What Hath Mother Wrought?

Thu, Dec 17, 2015 - 10:52am

Keynes, himself, is credited with line line "the market can stay irrational longer than you can stay solvent". Boy, isn't that the case today as the metals react as if yesterday's Fed rate hike was somehow surprising or unexpected.

We led off yesterday's podcast note by admitting that we had no idea of what to expect today...and we certainly didn't expect this!

Ridiculous! Again, it's as if no one saw this coming! Hasn't the Fed been telegraphing this since October 28? Wasn't the certainty of this rate hike the reason gold was smashed from 80 to 50 in the five weeks that followed? Didn't all of the Spec selling and shorting already drive the gold CoT structure to historic levels? And yet, here we are...gold is down as I type at 48. Well, whatever. Not much I can do about it except try to remain rational...if not solvent.

Here's a chart that I first published two weeks ago when gold last sunk to these levels. Are we finally seeing the washout that drops price to that 1035-1045 level? I guess we are, though we still haven't made a new low below what was seen on Dec 3 at 45.40.

All I know is that it's a shame there isn't a CoT survey today as I would love to have seen the results if there was. The amount of old Spec long liquidation and new Spec shorting has to be overwhelming. How else could price be down 3%? Are we back to where we were on Dec 2, when we speculated that the CoT actually went Commercial net long? Probably! Perhaps even more so. (Is that the foot long? And then some!)

<...Sorry. Gotta throw those references in there to help me keep my sanity...>

Does it matter that The Specs are likely NET SHORT and The Commercials are NET LONG as I type? I think so. Does it matter that price is near what we anticipated as a bottom and have discussed for weeks? I think so? Does it matter that sentiment is terrible and now virtually everyone thinks that gold is going lower, lower, lower? I think so. And, so, I still expect a gradual rally into year end, an extended rally in January and a positive year in 2016 that breaks the 3-year losing streak.

In the end...since my stack of gold and silver is just as shiny as yesterday...my only frustration today is that I haven't gotten the hoped for opportunity to short the S&P. It hasn't been up so far today and it certainly hasn't approached the 2090 level where I would look to get short. So, I have nothing. And the S&P is down 12 points as I type at 2061. Nuts.

The miners are getting the snot kicked out of them today but, so far, the HUI remains above that critical 105 level.

The long end of the yield curve is rallying with the 10-yr down 3 bps to 2.26% and the 30-yr down 4 to 2.97%. With Mother's 2-yr at straight up 1.00%, this further flattens the 2-10 yield curve to just 1.26% or 126 basis points. And the "economic news"...which obviously doesn't make the slightest bit of difference to anyone...continues to be all bad.

Some analysis of yesterday's "news" from Denver Dave and his pal PCR:

And besides the metals, crude is smashing toward new lows, too. Again, if we see $33-34, I might consider taking a grab at "the knife". I'll let you know.

So, that's all I have for now. I still own my UGL calls which expire in four weeks and I still own my Feb16 gold call which expires at the end of January...though all of them are worth considerably less than yesterday. Let's just see how the "market" reacts once today is over and we head into year end with all of the trade loaded onto the short side of the boat. For now, just try to keep your sanity while staying focused upon why you hold precious metal in the first place.


About the Author

turd [at] tfmetalsreport [dot] com ()


Texas Sandman
Dec 17, 2015 - 11:23am

Flying blind into the storm...

Just pulled down another 4 aussie gold kangaroos this morning. I am betting the swaps won't kick themselves in the shins for too much longer...

Dec 17, 2015 - 11:23am

Forgot to add

For those keeping score at home...

Another 183 Dec15 gold "deliveries" yesterday with JPM House stopping each and every last one of them and 181 being issued again by HSBC and The Scoshe.

The House (proprietary) account of JPM has now stopped 910 of 944 total deliveries this month for 96.4%.

Dec 17, 2015 - 11:25am

Not dumping miners

Until/unless the HUI closes decisively below 105. I'll let you know.

Dec 17, 2015 - 11:25am

Failing to support his charge against GATA, financial letter

Failing to support his charge against GATA, financial letter writer changes subject

Submitted by cpowell on Thu, 2015-12-17 13:54. Section: Daily Dispatches

9a ET Thursday, December 17, 2015

Dear Friend of GATA and Gold:

Financial letter writer Avi Gilburt today offers a rebuttal to your secretary/treasurer's response Tuesday (https://www.gata.org/node/16034) to his charge Monday (https://www.kitco.com/commentaries/2015-12-14/Confessions-of-a-Gold-Analy...) that GATA has taken out of context its documentation of largely surreptitious intervention in the gold market by central banks.

