this community and His Turdness frequently relies on the razor sharp wisdom (ans humor) to further educate his flock. As a personal aside it is a Swineflogger Family Favorite.

Sep 14, 2015 - 3:26pm

And as an aside for the record

Today is the day of the Shittorah. And nothing freaking happened. My prediction - and nothing will! What a bunch of goofball nutjobs believing in that crap.


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