The Week That Was

Sat, Sep 15, 2012 - 12:03pm

I tried to warn you that this week was going to be wild. I expected the pressure and intensity to ramp up with each successive day and it most certainly did. By Friday, everyone was ready for the weekend. That's fine but, come Monday, you'd better be ready.

What a fantastic week we had. Made even more special by the fact that we were set up for a disaster. Recall that I had been warning you for about 10 days that a Cartel Raid seemed on the horizon. They looked like they were once again setting everyone up for a massive beatdown. By the looks of the CoT yesterday, I was exactly right.

The situation, as it turned out, was eerily similar. Let's take a look:

December 2011: The price of gold bottomed late in December 2011 at $1525. The CoT also "bottomed" at a total gross Cartel short position of 325,960 and a net short ratio (gross shorts divided by gross longs) of 1.98:1. The price of silver bottomed at $26.40. The silver CoT bottomed with 55,356 gross shorts and a net short ratio of 1.34:1.

Jan-Feb 2012: The metals then took off on a two month rally, peaking on Tuesday, February 28. Gold reached $1790 (+17%) and silver made it to $37.50 (+34%). The CoT taken that afternoon showed a complete reversal from December. Now the total gross short position in gold was 390,412 with a net short ratio of 2.69:1. The total gross short position in silver had reached 78,395 and a net short ratio of 2.32:1.

And what happened the next day, 2/29/12? Using The Bernank's Capitol Hill testimony as cover, the bid side of the metals was overwhelmed by Cartel manipulation and a 3-month, short-covering beatdown ensued.

Gold bottomed again almost exactly three months later on Wednesday, May 30, 2012 at $1537. Two days later, the employment report for May was released and QE has been on everyone's lips since. On Tuesday, May 29, the CoT once again looked like this:

May 2012: On 5/29/12, the total gross short position of The Gold Cartel stood at 300,917 and the net short ratio had fallen all the way to 1.77:1. In silver, the gross short position was back to 60,151 and the net short ratio had fallen back to 1.31:1.

It had all been a set-up. From the lows in December, spec money flowed into the metals and The Cartels welcomed every dollar. At the peak, The Bernank was rolled out in front of the cameras to put off QE and The Cartels attacked. Over the next 90 days, they covered all of their fresh shorts and then waited all summer to play the game again.

August-September 2011: The final bottom for gold occurred on June 28 at $1552 and silver reached $26.21. The CoT on June 26 was once again at a "bottom", too. On Tuesday, July 10, the total gross short position of The Gold Cartel was 316,165 and the net short ratio was 1.93:1. The total gross silver short position was 62,478 and the ratio was 1.29:1.

As of this past Tuesday, September 11, look how things had changed again. Prices had risen considerably. Gold closed on Tuesday at $1735 (+12%) and silver closed at $33.56 (+28%). The total Gold Cartel gross short position was once again 380,239 and the net short ratio was 2.66:1. The total Cartel gross silver short position was 79,478 and the net short ratio was 2.47:1.

The Cartels had set us up again. The point is this: If the Fed had "disappointed, if The Bernank had put off all new QE until after the election, there can be zero doubt that we would have, once again, seen a massive, manipulative raid on gold and silver.

In hindsight, do you recall the very sharp and brief spike down that occurred about 10 minutes before the Fedlines were released on Thursday? This was almost certainly someone or something with foreknowledge of the raid, attempting to front-run The Cartels. By now, we all know what happened, instead. Rather than being "saved" by The Bernank and using "no QE" as cover to screw everyone once more, QE~ was announced and now The Cartels are trapped!

We'll use the days ahead to go into greater detail on the implications of this but rest assured for today that sharply higher prices are coming. QE~ only serves to increase the global demand for physical metal. This demand will underpin any attempts by The Cartels to start a selloff. Over time, they will be forced to cover at an accelerating pace, similar to April 2011 in silver and August 2011 in gold. There will be panics and you can count on every dirty trick imaginable being thrown at the "markets". This time, however, it's not going to work. With QE~ as a backdrop, every dip will be bought, each successive low will be higher. The overconfident and greedy fools could/should have used this time to draw flat and perhaps even go net long. Instead they arrogantly chose to play their games one more time. This time, however, they will lose. The game is over and the fireworks have begun, even if the players seemingly haven't yet heard the final whistle.

Only one reading assignment this weekend and it's this piece from Brandon Smith at Alt-Market. This is one that you need to read carefully and then print it off and keep for posterity.

