Wild Wednesday

376
119
Wed, Aug 10, 2011 - 3:18pm

Well, that was fun, wasn't it? What a day! I hope that you, my dear reader, had as much fun following the PMs as I did today. Now, get ready for tomorrow and, especially, Friday. As we approach the weekend, there is no doubt that things will get even more volatile.

There is a lot going on in the world and the PMs are going a lot higher. Let me explain. No, there is too much. Let me sum up.

1) France is on the verge of losing their AAA rating.

2) Italian banks are on the verge of collapse.

3) In the U.S., Bank of America looks to also be on the edge of the abyss.

4) The Fed signaled yesterday that rates will stay at zero for the next two years.

5) Rioting and civil unrest seems to be on the increase globally.

We were all watching The Cartel vigorously defend the 1770 level since Monday. Many smartypant shorts were watching, too, hoping against hope that the Forces of Darkness would not let them down. To their surprise (not mine), The Cartel failed and, once gold tripped by 1782, it quickly surged almost $20 to $1801 as all the smartypant bootlickers got squeezed and stopped. Predictably, gold has pulled back from $1800 as profit-taking set in. Equally predictable, The Cartel used some equity strength to sell gold on the Globex, too. The resultant dip stopped right on schedule at 1770 and gold has since solidified. I have a last of 1777. Look for another night of fireworks in Asia. If you doubt me, ask yourself what happened today to lessen overnight Asian demand. Anything? Nope. Look for gold to trade back to and, probably, exceed 1800 overnight.

Silver is doing great, too. As discussed last evening, it appears that the bottom of the recent correction in the commodities was achieved yesterday. Looks for this rally to continue, in spurts, for the next 3-4 weeks. This will be a favorable environment for silver to return to an uptrend. The chart looks like a bottom was found yesterday and yesterday's OI was likely the low, too. All of this just makes me even more confident that silver will trade to $44 or higher before Labor Day in the U.S. (Monday, Sept 5).

I hope you are slowly making back some of the fiat lost back in May. My goal is to do a better job of helping navigate this latest bout of craziness. Be patient but be diligent. You now know that a desperate and wounded C/C/C can and will change the rules in their favor anytime they feel truly threatened. Be cautious but be brave. We are on the right side of the math, the facts and history. Now is not the time to be distracted by MSM pundits and shills who cling to the power that the status quo bestows upon them. Trust your instincts but do not get cute or get greedy. In the end, this is about survival, not profit.

More later if I can stand it. After today, I may need to shut the MacBook down for a few hours! TF

7:15 EDT UPDATE:

As expected, the criminal C/C/C just announced this evening a margin hike in gold, effective at the close of business tomorrow. Read more here:

https://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-279.pdf

As you might expect, gold has pulled back on the news. After a high of 1818, it has pulled back to 1804. I doubt that big money Asian and European investors give a rat's ass at this point about Comex margins but you never know. Watch carefully this evening as this is sure to heighten volatility.

Though we all remember the 5 consecutive silver margin hikes in May, don't forget about the first silver margin hike last November. Silver corrected from $29 to $25 in five days but, as you know, it went on to double from there over the next six months.

TF

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  376 Comments

SilverTree
Aug 10, 2011 - 10:59pm

Sorry about the pic. It was

Sorry about the pic. It was kinda weird. I try to find or make funky pictures. Pushing the edge but try not to offend anyone.

Gramp
Aug 10, 2011 - 11:11pm

@ Shill, Sounds like you have

@ Shill,

Sounds like you have done a fine job teaching your daughters real life skills.

I am thankful every day for the similar skills given to me from my family.

My Father ran a Woodmiser Portable Saw Mill for years. Accumulating a vast stockpile of unique, and needed size lumber/ Timbers.I know his Bank account never had much in it, but his wealth can be measured by the Valuable, Desirable, PHYSICAL item in his possession. Local Timber Frame and Boat Builders regularly seek him for specialty orders. These convert well into Fiat. Smart old man.

SilverLeaf Number 47
Aug 10, 2011 - 11:12pm

Number 47

People and attitudes can change - one of the positive artifacts of hardship is that it's an opportunity for re-evaluating priorities and experiencing personal growth. As ugly as the next several years get, at the end of it, I think society will be less materialistic and less addicted to debt. In the roaring twenties, society was accustomed to all kinds of excess. The people that lived through the 1930s retained an engrained attitude of frugality for the rest of their lives.

