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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

Founder
turd [at] tfmetalsreport [dot] com ()

  278 Comments

alphamorph · Sep 26, 2012 - 3:11pm

I too, like what I'm seeing.

Barring a gross intervention, oil, gold and silver all look promising.

Somebody quick..... put a match under these Titans!!

Wallace Hartley · Sep 26, 2012 - 3:16pm

Sept. 26th last trading day for September silver futures...

Sept. 28th last trading day for September gold futures...

Dr G · Sep 26, 2012 - 3:19pm

Turd, maybe you should spend that silver money now :)

punchbowl · Sep 26, 2012 - 3:22pm

In addition to the end of quarter mark to market boogie woogie, which I think is responsible for quite a bit of the stock market action, there are also a few key things happening in the gold and silver futures markets this week that also provide the occasion for some 'technical trading.'

Harvey Organ reminds us that the metals often get 'hit' as an active month rolls over, to discourage speculators from taking delivery on their contracts. This is often marked by the 'first notice day.'

In the short term the markets are a bit treacherous because of the lack of enforcement of the basic rules that govern healthy markets. In the longer term these things tend to become just noise.

Pick whatever time frames you wish, but know the character of the markets in which you choose to participate.

Also bear in mind that during times of excessive market speculation because of hot money and lax regulation, information sources are often used and even co-opted to help to shape 'perceptions.'

This may even be unconscious if the information provider does not view certain stories that are offered at certain times with a skeptical eye. A little truth broadly embellished and assigned is the most reliable sort of lie.

Sept. 26 Comex October miNY gold futures last trading day
Sept. 26 Comex September silver futures last trading day
Sept. 27 Comex October gold options expiry
Sept. 28 Comex September gold futures last trading day
Sept. 28 Comex October E-mini gold futures last trading day
Sept. 28 Comex October gold futures first notice day
Oct. 27 Comex November E-mini silver futures last trading day
Oct. 27 Comex October silver futures last trading day
Oct. 27 Comex November E-mini gold futures last trading day
Oct. 29 Comex October gold futures last trading day
Nov. 27 Comex December gold options expiry
Nov. 27 Comex December silver options expiry

Nov. 28 Comex December miNY gold futures last trading day
Nov. 28 Comex December miNY silver futures last trading day
Nov. 30 Comex December gold futures first notice day
Nov. 30 Comex December silver futures first notice day

Dec. 27 Comex December gold futures last trading day
Dec. 27 Comex December silver futures last trading day
Dec. 27 Comex December E-micro gold futures last trading day
Dec. 31 Comex January 2013 silver futures first notice day

more at:

https://jessescrossroadscafe.blogspot.ca/

alphamorph · Sep 26, 2012 - 3:23pm

You too, may be a hero

When you learn to count backward to zero.

tyberious · Sep 26, 2012 - 3:31pm

There Are Always A Few People Who Get

Angry If I Write Something That They Disagree With

Author : David Schectman
Published: September 26th, 2012

READ THE FULL NEWSLETTER

I did get some negative feedback on the comments by Trader David R on Tuesday. Considering it was only a handful, and we mail to a very large mailing list, I am not surprised. I have stated this before, and evidently I need to state it again – I try and provide valuable information that I believe will benefit you. I try and present both sides of the view although I will support one over the other. The inflation/deflation debate is but one example. It is not my goal to tell you what to think; I try and get you TO think. You should be the ones who decide what is valid and what is not. But there are always a few people who get angry if I write something that they disagree with. That’s preferable to being ignored. At least people are reading what I have to say. If I wrote this daily in such a way that no one would ever get upset with something that I said, it would be so “milk toast” as to be of no value whatsoever.

Now, back to the Trader David R comments. The ONLY reason I published his comments, which by the way were never meant to be circulated, but were personal emails from David R to me, was because they validated what Jim Sinclair was saying. And what was that? He stated that the big banks were long physical and short paper! Funny, no one complained about what Sinclair wrote, but when Trader David R said exactly the same thing, feathers were ruffled.