Lastly, once again I beg everyone to recognize that this main thread is for the discussion of precious metals and issues affecting such. It is OK to reference events in the MENA as the current situation there clearly has an impact on the global economy, the price of oil and the equity markets. It is not OK to get into pissing matches regarding "radical Islam", "Zionism", "American Imperialism" and the like. There are forums for that and I've even gone to the trouble of setting one up for you: Going forward, I am simply going to delete and remove comments from this main thread that I feel are set to hijack the discussion and turn people away from the education that this site provides. No exceptions. Got it?

OK, with that, I wish everyone a fantastic and restful weekend. Come back on Monday prepared for another wild and crazy week.


About the Author

turd [at] tfmetalsreport [dot] com ()


RunRunRun redwood
Sep 17, 2012 - 1:44am


I think Schiff does not explicitly state the political implications of QE3 because they are so obvious. QE3 = obama wins, No QE3 = romney wins.

The implication is that there was a reasonable risk of deflation and market crash before the election, a risk removed by the qe3 announcement, thus helping obama.

It can be argued that the Republicans, in stating that they would remove Bernanke if they win, made qe3 much more likely.

That's my take on it anyhow.

Sep 17, 2012 - 2:09am

Look at this monthly gold

Look at this monthly gold chart. Looks like another upside breakout is coming today or tomorrow. MACD, slow stochastics, Williams R pointing up nicely.

Sep 17, 2012 - 2:14am

Looking for Miners Index Fund

I would like more returns than a typical SLV or PSLV ETF. Although I own plenty of PSLV, I want to diversify into the miners. However, I'm not very good at picking individual miners. Are there any ETFs out there that can do this for me?

Sep 17, 2012 - 2:16am

Most possible retracement

Most possible retracement level is 1745.

Sep 17, 2012 - 2:32am

Late night rant.

What if they loose control of the dollars quick drop?

Maybe they want the POSX to drop below 70.

Maybe QE3 is an official unannounced dollar devaluation and both parties know it.

Maybe if things get really out of control with the POSX, Romney's campaign goes all out Gold Standard or Bust and wins the White House. With the FED's blessing because that's the only way they save their evil system.

They are 10 steps ahead of us. Believe it. If you think they are a bunch of morons....look at your paycheck, look at your house, and look at your car. Then answer the question truthfully. Are they really morons? Do they really have no clue what's going on?

I'm not trying to step on any toes, just making a point. I guess it's the same thing as so many posters have ask with regard to the Cartel being trapped. They're not. I would have to see PM's double in a few days to believe that.

If I saw gold and silver double in a few days I would probably be seeing RETURN TO THE GOLD STANDARD Romney ads on T.V. too.

They know! The FED can probably tell you within a few days when it's all coming down. They have every piece of information they need to come up with the answer.

Every major country has a lot to loose if it does come down. So all of a sudden China and Japan have a problem. Why now? Not to mention the constant Iran boogie man thing is getting old too.

Does it make any sense at all to hurry up and build a Nuke just so you can Nuke somebody and then get yourself NUKED the next fucking day!!?? My answer is NO! It doesn't make any sense at all to me. But it's a damn good side show.

Anyway......With all the chaos just around the corner gold is up about 3 buck and silver is up .07 cents. Maybe it's not as crazy as I see it. Or maybe I'm crazy?

Sep 17, 2012 - 7:35am

Can I take the blue pill now?

I f I just stop reading this stuff and go back to my old ways, will it all go away?

Sep 17, 2012 - 7:40am

silver generators

homestyle silver generators do not produce 'nano' sized particles small enough to kill bacteria/viruses/fungal infections very well.

Meso-, Soveriegn and especially Utopia silver are excellant brand names having super-nano sized particles[producing a VERY high EFFECTIVE surface area..........therefore concentration].....and there are others.

silver is an indiscriminate killer...............great for eye stuff and candida..........will destroy good bacteria in the gut, however so if taken internally take only for awhile and supplement with probiotics[shop these carefully---they must be ALIVE......refridgerated the best-----] or PLAIN [any sugar,even raw fruit to a degree, ruins the effect] greek or goat yogurt......

Green Lantern
Sep 17, 2012 - 7:48am

Re: Can I take the blue pill now?

Ha ha, i am thinking the same thing. I think Valium or Atavan therapy might also do the trick!! Things are getting WAY TOO INTENSE. The only problem is I don't know where in the world I can go and tie a hammock to two tree's and just chill out until all this passes.

