Wrapping 2012

632
Sat, Dec 29, 2012 - 12:53pm

2012 is nearly over and it feels like it has been a tough and lousy year. And it has. But has it been that bad? Could it have been a lot worse? Damn straight it could have been.

As we entered 2012, silver had bounced off of $26 but was still only trading near $28. Gold had touched $1550 and was near $1570. There was no current, overt quantitative easing program, only Operation Twist, and we were just beginning an election year with all of the attendant MOPE and SPIN regarding an economic recovery. Things looked pretty darn bleak.

Of course, we know what happened next. The metals rallied through January and February. They swooned until August and then rallied again into October before being beaten back again. It was all painful to watch and very little fun to write about...BUT...the metals have eked out a gain this year. Gold is UP nearly $100 and silver is up $2 or about 7% each. Again, I'm not trying to slather lipstick on the proverbial pig here but...given all of the things we faced in 2012...that's not too shabby and, as we head into 2013, the situation looks almost entirely different.

The U.S. economy is dragging along the bottom. The U.S federal deficit and debt are growing hopelessly out of control and the country's credit rating is poised to be downgraded again sometime very soon. Global central banks are accumulating physical metal at an increasing pace and the Federal Reserve is openly printing $85B/month. My point is: If the metals can survive 2012 with all of the headwinds, how might they trade in 2013 with the wind at their back?

Exactly.

Yesterday's CoT showed a continuation of spec long liquidation in gold and the silver specs finally gave up, too. For the week, gold was only down $12 yet the specs shed over 14,400 net longs, which allowed the Gold Cartel to cover another 14,400 net shorts. But silver fell almost $2, with most of the damage coming on the successive days of 12/19 and 12/20. The specs responded by dumping almost 8,400 gross longs. Apparently the pain became too extreme to hold on any longer.

So, as we head into 2013, here is a CoT snaphot. The large specs are long a gross total of 200,436 contracts. The Cartel is short a gross total of 327,413 and the Cartel net short ratio is 2.34:1. As we entered 2012, the large specs were long 167,413 but The Cartel was short a nearly identical 326,454 with a net short ratio of 1.95:1.

The silver picture, once again, is more intriguing. Ponder these numbers:

DATE PRICE  LARGE SPEC LONG CARTEL LONG CARTEL SHORT CARTEL RATIO

12/27/11 $28 24,026 41,224 55,356 1.34:1

2/28/12 $35 38,012 33,802 78,395 2.32:1

8/14/12 $28 32,317 47,797 71,199 1.49:1

10/2/12 $35 47,236 35,788 93628 2.62:1

12/24/12 $30 39,620 44,302 91,010 2.05:1

A couple of things that jump out at me:

  • The Cartel gross short position has risen by 64% since over the past twelve months.
  • The Large Spec gross long position is also up 64% over the past twelve months.
  • The Cartel gross long position is nearly back to levels which have twice indicated price bottoms in the past.
  • The current Cartel net short ratio could be considered "neutral" at 2.05:1.

Finally, just a few words about price. The charts don't look too hot so don't be surprised by some further weakness in the short term. This would undoubtedly inspire even more long liquidation which would "improve" the CoT structure even more. But, as noted above, the fundamentals for 2013 are vastly better than 2012 AND this whole "fiscal cliff" nonsense will only serve to make them even more positive. Therefore, hang in there and buy the dip. Take delivery and add to your stack. Trust your instincts and be ruled by logic, not emotion. Look around and prepare accordingly.

TF

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  632 Comments

murphy · Dec 30, 2012 - 12:05pm

TED Talk

This is a compilation of why the F didn't we watch these presentations. This is from the second one.