The world didn't end. Life went on, and people were eventually happy again.

Shill
Aug 10, 2011 - 11:18pm

Thank you Gramp I try

Ok men lets liven it up in here a little and lets go shooting!!

Little levity to cheer everyone up :)

bbdgoco
Aug 10, 2011 - 11:19pm

NASCAR race to debase

lol can just picture the car decals and driver patches, instead of STP etc, it'd be

AIG, BAC, Countrywide, WAMU, GM, Bear Stearns, Merrill.

They could race around the track in reverse in Washington, call it the D.C minus 400

bucktooth
Aug 10, 2011 - 11:19pm

Its natures way of telling you

Just a thought on my first post

If just one million people out of 6.5 billion owned as much silver as the wife and i do, there would be none left for the evil empire left to paper over.

Be happy, we are on the right track.

For those of you who are over fifty, you might enjoy the spirit link.

Nature's Way by Spirit
TheGoodDoctor Hoping to learn
Aug 10, 2011 - 11:20pm

@HTL Thank you. *bows* My

@HTL Thank you. *bows* My pleasure. I try to do what I can do to help the knowledge ramp up become quicker and more efficient. Lord knows I struggled with some of it over the past 5 years of learning.

TheGoodDoctor UncleFester
Aug 10, 2011 - 11:21pm

@UncleFester No worries. I

@UncleFester No worries. I was trying to say that Ted/Izzy can explain the industrial/investment supply constraint issues better than I can off the top of my head. I was just trying to throw out some other reasons that the supply can be further constrained.

Silver is used in many things. But let's use electronics for a moment. The amount in a product (computer, iPad, iPhone, cell phone) is so small that it would hardly make a dent in the demand for silver. IE Just like with food or fuel the increase in price gets passed on to the customer. Will it be noticeable? Sure eventually.

Now, some of what you say is true. Stephen Leeb's past couple of books describe how natural resources will increase in price and certainly have an impact on things like green energy. Take solar for instance. Currently (ha ha punny!), solar uses silver at a more rapid rate that could very much cause supply constraints depending on demand for solar.

Leeb's argument however, is that the price of the inputs, (fuel, natural resources, water) in this case for solar, will eventually exceed (due to price increases) the energy output derived from the solar energy. So, is it prohibitive in that sense? Yes. But most things right now do not take up the amount of silver that a solar panel does. And if we get some sort of Moore's Law for solar power efficiency then that could change. Ultimately, Leeb thinks we will be using many sorts of energy sources: green, nuclear, fossil fuels, etc. in tandem.

I just don't see industrial demand as a factor in the pricing of many products, meaning pricing increases will be negligible. I think demand from investing will cause more disruptions in supply. But ultimately both must be taken in tandem to determine the total supply used in any given year. The amount coming out of the ground will cause an impact as well. IE Whenever we hit peak silver, which we may have already passed.

Imagine sovereign wealth funds, school endowments, pensions, retail investors, central banks and governments buying silver for investment. Now that will be disruptive for price.

TheGoodDoctor ¤
Aug 10, 2011 - 11:22pm

@DPH I love it man! "The Race

@DPH I love it man! "The Race To Debase!" Absolutely love it! I'ma going to use it! Now that would be a fun NASCAR race to watch with all those crashes!

Gramp
Aug 10, 2011 - 11:29pm

Au Taking a Breather...

Disclaimer: i know nothing...

Could it be healthy for gold to slow a bit?

Picked up several oz. Ag on the 'Bay really early this a.m. for well under spot. was like a bunch of listings were ending at a funk time in the a.m., and not getting as many bids as prime time in the evening.

Bobbi
Aug 10, 2011 - 11:30pm

re NASCAR race to debase

I'll take Jeff Gordon in the #24 JP Morgan Chase car ;)

Boomerang Johnson stoneeh
Aug 10, 2011 - 11:37pm

"Markus, would you mind

Thanks, Marcus.

Looked into it a bit & tried to wrap my head around it. Seems, quite shockingly, that what CME group did was within reason. (does not compute, does not compute).

Anyway, what I found (and it might be wrong) is that margins were last raised around June and since then the metal has gone up approximately 20% and the margins were raised today by 20%. Actually, seems fair & rationale. What am I missing?? :)

Mudsharkbytes
Aug 10, 2011 - 11:44pm

Take That Right Hand Road

Because I like Sleepy John Estes and Ry Cooder and the blues AND mandolins, and because of all the music videos I keep seeing on here.

