Objectives Met

Wed, Aug 3, 2011 - 2:41pm

As you know, I've been looking for a short-term peak in Dec gold, somewhere around 1680. I've also been looking for Sep silver to trade to a peak between 42 and 42.50. You may have noticed that this morning I simply split the difference and called for 42.25. I have intraday highs of $1675.90 in the December gold and $42.06 in the September silver. That's definitely close enough!

It looks to me like The Cartel has had enough for now. Combine that with an overall desire to lock in some gains and you've got a recipe for a small selloff. The Cartel my have tipped their hand a bit by whacking gold for $6 in one minute, just three minutes after the Comex close. It's hard to say for sure but history suggests that they will come back for more later this afternoon and overnight. The key now is to find points where we can buy back in for a short-term trade. The charts below should help.

If you're interested, here's my strategy:

Earlier today, I sold my spreads of Dec 1600 vs Dec 1700 calls. I rolled into new spreads of Dec 1700 vs Dec 1800. I'm still "long" but this freed up quite a bit of cash. I also changed around my silver spreads. You may recall that I was long the Dec 45s and short the Dec 50s against them. Again, to raise some trading cash, I sold my 45s and bought some 48s. So, my new spread is Dec 48 vs Dec 50.

Now, with my liquidity "issue" solved, I'm going to be looking to buy the dip I expect to see between now and this time tomorrow. Even though I expect a "modest positive surprise" in the BLSBS report Friday, I'd still like to do some buying before the report comes out, just in case I'm wrong and the report shows something like -50,000 payrolls! If I get the opportunity, I'd like to buy some October gold calls as well as some September silver. Keep an eye on the numbers I've given you and I'll let you know if I make any moves.

Have a great evening! TF


Just wanted to go ahead and get "on the record" here. I do not at all like the unusual action on the Globex this afternoon. The entire thing stinks of an upcoming raid, probably overnight and into tomorrow. Additionally, we know that The Cartel likes to raid the metals on the day before the BLSBS report, too. Combine that with this ugly, 5-minute chart and I think its safe to predict the raid I suspected earlier.

Let's watch and see. I've got a last on Dec gold at 1663. As mentioned above, a preliminary target for a selloff tonight and tomorrow would be 1635-45. Be prepared. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 4, 2011 - 10:08am

Looks like

Gas / Oil prices will be going down ...maybe a good time to load up soon?

Aug 4, 2011 - 10:10am

You know

People talk about gold and silver having to "correct" eventually. Guess what they are! There is no need for them to "correct" downward. They've been artificially held down for decades to perpetrate the ponzi scheme. It only makes sense that when the ponzi scheme becomes more and more obvious that the path of correction would be straight up. If the intrinsic value of fiat is zero, then what should gold's value be in relationship to the fiat the zombie world measures it in? Infinite is ridiculous but beyond your wildest dreams is a good measurement :)

Violent Rhetoric
Aug 4, 2011 - 10:12am

Looks like Europeans

Looks like Europeans are pulling Euros out of their bank to buy gold. Must feel like old times.

Aug 4, 2011 - 10:14am

@ Tom h/t to you re. svm

If you don't think the criminal bullion bankers massively short the silver mining stocks take a look at this. This is last quarter ending 6/30/11 for SVM that were just released last night. So far this morning the stock is DOWN 3.3%. What person or investment house in their right mind would sell this stock today?

Silvercorp Reports Net Income Up 82% to $25.6 Million or $0.15 Per Share and Cash Flow Up 46% to $33.9 Million or $0.19 Per Share for 1st Quarter of Fiscal 2012

7:01a ET August 3, 2011 (Market Wire)

Silvercorp Metals Inc. (TSX: SVM)(NYSE: SVM) ("Silvercorp" or the "Company") today reported its unaudited financial and operating results for the first quarter ended June 30, 2011 ("Q1 2012"). Record silver production, coupled with increasing silver prices, resulted in record quarterly sales. The following financial results are expressed in US dollars (US$) unless stated otherwise.