Bryan Stevenson: We need to talk about an injustice
No two ways about it: This is a really, really, really good talk. Bryan Stevenson delivered words at TED2012 that stunned the audience and received one of the longest standing ovations in the history of the conference. And not because he was selling perfume-scented technology flowers from behind well-designed rose-colored glasses, but because he asked us to face harsh truths about race, poverty, degradation, marginalization, incarceration and injustice. At turns candid, stat-filled, intensely personal and acutely aware of tragic moments in history, the talk is an absolute powerhouse. The next day Chris Anderson got on stage and asked for contributions, raising $1.12 million for Stevenson’s nonprofit, the Equal Justice Initiative.
Like I said: really, really, really good talk. Seriously: Why the eff haven’t you watched this?

https://blog.ted.com/2012/12/28/11-talks-from-2012/?utm_source=feedburne...

dingleberry · Dec 30, 2012 - 12:08pm

@ Bollocks

I notice from your links re Ebay that the one stating "plated" has not been bid up, whereas the " layered" are being bid up like they're real. Have been watching the listings increase for some time now and cant believe some peoples ignorance.Is it just a lack of understanding, lack of reading ability or just feckin stupidity ? The real problem has clearly arrived where they're just not bothering with the "layered " prefix and are selling fakes, and good ones at that. 

daveyboy · Dec 30, 2012 - 12:10pm

Beware of absolutes

Beware of absolutes :)

12/20/2011 "We are making a historic bottom right now. "[technically still true, as gold hit $1523 the next week, but hasn't gone below that again so far] 12/21/2011 “Each of those important support pivots that everyone is watching, like the 50 day moving average and so on, each one of those are taken out in the access market in the quiet trading, overnight, on three successive days. In other words, they take out these three important pivots, which turns the momentum buyers into sellers. "[fair summation] 1/17/2012 "If we get a pit close above $1,650 you could see a lot of scared shorts begin to cover. This could create a very quick move higher in the gold price."[good prediction] 3/7/2012 "You see people saying gold is headed to $1,620, $1,600, $1,500. I guarantee you these individuals do not know what’s going on in the physical market.” [gold proceeded to fall to $1620, $1600, $1545 over the next 4 months] 3/8/2012 "The physical silver orders that were just filled have been waiting since February 16th. Those orders near the $33 level were filled in huge size on Tuesday. These long-term accumulators are buying every dip. There were some fills at $34, but some very large orders were filled near $33. As long as we stay under $34, there is going to be constant accumulation. ” [silver of course made a new low a few months later of $26.18, and spent months with a $27 handle] 3/19/2012 "Those that have been calling for gold to collapse to $1,200 are completely unaware of what is taking place in the physical market. Who is going to sell it down to those levels? Hypothetically, if it were to drop below $1,600, China would literally be buying hundreds of tons of gold." [good point about gold's falling to $1200, but it did spend ~3 months below $1600, so China must've bought hundreds of tons squared] 4/5/2012 "There are bids for hundreds of tons of physical gold starting at the $1,610 level and below. This is why the recent decline in gold halted $2 above that level. "[those Asian bids seem always to be there until they're not] "You think the Fed and the bullion banks don’t monitor King World News?" [no comment] 6/8/2012 "During all of the chaos of the last couple of months, the Eastern hemisphere has been vacuuming physical metal out of the market...There was an absolutely staggering amount of silver that was purchased by an Eastern buyer three weeks ago near the $27 level" [that buyer and his Asian friends presumably ran out of money to buy silver when it fell to $26 shortly thereafter]. "The bullion banks are ...trying to extricate themselves from their short positions in the paper market. They are attempting to do this before transparency comes into the market. They do not want a situation where the aggressive hedge funds actually get evidence that these bullion banks are naked short." [of course, the same bullion banks proceeded to build up enormous short positions again several months later, positions that remain enormous in silver] 7/20/2012 "It is now beginning to be discussed, openly, that the unallocated gold is not at the banks. This is definitely the case with many of the allocated accounts as well. The reason I’m pointing this out is you have a more ‘open’ disclosure that’s taking place with regards to this. This tells me there is something major that is happening behind the scenes... something is brewing here. There’s no smoke without a fire. The reason this information is beginning to be discussed more openly is because of legal reasons. They need to be able to say, ‘We disclosed to people that the gold and silver wasn’t there.’ " [though King later gives the London Trader credit for calling the $200 rise that eventually followed this interview, clearly, he wasn't making a short-term price prediction here, just explaining a phenomenon. Nonetheless, his bullishness came right before gold moved past $1600 for good (so far, anyway)] 10/16/2012 "The London Trader assured KWN that 'we are not going to see a waterfall decline in the gold market.' ... India is back buying in the mid-$1,700s. India was back yesterday. India is back today. They need to buy gold and they are stepping ahead of other entities and becoming a large buyer. The Indians are not stupid. They know the commercials harvest the weak hands on the COMEX. Once they see open interest get to a certain level, they fully expect a reaction in the price. But your readers have to understand that there isn’t going to be a ‘correction’ this time, there will only be a ‘pull back.’ There is a big difference between a pull back and a correction." [you be the judge: gold was at $1750 that day, fell to $1684 over the next few weeks, made its way back to $1750, and since then has fallen as low as $1635 with most of the fall coming over a few days] 10/16/2012 "“It got to the point where the vast majority of stops were located near the $1,810 level. If gold would have pierced $1,810, that would have tripped the vast majority of all of those weaker, underwater commercial short positions out of the market. This would have created enough of a short squeeze that we would have seen new highs in gold very rapidly.This would have been a literal failure by these commercials (commercial signal failure). The gold market got to within $10 of their stops. Why do you think the bullion banks threw everything they had at the gold market at the $1,800 level? We were within a hair of a major price explosion, and disorder in the gold market. " [that certainly sounds plausible, but also (unfortunately) somewhat Wynter Benton-ish in its "just so story" aspect] 10/17/2012 "As the markets are taken down, it exponentially increases the amount of physical silver that needs to be filled." [but keep in mind, silver was at ~$33 at the time of this interview, so the "exponential" buying must have continued all the way down to $29.90, where silver now sits. Which raises the question, what good is this seemingly constantexponential buying if silver can fall 10% in a week, and show no near term signs of recovery? Maybe one day it will make a difference, but no obvious sign of that over the past year] 
FleetFeet · Dec 30, 2012 - 12:12pm