For the record, he is a “good guy.” He is not part of the manipulation. He does not work for nor promote the bullion banks. He simply shares his views of how the markets work based on his 18 years of inside experience. He is also off the charts bullish on gold and silver. Here is one of his recent emails to me and you will see, his views are very much the same as ours:

QE3 has to be one of the most irresponsible things I have ever witnessed in my life!! Why gold is not at $2,000 is beyond me! I think we will be there by end of year and $3,000 next year. Our future generations have just been sold out!!

To clear up any confusion on his position, he never said that the markets are not manipulated. Quite the contrary, he fully understands that they are manipulated. The only difference is that he believes the manipulation these days comes from the ultra large hedge funds and their ALGOS, not the banks. This is nothing to get upset over. The important thing is not WHO is doing the manipulation; it is that it IS being done. In the end, it’s all the same. It will fail and it gives us repeated opportunities to buy gold and silver for depreciating dollars.

I have presented the manipulation story, via Bill Murphy, GATA, Ted Butler, Andy Hoffman, Bix Weir and many others since I started writing this daily. Nothing has changed here. I have offered you an intelligent, credible alternative explanation to these events, which by the way is not at odds with the overall premise of manipulation, and leave it to you to decide which answer fits best.

Now had I presented the views of Jon Nadler or Jeff Christian I would deserve the criticism that some of you have sent my way. Chill out. You need take nothing more from his comments than a validation of what Jim Sinclair wrote about the banks being long gold and silver. David R could not be more bullish on gold and silver for at least the next four years!

Here are two statements from Jim Sinclair that he published Tuesday (which can be found later in today’s daily):

Jim’s Mailbox

September 25, 2012, at 10:21 am
by Jim Sinclair

This is pure manipulation (by the banks) for accumulation.

Gold is going to and through $3500 and just like the 70s, the big boys are going to make the most money in gold over the shortest period of time

Once again, Sinclair is telling you the bullion banks are driving down the price so that they can continue to accumulate more physicals cheaper! He is discussing gold in the first quote and silver in the second. He is giving you an honest explanation. If you don’t agree, no one is twisting your arm to make you change your mind. Remember, I am not trying to tell you how to think. I am presenting you with what I honestly believe to be the most valuable information I can find and I do have 30 years in this industry, which gives me a fair amount of insight.

Here is the latest from Jim Sinclair. He gets his criticism too, so I don’t feel so bad.

Cerote · Sep 26, 2012 - 3:32pm

Maybe molybdenum would work as tungsten does for gold, it has a density of 98% of silver's, and is probably a lot cheaper than silver.

tyberious · Sep 26, 2012 - 3:38pm

https://news.goldseek.com/GoldenJackass/1348689600.php

Boy the day just got better! I love his stuff!

muscrat · Sep 26, 2012 - 3:53pm

25 prominent hedge funds position’s on gold and silver hold no surprises: No silver, 3% of positions gold related and typically small.

Hedge Fund Wisdom just released a free 2nd quarter 2012 issue. The average fund had about 45 positions (min 9, max 152).

Most funds had no position in gold stocks. New and existing gold positions were mentioned about 26 times. Other than John Paulson who reported 28% in GLD and 9% in AU, the rest of any fund’s specific position maxed out at 3-4%, with many < 1%. GLD, which is rumored to have re-hypothicated "assets", had 6 mentions. ABX, ANV, and GDX each had 3 mentions. There were 7 mentions of closing gold positions. Roughly only 3% of overall positions were related to gold.

Silver is even better with just 3 mentions, ALL sells.

Won’t this revert to the mean someday?

Dr G · Sep 26, 2012 - 4:02pm

Gold stocks are nice but they aren't gold. Don't ever confuse them with gold.