-- Record sales of $69.7 million, representing a 90% increase compared to $36.7 million in the first quarter of fiscal year 2011 ("Q1 2011"); -- Record silver production of 1.6 million ounces, a 15% increase compared to 1.4 million ounces in Q1 2011; and gold production of 1,390 ounces, a 30% increase compared to Q1 2011. Silver and gold sales accounted for 71% of the total sales in the quarter; -- Net income of $25.6 million, or $0.15 per share, an 82% increase compared to $14.1 million, or $0.09 per share, in Q1 2011; -- Cash flow from operations of $33.9 million, or $0.19 per share, increased 46% from $23.2 million, or $0.14 per share, in Q1 2011; -- Silvercorp continues to maintain its low cost producer status with a cash production cost per ounce of silver of negative $6.12; -- Completed reserve and resource updates for the Ying Mining District, the BYP Mine and the Silvertip Project, reporting 24% year over year Measured & Indicated silver equivalent resource growth; -- Paid cash dividends of CAD$0.02 per share, totaling $3.6 million for the quarter; and -- Increased total cash and short term investments to $230.5 million.


In Q1 2012, net income attributable to the shareholders of the Company was $25.6 million, or $0.15 per share, an 82% increase from net income of $14.1 million, or $0.09 per share, in the same quarter last year.

The Company achieved record sales of $69.7 million, a 90% increase from $36.7 million in the same quarter last year. The increase in sales was primarily from higher metal prices, combined with an increase in the quantity of metals produced and sold. Gross profit margin improved to 80% from 72% in Q1 2011. Cost of sales was $14.1 million, a 38% increase compared to a year ago, which was mainly due to increased quantities of metals sold.

General and administrative expenses increased by $1.4 million to $6.1 million, compared to the same quarter last year, of which, $1.1 million relates to the VAT surtax, which has been levied since December 1, 2010.

The Company recorded unrealized losses on investments of $1.2 million in Q1 2012, which was related to the change of fair value of warrants.

Income tax expenses increased to $12.6 million from $3.3 million in the same quarter last year. The increase of income tax expense was mainly due to higher taxable income in the quarter and a higher tax rate compared to Q1 2011. The Chinese tax holiday, which allowed the Company's most profitable Chinese subsidiary, Henan Found Mining Co. Ltd. (Ying and TLP mines) to have a preferential 12.5% income tax rate, expired on December 31, 2010, increasing the income tax rate to 25%. The Company's another Chinese subsidiary, Henan Huawei Mining Co. Ltd. (HPG and LM mines), is currently subject to preferential tax rate of 12.5% until December 31, 2011, after which it will be 25%.

Cash flow from operations for the quarter was $33.9 million, or $0.19 per share, a 46% increase from $23.2 million in the same quarter last year. During the quarter, the Company paid $3.6 million in dividends, $10.5 million in capital expenditures, and ended the quarter with $230.5 million in cash and short term investments.


In Q1 2012, the Company achieved record silver production of 1.6 million ounces, a 15% increase compared to same quarter last year. The record production was achieved through increased production from the TLP, HPG and LM mines that continued to expand operations.

A total of 182,890 tonnes of ore were milled, a 23% increase compared to 149,189 tonnes in Q1 2011. The increased mill throughput was achieved as the second mill at the Ying Mining District continued to provide additional milling capacity. In addition, 7,964 tonnes of gold ore were milled at the BYP Mine as production commenced in this quarter.

Total cash mining costs increased to $48.66 per tonne from $40.33 per tonne in the same quarter last year. The increase in total cash mining cost was mainly due to (i) higher mining contractor costs as the Company paid approximately $1 per tonne more as compensation for increases in miners' salaries and benefits, (ii) increased materials costs of $2 per tonne as more mining preparation work was conducted during the quarter, and (iii) the impact of US dollar depreciation versus the Chinese Yuan of $2.5 per tonne.