Yo, Bullocks & others . . .

Hey, Bullocks

Thanks for paying attention to the eBay counterfeit auctions. If you have an eBay account, you could do the world (especially the world of PM's) a favor by putting a silver coin up for auction and using your listing to warn people about "Layered" coins. 

You could emphasize that your coin is genuine, but that layered copies of many types are coming onto the market, and they are not solid silver, they are junk metal with plating; and the sellers are misleading people. 

If you put a high reserve price on your coin, it wouldn't sell, and at the end of the auction period you could just re-list it, so you could keep your warning alive. I don't know what it would cost you to keep your WARNING up for a few months, but it would be a great Samaritan gesture! 

BTW, thanks for warning us. It took two or three of your posts before I understood the extent of the problem. Best wishes! 

BillyBoy · Dec 30, 2012 - 12:29pm

@Canada I second that of

@Canada

I second that of ancientmoney.

DrkPurpleHaze had posted a reminder and great chart porn on page 4 of this thread.

https://www.valcambigold.com/Charts.aspx

ClinkinKY · Dec 30, 2012 - 12:35pm

Aha, now we know who's buying:)

Al-Qaeda In Yemen Offers $160K In Gold To Anyone Who Kills U.S. Ambassador…

Al-Qaida’s branch in Yemen has announced that it will pay tens of thousands of dollars to anyone who kills the U.S. ambassador in Sanaa or an American soldier in the country.

A piece of audio produced by the group’s media arm, the al-Malahem Foundation, and posted on militant websites on Saturday said it offered three kilograms of gold, worth $160,000, for killing the ambassador.

The group said it will pay 5 million Yemeni riyals ($23,000) to anyone who kills an American soldier inside Yemen.

It did not say how the bounty could be collected, but said the offer is valid for six months.

The bounties were set to “inspire and encourage our Muslim nation for jihad,” the statement said.

