Another Parallel

Tue, Oct 23, 2012 - 10:40am

Continuing with the current theme, here's another reprint for you. Party like it's 2011!!

Just six, short days after calling "Turd's Bottom" and issuing a guarantee, ( all looked lost. It was January 27, 2011. Prices had peaked three weeks earlier in the post-QE2 euphoria and now nearly every "maven" was dumbfounded by the continuing weakness. Sound familiar?

So, for today, I invite everyone to go back to "The Watchtower" and review this post:

You'll find all sorts of parallels to today...even references to the sudden appearance of a shadowy "insider" who had begun posting cryptic messages on the Yahoo Finance boards.

Anyway, keep the faith and hang in there. This, too, shall pass.


About the Author

turd [at] tfmetalsreport [dot] com ()


Oct 23, 2012 - 9:15pm


Just read the book "Atlas Shrugged" and watched the movie. Book written in the 1940's shows a startling depiction of current US economics and policies. The author is an extraordinarily insightful and profound philosopher. Atlas Shrugged II is out in theaters now and will be going to see it this weekend. I recommend everyone to either read the book or watch the movie as it really makes you think about the current path of government intervention and our road to socialism, fascism... "who is John Galt" take me to Atlantis

Turdle GG
Oct 23, 2012 - 9:22pm


Aust inflation came in high. AUD up. High inflation starting to show up in one market = positive for precious metals.

Oct 23, 2012 - 9:22pm


This is what you admire?

The story of how Rand fell out with the libertarian economist Murray Rothbard is instructive of her anti-conservative temperament (many versions exist; this one is attributed to Rothbard’s protégé, Prof Harry Veryser). In 1958, Rothbard and his wife JoAnn Schumacher attended a seminar by Rand on the subject of God. Arguing that Christianity inhibited self-interest, Rand declared that anyone who had faith in the Almighty was “a damn fool”. She then went around the group asking each student if he or she was a believer. JoAnn happened to be a Presbyterian and, with a nervous whimper, answered in the affirmative. Rand turned to Murray and barked, “Your wife is an idiot, you must divorce her immediately.”

Murray’s response was admirable. He grabbed his wife’s arm and said, “JoAnn, we’re leaving. This woman’s nuts!”

The anecdote underlines three distinctly non-conservative, non-Tea Party traits about Ayn Rand. First, she confused worship of the individual for worship of an individual – herself. The Randian movement was a cult with Rand at the centre. She tolerated no opposition and schooled her pupils in an old fashioned didactic style: “I’m right, you’re wrong, and here’s why”. Sometimes she used the tools of totalitarianism to bring her people in to line. Rothbard was ostracised from the group, turned into a non-person in much the way Stalin expelled dissenters from the Soviet Communist Party. In this instance, her obsession with what she defined as “objective fact” (i.e. the physical “fact” that there is no God) was stronger than her belief in intellectual liberty. Her style of leadership runs counter to the Tea Party’s sensible refusal to lend its support to an individual political personality, to become the vanguard of one person’s ego trip.

Second, Rand’s insistence that Murray divorce JoAnn reflects a disregard for the most conservative of institutions: the family. Rand often stated that it was “immoral” to put family and friendship above productive work. To her, family was an accident of birth and marriage the bringing together of like minds with shared ambitions. Rationality trumped love and duty.

Third, Rand’s aggressive atheism puts her outside of the Right-wing mainstream. You don’t have to believe in God to be a conservative, but most conservatives recognise His social value – the importance of moral codes, tradition, volunteerism, mystery and the presence of an authority higher than man. But, like Nietzsche, Rand saw God as a barrier to greatness; like Karl Marx, she saw God as a distraction from material reality too.

The small-town, Calvinist populism of the Tea Party is centuries and continents apart from Rand’s libertine utopianism. Were she alive, Rand probably would have preferred to keep her distance.

Keep in mind that the Telegraph is a Conservative-leaning newspaper.

Oct 23, 2012 - 9:36pm

rocoach re: Rand

Personal issues for sure but don't throw out the baby with the bath water.

El Gordo
Oct 23, 2012 - 9:36pm

More on Dogs

Tenessee Rep. Scared of Dogs
Mr. Fix
Oct 23, 2012 - 9:41pm

Can anyone tell me how it ends? (Please?)

And then there is this,

We had a mighty fine discussion on Atlas Shrugged and Ayn Rand.

