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Shake A Stick At This

278
Wed, Sep 26, 2012 - 12:31pm

Here you go. More charts than you can shake a stick at. (Whatever that means.)

Let's start today with crude because I just think it's messed up. Price rallies from late June to mid-September with never once seeing more than 3 days in a row of declines. In fact, it barely did that earlier in September. You could just as easily say that it never had more than two, straight down days. And then, just as QE∞ was announced AND tensions ramped even higher in the MENA, price collapses? And it's now down for 7 of the past 8 days? We'll talk in a minute about how much of this corresponds with the surprise POSX rally over the past week but come on...7 of 8 days down for a cumulative 10+% move?? This seems very fishy, particularly when gasoline was just reaching $4/gallon in the U.S. and the presidential election is just 6 weeks away. Very fishy, indeed.

But getting back to The Pig...The question is: What the heck is going on here? Why on earth would The Pig rally immediately following the announcement of QE∞? I've spent some time thinking about this and this is the best answer I can come up with:

Remember that the POSX is an index against all other, major fiat currency. Even though it is quite clear that unlimited QE will eventually make The Pig relatively worthless versus hard assets, in the short term, the global flow of funds is actually toward the dollar and treasuries as The Bernank has effectively assured perennially-nervous international investors that there will be no default, at least not in non-inflation adjusted dollars. Against this backdrop and in the very short term, QE∞ is judged to be dollar positive. Seriously. I know that sounds crazy...and it is...but that seems to be what has happened over the past two weeks. The good news is that the POSX is finally reaching the end of the raid for this bounce as the area around 80 will once again serve as resistance. I would now expect a few weeks of volatile, sideways action before The Pig resumes its downtrend.

So, in the context of The Pig apparently being the driver of short-term events in the commodities sector (where gold and silver are incorrectly relegated for now), any gyration by The Pig seems to flow immediately into buy or sell orders for the metals. We saw an exaggeration of this earlier today. The POSX began to rally at 5:35 EDT this morning and immediately the metals began to roll over. WOPRs, programmed for profit by actual human beings, began to build up sell orders for the Comex open and....WHAMMO!....the open is ugly and short-term technical damage ensues.

So, now that both metals appear to be in short-term corrective phases, where do they go from here and where might they bottom? Before we go there I want to reiterate again: QE∞ ASSURES THAT METALS ARE GOING MUCH, MUCH HIGHER. THERE WILL ALWAYS BE, HOWEVER, BRIEF PROFIT-TAKING CORRECTIONS WITHIN THE PRIMARY TREND.

The charts below spell it out quite plainly. Let's look at gold first. Tremendous physical demand makes further downward action unlikely but I can't help but think a weak-hand clearing plunge toward $1725 is coming. Note that this type of move would also have a very pleasant impact on the short term RSI.

Silver is clearly in a corrective phase, too. Though it is holding in there quite nicely today and though it, too, is seeing considerable physical demand, the 12-hour chart sure looks like a brief drop below $33 is in the cards. I'd love to see it as I'm sitting on a little cash that is burning a hole in my pocket as I type.

Just a couple of other items to consider today. First, there's this article I found linked at the GATA site. Nothing earth-shattering, but it's a reasonably competent summary of how things may eventually play out. https://www.internationalman.com/global-perspectives/manipulation-of-the-gold-price

And I have another book recommendation for you. You've likely seen me mention before that "The Big Short" by Michael Lewis is a real eye-opener. Lewis puts the entire "2008 Financial Crisis" in easy-to-understand terms and everyone here should read it.

Lewis' new book is a follow-up called Boomerang. It's not as good as "The Big Short" but very, very interesting nonetheless. Please read it. One of the chapters describes California as Italy or Spain as they relate to The Pig and The Euro, respectively. Along those lines, look at his headline from ZH. https://www.zerohedge.com/news/2012-09-26/california-screaming-4th-muni-bankruptcy-looms-atwater

OK, that's all for now. It has taken me quite a while to type this up and now I see that the metals have rallied smartly during the interim. That's great. Glad to see it. This does not, necessarily, make this post obsolete, however. Stay on guard and look for another dip.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  278 Comments

jaw777 · Sep 26, 2012 - 1:40pm

shake a stick at a chart anyway? 

