Ying and Yang

No, this is not a post about some new Chinese law firm. Instead, it's just an update on the metals markets which, while refusing to go further down, aren't making much progress to the upside, either.

Today's message: A few more slightly positive US economic datapoints and these are likely enough to make a December FF rate hike a fait accompli.

Again, though...and I can't stress this enough...we have traced out a pattern that is remarkably similar to last October and November in the run up to the most recent FF rate hike. And what happened beginning the very next day? Well, by now you know the story.

The week of the October 2o15 FOMC produced a high trade in the Dec15 contract of $1183. As the Fedlines were digested later that week, it became clear that the Fed was going to raise the FF rate at the December 2015 meeting come hell or high water. And they did. However, take a close look at how gold traded in the days and weeks between the Oct15 FOMC and the December rate hike.

Price fell from $1180 to $1050 in about five weeks but note that it bottomed well in advance of the actual "news" of the FF rate hike. This 10+% drop was fueled by a near panic level liquidation of the Specs at the Comex. How bad was it? From the CoT survey of 10/27/15, just one day before that fateful FOMC and Fedlines, the Large Specs in gold were NET long more than 157,000 contracts while the Commercials were NET short nearly 166,000. Just five weeks later, the NET position of the Large Specs was down to only 10,000 contracts with the Commercial position reaching an alltime low of just 2,911 contracts NET short. We even speculated at the time that there were some days, intraweek, where the Gold Commercials were actually and historically NET LONG.

Well now compare last autumn to our current situation.

Just as back then, a FF rate hike is a near certainty at the FOMC in December. However, as you know, the anticipatory move in gold began a few weeks ago with the beatdown and purposeful break of both the 50-day and 100-day moving averages in late September. Take a look at the current chart and compare it to the one posted above:

In 2015, we had the October FOMC and then two stout down weeks. Before price turned, we slogged through 5-6 weeks of consolidation and CoT improvement before the blast higher began.

In 2016, we had the September FOMC and then two stout down weeks. Price is attempting to bottom and turn while the CoT improves, but it doesn't seem ready just yet to begin moving consistently higher.

In 2015, the turn in gold began once the actual rate hike took place. The rate hike and forecast for 3 or 4 more in 2016 led to dollar strength, which led to Chinese devaluations, which led to emerging market crises, which led to equity selloffs and the gold price was already 5-10% off its lows by late January before the real fun began with the USDJPY falling 10% in early February.

Are we headed down that same path again? It certainly appears so as the first major salvos of Chinese yuan devaluation were fired last week: http://www.zerohedge.com/news/2016-10-20/dear-janet-china-devalues-most-august-yuan-tumbles-lowest-sept-2010

And, just as in 2015, the CoT is certainly undergoing a makeover, too. From the survey of 9/27/16, the Large Specs in gold were NET long 292,000 contracts while the Commercials were NET short 325,000. As of last Tuesday and just three weeks later, the Large Specs were down to 180,000 NET long for a reduction of 38% and the Commercials were NET short 203,000. To be sure, these are still hefty positions but much more "bullish" than the levels seen through the past summer.

And now check the full long-term chart. You can see again the similarities between now and last fall. Also be sure to note, however, that the trend has clearly changed and that price is pointed higher.

So while we must still deal with the consolidation for a while longer...the Ying and Yang mentioned in the title of this post...it is clear to me that the trend remains higher and that the now-expected FOMC FF rate hike will be simply another "sell-the-rumor, buy-the-news" type of event for gold and silver.

This current period of relative quiet should be used to prepare for the next leg UP, not some sort of new bear market where paper prices are sharply falling. Use your time wisely and continue to prepare/stack accordingly.

TF

www.tfmetalsreport.com/subscribe

32 Comments

DOOGIE's picture

In Like Flynn

Ha Ha

Marcrward's picture

Silver

Keep stacking. It's your choice.

The Sprott weekly wrap up with maguire is a must listen too! I made all the young consultants on my team listen to it and tell me the implications...

Thanks craig! your insight, guidance and accessibility is truly unique!

forever20's picture

bronze? turd in the pecking order

don't you just wonder what the F is going on - oil spikes, sudden rush into S&P.

but i'm taking advantage of gold and silver to add - thanks to the monkeys

Turd Ferguson's picture

Full ATE now available

MODERATOR

Here's the link:

Stackable's picture

Yin not Ying

Yin and Yang

Turd Ferguson's picture

Yes

MODERATOR

But the joke is funnier with Ying

Response to: Yin not Ying
Turd Ferguson's picture

Strange days, indeed. Most peculiar, mama...

MODERATOR

Again and with meaning: NEGATIVE RATES ARE THE MOST POWERFUL FUNDAMENTAL FOR PHYSICAL GOLD EVER CREATED.

 

Lurker's picture

What are the options

What are the options expiration sweet spots?  Expiration this Friday?