I went to see part two with my family last weekend, Really enjoyed it. I would really like to know how the story ends.

If anybody is feeling charitable, they can send me a personal message, with a very brief description on how it all turns out in the end.

I'll probably never read the 1200 page book. And I'm not going to hold my breath for part three to come out on Netflix.

The whole forum is here:

The Watchman
Oct 23, 2012 - 9:48pm
Oct 23, 2012 - 9:51pm

@ Prize Fighter

I'm enjoying the debate. At least it's a discussion about real ideas. Sad to think Russian TV is our best source of reality in this country. It's amazing how so many people have been dumbed down to support the two party system (I admit I was one until a few years ago).

People doing so are sticking it up the ass of the dead that have fought for the principles America was founded on, and it makes me PUKE!

Thanks for the link.

Oct 23, 2012 - 9:53pm

Removed comment

Removed comment.

Oct 23, 2012 - 9:56pm

Harvey's Up!

Ah, yes, that exciting time of day when the shining light from the Harvey Report illumines the dark recesses of the morass of Keynesianism. Tonight the light shines on the German peoples' demand for repatriation of their gold, rising gold demand in India, the "Burma Road" gold trail among Turkey, Dubai and Iran, Steven Leeb's comment that people are scared and everything is being liquidated, and Nigel Farage calls a black swan a black swan. All this and more on the Harvey Report!


The Watchman
Oct 23, 2012 - 10:01pm

From Casey Research

Investors are shifting from paper to physical.

I began to watch this trend after it was reported last year that billionaire hedge fund manager John Paulson dumped his shares in the ETF GLD, opting instead to purchase physical metal. Since then, the shift out of paper proxies for gold and into the metal itself has picked up steam, and it's now clear that a new investor trend is under way.

Here's the evidence. The following chart shows the total purchases since 2001 of gold coins and bars versus the net additions to gold ETPs.

(Click on image to enlarge)

Total coin and bar purchases are up 96% since 2009, while net additions to ETPs are down 73% over the same period.

While ETPs include the ownership of physical bars, it's clear that increasing numbers of investors are buying more bullion than proxies. This is a remarkable shift, especially given the claimed popularity of GLD.

The shift is even more dramatic with silver.

(Click on image to enlarge)

Investors have tripled their silver bullion purchases since 2007, while the exchange-traded vehicles sold 26 million ounces more than what they bought to back their funds last year.

Why is this happening? And what does it mean?

Certainly some of the shift stems from concerns with the funds themselves. While I discount allegations that these funds don't possess the metal they claim to hold, there are other issues, such as complicated custodial structures and the possibility of leasing or substituting paper certificates for physical metal.

Another reason for the shift is certainly due to global economic, fiscal, and monetary concerns. As fears of systemic risk ratchet higher, it's only natural for investors to gravitate toward the safest methods for holding physical metal. Throw in events like what happened to MF Global last year, and it's easy to understand why many investors would prefer holding their own bullion over a fund.

More important, what should we do as a result of this trend?

First, this is not a "keeping up with the Joneses" debate. We support the overall thrust of this shift into physical metal; gold is not an obscure metal that sits in a vault and "does nothing." It offers direct and immediate financial protection for you and your family like nothing else can.

Remember that gold is above all else the world's best, time-tested form of money – something people were duped into doubting in the 20th century, but are now beginning to remember. Today's environment is exactly one in which gold shines: eroding purchasing power of paper currencies, vulnerable global economies, fears of inflation and/or deflation, a shaky banking system, insurmountable public debt levels, and fanciful money-printing schemes… if there were ever a time to own gold, this is it.

Having metal in your control and at your disposal empowers you in times of turmoil and lets you avoid dependence on counterparties.

Second, this trend carries a subtle signal: diversify. If risks are at a level sufficient to encourage holding physical metal, it's also worth diversifying that risk. Stash some at home, use private vaults, and store some internationally. Even large institutional investors frequently use more than one facility. No single method or location is risk-free, so spread it around.

An easy way to do that is with a new breakthrough program we helped establish and fully endorse: Hard Assets Alliance Storage locations include Zurich, London, Melbourne, New York, and Salt Lake City (with Singapore coming soon). You can conduct all services online, and the metal is fully allocated and registered in your name. Selling and taking delivery are as easy as buying or selling GLD. Perhaps most attractive is that your order is bid out to a network of dealers who compete for your business, ensuring you get the best available price.