Goin' to Brownsville.

Video unavailable
Awake
Aug 10, 2011 - 11:44pm

Re: "Those don't look too awful"

Reading through the blog and noticed Boomerang's question. I found these three videos really helpful in explaining margin hikes.

https://www.youtube.com/user/stellaconcepts#p/u/39/gl192d5tYLA

https://www.youtube.com/user/stellaconcepts#p/u/38/Fowdf-hgRS0

https://www.youtube.com/user/stellaconcepts#p/u/37/4HOvl3lSwX4

This guy created these videos after the silver May Massacre.

Great for explaining this part of the market!!

Blessings

FriedEggs
Aug 10, 2011 - 11:44pm

4Rant7

It is sad... isn't it? That we have to meet under these circumstances. That we have to waste our time on this horse s&%t when we can spend it one million other ways, like family for example... how about friends?

It didn't have to be like this - that is what pisses me off.

I was walking through the local Mall the other day and all you see are kids and just people in general texting, on the cell phone, BBMing, ipods,, iphones, ipads, etc... faces looking towards the ground, no one looks at at each other any more. People.acting.like.robots.beep.

People focused in fantasy land - not in reality. Zombies.

WHY DONT PEOPLE ask questions like this/us? ...i cant believe it...system.overloaded.

Work.Buy.Consume.Die.beep.

Fried(e)

jlee2027
Aug 10, 2011 - 11:44pm

@SilverLeaf

As ugly as the next several years get, at the end of it, I think society will be less materialistic and less addicted to debt.

Amen to that! My kids and wife are so "entitled" it's not funny.

OC15
Aug 10, 2011 - 11:44pm

Gold

going straight up is not volatility. It's an ass whoopin.

russiandoctor
Aug 10, 2011 - 11:48pm

Hello

Hello Mr. Turd and all the Turdites. I have been reading this amazing blog for a while now and I appreciate everything I read on this blog.

I need your help regarding my IRA. I have 140 K. I am in the midst of buying PM so I need to know if I should put gold and silver eagle in my IRA or gold/silver bars. Also I want to know if I should wait to see what happens next in the next few days with margin hikes for gold and how much of my investment should be in gold and how much in silver. I do appreciate all your input! Thank you all for the best PM blog in the World!!!

question
Aug 10, 2011 - 11:49pm

Its natures way

Now that takes me back! Thanks

Shill
Aug 10, 2011 - 11:53pm

I am sure this was posted?

https://www.youtube.com/watch?feature=player_embedded&v=OzZviW44E8U

Calling it an evening, eat hearty men for tomorrow we dine in hell :)

Be well

IBSammyG
Aug 10, 2011 - 11:54pm

Bizarro Platinum Gold

We must be living in Bizarro world here because the price of gold has been up to $35.00 over the price of Platinum. I'm a total noob compared to most people here but this just screams blow-off for Gold or rally for Platinum. My brain is telling me I'm dumber than dirt if I don't sell my Gold and buy Platinum. Am I wrong to think this and if so why?

question Mudsharkbytes
Aug 10, 2011 - 11:55pm

Take That Right Hand Road

Feel like I'm in a time machine; love it!

jlee2027
Aug 10, 2011 - 11:56pm

Jamie Dimon

Trying to hold down Gold and Silver

Bobbi
Aug 11, 2011 - 12:03am

IBSammyG - I'm no expert

but this is not about technicals anymore, it's all about fundamentals. The world has just rejected all fiat currencies and this is giving strength to gold. Do I believe that 1 oz of platinum should worth more than of 1 oz of gold? I don't rightly know, but what I do know for sure is this: The fair market (if given a FAIR chance) will figure it out!

Shill
Aug 11, 2011 - 12:06am
Turdle GG
Aug 11, 2011 - 12:06am

"The race to debase currencies"

Bloomberg TV's European presenter just used this term. He said he got it from one of the "gold commentaries".

https://www.bloomberg.com/tv/

UncleFester
Aug 11, 2011 - 12:06am

TheGoodDoctor

I hear you. There's a lot to consider, a lot of data to take in. Sometimes I find myself so inundated with it, it's hard to see the forest for the tress. My point was to try to help to get above the tree-tops. Sure, a CB could buy up silver and hold it as reserve. That would be a sea-changing event that would disrupt commerce, no? Disruption in the commerce in all the things you stated! Is this thoughtful, is this just? Precisely when the world needs silver for electronics, solar panels, energy storage, etc? I don't believe this is practical, it does not put silver where it is fundamentally needed! Sure, one might corner the market and extract the highest price, but what would this accomplish? If it was done by a Hunt or some other speculator, then I understand the risk/reward. If this is done by a CG or CB, then what is the point? A CG/CB is dependent om future productivity, on future taxes. It's a "cash" flow business! The net gain is probably neutral to negative, no? Corner the market at the expense of productivity?