Hey now that's an idea

December 21, 2012 Shit hits the fan. What should I eat for dinner conch fritters or grouper?

Green Lantern
Sep 17, 2012 - 7:58am

re: Colloidal Silver

I haven't chimed in on this conversation. Many of us had this conversation sometime back in the Speak Easy discussing best brands, how to use Kinesiology to test brands or even if you will have an allergic reaction, and lots of stuff. Currently, I am on a strictly pork diet so I don't want to think about good nutrition. But doesn't mean I don't know.

As good as colloidal silver is for an infection, if I had a choice between colloidal silver and Oxygen therapies, I would choose Oxygen therapies hands down. No micro organism can live in a highly oxygenated environment! Not Aerobic or Anaerobic. Pathogens don't like it and virus's swear at it.

It has been used in everything from your garden variety cold and flute to Cancer and other serious condition . Mountains and mountains of good anecdotal evidence. Not as much with colloidal silver. Easily available, cheaper than colloidal silver and can be used just for regular cleansing.

I highly recommend that you find somebody that is trained in muscle kinesiology for colloidal silver. I know how to do it to determing best brand and dosage and even if I need it. But inevitably oxygen therapy always shows up stronger.

If I was going to have one remedy during a SHTF scenario and had no access to doctors it would be OxyLift. Similar products are available at the Vitamin Shop including Aerobic 7 and Cell something.

You can purify water with it if necessary. But I'd still prefer a distiller.

Sep 17, 2012 - 8:00am

Sep 17, 2012 - 8:11am

Diminishing returns on AGQ

Last night, I was wondering if my investiment in out-of-the-money AGQ calls for Jan had a chance to make some fiat. So I decided to plot the value of AGQ each time silver has been at $34 in the past 24 months.

The lower yellow line on the chart, you will recognize, is drawn on the low points for silver. The upper yellow line is drawn across the points when AGQ went past $34. You will notice that both lines slope downward. So it is entirely possible that my calls may not get "in-the-money," even if silver takes a shot at 50 by January. But AGQ still looks like the best fiat silver investment for now. I have always been able to get filled at my price in AGQ, but I do choose prices where I see some volume of at least a few hundred contracts.

Since this is a price of the shares and not an option, there is no "volatility factor calculated into the price. Is AGQ tied directly to AG? Or does it trade more freely with the price rising and falling based more in investor demand. Perhaps the custodians of AGQ diluting the derivative product to limit investor gains?

Doctor J
Sep 17, 2012 - 9:00am


Nothing nefarious. Just the math.

Let's say AGQ = 100

AG price drops from 40 to 30 (25%). Being a 2x long, AGQ drops 50%. AGQ price = 50

AG price rallies back from 30 to 40 (+33%). Being a 2x long, AGQ rallies 66% or $33. AGQ price = 83

So, AG roundtrips from 40 to 30 to 40 and is unch.

AGQ falls from 100 to 50 but only rises back to 83.

This is why these are trading vehicles, not long-term solutions.

Eric Original
Sep 17, 2012 - 9:02am

Thanks for the morning chuckle, Green Lantern

"Currently, I am on a strictly pork diet..."

Sep 17, 2012 - 9:30am

Good article on China

Covers the historical background of the West's relationship to China. They remember things, even if the West does not.

The Western View of China is Wrong

If you ask most people in the West about China, they know it has the world's largest population, owns more US dollar denominated Treasury debt than any other nation and invented fireworks, paper and maybe the printing press. It was historically a poor country, partially colonized by Great Britain and other western nations who brought Christianity, modern development and the best of civilization to a backward nation filled with starving people. China suffered badly during the Japanese invasion prior to World War Two and was an ally until Mao and the communists took over. Today it is a growing world power beginning to flex its military and economic muscles and this is a threat to western dominance.

The Chinese View and Real Situation is Somewhat Different


Nuclear Rocketman
Sep 17, 2012 - 9:54am

Doc J

I too bought some AGQ calls for Jan and am optimistic than some fiat will be made. Why? With all of things that Turd and Bill Murphy have been discussing that could have a positive influence on the silver price this fall, in addition to QE3, the odds seemed better than normal so I placed my casino fiat on the table.