The price of gold can go up and the value of the stock can go down. If oil is high it costs more to mine gold, and that's bad for gold stocks. If the board of directors is embezzling money, that's bad for gold stocks. If a mine is nationalized, that's bad for gold stocks. If a mine is closed due to death or unsafe work environment, that's bad for gold stocks. If the CEO is lying about production, that's bad for gold stocks. If war breaks out in a mining region, that's bad for gold stocks.

The list goes on and on. Gold stocks are fine for gambling, but they are no different than any other stock in the market.

There is a theory that when gold goes high it will be unreachable for the common man, so they will rush into gold stocks. Maybe, but if gold is really that high do you want your income placed in a stock? Better get direct registration so you actually own something. And who knows if you will be able to sell it for a profit in the chaos that may be occurring.

tyberious · Sep 26, 2012 - 4:03pm

Someone pointed out to me that bullion trader David R. laid out a challenge to our crowd to check the JPM financial statements where they state the value of physical commodities they hold in their "contango" game. Remember he said that JPM has a matched book where they buy a COMEX short for every Physical long? So I decided to take his challenge. Here's the results: In the JP Morgan 2011 Annual Report it states they hold $26B worth of all physical commodities (including oil, gold, silver, etc). (See page 189) https://files.shareholder.com/downloads/ONE/2087390084x0x556139/75b4bd59-02e7-4495-a84c-06e0b19d6990/JPMC_2011_annual_report_complete.pdf If David R.'s theory is TRUE then JPM would hold a similar value of derivatives related to these commodities. So I went to the Office of Comptroller of Currencies (OCC) to find the answer which should not surprise anyone EXCEPT David R... JP Morgan holds $497B in commodity derivatives! (See Tables 9 & 10) https://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq411.pdf I've added this point to my arguments here: https://www.roadtoroota.com/public/1013.cfm The battles continue and the dis-information campaign is ramping up. May the Road you choose be the Right Road. Bix Weir www.RoadtoRoota.com

tyberious · Sep 26, 2012 - 4:04pm

Missed your post!

petedivine · Sep 26, 2012 - 4:12pm

Someone pointed out to me that bullion trader David R. laid out a challenge to our crowd to check the JPM financial statements where they state the value of physical commodities they hold in their "contango" game. Remember he said that JPM has a matched book where they buy a COMEX short for every Physical long? So I decided to take his challenge. Here's the results: In the JP Morgan 2011 Annual Report it states they hold $26B worth of all physical commodities (including oil, gold, silver, etc). (See page 189) https://files.shareholder.com/downloads/ONE/2087390084x0x556139/75b4bd59-02e7-4495-a84c-06e0b19d6990/JPMC_2011_annual_report_complete.pdf If David R.'s theory is TRUE then JPM would hold a similar value of derivatives related to these commodities. So I went to the Office of Comptroller of Currencies (OCC) to find the answer which should not surprise anyone EXCEPT David R... JP Morgan holds $497B in commodity derivatives! (See Tables 9 & 10) https://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq411.pdf I've added this point to my arguments here: https://www.roadtoroota.com/public/1013.cfm The battles continue and the dis-information campaign is ramping up. May the Road you choose be the Right Road. Bix Weir www.RoadtoRoota.com

BagOfGold Dr G · Sep 26, 2012 - 4:31pm

Yes!...Gold stocks ARE nice!...However...you are biased against gold stocks because you are not invested in them!...Just because you hold only physical gold...does not make gold stocks a bad investment!...There are pros & cons to owning both physical gold & gold stocks!...So...once again I will say to you...

The Bullshit Button

Bag Of Gold

benque · Sep 26, 2012 - 4:33pm

So, by my quick calculation, the morgue is short 2000% of their long? I was never very strong in math, so I question my conclusion, and the devestating results to Jamie et al, if commodities rock & roll like we all expect them to.

Dracula · Sep 26, 2012 - 4:40pm

I have read what the fake gold company says in their site. To get a good fake, the width of gold must be 1/16 in, like 1.58 mm. On each side. So for 1 oz bar is hard to meet the condition.