Nice to see the reversal along with confirmation by some of the miners. Hopefully others will be along shortly.

I saw this same pattern last month right after options expiration (August). The dip caused me to unload my Sept AGQ calls early. Profitable, but I could have made a lot more being patient. Expect the uptrend to resume. Bernanke has effectively established a put under the precious metals markets. What idiot would not buy the dip when we are openly printing an infinite amount of money? 

stingbee30 · Sep 26, 2012 - 1:41pm

Reversal of the bearish trend....the close @34.00 was significant....Some major buys towards the end of the close, and the volume picked up on two SLV CALLs that i have been following (OCT37, and OCT35)....

Happy Thursday....Looks like it....we could make a run towards $34.50+

Happy Friday....Looks like it....We could make a run towards $34.80+

TIPS: divergence from OIL, and soon from USD

Golden Cross on Friday? Ivar mentioned this earlier...

padme · Sep 26, 2012 - 1:43pm

What a turnaround in miners!

Pining, enjoy your great art work as always.

Eric Original · Sep 26, 2012 - 1:48pm

That made my day! Even more than the FUBM I called on "First"!!

GDX is green, btw! Suck that, Evil Ones!

tyberious · Sep 26, 2012 - 1:49pm

Does Shine!!!

BagOfGold · Sep 26, 2012 - 1:50pm
Smelly fish...
Corn sucks...& is not what you thought it was...
Simons CornDog & the price of gas has got you down...
Remember...this guy is always in your corner!!!... Bag Of Gold
Beastly Stack · Sep 26, 2012 - 1:51pm

Bollocks,I have never seen that guy,classic!

Turd,I feel your pain.I have bought corn a couple of times but exited with tiny profits and losses.Look at April live cattle,I had parked some money in a couple of futures contracts there for some time.OUCH my parked fiat is now gone but I guess a couple of thousand in live cattle is better than my whole acct in Oil,gold or silver!

I am salivating at the prices we have in everything but I am just being patient.

Isn't it funny how Europe is all over the TV again,oh you mean the world is not fixed?I thought everything was just peachy!

Be careful out there!

Beautiful close on the CRIMEX today!

tyberious · Sep 26, 2012 - 1:54pm

(Don't worry, paper money is an infinitely bigger scam.)

Silver Stock Report

by Jason Hommel, September 26th, 2012


There are more reports of fake 10 oz. gold bars:
https://tinyurl.com/93pdqj6

Fox News has a video of the bar:
https://tinyurl.com/czkcquf

Patrick Heller has commentary on this topic, on which I disagree, and I rarely disagree with him:
https://tinyurl.com/9zp9xsc

Some people are needlessly in a panic, and since I'm a bullion dealer with a bit of knowledge and expertise, I'd like to bring the voice of reason to the table. There is no need for any hysteria.

My conclusion is that this is not a conspiracy to throw physical gold or silver into question, but rather, it is likely the work of one individual who found a way to scam some dealers, which is impressive, because dealers don't often get scammed; it's why they are in gold in the first place. The thief will get away with it only this once, maybe, if they don't catch him, and here's how they will catch him, and prevent this from ever happening again.

The sale of these 10 oz. gold bars had to be either for cash or wire. A fraudster would not likely give his name to be put on a check. If it's a wire, then the seller can also be easily identified, so that's not likely. That leaves cash as the likely form of payment! 

If it was cash, since it was over $10,000, and closer to $17,000 per bar, there should have been a CTR cash transaction report, with a social security number, which would also identify the counterfeiter. If no CTR exists to identify the seller of the bars (and no smart seller of the bars would go for putting down valid info on a CTR), then the bullion dealer kind of broke the fincen.gov Federal Money Laundering regulations! 

So, it's likely that one of the two parties is in trouble!

