Cutting Vacation Short

548
Wed, Feb 20, 2013 - 10:04am

This is relentless and unforgiving...and I'm not talking about MrsF.

So bad that I'm cutting my mini-vacation short. I still don't have time for a full post so here are two items for you to read this morning.

ZH has been doing an excellent job chronicling the consistent, daily destruction. Here's the latest: https://www.zerohedge.com/news/2013-02-20/precious-metals-morning-slam-right-schedule

And here's someone who has noticed some of the same "anomolies" that I have: https://www.zerohedge.com/contributed/2013-02-20/curious-case-falling-gold-and-silver-prices

The charts, of course, look terrible. Having failed at hoped-for support, silver looks like $28 and gold, if $1580 fails, looks headed all the way back to the bottom of the 18-month range, near $1550.

This is all highly unusual and indicative of extreme manipulation and panic-level positioning. At the risk of sounding trite and reading like another KWN pumper, I must say it: THIS WILL PASS. THESE EXTREMES WILL BE RESOLVED SOON AND NEW UPLEGS WILL BEGIN. PLEASE BE PATIENT. THE FUNDAMENTALS ARE STRONGER THAN EVER AND PHYSICAL REALITIES WILL SOON REPLACE PAPER SHENANIGANS AS THE DRIVING FORCE BEHIND PRICE.

More later if possible.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  548 Comments

ag1969
Feb 20, 2013 - 1:47pm

DollarMenu2

Thank you for that excellent advice. I am calm now. Enraged by a newbie and calmed down by a newbie. I wonder what the difference was?

Keg
Feb 20, 2013 - 1:48pm

FOMC minutes coming up at 2:00

Will that drive any action?

¤
Feb 20, 2013 - 1:53pm

Grublux

Thanks for that yes

Soundgarden - Superunknown
Nigel Black
Feb 20, 2013 - 1:53pm

McAlvany's video

David McAlvany just posted a new video. It is excellent. It covers everything we have been discussing plus he also shares that they are having a hard time obtaining physical gold for their European and US clients.

Worth 38 minutes of your time (IMHO):

Navigating well in times of Distraction | McAlvany Commentary
Ten_of_Swords
Feb 20, 2013 - 1:54pm

Not for the weak stomached

The following is an excerpt from an article, by Jeff Clark, discussing the volatility of gold and silver:

Most precious-metals investors know that silver is more volatile than gold. But do they know just how big that difference really is?

We thought it would be interesting to measure how much greater silver's daily moves are – both in gains and declines – than gold.

We documented the daily price movements for both metals, and then calculated the difference using absolute values. To interpret the charts below, you need to know that:

  • Values above zero represent days when silver had a greater percentage move than gold, as depicted in gray.
  • Values below zero are days when gold moved more than silver, as depicted in orange.
  • The values don't tell us the direction of price movements, only how much they differed between each other on any given day.
  • The darker horizontal lines represent the moving average of the price differences for each metal.

With that in mind, here are the differences in daily price movements between silver and gold, measured in percentage points.

The article goes on to show the daily price movements during the late 70's- early 80's. In the summary, the author compares the two and states this:

The historical record tells us that when we enter the mania, silver's volatility will increase. If we have a similar period as in 1979-'80, we can reasonably expect volatility to double over current levels. This will be the result of more investors joining the precious-metals industry. The moves will, on some days, be breathtaking. So again, one must be prepared emotionally to handle the volatility, as well as be more nimble when it comes to buying and selling.

Bottom line. It is going to get rougher. If you haven't got your sea legs yet, stand towards the rail but remember: One hand for you, one hand for the ship.

The article is a great read. Not too much new information, but seeing it in charts drives the point home to me.

Keg
Feb 20, 2013 - 2:02pm

Look out below.

Look out below.

NonoverlappingMagicCereal kingboo
Feb 20, 2013 - 2:02pm

@kingboo

Not only do you have the un-mitigated nerve to roll in here and try to turn strong hands into weak ones..........but then, THEN! you don't even have the balls to take a position??? !!!

That is correct - I do not have the balls to hold a belief without sufficient evidence. Overall, your post is a pretty accurate (though mean-spirited) characterization.

tyberious
Feb 20, 2013 - 2:04pm

From David's Desk  David

From David's Desk 

David Schectman

 

JP Morgan's Silver Position

JP Morgan inherited Bear Stearns huge "short" position in silver (and gold) when the Fed arranged for them to takeover (the bankrupt) Bear Stearns. They have been trying to extricate themselves from that position since 2008. They are trapped. Even now, when they desperately try and reduce their shorts but pulling their bids and allowing the market to fall, with the hope of buying all of the sales at a lower price (to help cover their shorts), the "Raptors," (large hedge funds) step in and buy many of the contracts, making it impossible for JPM to cover.

