Shakeout

283
Wed, Nov 28, 2012 - 10:32am

In hindsight, I'm mad at myself for not seeing this coming. Though I'd been telling you all week to expect weakness as The Cartel attempts to dissuade Dec12 contract holders from taking delivery, I didn't anticipate the severity of this morning's action.

Monday, I tried to warn you by using The Godfather as a reference. Yesterday, we discussed the possibility again. I didn't expect a huge selloff so I only gave you preliminary support levels. Boy, was I wrong. They came after it hard this morning with the deliberate intention of smashing price. Here are your 1-minute charts. Note that the sole focus, at least initially, was gold. It was hit right at the Comex open. Silver, which doesn't open until 8:25 just saw some spillover selling, initially. Silver then became the target later once The Forces of Evil saw the opportunity to attack it and drop price below the 50-DMA.

To save time, below is a C&P of a comment that I posted to the previous thread. This is the most likely explanation of the mechanics behind the attack:

Submitted by Turd Ferguson on November 28, 2012 - 8:50am.
MODERATOR
This is all just manipulative bullshit. The likely cause of the drop was the deliberate and manipulative unwinding of a Dec position, probably a spread trade. The manipulator takes the long side off all at once and then looks to cover the short side at a later time after price has been driven $20+ lower. In this case, the manipulator gets the added benefit of the momo-HFTs chasing price lower because of the breach of the 50-DMA (near $1740). Now down $30, the manipulator can begin to cover the short side for considerably less money than it would have cost if he had done the whole thing instantaneously.
Soon (later today or tomorrow) we'll get an FUBM where actual buyers pick up the discount and price rallies further on the back of the physical orders that were filled on the drop.

The goal now is to recover the damage. Gold is, unfortunately, back under "The Iron Dome" and it will have to fight again to break through. The goal for silver is easier. Get back above the 50-day, near $33.20, and the short-term technical picture will remain unchanged. I suspect this will happen later today but I also expect more raid attempts before FND on Friday.

Again, given what appears to be an extremely tight physical situation and the escalating open interest, I should have expected a raid of this magnitude today in order to frighten the remaining Dec12 longs. Live and learn, I guess, and we'll have to plan better in late January when the Feb13s go off. Until then, watch for more raids today and continued volatility through the remainder of the week. I am still expecting a very strong UPtrend in December that will carry over into 2013. Be patient. Hang in there and keep the faith. BTFD and take delivery.

TF

p.s. Obviously, trading these markets is extremely difficult. You'll recall that back in April, I enlisted Coghlan Capital and Andrew Maguire to help you navigate things profitably. To that end, I've scheduled a FREE webinar for next week with Paul Coghlan. He'll demonstrate for you the techniques he uses to trade and, frankly, we hope this encourages even more of you to join "The Army". The link to register is below. I strongly encourage everyone to attend.

https://www1.gotomeeting.com/register/240678176

About the Author

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  283 Comments

SIlverbee
Nov 29, 2012 - 8:53am

When the FUBM

Goes HIGHER than the start of the waterfall then its significant as that would indicate new buying rather than the short sellers mopping up.

Could a high OI not also scare the shorts into selling too as more will proportionately stand for Delivery (SFD)?

I think only about 10Moz is the max on a normal Dec contract. Would that be enough to F.M COMEX or LBMA?

Cononish1314
Nov 29, 2012 - 8:56am

Blythe's Blog

"Keep smashing those silver prices Blythe. I'm stacking. "

No,no,no! A basic misunderstanding of female psychology. He should have said "Keep stacking those silver prices Blythe. You're smashing. " Then it wouldn't have got removed.

I suppose I'll need to admit that she's in good shape for her age. But then Neil Young said something similar about Dubya (shortly before exhausting his list of positive comments).

SIlverbee
Nov 29, 2012 - 8:58am

You know Blythe works for Deutsche bank now

Commodities management Director.

Also Deutsche bank has jumped ship from the banking cartel and has turned whistle blower for the prosecution of other banks I think for immunity?