Remember: once Main Street enters the precious metals market – whether it's an overnight event or a slow awakening over time – we expect supply for physical metal to become increasingly spotty, premiums to rise, and much higher gold and silver prices to ensue. That process may be under way now, so our advice is to make sure your stash of gold and silver is big enough to get to the other side of the crisis intact.

Bottom line: this is a trend you want to be a part of – and you don't want to be late.

The Watchman
Oct 23, 2012 - 10:08pm
Mikeyk23 rocoach
Oct 23, 2012 - 10:11pm

atlas shrugged

oh c'mon, is it really the first time you've seen a genius way ahead of her/his time that was a little crazy?? I dont care about Rand's beliefs in God, I'm merely showing the startling predictions she made for America's future back in the 1940's all coming to fruition today.

o.k. for something more important, did we just see a bottom finally in SLV?? I bought a few more call options today at the close, but I dont even want to look at the positions I opened the day when QE3 was announced. ouchhh!! o.k. for all the Turd's great calls, I'm pretty sure that was a terrible one as I recall at that time, he said go all in folks! accountability anyone...:) ha, but love this site, read it multiple times every day! I'm still not sure why I invest in paper PM's since everybody agrees that its so heavily manipulated that is frankly impossible to make the right calls. ugghhh lost a pretty penny betting on this stuff the last couple of years

Nigel Black
Oct 23, 2012 - 10:12pm

for you folks in the USSA

The lovely Lauren Lyster (and her guest) has some interesting (and possibly scary) news about the IRS and Americans who hold PM's:

The Precious Metal Barter Tax and IRS Mission Creep!

As a non-American, I feel badly for you USSA folk in your upcoming election, no matter who becomes President.

Wall St. wins either way. The American people lose. It is as simple as that.

But what do I know... I am just a stupid foreigner.

Prize Fighter
Oct 23, 2012 - 10:12pm


It's been highly entertaining and a small source of pride this evening to watch slivers of hope espouse sanity. The only dark spot IMO is Larry King moderating. I think Judge Nap. would have been the bomb.

Oct 23, 2012 - 10:14pm
Oct 23, 2012 - 10:19pm

Removed comment

Removed comment.

Oct 23, 2012 - 10:23pm

It's been highly entertaining and a small source of pride this .


It's been highly entertaining and a small source of pride this evening to watch slivers of hope espouse sanity.

There is a remant in Amereica that understands what it is all about.

Gary won me over tonight. Not from one of the other candidates, but from the couch I never sit on, but was going to do so Nov. 6th.

If I'm going to cast a vote, I'll only do it for something I believe in.

The Two Party system is a One party system OWNED by the same behind the scenes oligarch.

This insanity has to end, the question is how bad will the dumbed down people let it go ...

The Watchman
Oct 23, 2012 - 10:27pm

Ted Butler Speaks the TRUTH

If we get the resolution to the downside as appears likely at this point, many will cry manipulation. A sharp price drop will, of course, be manipulative, but the real manipulation has taken place all along as JPMorgan increased its concentrated short position beyond any legitimate level. At the core of the manipulation resides JPMorgan’s concentrated short position. That the regulators have allowed this to occur and put so many investors at risk is shameful beyond description. I don’t know how Gensler and Chilton look themselves in the mirror. Maybe the average investor has difficulty in fully comprehending the COTs, but not the agency itself. - Silver analyst Ted Butler...20 October 2012

WhyMeLord stingbee30
Oct 23, 2012 - 10:28pm

@RE: Everything is a consipiracy on this board

No, the reality is that everyone is just a bit relieved that the leader of the country WITH THE MOST NUKES is a WuSS!

Sorry, just had to say that.

Edit: Don't get the wrong impression here, I'm not advocating "Nuclear" war, just sayin that someone has dropped the big stick and of course everyone else is soooo happy! Wait til the morans wake up and find out what that means...

Prize Fighter
Oct 23, 2012 - 10:29pm

Short term silver....I've

Short term silver....I've bought as recently as this afternoon BUT I'm going to call an outside chance of another run at $28 something. (Gary Johnson just said "silver bullet" at the debate...huh? what was he saying?)'s why...