People I talk to also feel that the reason gold is punished is to influence the price of silver, to the downside of course, in aid of JP Morgan's quest to shed their huge short silver position.

Here is what Ted Butler had to say about JP Morgan's short position and the Bear Stearns position they inherited:

The Real Story - Silverseek.com

November 10 2008

The price of silver at the time of Bear Stearns implosion was $20 to $21 an ounce. A free market covering of a concentrated short position of this size would have driven silver prices to the $50 or $100 level and would have exposed the long-term manipulation. Rather than let the free market deal with the required short covering of such an uneconomic and unbacked short position, government authorities arranged to have the short position transferred to JP Morgan. This was undertaken by the U.S. Treasury Department, along with taxpayer guarantees against loss to Morgan worth billions of dollars. This was done, no doubt, to save the financial system from imploding. This was also patently illegal, as it aided and abetted the silver manipulation.

I'm sure the motive behind the illegal transfer of the silver short position was the mistaken assumption by Treasury that an explosion in the price of silver (and gold) would threaten overall financial stability. Well guess what - they succeeded in crushing the price of gold and silver, but to no avail, as financial stability has been shattered.

JP Morgan was not just an accommodative good corporate citizen in the illegal transfer of the manipulative silver (and gold) COMEX short position. In addition to undisclosed government guarantees against loss, JP Morgan was given free reign to liquidate the COMEX short position at their discretion, knowing full-well the regulators would look the other way, no matter what dirty tricks were necessary to cause the price to collapse. Nor was JP Morgan a neutral agent in the silver price collapse. Data from the Office of the Comptroller of the Currency (OCC) https://www.occ.gov/deriv/deriv.htm indicates that JP Morgan held a much larger Over The Counter (OTC) derivatives position in silver and gold than was transferred to them from Bear Stearns.

My analysis shows that Morgan has made many billions of dollars, perhaps tens of billions, from their downward engineering of silver and gold prices from their combined COMEX and OTC short positions. They have used that engineered price decline to buy back as many short positions as possible. If investors are wondering what caused the destruction of billions of dollars in gold and silver values, metal and share price alike, look no further than JP Morgan, and the government officials who enabled them.

There can be no question that the CFTC is complicit in all these illegal activities. Same with the CME Group, owner of the NYMEX/COMEX. It is not possible that they are not privy and an active party to this successful downward manipulation. To think that officials at the CFTC, from the top of the agency, to staffers and even the Inspector General, have taken oaths of office to uphold commodity law and then have allowed that law to be repeatedly violated is beyond repugnant. That they have knowingly participated in an organized cover-up of this manipulation and have taken to lying to a Congressman calls for criminal prosecution.

 

Continue reading on SilverSeek.com

 

Here is a discussion from NIA on this topic, which adds to Butler's position:

 

...March 14th, 2008, the very day Bear Stearns failed, was the same day silver reached a multi-decade high of about $21 per ounce. Bear Stearns was on the verge of being forced to cover their naked short position in silver, which could have quickly sent silver as high as $50 per ounce. This would have caused a loss of confidence in the U.S. dollar and a possible currency crisis. Instead of allowing this to happen, the Federal Reserve orchestrated a bailout of Bear Stearns and JP Morgan acquired their assets with the backing of the Fed. Shortly after taking over Bear Stearn's silver short position, JP Morgan was able to manipulate the price of silver down to below $9 per ounce. (They made billions!)

Continue reading on inflation.us

For those of you who want to know more about how this all happened, I have re-printed a detailed explanation that Butler published three months ago, titled A Manipulation Timeline.

Do you agree? A lot of smart people think this is exactly what is going on. One of these days, JPM will have to bite the bullet and move out of their position, regardless of the price, and it will most likely be caused by a rising market, in spite of the manipulation.

My silver position is as large as my gold position. My expectation is simple - silver will outperform gold, and if it doubles gold's gains from now forward, I will not be surprised at all!

Yesterday, Bill Holter discussed the shortages of ammo and guns in Texas. I have experienced the same thing here in Miami and in Minneapolis. A friend, here in Miami, owns a guns store. He turns customers away. He hasn't had a new gun, handgun or assault rifle, to sell in months. I visited a major gun dealer in Minneapolis, after the first of the year, and they were virtually out of everything.

There was some inventory, but a fraction of what they usually have. The store was crowded. Yes, ordinary Joes are stocking up on guns and ammo. They are afraid - not only of the bad guys, but of our own government.


Sincerely,

David Schectman

Miles Franklin

tyberious
Feb 20, 2013 - 2:07pm

John Rubino-The Currency Wars

John Rubino-The Currency Wars will Destroy Wealth but Precious Metals will Benefit

https://www.youtube.com/watch?feature=player_embedded&v=Oi1QS6eckzg

WallStForMainSt, Published on Feb 19, 2013

Mo Dawoud from Wall St for Main St interviewed John Rubino, who is the author of “The Collapse of the Dollar and How to Profit From It”. He is also a former Wall Street analyst. In this interview, we discussed the general stock market and if the so-called government spending cut will have any affect on the market. We also discussed the ongoing currency wars and how Japan will be the first to fall. Plus much more!