Quisp · Sep 26, 2012 - 4:40pm

If he has to write about it, I'm sure that it was more than just a few complaints!

SteveW · Sep 26, 2012 - 4:42pm

I've been poking around the CME site but can't find the data on open interest for options. Seems like it should be publicly available just as the futures contracts are. Anyone know the location?

Not that I trade futures but it impinges on equities options and I expect my underwater Oct SLV 35 calls to recover next week. Need to make some fiat here to buy some more physical.

BillAuAg · Sep 26, 2012 - 4:59pm

Punch out counterfit coins made of tungston and plate them in 24k gold.

How would you know?

.05 gm light if all else is the same

Eric Original · Sep 26, 2012 - 5:01pm

Lots of media coverage of the impending bacon shortage today. This, combined with the last day of a sale at my local grocer, has caused me to stack bacon big time today. Had to rearrange the pies in the freezer, but I made it work!

benque · Sep 26, 2012 - 5:08pm

SteveW,

Here is a link for Dec. Gold options contracts. There is lots more if you poke around the site.

https://www.barchart.com/commodityfutures/Gold_Futures/options/GCV12/opt...

Here is a calendar from cboe.com for options expiries (hope its not too small to read):

· Sep 26, 2012 - 5:14pm

Are you lonely? Are you fustrated? Do you stay up late at night thinking to yourself that QE3 doesn't seem to be working? And the Fed, the ECB, Japanese Banks aren't doing enough to help your investments? Worry no longer. We have something to ease your troubles.

Fed’s Evans Calls for More Easing, Warns of ‘Lost Decade’

Federal Reserve Bank of Chicago President Charles Evans said policy makers must not be passive in the face of high U.S. unemployment, firing back at critics of the Fed’s decision this month to step up record stimulus.

“We cannot be complacent and assume that the economy is not being damaged if no action is taken,” Evans said today in a speech in Hammond, Indiana. “If we continue to take only modest, cautious, safe policy actions, we risk suffering a lost decade similar to that which Japan experienced in the 1990s.”

Charles Evans, Federal Reserve Bank of Chicago President, Voices Support For Aggressive Economic Action

In his remarks, Evans took issue with those who have warned that the Fed's efforts could have unintended adverse consequences.

"Being timid and unduly passive can also lead to unintended consequences," Evans said. "If we continue to take only modest, cautious, safe policy actions, we risk suffering a lost decade similar to that which Japan experienced in the 1990s."

Evans has argued for the past two years that the central bank needs to adopt an explicit target for unemployment and pledge to provide economic stimulus until unemployment dips below that threshold. Evans has suggested providing support until unemployment falls below 7 percent as long as the outlook for inflation remains below 3 percent.

The Fed's interest-rate committee next meets on Oct. 23-24 and most private economists say they are not expecting any major policy changes at that meeting, (they said that last time and THEY WERE WRONG) given what has already been done. However, they said the Fed may decide to announce more support for the economy at its last meeting of the year on Dec. 11-12.

Bank of Japan Is Ready for Monetary Stimulus Again

The Bank of Japan is ready to expand monetary stimulus again even after this month's action and may ponder new steps if necessary, board member Takehiro Sato said, warning of global uncertainties that could push the economy into recession. In an exclusive interview with Reuters, Sato also said Japan may not achieve the BOJ's 1 percent inflation target as early as the central bank had hoped, issuing the strongest warning to date by a policymaker of risks to the country's recovery.

"We won't hesitate in taking additional monetary easing steps if we feel that risks have heightened enough and that the economy may undershoot our forecasts even after this month's monetary easing," he said on Wednesday

https://www.cnbc.com/id/49183261

In light of what Central Banks are willing to do to avoid sinking into a global recession, I vote that the continued violence in Spain becomes another Greece moment that lasted for months. Even with the Parthenon burning, and all the incorrect calls that Greece was going to depart, they didn't. Fear on/fear off day after to day after day. Central Banks will continue to pump made up money into the system as EU goes through chaos and riots but stays in the EU.