Rather than defend his charge by reviewing any of the supposedly misconstrued documents, which would require a little effort, Gilburt changes the subject and himself misconstrues GATA in several respects:

-- Gilburt criticizes GATA for not being an investment adviser when your secretary/treasurer, rebutting him, proclaimed that GATA is not an investment adviser but an organization advocating free, transparent, and fair markets.

-- Gilburt says GATA is mistaken to assert that fundamentals should control markets. But GATA has not asserted that. While fundamentals often do control markets, as when a commodity is exhausted and higher prices are necessary to spur supply, of course there may be other factors. GATA strives to identify another factor in the gold market, intervention by central banks.

-- Gilburt charges that GATA maintains that there is no manipulation of the gold market when gold prices are rising. This charge discloses that Gilburt really pays no attention at all to what GATA says. As recently as Monday your secretary/treasurer again called attention to a study speculating that central banks mean to push the gold price way up eventually to help monetize assets and devalue debt:


Dec 17, 2015 - 11:29am

Spot the difference

My trading desk.....and Goldman's floor.....................................Do I still have a chance?

Dec 17, 2015 - 11:31am

fremarkettrader: Perception is their only interest

It looks like they have accomplished the objective of destroying the concept of gold or silver as money in USAA, Europe, Japan, South America. They basically pulled it off... . How do you dislodge the fiat money mindset from the masses if after generations of no discussions on gold the mystery of why gold is real money dies? We are down to simple hyperinflation and NIRP as the only reasons to abandon the system and you'll be eating dog food, told its steak and the serfs next to you won't know any different..

Back to rooting for a reset and a wake up call to the Sh*t dollar.

Dec 17, 2015 - 11:38am

JM Bullion

100 oz RCM Silver Bar (New) Any Qty Available for Only $0.65/oz Over Spot!

I think, I might buy one, today or tomorrow. Currently, it is $1,445.00

Verus nemo
Dec 17, 2015 - 11:51am

Man, tomorrow's $1.1T options expiry is going to be

something to behold, I think! Policy error? Yeah, I think so.

Yesterday's strength in the metals market was odd, I thought, but today's weakness (mostly due to the USD$ strength?) is pretty much in line with what I was expecting. I'm soon on my way to a store locally where I can exchange pretty pieces of cotton for real money again.

Is anyone else watching those implied lease rates on gold and silver that are published on the sharelynx.com website here?


I've got mine set to six months so I can better see what's going on each day. They seem to me to be mimicking what Craig is reporting from the COT reports and the occasional GOFO report from London, i.e., that gold is increasingly tight and the commercials are increasingly less net short and more long but that the silver COT still has a ways to go before suggesting a rally.

I don't know but it looks more and more like the world has every reason to abandon our fraudulent WRC and try their best to extricate themselves as best they can from it. We're heading here into a flat yield-curve deflationary depression but exporting our inflation everywhere else with reckless abandon. How much longer can we expect the ROW to put up with our hubris? Those USD denominated carry trades must be a nightmare to unwind.

I always thought that we'd see our USD$ depreciate into the toilet but am increasingly seeing Jim Willie's assertion that our USD$ would just rise, rise, rise and then disappear as the ROW abandons it. BTW, others earlier pleaded for more Jackass over the Christmas break; personally, I've had enough. There is rarely anything new added by Jim each time and I'm weary of the abundant arrogance displayed each time he emphasizes how moronic the MORONS are. Good grief. I'm tired of the schoolyard name-calling that accomplishes nothing. How about trying to attract someone of Jim Grant's caliber to an A2A soon?

Keg (I believe it was), earlier today wrote about expected weakness continuing into year-end so that YTD numbers would look awful. Keg: do you mean more awful than the YTD -11.4% in Au and -12.9% in Ag? The USD$ is up YTD nearly 8%, how much more of a contrast do you imagine is needed to scare the investing public off from the true remedy to this nonsense? I too have typically waited until late December to buy physical and take advantage of that weakness but I'm not waiting this year. Perhaps the paper price will be lower, significantly even, but I've noticed that the price I have to pay locally isn't declining much with each drop. I recognize that I could acquire it cheaper online but I've chosen in recent years to quietly and discretely add where I can locally, exchanging trash/cash/fiatscoes for the real thing.