Total cash milling costs increased slightly to $12.42 per tonne from $11.94 per tonne in the same quarter last year, mainly due to the US dollar depreciation versus the Chinese Yuan. The milling costs at the BYP mine was higher than normal as the production was only at one quarter of its normal capacity.

Including by-product credits, total production cost per ounce of silver was negative $4.63 and the cash cost per ounce of silver was negative $6.12, a cost increase of 11% and 3% compared to the total production costs and cash production costs per ounce of silver of negative $5.21 and negative $6.31, respectively, in same quarter last year. The marginal increase is due to higher production costs, partially offset by increased by-product metal prices.

Silvercorp's total operational results for the past five quarters are summarized at Table 1 below:

Table 1: Consolidated Operational Results Q1 2012 Q4 2011 Q3 2011 Q2 2011 Q1 2011 30-Jun-11 31-Mar-11 31-Dec-10 30-Sept-10 30-Jun-10 Ore Mined (tonne) Direct Smelting Ore (tonne) 3,108 2,740 3,711 3,065 3,426 Stockpiled Ore (tonne) 176,011 122,951 163,502 151,380 141,556 ------------------------------------------------------- 179,119 125,691 167,213 154,445 144,982 ---------------------------------------------------------------------------- Run of Mine Ore (tonne) Direct Smelting Ore (tonne) 3,108 2,740 3,711 3,065 3,426 Ore Milled (tonne) 179,782 132,924 157,817 147,488 145,763 ------------------------------------------------------- 182,890 135,464 161,528 150,553 149,189 ---------------------------------------------------------------------------- Metal Sales Silver (in thousands of ounce) 1,592 1,047 1,523 1,343 1,387 Gold (in thousands of ounce) 1.4 1.1 0.8 0.3 1.1 Lead (in thousands of pound) 20,621 14,385 18,795 17,028 18,803 Zinc (in thousands of pound) 4,102 3,253 4,791 3,869 4,431 ---------------------------------------------------------------------------- Head Grade of Run of Mine Ore Silver (gram/tonne) 303.0 290.0 330.0 312.0 326.3 Lead (%) 5.5 5.6 5.7 5.6 6.1 Zinc (%) 1.5 1.8 1.8 1.9 2.0 ---------------------------------------------------------------------------- Recovery Rate of Run of Mine Ore Silver (%) 91.3 91.8 92.0 91.6 90.9 Lead (%) 94.7 95.6 95.3 95.1 95.2 Zinc (%) 72.8 67.8 70.1 70.1 69.5 ---------------------------------------------------------------------------- Cash Mining Cost ($ per tonne) 48.66 45.54 48.30 40.36 40.33 Total Mining Costs ($ per tonne) 60.07 56.55 58.28 49.12 48.61 Cash Milling Cost ($ per tonne) 12.42 15.31 12.11 11.36 11.94 Total Milling Cost ($ per tonne) 13.94 17.26 13.69 13.06 13.62 ---------------------------------------------------------------------------- Total Production Cost per Ounce of Silver ($) (4.63) (6.06) (5.93) (5.17) (5.21) Total Cash Cost per Ounce of Silver ($) (6.12) (7.61) (7.13) (6.30) (6.31) ----------------------------------------------------------------------------
Aug 4, 2011 - 10:16am

Tom L

Wanted to ask you about your statement that Rothbard was at least as great as the founding Austrians. Haven't read Rothbard in decades. Can you point me in the direction of what to read beyond ME&S? Thanks in advance.

Aug 4, 2011 - 10:19am

Tom, my point was from last

Tom, my point was from last time as I recall, if the issuance of money is created with charges (so called competition to the FED, then money will remain debt. The governments will remain in debt and thus forcing the purchasing of more debt to pay off the existing debt.

Now, as for this notion that governments are simply parasites, that I don't buy. A government is as good or as bad as things are allowed to become. If this crisis has taught us anything, it is that real regulations should not only exist but the breach of them should come with massive costs to the perpetrators.

The problem is big corporations have effectively become government. The other problem is this notion of "big government" a government needs to be big enough to do the job it is elected to do taking into consideration the population size.