Bollocks · Dec 30, 2012 - 1:01pm

@dingleberry @FleetFeet

dingleberry - I think people are just unaware of what "layered" really means.
Indeed, the fake auctions that aren't even using that word are particularly worrying as it must mean that they are really good fakes (they certainly look that way).

FleetFeet - thanks, I'll consider that.

Oh PS: these, I am not wink...



Luckily for everyone here, I'm not going to post up a pic of what I am surprise.

ancientmoney ClinkinKY · Dec 30, 2012 - 1:07pm

@ClinkinKY

Remember that Al Quaeda is a creation of the U.S. MIC. They were a group that the U.S. supports when it is convenient, and attacks for War on Terror purposes (to make sheeple feel "safe.") This may be more disinfo, to scapegoat gold as "bad" as terrorist groups supposedly use it against U.S. personnel.

treefrog · Dec 30, 2012 - 1:26pm

the year winds down at treefrog manor

2012-12-30_10-36-55_532.jpg

sunny december day in north florida. life is good, even if the sun is bright enough to cause squinting.

a prosperous new year to all!

ClinkinKY ancientmoney · Dec 30, 2012 - 1:34pm

"Sometimes a cigar is just...

...a cigar"---Groucho Marx:)

Byzantium · Dec 30, 2012 - 1:35pm

The hard data around the historic gold price.

Here is some free WGC data in Excel format of the daily/weekly/monthly/quarterly & annual gold price back to 1978, in various currencies.

There are various sites that graph this for us (such as Kitco and Goldmoney), but this link supplies the actual numbers, for anybody interested.

Are there any other or better sources of hard data and graphs for this?

I'd be interested in a silver one in particular.

The page is

https://www.gold.org/download/value/stats/statistics/xls/gold_prices.xls#ref/rss

and I found it from a link in this interview with Alasdair Macleod.

https://goldswitzerland.com/a-failure-on-comex-silver-alasdair-macleod/

The data is apparently updated at the same link, but i don't know how frequently.

ancientmoney · Dec 30, 2012 - 1:49pm

"Everything is not as . . .

it seems . . ." --Alice Through the Looking Glass

ClinkinKY · Dec 30, 2012 - 1:58pm
Excalibur · Dec 30, 2012 - 2:16pm

A good piece as usual

Alasdair Macleod's Outlook for 2013

2012-DEC-30

systemic riskI have not faced the prospect of a new year with so much trepidation as when I contemplate what is in store for 2013. Systemic risks abound, which of themselves are not the main story, only milestones on the road to final currency destruction, unless governments somehow regain their senses.

To help understand the perils of 2013 I shall give them their background context first before listing them individually. No such list can be exhaustive or temporally sequenced, but all on it have the same root: the long-term accumulation of a burden of unsupportable debt.

https://www.goldmoney.com/gold-research/alasdair-macleod/alasdair-macleo...

¤ · Dec 30, 2012 - 2:57pm

Public Trollin'

Public Trollin: Snowman Scare!
thurd aye · Dec 30, 2012 - 3:15pm

EBay your fake selling

EBay your fake selling friends.

Firstly,I feel that the word TROY on these bars catches them out.Troy is reserved for very few precious metals,therefore base metal 99%,silver 1% or less, is A LIE.

Secondly,does anyone know what they are using as base? Tungsten=gold by weight(close).What equates with silver to make the 31.1 gms?

I haven't used EBay for 10 years.Details gone now,or I would post a real Ag coin and explain. :O))

Bollocks · Dec 30, 2012 - 3:29pm

Oooops!

In my post earlier about the scam silver sales I said:

"What's worse is that I'm seeing these start to appear quite a lot - particularly the Pan American 1oz bars. Here's some on sale which aren't even marked as "layered", rather as solid silver:

https://www.ebay.co.uk/itm/5-Pan-American-999-Fine-Silver-1oz-Layered-Bar...

I'm pretty certain they're fakes - check the feedback, all "private" so you can't see the items sold (probably very low-value goods) and a member for just 2 months - but building up the feedback in that time."

Someone just pointed out that it does say layered.