Post QE3, I threw away all my personal TA metrics and just let the big dog run. What did I care, my last big buy was 27.14. I've made mention of watching for gap-ups on 5-minute candles. This method made me sit on the sidelines when silver ran to $37 because i was waiting for a gap to fill at 27.50. Got it, bought it, happy, done. Took 5 months for it to happen but it did.

Well, just before the big announcement another small gap up was created around $28.60 which I was watching. But after QE3 I just tossed that old gap methodology aside and surely thought this would override the smallest of gaps and haven't mentioned it since. (Plus, like I said, I was out of dry powder so what did I care really? It served me when I needed it.) Now that MOPE is back in the markets and weekly silver candlesticks and trendlines show me strong rising support in that gap area of ~$28, I'm haunted by it.

If it happens, I won't be surprised and I'll at least have something to point at to allay my fears. I really really think that would be a great scare and immediate rebound area. I didn't think it possible weeks ago, now...maybe? I know that doesn't help but self honesty is something I value no matter how much it hurts.

I could equally be wrong on all of this. It's only one metric I follow(ed). If it does happen, you can bet it will be first string again. Maybe it's just another one of Santa's self-fulfilling tricks they use. *shrug

Dyna mo hum
Oct 23, 2012 - 10:36pm

El Gordo

That Tn. Rep. might have walked past a mirror and seen a reflection of her large self and mistook the image of her dog likeness.. I think she can attribute her high blood pressure to biscuits and gravy from over to the Waffle House.

WhyMeLord Anonymous
Oct 23, 2012 - 10:37pm

@Ayn Rand

Yes she wrote fiction.

One could argue that the US Constitution is also fiction.

What's your point?

Oct 23, 2012 - 11:03pm

The White House Situation Room

knew within two hours the group Ansar al-Sharia had claimed responsibility for the attack in Benghazi.

A third email, also marked SBU and sent at 6:07 p.m. Washington time, carried the subject line: "Update 2: Ansar al-Sharia Claims Responsibility for Benghazi Attack."

The message reported: "Embassy Tripoli reports the group claimed responsibility on Facebook and Twitter and has called for an attack on Embassy Tripoli."

While some information identifying recipients of this message was redacted from copies of the messages obtained by Reuters, a government source said that one of the addresses to which the message was sent was the White House Situation Room, the president's secure command post.

Oct 23, 2012 - 11:12pm

Jim Sinclair speaks in annoying riddles and nuisances.

Jim Sinclair speaks in riddles and nuisances. It's really annoying.

Thankfully one of his readers posted this explanation of what Jim actually meant by "spread". The dumbest thing is that this is actually what we already knew already, it's like saying "buy low, sell high" for investment advice. So what's Jim's point? Perhaps he's pissed at people buying high and then blaming the cartel for the price smack, then the people get fear and sell at the lows only to see their position get raped to the upside......


The Spread From An HFT:

Traders are NOT stupid. They are attempting to maximize gains while minimizing risk. They look at the same charts you do. They read the levels, know the fibs (in fact CQG has this as a standard charting tool), and are aware of support and resistance. The manipulators also have huge bank accounts to draw from.

The basics of a spread:

Traders use correlated markets to hedge risk. Direct correlated markets are DAX to S&P 500 (depending on time of day) and German Bund to US 10 year T-notes. If you don’t understand correlated markets then you will NEVER be able to HFT.

In the case of gold, correlated markets are silver, and to a lesser extent platinum. Currencies and bonds can also be used as inversely correlated markets, however the correlation is not as rigid.

Spreading means to have a balanced position across at least 2 markets (more if you are a big hedge fund). This means a balanced position such as US 10 year T-notes to German Bund. HFTs will also use the yield curve to hedge risk when a spread position is getting dangerous such as “hopping” into US 30 year bonds. In the case of gold, this can be using June contracts to offset December contracts.

The way market manipulation works with spreading:

When gold was at $1650 in early September, gold was a BUY. Everyone knew that the Fed would announce QE to infinity (Jim was saying this for years!). Gold was also testing support at $1650, so when it bounced off that level, the long trade was on.

Traders could lock in profits at $1700 prior to the fed meeting, but they don’t. The position is already in a profit, Fed is about to hand traders a windfall and December (square the books and take a break) is a long way away. So, add to the winning position, still in profit and with minimal risk.

After the fed meeting, that position makes a whopping profit.