Bollocks
Nov 29, 2012 - 9:00am

Self-regulation? JEEZ - that means NO regulation!

Leveson report proposes tougher press self-regulation

A tougher form of self-regulation backed by legislation should be introduced to uphold press standards, the Leveson report has recommended..

Lord Justice Leveson said the press had "wreaked havoc in the lives of innocent people" for many decades.

He said the proposals in his report will protect the rights of victims and people bringing complaints.

He criticised the relationship between politicians and press over the last two decades, which had been "damaging".

Prime Minister David Cameron set up the Leveson Inquiry last July after it emerged journalists working for the Sunday tabloid the News of the World had hacked the mobile phone of murdered Surrey schoolgirl Milly Dowler. The paper was subsequently shut down by its owners News International.

The inquiry, headed by Appeal Court judge Lord Justice Leveson, ran for eight months from November 2011 and took evidence from politicians, press and victims of media intrusion.

More: https://www.bbc.co.uk/news/uk-20543936
-----

So, it'll be business as usual for the MSM. Surprise Surprise.

¤
Nov 29, 2012 - 9:07am

Fed's Fisher urges U.S. government to act on employment

Fed's Fisher urges U.S. government to act on employment

FRANKFURT | Thu Nov 29, 2012 8:41am EST

FRANKFURT (Reuters) - Dallas Fed President Richard Fisher, a top U.S. Federal Reserve official, on Thursday urged the U.S. government to give businesses more of incentives to invest and use the liquidity the central bank has provided to create jobs.

The Federal Reserve said in its Beige Book report on Wednesday that the U.S. economy had trucked along at a "measured" pace in recent weeks and hiring remained modest.

Fisher called for more action from the government to boost employment, saying there were limits to what monetary policy could do.

"We at the central bank have been carrying the load and this is a very dangerous predicament," Fisher, a self-described anti-inflation hawk, said during a lecture in Frankfurt.

"Monetary policy provides simply the fuel, but the incentive has to come from our fiscal authorities," he added.

"The gas tank is full (with liquidity) and now we have to get someone to ... step on the accelerator to propel the job creating machine in the United States. There is a limit to what a monetary authority can do. All we can do is provide liquidity."

Basil SIlverbee
Nov 29, 2012 - 9:08am

@Silverbee

You are of course correct but please be careful !

Most people here are under some illusion that Blythe Masters heads up some sort of "cartel" intent on suppressing the price of precious metals. Ridiculous ? - Yes indeed.

Please don't shatter their illusions - you should know by now that reality has no place round here. So please delete your post and let the Confirmation Bias continue.

¤
Nov 29, 2012 - 9:14am

Gold Miners Unfazed By Congo Violence

Gold Miners Unfazed by Mounting Violence in DRC1

Wednesday November 28, 2012, 4:15am PST

By Michelle Smith2

M23 rebels are refusing to withdraw from Goma, the capital of the Democratic Republic of the Congo’s (DRC) mineral-rich North Kivu province. “They have refused to leave the city of Goma. This is a declaration of war, and we intend to resume combat,” said5 Colonel Olivier Hamuli, a spokesperson for the Congolese military.

The M23, or March 23 Movement, largely consists of former Tutsi rebels who were incorporated into the national army, FARDC, under a peace deal. These rebels broke away and formed the M23 about eight months ago.

The group has made notable advances in the DRC’s eastern region and now controls a significant portion of North Kivu. The rebels have announced that they intend7 to seize Bukavu, the capital of South Kivu, another mineral-rich province, and have even threatened to liberate the DRC by marching to the nation’s capital, Kinshasa, to overthrow the Joseph Kabila-led government.

Leaders of the Great Lakes region met last week following the capture of Goma and set a deadline for the rebels’...

https://goldinvestingnews.com/29939/gold-miners-unfazed-mounting-violenc...