Volatility is going to be off the map as all this transpires. And I do not see any choice for those who want to make some money out of this mess that at some point, you have to jump in while the jump rope is being swung and do it deftly so you don't get whacked in the head. 

Speaking of getting whacked in the head.

I'm assuming US police are studying these video's as they should. But those who expect to protest here when things get bad should also study it. It seems that an organized crowd could easily overwhelm the police with the proper organization. Ya gotta bring your own stick.

https://youtu.be/2YH5Hwbshg4

That's not my head

atarangi · Sep 26, 2012 - 5:18pm

What are you going to use to punch the tungsten ?

Boswell · Sep 26, 2012 - 5:23pm

Sounds about right!?

"Marine biologists have finally solved the mystery of how the “vampire squid” feeds, and what on — namely a delightful recipe of corpses and faeces washed down with its own mucus."

Article: https://www.wired.com/wiredscience/2012/09/vampire-squid-video/

Video:

https://www.wired.com/wiredscience/2012/09/vampire-squid-video/

SilverSurfers · Sep 26, 2012 - 5:24pm

QE3 has to be one of the most irresponsible things I have ever witnessed in my life!! Why gold is not at $2,000 is beyond me! I think we will be there by end of year and $3,000 next year. Our future generations have just been sold out!!

NOT SO FAST. We all know where QE to insanity will take us all. Implosion

Sure, many flunk history, get an F, and have to repeat, and but that does not mean we give up on the whole, to re-learn the lessons of

1) Limited Federal Government,

2) Gold and Silver Legal Tender

3) A republic of sovereign states

4) Free markets, etc etc

When past the point of no return, be done with it, already. Have faith, my new friends, that the US government will continue to do the same wrong stupid things, enslaving us all as tax mules or dependents, for the phoenix WILL RISE to right wrongs of 110 years of leftist political pandering, judicial corruption, and legislative impracticalities. The system needs flushing. Sorry turds, but hanging in there expecting a different result from minor 4 years presidential adjustments, is near insanity. Im just more realistic than most and want to accelerate the rise from the ashes, and will surely vote BHO to get us back to the promise land just a tad quicker.

We can wipe out the national debt TOMORROW, and regain freedom from government. 

We can repeal all social programs at the Federal level, TOMORROW, and restore the republic.

We can abolish the FED bank and fiat paper money, TOMORROW, and restore honest money. 

We CAN do these things overnight. We collectively simply lack the political will to do so, and just need a huge kick in the pants. Human nature, our individual greedy devils and compassionate angels, and market forces will regressively return us all to the day of our past glory where the republic and self reliant hearts were strong. Have Faith. I thought phoenix would come by 2035, but now believe this decade may see long sought after changes. Keep the faith.

Pegasus TF · Sep 26, 2012 - 5:25pm

uses the classic form of a dis-information plant and it will be fun to see it refuted."

Character is right! This guys needs to own up. I'm tired of listening to people who claim to know something, but won't put their name on the line -- especially someone who claims to be an authority - yet comes out of nowhere. Otherwise it is just blind faith, which in this case, only serves to muddy the waters.

Bollocks · Sep 26, 2012 - 5:29pm

"Had to rearrange the pies in the freezer"

Tell me about it! Jeez, I'm constantly re-arranging my pies.

Pies. Goddamn pies. Pies everywhere.

Got any tips on how you re-arrange them? I've only been doing it for about 5 years and feel I still have a lot to learn.

Thanks for any help! smiley.

benque · Sep 26, 2012 - 5:32pm

For those of you who are well stacked, and generous of spirit, this Halloween, place a few 1 oz silver rounds randomely in your treat bags. You may generate more interest and buying incentive for having done so. Maybe, just maybe, some super intelligent kid without focus could thereby be stimulated to devise and action a plan to take down the morgue!

Gotta have faith in the youngsters!

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11/14 8:30 ET Consumer Price Index
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