Oops, I posted up the wrong link. That link was to the ones that sold for 200 dollars.

This should have been the link:

https://www.ebay.co.uk/itm/5-Pan-American-999-Fine-Silver-1oz-Bars-/3308...

Looks like these are heading towards 200 dollars too. Ouch!

-------------

@thurd aye - I think the base metal is copper. I doubt the weight is accurate, it's simply a scam.

SIlverbee · Dec 30, 2012 - 3:44pm

The Euro is gold backed?!

I was reading somewhere that in the infancy of the Euro to enable it to be set up it was to be backed buy various reserves which consisted of host currencies and GOLD.

It might even have been on wiki but I definitely read it.

Groaner · Dec 30, 2012 - 3:58pm

Looks like we get a down market tonight.

I am worried about the Hui.. they are killing the miner stocks..

Glad I own a bunch of metal.. Just bummed that I have been losing in the paper markets.

FleetFeet · Dec 30, 2012 - 4:12pm

Apology

My apology for misspelling Bollocks' name. Bullocks/Bollocks, is it too late in life to learn the difference? 

Bulls/balls -- they go together, don't they? 

Dyna mo hum · Dec 30, 2012 - 4:12pm

From Fox news

Looks like Wayne Allen Root gets it gets it right. I only hope the masses wise up quick! https://www.foxnews.com/opinion/2012/08/23/why-are-on-brink-greatest-dep...

Bongo Jim · Dec 30, 2012 - 4:28pm
Owl Canyon Mr. Fix · Dec 30, 2012 - 4:30pm

Would you be kibd enough to elaborate on this:

''Unfortunately, you may not be able to “cash it all in” at anything that resembles a profit for quite some time.''

sandy beach dave · Dec 30, 2012 - 4:39pm

Federal Judge throws out JPM Manipulation case

What a country we live in! This makes me sick to my stomach. JPM is not only Too Big To Fail, they are Too Big To Prosecute.

https://maxkeiser.com/2012/12/30/federal-judge-dismisses-silver-manipulation-lawsuit-against-jp-morgan/

criscrossing · Dec 30, 2012 - 4:48pm

US Dollar

Charles H. Smith posted this very informative article https://www.oftwominds.com/blogoct11/orthodoxy-heresy10-11.html

Here he also addresses the Triffin paradox which was my first introduction to this theory.....I believe CHS may be correct in predicting that a global recession will cause the dollar to strengthen....and if this is true what would that portend for the metals?

Such a wonderful community here....to all a very happy New Year!

ivars · Dec 30, 2012 - 4:49pm

@Canada-relation to USG debt and correction length

I think just ask yourself as I do - why is gold going up exponentially for the last 12 years? Of course, loss of trust in fiat USD (other fiat the same). What is the most common tendency in fiat economies during the last 12 years? Buildup of sovereign debt. High inflation is past, before 1982. Sovereign debt increase took its place. Instead of hidden tax on todays citizens in form of inflation that tax is now levied on future income in form of government debt payments.

The correlation between gold prices and USG debt is around 94% over last 12 years. Nothing else comes even close. Debt continues to increase , fiscal cliff or not, just with different speeds. Future speeds of debt buildup are discounted from gold price, if they are slow, added if they are fast. USA fiscally did better then expected in 2011 and 2012 due to extremely low treasury yields, arresting the increase in the speed of debt , and with fiscal cliff, will be slowing it down in 2013. So gold prices went down and stagnated, now moving down again.

For 2013, with fiscal cliff , the speed of debt increase may HALVE in H1 2013, and, depending on resolution, may stay lower than in 2012 and has probability even to continue this slowing down later ( in which I do not believe) . It is just a probability but enough to make correction in gold prices - actually there has no been real correction yet, just sideways trading after 1900 bubble. So now one is in cards. But it can not last.