Nov 29, 2012 - 9:16am

On Blythe

Nice comments. They make the point. Recommendation: Take care not to post something that could be read as a threat. IP address and all that you know. I would hate to hear that people in flack jackets knocked on your door. I suspect she could arrange it.

doo-dah, doo-dah

philipat
Nov 29, 2012 - 9:16am

USD Down/PM's Down also

OK, I can live with a divergence between the USD and PM's. But after a BB beatdown to see PM's down with USD, something here smells not right. Does Blythe have her legs open again??

ancientmoney Basil
Nov 29, 2012 - 9:19am

@Basil

Yes, it is ridiculous to think BM heads up a PM smashing cartel.

She is the worker-bee, doing her whack-a-mole job with steely efficiency--for now.

SIlverbee
Nov 29, 2012 - 9:24am

Could this constant intraday see sawing

be as a result of weak shorts (raptors) bailing and then the EE covering the price increase to leave the price net unchanged?

Sisyphus
Nov 29, 2012 - 9:27am

Different views on PMs long-term

"Leigh Skene of Lombard Street Research thinks the European debt set off a serious chain of defaults, which makes deflation inevitable and will send the dollar soaring and gold plunging. By contrast, John L. Williams, who heads Shadow Government Statistics, thinks that beyond the fiscal cliff lies the U.S. government's insolvency, which will set off a run on the dollar that will result in hyperinflation and launch gold into the stratosphere."

https://online.barrons.com/article/SB50001424052748703711604578147074234...

Hawk
Nov 29, 2012 - 9:27am

Guys just a heads up, Andrew

Guys just a heads up, Andrew will be speaking on the webinar on the 5th of December, limited spaces so sign up early if you want to hear what andy and paul have to say. https://www1.gotomeeting.com/register/240678176

Cheers,

HAWK

¤
Nov 29, 2012 - 9:31am

Germany displaces China as US Treasury's currency villain

Germany displaces China as US Treasury's currency villain

The US Treasury has issued a damning criticism of Germany’s chronic trade surplus in its annual report on worldwide exchange rate abuse, although it stopped short of labelling the country a currency manipulator.

The report said Germany's current account surplus is running at 6.3pc of GDP Photo: AP By Ambrose Evans-Pritchard

6:53PM GMT 28 Nov 2012

Treasury officials told Congress that internal balances within the eurozone are disrupting the global trade structure, with almost nothing being done by north Europeans states to curb their huge surpluses.

The report said Germany’s current account surplus is running at 6.3pc of GDP, and Holland is even worse at 9.5pc. Yet the countries still cleave to fiscal austerity policies that constrict internal demand.

The EU’s new tool for cracking down on intra-EMU imbalances is "asymmetric" and does not give "sufficient attention to countries with large and sustained external surpluses like Germany".

While the eurozone as a whole is roughly in trade balance, the EMU regime of austerity in the South without offsetting stimulus in the North is creating a contractinary bias, holding back global recovery.

The US Treasury said eurozone surplus states have "available room" for fiscal stimulus but refuse to act, despite repeated pledges by EU leaders that more must be done to foster growth. "They have not yet made any concrete proposals capable of yielding meaningful near-term results."

Germany's permanent surplus is in stark contrast to the shift under way in Asia. China has "partially succeeded in shifting away from a reliance on exports for growth", and has slashed its surplus to 2.6pc from 10.1pc in 2007.

While the yuan remains "significantly overvalued", China’s has stopped building reserves to hold down its currency and has seen a 40pc appreciation against the dollar since 2005 in real terms. Double-digit wage growth is closing the currency gap by other means.

A chart published in the report shows that Germany has overtaken China to become the biggest single source of global trade imbalance, alone accounting for a large chunk of the US deficit....

https://www.telegraph.co.uk/finance/currency/9709882/Germany-displaces-C...

philipat
Nov 29, 2012 - 9:35am

@DPH

The rest of the world (Incidentally equal to 96% of the Global Population) is manipulating currencies and debasing civil liberties. Does anyone, anywhere, still belive this garbage??