(And if a dealer violated Federal law, he is not likely to do that again, especially not now that there is a Federal Investigation!) But since the first report of these fakes was from a "dealer to dealer" trade, this explains why one of the dealers spoke up, because the second dealer in the dealer to dealer trade likely fully documented the trade.

I'm thinking that this was a small operation by an individual jeweler who looked for dealers who would not require a CTR on cash transactions, and who did not hit the same place twice, and who only sold as much as he could get away with, limited usually by the "cash on hand" of the bullion/jewelry shop to whom he sold the bars. 

Thus, it does not require a "global remelt" or re-assay of all bullion.

I don't see this as a kind of Federal false-flag conspiracy operation to try to call all gold into suspicion, and it doesn't do that for me yet. I would begin to worry more if the world reports gold eagles, or any single one ounce gold coins, filled with tungsten.

And since Gold Eagles are US Currency, counterfeits of those would be under the jurisdiction of the Secret Service for investigation. 

Of course, if they can do it with a 10 oz. bar, they can do it with a 1, technically speaking. But so far, they didn't. Think about why not. And this brings me to silver.

So, how do we know that silver rounds that we buy and sell are not fakes?

Well, we just heard of fake ten oz. gold bars, not 1 oz. gold bars. The reason is likely because the time and energy it takes to make a fake must be substantial.

Clearly, these were hand made, hollowed out or sliced open bars, also created at risk. There would be no incentive to hand craft silver fakes, as the profit would not be there, as it may have taken thousands of dollars in skilled labor to make these fake tungsten gold bars. Nobody would spend thousands to make a really good fake $35 piece.

Furthermore, there is no equivalent of tungsten for silver. Tungsten weighs nearly the same as gold, there is nothing that weighs like silver. 

Would a mint make fake silver rounds? No.

Mints can make everything from video game tokens to casino chips or copper rounds. 

If a mint made a fake, the mint would be prosecuted, and shut down, and there is no incentive to put over a million dollars worth of machines at risk to make $100,000 in fakes. 

Besides, machines don't make fakes.

The best machine-made silver coin fakes in existence are the US government issued common coins with the copper in the middle that you can see. Plated items do not wear well, they bubble or peel. Clad items show the different metal on the side, as common coins do, when the blanks are punched out of a strip of metal by machine. 

Thus, the fake 10 oz. bars are likely hand crafted.

Yes, we do test the purity of the silver rounds we have. Weighing works. Also, the look, the feel. Plated items are easily detected by hand, as plate bubbles, and it leaves a "smooth" look and feel to the coin as it's like paint that smooths out the stamped image and fills in the lines and grooves. And also, for plated items, the weight is often off by 30%.

We have cut into a number of silver rounds over the years, and we've never detected a fake from our regular suppliers.

We have bought silver fakes from the public, because the customer does not know they are fakes, and they typically sell only like 3 at a time, and we are moving fast on the small trades, and we did not examine them closely enough. We all learn. These days, every trade is double checked by at least two people, to try to avoid such mistakes. The fakes we bought were plated buffalo copies, did not even say they were silver, etc. It was a simple mistake that should have been easy to see, unless you are just not paying attention or in a rush. 

And again, it was only a handful, and in the silver, it was not a sting operation, and does not make me suspect the rest of my bullion.

In conclusion, there is no need to re-test or re-assay any of your own bullion. It's likely that 99.99% of all the bullion out there is 99.99% pure. And if that's not good enough, I don't know what is.

Perth Mint agrees that fake gold is very uncommon, and has proof.
https://www.perthmintbullion.com/us/blog/blog/12-03-26/Fake_Bars_-_The_Facts.aspx

The fact that the bullion world is abuzz with this story goes to show how ultra rare these kinds of fakes are. They are so rare, and there are so many bullion dealers, I wonder what these fake bars would sell for on ebay? Might even sell for more than the gold, after all, the artistry was supposed to be superb, and doesn't good art always sell for more? Anyway.