So the only real possibility that gold exits the current bull market is actually CUTTING down the USG debt, which seems unlikely in 2013, but can happen later in case trust in USD is going to be lost further and faster by faster increasing debt in 2014-2015 . Given all things in total, its most plausible that gold bull market will continue to run on, with a possible spike in 2015-2016 when a partial USG default can occur ( on FED) if loss of trust in the USD starts to lead to increased bond yields, accelerating USG into insolvency. That would lead to a massive correction, where one can really exit gold at maybe 10 000 USD, the question is will that be smart than as gold will probably be the basis of new monetary system and cost no less than 4000-5000 USD, so still higher than today. By then it can be wise to enter other real assets that will have bottomed ( have no idea which ones).

Base line: Debt has replaced 1970 ties inflation scare (after Nixon went of gold standard and devalued USD) as source of loss of trust in USD. in 1980-2000 trust was rebuilt by inflation targeting. From 2000 lost due to rapidly worsening balance sheet of the USG which stands behind the USD. It is kind of obvious- WHY else would gold appreciate so fast? Of course, in a way its a continuation of the same USD devaluation that happened in 1970 -ties, but done in different manner, by borrowing from future ( and then asking those debts to be repaid in gold- see below).

But again, its not unique to the USA, so loss of trust is not measured against other fiat currencies, but gold. Seems that gold is still conceived in the investor and CB world as the true reference of value.

Second, this gold bubble will end some day as did the previous, but this time not by rate increase ( cost of money) , but by default ( cleaning up the balance sheet of USG). That is needed since no debts are written in gold, and debts can not be inflated away , as that would hurt the CREDITORS- the elite, which makes no sense at all. Even more so, debts are more likely to be rewritten in gold when CBs have enough gold in their vaults ( as share of total world gold) that any black market in gold in significant proportions can be excluded. That requires , if there is 160 000 tons of gold above ground now, about 100 000 tons in total in CBs. The fight is on now who will get which share of the necessary 70 000 ton addition to current CB reserves. I am sure the USA is targeting to get most of it, and will get it. Rest will go to other important players like Germany and EU, Russia and China.

The chat around is that the USA will not be able to get its share. I am sure it will be. What is the use of the most powerful military in the world if one can not protect its economic interests? EU is just a tribute payer to the USA in terms of military protection it gets, and will pay again. China will not be able to muster enough military clout fast enough , nor Russia.

These are not economic games. These are geopolitical ones, and pure economic or market approach makes no sense here. The strongman always gets his share. In this case, the USA. Have no doubt about it. Round one will be won by the USA, and the losers already know it, so they will not even put up a serious fight, just pretend and try to act in secrecy. There is still time for them to cut a better deal further in future.

Bollocks · Dec 30, 2012 - 4:58pm

Speaking of which, Bongo...

This is a cracking rendition - when the original band got back together about 5 years ago for a few shows...

https://www.youtube.com/watch?v=5ewVvVCRWxE

kryton619 thurd aye · Dec 30, 2012 - 4:59pm

@thurd aye

I checked this the first time that Bollocks posted the layered silver bars.

In the description of the layered item it states the following:

You are bidding for these 5 x 1oz Pan American Silver bars, the bars are layered in pure .999 silver and come complete

with their own protective capsule. The bars weighs 31 grams each and the measurements

are 50x28x3mm, shipping by 1st class royal mail recorded delivery. Free P&P, No reserve auction, will only ship within the UK..

From the Pan American silver brochure we can find the measurements of the genuine bar which is 50 x 29 x 2.1 mm.

So we can see that the layered bars almost the same in length and width, however, they are ~ 1/3rd thicker than the genuine bars. So the product that they are using does not have the same density as silver.

Bollocks · Dec 30, 2012 - 4:59pm

FleetFeet

I can handle it.

Just about.

Monedas · Dec 30, 2012 - 5:05pm

Murphy !

Enjoyed those TED talks (haven't finished them yet) .... except for the usual whining from the blacks ! Especially enjoyed the Chinese lady who upbraided those stupid liberals .... talking about the positive side of factory work in China ! Great stuff .... reaffirms all my God given, gracious instincts ! Monedas 1929 Comedy Jihad The Closer You Look .... The More You Notice Karl Marx Sucks World Tour devil

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