Turd Ferguson's picture

Actually, Comex November

MODERATOR

Actually, Comex November option for gold and silver expire at the close today. 

Because neither are "delivery" or front months, the sweet spot stuff isn't really in play today. Now, next month, when we get the Dec16 options going off the board, then we'll have something to deal with. For today, no big deal.

Turd Ferguson's picture

In the context of the DB silver fix settlement

MODERATOR

Read this from ZH and note how DB is actively working with authorities in other instances. 

http://www.zerohedge.com/news/2016-10-26/deutsche-bank-probing-misstated-derivative-valuations-after-finding-divergences

Turd Ferguson's picture

No JBSFC last night

MODERATOR

In their absence, read this while keeping in mind that this is the first buildup of hostile forces directly on Russia's western border since June 0f 1941...and you know (and, more importantly, the Russians know) what happened next.

http://www.zerohedge.com/news/2016-10-26/nato-pushing-biggest-military-build-russias-borders-cold-war

AGAU's picture

Ying Yang

I would like to see  a bit more Yinand a bit less Ferkin Yang!!!

canary's picture

The spike in S&P correlates with the spike in oil

fut_chart.ashx?t=CL&cot=067651&p=m5&rev=

Dr Jerome's picture

Fate

I was destined to become a stacker. I collected coins as a kid but lost interest in high school. I kew what silver and gold were. After the Hunt bros run-up got my attention I figured I should buy some silver. It had just crashed from 48 down to $10 per ounce. I recall standing in that dealer, holding a 10 ounce bar in hand and considering the bid ask spread of $4. I figured if the price was 10, but I had to buy at 12, and they would only buy back at 8, that I should pass. I wish I would have just gone back to collecting coins. I would have discovered "junk silver," probably near spot price.

Fast forward 23 years and I noticed junk silver for sale at an antique ship for about $4 per ounce. I should have looked more closely. Five years later it was up to $7 an ounce and I decided to buy some. Of course I began to dig into coin values at the coinflation site. they keep a list of current news articles on their front page. As I started buying all the under priced junk silver I could from antique stores, I clicked on those links that led me to Kitco, ZH and eventually to the TFM blogspot page. At the same time I met a metals dealer that ran a booth in a local flea market. We talked at great length and he convinced me to buy more junk at spot... I was hooked. it was fate.

And today I agonize at the market criminality; I am appalled by the deep levels of corruption and complicity between banks, politicians, markets and other conspiracy players.

But I had to stack. it is the only financial refuge I can see. Since we cannot leave the country, prepping does not cost that much (and I appreciate Fandanago's post in the last thread). Our frugal lifestyle and a fair paying job have given us extra cash. What else could we do but keep stacking?

billhilly's picture

optimism/pessimism

...keeping with the yin/yang theme, I'd sure like to share the optimistic feel right now but the movements just don't feel good.  The levels, while appearing stable, just have that sense of pending smash.  I don't want to be a pessimist, so instead, I'll just be "cautious".

I did jump into a new miners position (small) this am, so we'll see.  Several miners are reporting today after close.  I think they should have some good numbers since the prices were high last quarter but will the enthusiasm continue ??? 

Always good to save some dry powder.

Thanks again TF for all the fine work you do !

tyberious's picture

Transition of Price Discovery

Transition of Price Discovery in the Global Gold and Silver Market

By: David Jensen | Sat, Sep 24, 2016

The following is a presentation "Transition of Price Discovery in the Global Gold and Silver Market" is by David Jensen to the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) on September 22, 2016 in Vancouver, BC.

pdf.gifTransition of Price Discovery in the Global Gold and Silver Market

Turd Ferguson's picture

You can read all of this if you want

MODERATOR

However, just be sure to skip to the end and read the section titled "IMF REPORTING STANDARDS".

https://www.bullionstar.com/blogs/ronan-manly/bullion-banks-pass-parcel-el-salvadors-gold-reserves/

Does this sound familiar?

JQuest's picture

Investors' Panic Buy Stocks Into The Green On Oil Spike To $50

"Investors' Panic Buy Stocks"

Algos Panic Buy Stocks...

Oil is just another tool used by TPTB to manipulate the markets!

http://www.zerohedge.com/news/2016-10-26/investors-panic-buy-stocks-green-oil-spike-50

infometron's picture

Caution is the better part of valor

I just took profits on some of my  largest holdings, raising my cash position to 25%.

Not capitulating, just positioning myself on the possibility that we have another smash down and test the 1210 support zone. I would have been much the wiser to have done that at 1310, quite frankly, but whatcha gonna do?

I've only lost money underestimating the blatant criminality in these markets.

marchas45's picture

Look Out Below

Ying and Yang are at it again but don't worry it will all level out.  laugh Keep Stacking

Noteriety's picture

Gold/CAD

On the bright side here in Canada, my Goldmoney account hasn't lost and has actually gained some CAD powder value today. We'll see how long that lasts. 