We have never recommended 10 oz. gold bars, for an entirely different reason. Gold bars are NOT wildly popular with the public, in fact, they are very rarely purchased or ordered by the public. In three years, I think we have only traded two of them, and two kilo gold bars.

Gold is money when it is fungible, meaning that every piece is similar enough to other pieces as to be easily exchangeable. A 10 oz. or a 31 oz. gold piece is a large chunk of capital to put into a less desired, "non-moving", not popular form. Also, when a 10 oz. gold bar is encased in a large piece of plastic, you are not even saving any space, as 1 oz. coins in a plastic tube use up less space in a vault, so a big gold bar in large plastic becomes even less useful. 

The best and two most popular forms of gold are Gold Eagle 1 oz. coins, or generic gold 1 oz. bars. Again, my chart of my most popular forms of bullion bought and sold can be very useful for this discussion: https://jhmint.com/reports.html

If you ever visit the JH MINT in Grass Valley, ask to see our tray of fakes. I keep a tray to show how badly done most fakes really are. We have on display fool's gold, lead coins, gold electro plated coins, commemorative plated coins. They never get the weight and look just right, and most are not intended to be fakes. A gold plated commemorative coin filled with copper is about twice the size, and half the weight of a gold coin. (Because gold is dense and heavy, like tungsten.) It's extraordinarily easy to detect most fakes.

Finally, as proof that what I'm saying is true, that 10 oz. gold bars are not so popular: the reports of the fake ten oz. gold bars show they were sold to refiners. Well, that's because a refiner is most likely going to melt them down, like all the other useless forms of gold out there like used, old, dented, out of style gold jewelry or placer nuggets and gold teeth.

The other way I know the news reports are lying when they write, "ten oz. gold bars are popular" is the fact that no form of gold is popular because gold itself is still very unpopular and remains a rare and overlooked market, and remains undervalued. All the gold produced by the world every year, at 70 million oz., x $1700/oz. is $119 billion/year., which is tiny in the scale of world finance. Gold Eagle coins are only a $1.7 billion/year market in the USA given the mintage figures released by the US mint, and thus, the 10 oz. gold bar market is far smaller than that, perhaps less than 1/100th in size I'd estimate, and thus, perhaps be only about a $17 million annual market in the USA. If ten of these bars are now reported to be counterfeit, that's $170,000 worth. It's tiny, and wildly unpopular, not popular.

In conclusion, ten fake 10 oz. gold bars was a $170,000 scam. That means that almost no gold in the gold market is fake. Paper money is a scam worth hundreds of trillions, that's maybe closing in on a quadrillion, which is $1,000,000,000,000,000. That means that all of the paper money in the paper money market is fake.

If this article was useful to you, please forward it to others, or write your own articles linking to this one, or even copy parts of it.

Wallace Hartley · Sep 26, 2012 - 1:59pm

On Turd's conundrum involving wide-spread commodity weakness following the QEternity announcement...

I would contend that it has to do with the end of the 3rd quarter, options expiry, and the upcoming 2013 Capital Gains Tax increase. The Fed provided the cover for the banks/hedge funds (any difference?) to exit over-weighted commodities positions for a profit to boost 3rd quarter earnings. The larger commodity sell-offs seem to be concentrated in recent short-term gainers. Keep in mind that the capital gains tax is set to increase 20% come 2013...why would the big boys wait to unload their winners during the potentially massive year end sell-off? They've made a handsome profit on the QE ramp-up, they then sell their winners and pay the lower capital gains rate locking in a nice gain. They then go short and wait for the rest of the investment community to dump their holdings prior to year end (and make a nice profit at the lower capital gains rate again). 

Everything began to make much more sense to me when I came to the realization that everything, and I mean EVERYTHING the Fed says and does is to benefit the big banks. Maybe I'm dead wrong, but this scenario makes sense to me....

BagOfGold · Sep 26, 2012 - 2:02pm

& "the bacon indicator" is just sizzlin'!!!...