Cononish1314
Nov 29, 2012 - 9:37am

B-b-b-back in the XXXIV

Seems that silver has gone back over 34 while I was enjoying all this sexist banter.

philipat
Nov 29, 2012 - 9:38am

@Basil

Thanks for the opinion. So kindly explain why JPM holds 35% of all (Naked) Silver Shorts? Your darling Blythe famously said that "We only protect our positions on behalf of clients. We don't take directional bets. It would be illegal and we don't do it"

So, either she is a complete Fucking liar or else please explain a short Comex position of 35% of the TOTAL short interest? The only alternative explanation is that JPM represents The Fed, which would, therefore, be entirely above prosecution. Under the law as it stands.

S Roche
Nov 29, 2012 - 9:38am
Sisyphus
Nov 29, 2012 - 9:41am

@Basil

You're right, of course. Having a huge volume of concentrated shorts doesn't affect anything. Just look at Palladium, which has about an equal number of longs and shorts, and that's not going anywhere.

Oh, wait....

SilverDog66
Nov 29, 2012 - 9:42am

BOOM

FUBM!!!!!!!!

RunRunRun
Nov 29, 2012 - 9:44am

sweet silver

got to love how silver is moving, undaunted, upwards.

proud of her, whatever happens

philipat
Nov 29, 2012 - 9:44am

@S Roche

Roche? Yes, I need some Valium!!

China? Yes, I have heard that arguement BUT the Chinese are the World's largest producer of Gold and, in total, are accumulating at a rate of around 1K Tons PA, half produced domestically and half imported.; Roughly. Whilst I have lived in Asia for 30 years and have great respect for the Chinese, that just doesn't fit their bill. I may be wrong, of course, but they normally go directly at it, stay with it and work on it 24/7.

¤
Nov 29, 2012 - 9:45am

USD / EUR

The above article reinforces my belief that if/when the USD weakens to the point that TPTB need it to strengthen that the US/Fed could easily take the Euro down with minimal effort.

Just imagine how much Fed help has been offered regarding foreign reserves/bonds of all types the Fed has soaked up in that marketplace with all types of swaps we'll never know the extent of.

At some point some major currency will be a casualty in the currency war. Will the US sacrifice or weaken the Euro at some point if it suits their purposes? I think so. I also think that one of the main reasons for it's creation was to act as a buffer of sorts for the USD.

Picture the moment in time (decades ago) when the Euro was being conceived and what was taking place at that time with global trade and settlement and gold. My opinion is that the Euro has been very functional but has always had a expiration date on it when TPTB will decide when that expiration is.

I realize that sounds very USD egocentric (my apologies for that) but you have to ask yourself if the Fed or US was totally opposed to letting a new major currency into the global mix back then would they have allowed it? The one thing I've learned or witnessed is that if it doesn't suit the Treasury/Fed.'s purpose to give them an advantage then any major monetary initiative are not allowed or they're greatly impeded.

My view is that the US will allow or facilitate the Euro's take down and all they would have to do is withdraw Treasury/Fed help when they feel it's time to do so. Without that massive and secret Fed. swap line it would have already happened imho.

balz
Nov 29, 2012 - 9:47am

Nov 29, 2012 - 9:48am

Oh my goodness gracious!

Did you buy the freaking dip yesterday??

SilverDog66
Nov 29, 2012 - 9:48am

NEWS FLASH SILVER

Silver makes NEW one month high!

Take that BM!!!!

tmosley
Nov 29, 2012 - 9:48am

Damn, I really screwed up.

Damn, I really screwed up. Was hoping for another slamdown to make my monthly purchase, but here we are back near the recent highs.

Ugh.

brokerk22
Nov 29, 2012 - 9:51am

Dollar

The dollar looks pathetic it wants to go way LOWER!!! If it breaks 80 lock and load.

Cononish1314 RunRunRun
Nov 29, 2012 - 9:53am

It's an interesting one that

It's an interesting one that silver has fought back better against the smash. At times you might have imagined indications that gold would have done better.

(BTW, no-one ever replied to my post about the validity of the 30-year cup-and-handle. Must have been really stoopid.)

SIlverbee
Nov 29, 2012 - 9:55am

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