I think the USD is on a bit of tear today but I haven't looked at other charts.

Dr. P. Metals's picture

TO THE MOON ALICE!!!!

METALS GOING TO SKYROCKET!!! ANY SECOND NOW!!!

er, maybe any day? week? month? year? decade?

my best impression of the shills!

Ned Braden's picture

Nigel getting in trouble again....

EU dragging feet on Brexit....

canary's picture

Just an observation

I hear more "experts?" talking about signs of rising inflation, (Yellen included...willing to tolerate "high-power economy").

And the banks taking some money from their deposit to the Fed and making them work somewhere else.....????

On my personal level...I'm getting lately some bank's offers for loans and balance transfers....something I have not seen for a while.

JQuest's picture

Texas County Enacts "Emergency Paper Ballots"

"After "Software Glitch" In Voting Machines"

The entire US election better go to HARD COPY PAPER like the Brexit vote or this election will be fixed by Soros "fixed" voting machines and the "totally corrupt" two party system! There has to be a PHYSICAL paper trail or these criminals will steal the election!

http://www.zerohedge.com/news/2016-10-26/texas-county-enacts-emergency-paper-ballots-after-software-glitch-voting-machines

JMHO

infometron's picture

Pretty quiet around here...

To hedge or not to hedge, eh?

Markedtofuture's picture

GH - USA Actually Bankrupt Now-Laurence Kotlikoff

By Greg Hunter On October 26, 2016 In Political Analysis

A.jpg

Renowned Boston University Economics Professor Laurence Kotlikoff is running for President with a write-in campaign. He says we need an economic expert, not a politician, to fix our severe financial problems. Dr. Kotlikoff explains, "Our democracy is in trouble. We have 14% of the electorate who have chosen Hillary Clinton for us to vote for, and a different 14% have chosen Trump to vote for. The vast majority of the population realizes neither Clinton nor Trump are qualified. Just on the economic front, these folks have no idea how fiscally sick our country is. The fact that we have off-the-book liabilities that make our true debt roughly 15 times larger than the amount the government is actually reporting, so, our true debt is about $206 trillion. The debt the Congressional Budget Office is telling us about is about $13.5 trillion. . . . We’re short $206 trillion. The country is 53% underfinanced. So, the country is actually bankrupt right this minute. It’s not $206 trillion in the future that we owe, it’s $206 trillion today. It’s our credit card bill, and we’re broke."

Kotlikoff goes on to say, "So, if you put everything on the books, we’re broke, and we’ve been printing money out the wazoo since 2007 to pay Congress’s bills. That’s the truth about quantitative easing. We need to have somebody who knows what’s going on in the big picture here and has a game plan to get rid of this fiscal gap, and do it without total chaos. If we leave things the way they are, people will view the country as leaderless fundamentally and printing money to pay its bills. Then, the expectation will occur, and that’s going to raise rates, and that’s going to drop bond prices, and that will sink the banks, and, yes, you can have another great recession like Bill Gross is referencing (bond super nova). I’ve been saying this for decades. The time for the last straw to drop on the camel’s back, and when it’s going to drop that camel is hard to say. If you look at the fundamentals, and the fundamentals look like that of an emerging country, we are the most indebted developed country relative to GDP of any country around. We are in worse shape, I believe, than Russia or Greece, and far worse shape than Italy."

Join Greg Hunter as he goes One-on-One with Professor Laurence Kotlikoff, who is running for President in 2016 with a write-in campaign.

(There is much more in the video interview.)

Video Link

http://usawatchdog.com/usa-actually-bankrupt-now- laurence-kotlikoff/

infometron's picture

HUI hanging by a thread...

but fighting its way back to just above the 200 day simple moving average.

I hope Craig is right, but I'm anticipating at least one more washout.

Git yer stink bids in now (this is not investment advice)!

ancientmoney's picture

Gold "price" will not rise until...

the PTB/banksters are ready.

There is some 4 billion (or more) ounces of gold sitting somewhere in the world right now, all of it owned by someone or some entity.  Most of it is not for sale.

What we see being "sold" is primarily PM derivatives--not the physical gold and silver hoards.  Sure, some physical is sold into the market for stackers, industry, etc.  But again, most is just derivatives trading.

The people who control the big hoards of gold are content to sit on it.  They are not yet interested in seeing gold go manic in price, as they hold too many dollars, yen, yuan, and euros (and things denominated in them like bonds) as well right now.

They don't want the western peoples to get frenzied about gold ownership, as that would mean that they would not have continued, cheap and free access to new mine supply.

When they decide the time is right, there will be no warning.  No chartists will see it coming (other than those who declare it regularly anyway).  There will be no time for those who are without physical to read the teas leaves, then make their move.

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