Addicted To Bacon - A Sizzlin' Bacon Rap Song

Bag Of Gold

Eric Original · Sep 26, 2012 - 2:04pm

Step One: Pour a large glass of Whisky

Step Two: Put on Chunky Mark

Step Three: Get Loud...

cheeky

· Sep 26, 2012 - 2:08pm

Madrid, Spain – Right NOW !!

Citizens have surrounded the Congress building in Madrid and are demanding immediate resignation of the Government.

 Massive Protest Erupts in Spain!:
Police Start Violence:

Stream: https://www.livestream.com/spanishrevolutionsol

SilverSurfers · Sep 26, 2012 - 2:16pm
Posted Monday, September 17, 2012 3:56:37 PM

Forbes says that QEIII is not a good thing. I could of told you all that 5 years ago ....

...

today, as you can see, they are at it again, manipulating, (which, by the way is not really a bad thing, as it support the bull run long term), and manipulating will not stop, all the way to 35,000$/oz Au

They "paint the tape", after NY close, to try to trigger stops in low volume times.
Technically, would like to see Silver drop to 32.50, to retest support, and then blow through 35.30, resistance, to then test 37.50, and again, would like to see then a drop to 35.30, and then the move to 47/oz, where I will consider a round-trip to multiply ounces on the Au/Ag ratio.

This stair step action, is classic bull market action, no blow off, just climbing the wall of worry.

47$/oz should correct to low 40s, thinking about 41$.
thus a 6$ move on 41$, which is about 15%,
and move back to Ag at 41$/oz to ride it back to 47$ completing the round trip,
for another 15%, which totals 30% increase in metal weight. (<-- max best case, of course)

=============

James Turk indicated that the physical market is so robust, that normal (manipulation is the new normal) corrections, may not occur.

32.50 may not happen.

tyberious · Sep 26, 2012 - 2:20pm

Not on CNN, MSNC, I wont bother checking Fox! I hope it alls goes BOOM!

SilverSurfers · Sep 26, 2012 - 2:20pm

Dont believe all the MSM BS.

That was a campaign rally for Nigel Farage

https://totalcontrol.blogtownhall.com/2012/09/22/nigel_farage,_ukip,_jus...

tyberious · Sep 26, 2012 - 2:26pm

Well done. I think that this Hommel guy is likely correct.

usk · Sep 26, 2012 - 2:29pm

 - maybe trying to influence 1750 taking delivery .....

Richard Guthrie

Wondered why 1775 has been defended with the passion of a Greek Bridge in the last few weeks,..

Of course, of course, Option expiry on the Oct Gold Contract today,

Looking at the Call Open Interest yesterday at Strike Prices around present spot levels, one can see why the Option Writer’s were so keen to put a stop to Friday’s breakout higher,

Note the heavy concentration of Open Interest between 1775 and 1800! Had the market held it’s highs on Friday into the close, it would have likely set up a run over 1800 into today’s close, which would have put another 14,000 Calls in the money at expiry! 14,000 calls is an eye watering 1.4 million ozs of Gold equivalent (circa 44 tonnes),

Now you know why 1775 these last few weeks has been defended with absolutely everything the b*stards can throw at it,

My guess is that once expiry’s through today the pressure’s off which might very well mean a quick rebound to new multi-month highs!
Best,
Rich (Live from 'The Bridge of the Silver Rocket Ship')

Nana · Sep 26, 2012 - 2:34pm

https://nlpc.org/stories/2012/09/25/epa-sued-over-heinous-experiments-hu...

EPA Sued Over Heinous Experiments on Humans

After experiments on humans were conducted that exposed them to airborne particulates considered to be lethal, a sound-science advocate has accused physician researchers working for the Environmental Protection Agency of misconduct and violations of the Hippocratic Oath.

Steve Milloy, publisher of Junkscience.com and author of Green Hell: How Environmentalists Plan to Control Your Life and What You Can Do to Stop Them, filed a complaint with the North Carolina Medical Board last week that accused three doctors in the state – two employed by EPA (Dr. Andrew Ghio and Dr. Wayne Cascio) and one by the University of North Carolina (Dr. Eugene Chung) – of intentionally exposing test subjects to inhalable pollutants that the agency considers both cancer- and death-causing.