Hopefully, you will be handsomely rewarded and your avatar will be modified to show a slight smile and twinkle in your eye. :)

Sep 17, 2012 - 9:57am

Draghi, Schaeuble, Lagarde Caption Contest

Just for fun... (that's Germany's Schaeuble with the 'outreached' hand)

Haole Guy
Sep 17, 2012 - 10:01am

You are being lied to.

This is an excellent video

Video unavailable

Sep 17, 2012 - 10:05am


I have been considering changing my avatar back to a more optimistic pic of Aristotle. His downcast glance reflected my overall pessimism last spring when I uploaded this one.

Sep 17, 2012 - 10:08am



Sep 17, 2012 - 10:09am

First Post

Long time lurker, followed Turd over here from Zero Hedge. The main reason I registered was to thank Turd for starting this site and to thank others for the information they so freely share.

Special thanks to SRSrocco for his terrific posts which I know have to take many hours of research.

A great day to all.

Sep 17, 2012 - 10:09am

Caption contest

Then Ben said "infinity." ... now we can buy up those Greek islands and start prepping.

Sep 17, 2012 - 10:10am

Hey Doc

lol....I'm guessing this is not an option

Sep 17, 2012 - 10:13am


Whats with the huge spreads on the metals this morning? Netdania shows .10-.15 spread on silver and 2-3 $ on gold. Don't recall seeing that during regular trading hours.

Haole Guy
Sep 17, 2012 - 10:16am

More good news

I think I'll be moving to New Hampshire in the very near future. Live free or Die

Haole Guy
Sep 17, 2012 - 10:19am

I think we might have just finished the correction?

Wouldn't it be nice if this was correction we've all been waiting for and silver moved higher from here?

Sep 17, 2012 - 10:26am

re Caption

And then we said we would print money and the Euro went up! ha ha ha - eat that Bernanke!

Sep 17, 2012 - 10:27am

Caption Contest

Lagarde thought bubble: (((...just grab it and we'll bring him to his knee's in public...)))

Draghi to Schaeuble: "Try that again Wolfgang and I'll have Maurice bite the hand that feeds you"

Haole Guy
Sep 17, 2012 - 10:39am

Texas Straight Talk

Do you think the riots in the MENA are about a movie? I tend to believe Ron Paul and not the MSM. This is about US Foreign Policy and I think a little bit of QE3 since the petrodollar inflation is currently ravaging these countries.

Ron Paul's Texas Straight Talk 9/17/12: Consequences of an Interventionist Foreign Policy
Dr G
Sep 17, 2012 - 10:41am

Re: AGQ, Turd nailed it.Also

Re: AGQ, Turd nailed it.

Also note that AGQ's movements are correlated to the London silver fix. So in theory silver could be smacked down in London and get a low fix, rise in NY trading and then get smashed again in London and AGQ would see none of the gains received in NY trading.

If you are truly interested in silver, AGQ is not a wise choice.

And Turd's math is especially important to stocks in general. Take a stock, for example, that is valued at $100/share. If it loses 50% of it's value it would then be $50/share. Let's say it has a phenomenal gain of 100%. That would take it back up to $100/share, which is only the break-even point. That's why stocks are dangerous.

Sep 17, 2012 - 10:53am

New Thread



Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 4/15

4/16 9:15 ET Cap Util and Ind Prod
4/17 8:30 ET Trade Deficit (Feb)
4/17 10:00 ET Wholesale Inventories
4/18 8:30 ET Retail Sales (March)
4/18 8:30 ET Philly Fed
4/18 10:00 ET Business Inventories (Feb)
4/19 8:30 ET Housing Starts and Building Permits

Key Economic Events Week of 4/1

4/1 8:30 ET Retail Sales (Feb)
4/1 9:45 ET Markit & ISM Manu PMIs
4/1 10:00 ET Construction Spending (Feb)
4/1 10:00 ET Business Inventories (Jan)
4/2 8:30 ET Durable Goods (Feb)
4/3 9:45 ET Markit & ISM Services PMIs
4/5 8:30 ET BLSBS

Key Economic Events Week of 3/25

3/26 8:30 ET Housing Starts (Feb)
3/27 8:30 ET Trade Deficit (Jan)
3/28 8:30 ET Q4 GDP final guess
3/28 10:00 ET Pending Home Sales (Feb)
3/29 8:30 ET Personal Income (Feb)
3/29 8:30 ET Consumer Spending and Core Infl. (Jan)
3/29 9:45 ET Chicago PMI
3/29 10:00 ET New Home Sales (Feb)

Recent Comments