I too miss Pining-for-the-Fjords; where is he? And Mickey...I am increasingly coming to appreciate the wisdom shown in your posts, Sir. Thank you!

Dec 17, 2015 - 11:52am

This one's for you Libero


A Majority Of Americans Oppose "Assault Weapons Ban" – Highest Number On Record

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The person who bothers me the most on this entire topic is Mayor Michael Bloomberg, of my hometown NYC. You can tell when someone is disingenuous if they freak out over gun violence like it is the biggest issue in America today and at the same time protect the banksters and their “too big to fail” culture, which has and continues to systemically steal trillions of dollars from the poor. This is Michael Bloomberg to a tee, so this man should have no credibility on any moral subject when he protects and coddles the most dangerous criminal organizations on this planet. I guess there is something “liberal” about white collar crime.

The other way to spot a hypocrite is to see whether they ever speak out about other acts of violence, or if they only open their mouths when it comes to gun incidents. I see this attitude all over the “fake left” landscape. If someone you know, or someone in the media never decries American drones strikes that kill children regularly in the forgotten parts of the globe, yet jumps at every gun incident like it is the end of the world, that person has an agenda. That person hates guns, not necessarily violence. They do not have a clear head in this argument.

– From the post: How to Spot a Hypocrite in the Gun Debate and Other Reflections on Newtown

U.S. President Barack Obama is not just the world’s best gun salesman, he’s also the world’s worst gun control spokesperson.

Despite immediately politicizing every single shooting event in recent years by using his bully pulpit to lecture the American public on why citizens must give up their rights to feel safe, his message has fallen on deaf ears. Why?

Mainly because a man who consistently orders drone strikes on women and children all over the world, intentionally bombs a Doctors Without Borders hospital into oblivion, and who launched more shady wars across the globe than George W. Bush, doesn’t exactly hold much credibility as a humanitarian pacifist looking to “save the children.”

Beyond this obvious hypocrisy, his gun control “sales pitch” is generally void of any logic whatsoever. For the perfect example, read the post: How Obama is Using the Grossly Unconstitutional “No Fly List” to Push Gun Control.

Meanwhile, countless Americans have no doubt watched the following video, in which the White House Press Secretary stumbles and stutters in a embarrassing attempt to answer a reporter’s simple questions on the potential effectiveness of Obama’s “common sense” gun control measures.

White House Can't Give Answers to Gun Questions

Put all of this together, and you get the following. From ABC News:

A majority of Americans oppose banning assault weapons for the first time in more than 20 years of ABC News/Washington Post polls, with the public expressing vast doubt that the authorities can prevent “lone wolf” terrorist attacks and a substantial sense that armed citizens can help.

Just 45 percent in this national survey favor an assault weapons ban, down 11 percentage points from an ABC/Post poll in 2013 and down from a peak of 80 percent in 1994. Fifty-three percent oppose such a ban, the most on record.

To see just how dramatically public perception has changed, take a look at this chart:

Indeed, while the division is a close one, Americans by 47-42 percent think that encouraging more people to carry guns legally is a better response to terrorism than enacting stricter gun control laws. Divisions across groups are vast, underscoring the nation’s gulf on gun issues.

There’s lopsided agreement on another concern: Just 22 percent express confidence in the government’s ability to prevent lone-wolf terrorist attacks, with 77 percent skeptical about it. Confidence in the government’s ability to stop a large-scale organized terrorist attack is much higher, albeit still well short of a majority -– 43 percent.

The results of this survey, produced for ABC by Langer Research Associates, point to a shift away from the position favored by Barack Obama and others who responded to the recent attack in San Bernadino, California, by calling for stricter gun control measures. Notably, in a statistical analysis, Obama’s overall job approval rating is the single strongest factor in views on an assault weapons ban.

The increase in opposition to banning assault weapons since 2013 peaks in some groups -– up 18 points among strong conservatives, 17 points among higher-income earners and 16 points in the generally more liberal Northeast. But it’s a broadly based trend. Many groups have moved from majority support for an assault weapons ban two years ago to majority opposition now: whites, 30- to 64-year-olds, suburbanites, political independents, moderates, residents of the West and Midwest, anyone without a post-graduate degree and those in $100,000-plus households.

No wonder he’s attempting to push gun control via executive action. Before trying to “spread democracy around the world,” I think Obama should take a long hard look in the mirror.

Dec 17, 2015 - 11:59am

Sell the rumor, sell the news

I have a free bridge in Brooklyn to give anyone that believes this story was anything but MOPE


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