So, square the position by shifting contracts (Sep to Dec) and lock in some gains. This is the consolidation at the end of September. Some of the added contracts are withdrawn while volume is up to lock in gains.

These traders still have their initial wining position. They know it is a good position, but now it’s time to hedge some risk. To do that, shorts are added. These can be in the farther out months, or in a correlated market. This lowers the net risk. While the market is filled with speculator volume, more spreads can be added without moving the market too much (remember these are HUGE sums of money in a small-ish market).

As we enter October, the price of gold is being capped at $1800. Every single long push is balanced by shorts. The long pressure dries up, specs that made money to $1800 start to close out and look for a pull back. To a manipulator, that’s great! Any longs at $1800 are in late and have near position stops, so the easiest thing in the world to do is make ‘em hurt.

In a spread, you are holding longs and shorts. Remember that selling a long is the same as buying a short. So by hard selling a long position, you are buying a short. If you have a short position, selling the long moves the market in your favor at these volumes.

To move the market in your favor, all you need to do is pull one leg of your spread (at critical price and timing points). Remember that the long leg is ALREADY in profit on the books. So, close the long leg and book the profits. Time it so that market news releases hit harder and you’ll understand the action in October.

This closing of the long positions, in volume and timing, is targeted at hitting “stop loss” orders on weak longs. This has a cascading effect of pushing the market quickly lower. This brings in the momentum traders and algorithms that trade momentum. This forces the market even lower, creating more profit on your position.

As action stalls, the market consolidates at the end of the trading day when the momentum traders book profits. The rule of thumb for most HFT is “no positions open over the night.”

The short spread is now in profit, so it can be held without risk of loss. Spreading into Asian markets, however can make a nice little profit for the night session.

Overnight, Asian demand (heavy on physical) brings the price up. This means that any spec longs with an overnight position will be booking profits in the morning (if they are smart). The overnight long spread brings the cream to a wining position. This can be closed out to start the selling pressure for the NY open/London close. Asian traders will be booking profits at close, adding to this selling pressure.

If you have deep pockets, this position can be shorted through the EU/London session further adding to your position, but hedging your risk (ie. locking in gains from the Asian session).

Just before US open, the market gets a slam as traders through London close the night long positions and prepare for another round of bashing the US market. When the market opens, specs that didn’t take their “chop” early (book profits) now realize they will be lucky to pull out at even. (The second best trade you can make is a scratch). The slow specs will soon feel the crunch on their stop levels.

This starts the cycle rolling all over again, putting the short leg of the spread more into the green. As price gets to a level of resistance ($1726, $1700, $1696, $1678, etc.) the short positions are gently closed at a profit or the long is added to balance the position for a "wait an see" (election year).

Remember, it’s an election year… and a long way to the December Holiday season. After the last couple of months, it will be time to square the book for the end of year bonus and take a Tahiti holiday. So, if you are into physical, the new year will indeed be golden.

Thank you for helping me secure my future with physical gold.

CIGA Henry

The Watchman
Oct 23, 2012 - 11:21pm


NO Central Bank holds ANY SILVER-the manipulation will be over soon-it is a "House of Cards" and and it's collapse is guaranteed,it will be sudden and unstoppable.

From Ed Steer:

" Nowhere on Planet Earth does any central bank hold even one good delivery bar of silver...and when that silver thermonuclear device finally does reach critical mass...look out. Ted Butler was hard at work on this 15 years before GATA showed up on the scene...and it's an unknown which metal will explode first. But one thing is for sure, the one that blows up first, will take the other with it...and when the smoke finally clears, the world on the other side of this event will be totally different than the one we live in today."

Oct 23, 2012 - 11:47pm


Big Brother is watching you. Well, seems like we have drones now spying on people in the US and the NSA is building the huge new data center in Utah to collect every scrap of information possible on all of us. But this can't be happening.... George Orwell's book was only fiction.

Oct 24, 2012 - 12:02am

how long before kitco scrubs

how long before kitco scrubs the spike to $33.50

Oct 24, 2012 - 12:39am


Don't see it on NetDania?

Was exciting for a couple milliseconds. ;-)

Gold Dog SRSrocco
Oct 24, 2012 - 1:24am


If you give me the company you wish to know about I will try to "boil the fat" out of their costs and see if I can't get a little closer to what the actual cost of producing an oz is for you. Dog- Masters in Accounting and MBA I am so smart I make myself sick! LOL


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