To me, it seems like corporations hijacked government to massively profit off it and knowing that at some point people would lose all faith in government so at which point, so the pretense would stop and "free market" would prevail.

We live in a globalised world where very little in the way of competition exists. The barriers to error are jaw dropping and this is why the oligopoly's remain largely untouched. So this idea the "market" will sort itself out is just erroneous, especially when the market consists of only a few players. These "free marketers" or those that lobby the hardest are the very people who have had the best in this current system. A system where their wealth is offshored, or where the corporation tax amounts to a few percent.

Aug 4, 2011 - 10:25am
Tom L
Aug 4, 2011 - 10:26am


Rothbard should absolutely be considered along with Mises and Hayek.

I recommend highly:

The Ethics of Liberty (essential reading)

What Gov't Has Done to Our Money

The Mystery of Banking

It was Rothbard who connected the ethical and moral arguments to Austrian Business Cycle Theory and, by extension, launched the modern libertarian movement, honestly. It was Rothbard that helped found Cato and told the Koch's to go fuck themselves when they sold out to gain more influence in D.C. I have not read Man, Economy and State but I've read the above two books and dozens of articles and listened to some of his lectures at Mises.Org. Rothbard's influence is reflected in the this generation's Austrians like Wenzel, Woods and Murphy.


Aug 4, 2011 - 10:31am
Tom L daveyboy
Aug 4, 2011 - 10:31am


Government is absolutely a parasite. Gov't created the corporation to be able to pick winners and losers in the marketplace where it had no direct influence under a hard currency standard.

To say that corporations hikacked government is to betray collectivist and progressive notions about the potential for philosopher kings to no more about your life than you do. It's endemic to the argument. The corporation, as presently constituted, is the problem, not because government could work if it were free of their influence but because they are a violation of the concept of rights, which government does not have the power to grant, but do so to arrogate power to both sides of the relationship. It's Hamilton's American System writ large to excompass more than just the banking sector.


Aug 4, 2011 - 10:37am


Need price of gold yesterday at 6:30pm and also at 11:00pm last night...can't find where to get this info...PLEASE HELP!

MisesFan Tom L
Aug 4, 2011 - 10:40am

Rothbard is pure genius.....

and easier to read than Mises, IMO.

I highly recommend "A History of Money and Banking in the United States".


He also wrote articles under the pen-name "Aubrey Herbert"

Aug 4, 2011 - 10:41am

DPH, the Global Asset Strippers

Have been around since the days of the British East India Company. They got organized, and went global. It is fascinating history to follow.

The true story of the opium trade and how it was used to force China open to western produced goods is a great example of the MO and one that would blow your doors off. The EE of that day just hated that most of the China trade was one way, in the favor of China. Chinese had little use or desire for most western goods. Well the EE took care of that. They even fought 2 wars to make China stay an addicted cripple that could be exploited at their pleasure. This is what we are dealing with.

The fact is, the fortunes of many of the wealthiest British and American families wielding extreme wealth and power today were founded on the back of the global narcotics trade. Many of the most prestigious British banks, as well as American Express, were founded in Hong Kong as money launderers of the proceeds from the "China Trade". They don't sue anyone for saying that. Because they know from whence they came.

Today, many of the same families and financial organizations continue to run behind the scenes what many in the know call the biggest, oldest, most lucrative trade in world history. Now it's heroin and cocaine, and the world is their marketplace. Funny how we wound up in Afghanistan isn't it?. They only produce 90% of the world's poppy crop. The Taliban? Fact is, they put a major dent in Poppy production and became very bad for business. You know the rest. There's nothing new under the sun.

taoJones Tesla
Aug 4, 2011 - 10:56am


re: Raid On Silver Starting

Sorry if you've been asked this already... I'm not on that often... What charts do you use that show volume?

Thanks in advance... :)

TheGoodDoctor BlackHawk
Aug 4, 2011 - 6:48pm

@Blackhawk Who run

@Blackhawk Who run Bartertown?


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