We are really talking two sides of the same coin, so let's look at things from the demand side. The demand for silver is both industrial and investment. Investment demand as "silver is currency", lets tackle that one. Silver is most useful as an industrial metal, not as a medium of exchange in conducting commerce (currency). It is not a currency today for all the reasons you already stated! If you were economic czar, would you decree that silver is currency even though it is useful in so many industrial processes? Investment demand as "silver is a reserve asset". Is this any different than buying MBS or CDOs and holding those as reserve? The immediate answer is yes it's physical, but stop and think about it. Their value is derived from future payment, and therefore future commerce/productivity. Is that not silver's value too, for all the reasons you stated?

Gold has no other use other than a wealth reserve, there is no industrial demand. Its primary utility is as a savings vehicle through long timelines. It's value is derived from the past not the future! Gold is the economic battery, no? When paper currency burns, commerce stumbles and future productivity declines. All those invested in paper, invested in the future, will search for the battery to store their wealth.

Kindest regards,

Fester

Prize Fighter
Aug 11, 2011 - 12:07am

russiandoctor, I would stay

russiandoctor, I would stay away from IRA allocated metals. You have to pay a 3rd party to store them and all you have to show for it is a piece of paper. Not to mention you will pay 28% collectibles tax. If there ever was a confiscation, restriction or more outrageous tax, those IRA accounts with physical will be hit first.

Personally I'd cash out, take the hit, pay cash locally and store your own. Done deal. Otherwise you will always have that counter-party risk weighing over you. Maybe it will work out. It's certainly better than owning banking shares, but I would hate to choose right and still lose because the system I was betting against actually did fail and took my bet down with the ship.

154_silver
Aug 11, 2011 - 12:12am

Number 47

Wanted to thank you for your post - it's good to hear from folk beyond "stateside" - as one who spent many years in the UK, mainly Glasgow, I could appreciate much of what you were saying. . . about how a "generation" has been sucked into the consumer culture particularly. It's perhaps not as noticeable "here" because it's been ongoing for many decades, whereas it's fairly new to UK/Ireland.

And I think that may be a strength in the coming months, the fact that many will still remember the "nation of shopkeepers" - where every town & village had a High Street with (mostly) independent greengrocers, butchers, bakers, newsagents, corner shops - when folk did their shopping every couple of days for what they needed, interacted with their neighbours, etc. It's what community is all about, and keeping wealth within the community as well. I'm sure you understand, as wanting to open a coffee shop would have also supported a community feel, neighbourly. This awareness will be very important going forward, as watching out for each other will be prioritised.

The rioting going on now is different than, say, 1981's riots in places like Toxteth, Brixton, etc. - although it's "youth with no prospects" as then during Thatcher's years of deregulating, selling off state assets, breaking up the miner's unions, enacting the poll tax, etc. Before the City's "Big Bang" there was more social cohesion because there was less social debt, less accumulation of "stuff" - less posing, as they say.

So you are right to note that it is this generation's children - and those who haven't matured enough to be considered "adults" - that have been carefully groomed to consume. Again, in the US this has been going on many more years, so it is harder to "see" because it feels more "normal" - the media & even the government refer to "citizens" as "consumers" - as though it is a patriotic duty to go into debt for more. Not everyone buys into that, but it's more prevalent.

Take heart, and know that teaching your children real values, particularly to value other humans, is a good thing to be tasked with going forward. Your kids will have one foot in "each" reality, experience of both, and that's learned wisdom - you can't teach that, but you can know it in your bones. It won't be easy, but it will be rewarding, in a way we don't really ken as yet.

You've the awareness to see the "now" - this puts you ahead of most, and of value to many. Best wishes!

indosil
Aug 11, 2011 - 12:16am

Corrupt

Talk about Corrupt Blythe's Friends Network.MCX of India just raised the Silver Margin to 10%.Same old shitty excuse under the garb of Volatility.FUMF.Surprisingly Gold Margin remains the same.WTF...anyways i m buyin both of em..lol....

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