Mo Dawoud from Wall St for Main St interviewed John Rubino, who is the author of “The Collapse of the Dollar and How to Profit From It”. He is also a former Wall Street analyst. In this interview, we discussed the general stock market and if the so-called government spending cut will have any affect on the market. We also discussed the ongoing currency wars and how Japan will be the first to fall. Plus much more!

tpbeta
Feb 20, 2013 - 2:08pm

@NonoverlappingMagicCereal

Correct or not, please go away Troll.

dgstage
Feb 20, 2013 - 2:08pm

Here comes another beatdown

ITS FOMC TIME

WHAT A FUCKING JOKE

ivars
Feb 20, 2013 - 2:09pm

@ancientmoney- gold backed money

I can say that I have not made up my mind about the next reset in world monetary system. I do not know enough about monetary systems and their evolution. One thing that i know is that credit based systems came in history long before commodity based , and commodities were used to denominate debt in comparable terms. There was no barter-commodity - gold transition. It was always credit ( and debt) and then transition to ways of measuring and keeping accounts of these debts created all sorts of money including gold and silver. The idea of complementary currencies NOT issued by central banks also has a lot of merit as it does not confine the productive activities to the money supply that has to fit one for all. Also, I am not sure that compounded interest is necessarily a thing that shall survive in future, 

All I know is that short term ( and that can take 4 years) there will not be gold backed currency as geopolitical games can not be played out in so fast way to position current powers to assure that movement to gold backed currencies will happen in the way they wont. 

Hence for next 4 years ( or if I learn something new I may change my mind) I do not think one should worry about paper/physical price divergence. It is no problem for paper price and physical to move up to 10000 USD. it will be just 5-6 times more than today. Since 2001, price has moved up same amount? So the process will be the same, just accelerating. And causing panic, spikes, margin increases etc but not divergence as long as USD will remain viable- and it for sure will for the next 3-4 years. May be it will be devaluated ( unlikely) - but if it does, the price in paper will be the price for physical as long as futures markets are existing and its allowed to sell/buy gold. There can be some partial debt forgiveness for economy to catch up with debt curve- a huge price for financial capital, but may be one that needs to be taken to gain longer term status quo for the system. 

As I wrote earlier, the fact that the compounded interest that always will accelerate faster than real economy will always create debt crisis sooner or later and that usury is now one of the most honorable and well paid profession and that debts incurred on basis or irrational race between compound interest and real economy are considered holy and almost untouchable while the only thing they do is ensure transfer of real wealth from debtors to creditors- I think its crazy, and must have be eradicated/changed in the very bottom of the system. Otherwise it is just logical that debt will first run up asset prices and than collapse the economy during which assets will be transferred to creditors, and of we go again. That is called business cycle but in fact is just debt cycle. 

So I know too little or already too much to make a choice... I am not a believer, I like to understand...So I will leave this -gold backed or something else -for later, hopefully before something happens in practice.

Dyna mo hum
Feb 20, 2013 - 2:10pm

"EGGS IN MY BASKET"

I am about to buy a larger basket as my holdings in Phizz are about to expand.

tobydaniel
Feb 20, 2013 - 2:11pm

This is the reason for the last "blip" down in metals

https://www.zerohedge.com/news/2013-02-20/fomc-minutes-out-hawkish-rumbl...

Have fun with the 20's in silver. We will be here for a very long time. Feds aint giving up just yet! They have plenty of bullets left to keep the price of silver down. Dont fool yourself. Instead, buy the real thing. Buy physical now! They cant mess with that as much.

achmachat
Feb 20, 2013 - 2:12pm

on Netdania

the 10 minute bar for silver shows a volume of 12.300 units (contracts, or netdania-units, or whatever) when the minutes got published.

we haven't seen this massive volume in a very long time!!

Grublux
Feb 20, 2013 - 2:13pm

DPH

Glad to contribute! Hope it helps

foggyroad Groaner
Feb 20, 2013 - 2:14pm

Groaner LOL Clouseau investigating

the 'massage' very funny.angel

Bollocks
Feb 20, 2013 - 2:14pm

Santa

...must be shitting himself surprise.

ivars
Feb 20, 2013 - 2:16pm

FOMC time

If You read the notes they infuse a bit more uncertainty in Fed ultra easy rhetoric at least and that has been holding prices down for last months, so naturally a bit more of confidence show from FED will bring prices down. That was to be expected from these minutes, was it not?