“During these experiments, the study subjects were intentionally exposed to airborne fine particulate matter (“PM2.5”) at levels ranging from 41.54 micrograms per cubic meter to 750.83 micrograms per cubic meter for periods of up to two hours,” Milloy wrote to Dr. Ralph C. Loomis, president of the NC Medical Board. “…the EPA has determined that PM2.5 is ultrahazardous — i.e., that exposure to even low levels of PM2.5 are potentially lethal within hours of exposure and that no exposure to PM2.5 is safe.

“The EPA also believes that PM2.5 is carcinogenic to humans.”.............

-----------

Sorry this is off topic but this definitely crosses over the line and EVERYONE needs to know about this.

Seems TPTB manipulate anything and everything they want to..... including your very life....and YOU PAID for it.....

PLEASE spread this far and wide because the media won't tell you the REAL news, the truth...

ReachWest · Sep 26, 2012 - 2:38pm

Here's how I tackle the morning meal each and every day.

Someday soon that Silver will fall into the Frying Pan and then we'll be really cooking!

Dr G · Sep 26, 2012 - 2:41pm

Man, silver is looking beautiful to me in the very short-term chart. I see a complete reversal of the losses that were accumulated in trading yesterday. Very nice.

Bollocks · Sep 26, 2012 - 2:42pm

Glad you enjoyed that Chunky Mark clip! I think he's a national treasure (here) in the UK. His rants are EPIC.

Google (who own YouTube) tried to censor him some time ago, putting his channel on probation for 6 months because of the profanity - they said (more likely because of his passion and the truth he speaks, they couldn't handle it). He had to calm down his rants after that, and was pretty upset about the threat to shut him down.

But I'm sure YouTube were doing it for the good of the people. Everything is done for the good of the people wink.

Yeah, right.



tmosley · Sep 26, 2012 - 2:43pm

Modern day Nazi scientists should be hung in a near future Nuremburg.

There is no excuse for this, ESPECIALLY given the madness that legitimate researchers have to go through for IRB approval. Think: 6 month process to get approval to collect spit in a cup. That really happened at my last lab group.

usk · Sep 26, 2012 - 2:45pm

And if you look closely, you can also see why they want to see it under 1750 today and tomorrow, too.

achmachat · Sep 26, 2012 - 2:50pm

I just ordered a sizeable amount of little round things with the Queen on them.

I tend to have some kind of voodoo magic powers; usually there's a reversal of the short term up-trend that follows within the next 30 minutes.

LaMachinna · Sep 26, 2012 - 2:51pm

A MUCH NEEDED REFRESHER and lift of spirits. THANKS COMRADE!!!!!! Classic Turdland yeslaugh

Thanks again Turd for all you do and the spot on guidance. 

Turds, carry on.

Fellow comrade-LaMachinna

Beastly Stack · Sep 26, 2012 - 2:51pm

I should know this!

I thought it was yesterday for some reason.Was it today or is it tomorrow?That is a big deal bc of what Turd pointed out!Over 5600 1750 calls!Well done Turd,well done!

Can someone please clarify when the expiration is or was?

Thanks

tyberious · Sep 26, 2012 - 2:56pm

is more of the same in Au and Ag markets. Price containment prior to options expiry. y

Just doing my part for the community. Jason a pretty good guy done some business with hi and I can attests to his trust worthyness.

Dr G · Sep 26, 2012 - 2:56pm

Yes, getting close to the golden cross in silver.

· Sep 26, 2012 - 3:01pm

Blood in the streets of peripheral EU --> increased breakup risk perception --> lower EUR --> higher Pigatha --> lower (not as high as otherwise would be) PM prices

Marblesonac · Sep 26, 2012 - 3:11pm

The body follows the mind:

Have a positive outlook

Have love in your heart

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