ReachWest
Feb 20, 2013 - 2:17pm

Risky

So the Fed prints to the tune of $1,000,000,000,000 (Trillion - I think) this year and the FOMC lead headline is:

"SEVERAL FOMC PARTICIPANTS SAID EASING MAY PROMPT EXCESSIVE RISK"

What a nutty world we live in.

Pax Argentum
Feb 20, 2013 - 2:18pm

Yay, the Shiny's on Sale!

Thanks Paper Tigers!

Those of us with room still under our mattresses and in our canoes give you our most heartfelt appreciation for your market-warping, reality-distorting gamesmanship.

More Ag is on its way to my underground bunker as a tribute to the Morgue and in particular the asshats at the CFTC. 

BTW, for those of you that are interested, the latest Canadian wildlife coin, the Wood Bison is available for pre-order. Apmex says shipping Mar 1.

Keep Calm and Stack On.

Pax

Keg
Feb 20, 2013 - 2:35pm

Reach West - very nutty world

Headline was just to temper expectations. They must contain interest rates while continuing to print mass quantities of fiat. Nothing in the minutes indicates they are changing policy. 

The Doc
Feb 20, 2013 - 2:36pm

Fed minutes= PURE MOPE -Doc

Fed minutes= PURE MOPE

-Doc

foggyroad
Feb 20, 2013 - 2:37pm

Where is all this twenty dollar an ounce silver

Twenty dollar an ounce silver going to be produced?

Most producers are not going to make a cent at 20/oz.

They will lose money, stopping the mills, laying off staff, stopping new Cap Ex.

This will tighten supply further causing, more imbalance, than already exists between paper and physical markets.

It would be counter productive to keep pushing Silver spot down, too large a gap would render the paper market irrelevant.

Unless, diesel fuel goes to a buck a gallon, and hourly wages to a 2.50 an hour .

Most by byproduct supply is inelastic.

Basil thedukes
Feb 20, 2013 - 2:39pm

@thedukes - I beg to differ too !

Well one of Sinclair's greatest blunders of all is the $1650 fiasco which are amazingly quoting as one of his "great calls" !!?? How can you possibly say that ??

If you have been following sinclair since 2003 , surely you are aware that he made an outrageous $1,000,000 bet that Gold would be over $1650 by January 2011. In reality, Gold had only just scraped past $1400 by Jan 2011 !! You can't get much more wrong than that !

https://gold-news.goldprice.org/2008/04/jim-sinclair-bets-million-dollars-gold.html

And that really is just one of many big blunders. He also was calling for $480 Gold ages before it actually happened, again making a fool of himself.

Sure - he gets some of his predictions right but so would a monkey, simply by the laws of probability. Just predict if the toss of a coin will be heads or tails and you'll get half of your predictions right on average.

hsofiak achmachat
Feb 20, 2013 - 2:40pm

@on Netdania

Absolutely correct. Also, check the tick volume (wish I knew what the volume scale was). It is 1000 to 1500 ... the highest I've ever noticed.

¤
Feb 20, 2013 - 2:42pm

$1555

If we break that strong support we drop to $1510 like it's nothing.

Same thing for $27.50 If we break it with ease we'll see $26.80

Being low on any meaningful dry powder to spend right now is a bummer. I think alot hinges on the next 80 minutes and how the Asian market responds later. This might accelerate.

Will $1555 stand?

SRSrocco
Feb 20, 2013 - 2:42pm

FOMC INSANITY...

FOMC INSANITY... again, this is another typical example of ANALYSTS' IQ's GONE BAD. Anyone who still has their BRAINSTEM connected to their head, realizes this is MOPE SQUARED.

MOPE - Management of Perspective Economics (Sinclair)

This of course is what they were going to say. Why? Gas prices are at all time highs? High gas prices are not good for the economy. So we bring out the typical FOMC NITWITS to regurgitate their HAWKISH propaganda.

We must remember, the FED has to buy U.S. Treasuries forever or until the U.S. Treasury market collapses. If we pay attention to Jim Willie and common sense, we realize the $100's of Trillions in the great DERIVATIVES CARRY TRADE would implode if easing stopped. So, anyone who has a notion that the FED will stop, may need to make an appointment to the nearest MRI clinic and get a brain scan.

Of course, this only works in a market that has no clue of WHAT IS UP or DOWN.

This is another EXCELLENT EXAMPLE of why markets can not value correctly today. It is total and complete BS.... squared.

Silverman
Feb 20, 2013 - 2:44pm

Charts are ugly

25 silver looks possible. 

Bugzy
Feb 20, 2013 - 2:46pm

Internet

Something odd; alluded to here regarding Sprott etc.

Websites going down:

This week: Vancouver general phone system. BCIT systems. Turd site down two days in a row. KWN etc......

ALL DIGITAL CURRENCY - not a hope in hell.

Bugzy

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