The Extra "F" Is For "Final"

Tue, Apr 2, 2013 - 12:25pm

As anticipated last week, the metals have been severely beaten again this morning. So, is this it? Is gold going to $1400? Is silver going to $22? Or is this your opportunity to BTFFD?

I lean toward the latter. That said, just a few observations on this fine Tuesday morning...

First, the draining of the GLD resumed in earnest yesterday. After sitting tight for seven, consecutive days, the total gold in "inventory" dropped by another 4.11 metric tonnes. For those keeping score at home:

  • 132.87 metric tonnes year-to-date or 9.84% removed. That's just short of 4.3MM ounces.
  • According to the World Gold Council, 133 mts is slightly less than the entire holdings of Thailand and slightly more than Singapore. Holding 133 mts would put you at #25 on the global list.
  • 4.3MM ounces is the equivalent of 43,000 Comex contracts.
  • 4.3MM ounces is 10,750 London Good Delivery bars. "That's a lot." Seriously...think about that for a moment. Ten freaking thousand gold bars! Oh my goodness!!
  • 4.11 mts yesterday is 132,139 troy ounces or 330 London Good Delivery bars.

So now think about this. What if this isn't just "investor rotation"? What if those 10,750 gold bars haven't simply been returned to Authorized Participant vaults? What if I'm right and the lion's share of those bars are leaving due to liquidation and conversion? If so....from where will the gold materialize to restock the GLD "inventory" when price inevitably reverses?

Uhh.....moving on.....

Now chew on this: The "Cyprus Story" broke on Saturday, March 16. I seem to recall that even the FOAD, Gartman, stated that weekend that he'd be "shocked if gold didn't open above $1625 on Sunday evening". Well, it didn't. In the entire time since, it hasn't seen $1625. In fact, ponder this one:

  • On Friday, March 15, gold closed at $1594.70 and had a total open interest of 447,314.
  • Two weeks later on Thursday, March 28, gold closed at $1595.70 and total open interest stood at 408,594.

Now wait a minute. Hold on just a second. I thought that "Cyprus" was about failing confidence in fiat currency. Isn't it also about lack of trust in the financial and banking system? ( Hint: IT IS!) So, then, why on earth would open interest in Comex gold be DOWN 10% since the event began?

I'll pause here for a moment while you ponder that...




Before you say "contract expiration", I'll certainly grant you that that had an impact. But 10%?!? Seriously?!? If ever there was a time when open interest should be expanding, it's now. Yet, it declines. So, again, what does this mean? Why is it happening?

Simply put, this is just more evidence of the growing disconnect between paper and physical. Gradually, The Comex is losing credibility and relevance. That global physical demand is soaring while Comex paper demand is declining is a clear signal of just how FUBAR the entire, current system of price discovery has become.

Now, this alone does not mean that metals trading on the Comex will cease to exist tomorrow. It won't cease next week, either. But in this post-MFG world where physical possession is paramount, the current system is slowly fading away. Ernest Hemingway once wrote (and I paraphrase): "How do you go bankrupt? Slowly and then all at once." This same reasoning applies here. How did The Comex...and by extension the BBs and the BIS...lose relevancy and control? Slowly and then all at once.

Lastly...getting back to the title of this thread. I firmly believe that this is the final dip. I've urged you to buy all the way down since October and I'm not stopping now, confident that every purchase I've made over the past 6 months will soon be deep in the black.

We are now back down to the bottom of the current, 18-month price ranges. I wrote yesterday about the extreme condition of the CoT report and the last crop of "greater fools" about to parade into the short side. As those specs sell into this market today, whom do you think is taking the other side of those trades, remembering that for every seller there must be a buyer? This week's CoT survey is today so we are likely going to see the single-most bullish CoT in memory when it is released on Friday. By then, price will have likely rebounded considerably, leaving many to complain once again about the lag/delay in publishing the info. Whatever. It doesn't matter anyway when we already know how the report will look.

Expect silver to show near record (if not outright record) low levels of Spec net long and Cartel net short ratios. These are, of course, not date-specific bottom indicators. However, when we look back at these price levels 8-12 weeks from now, it will be obvious to all that the next move was going to be sharply higher, not sharply lower.

OK, as I type, I see that another wave of selling has hit the pits. Gold is at $1580 and silver is at $27.41. Good. Take a look at this gold chart. Note that on every occasion since Feb 20, when gold dropped below $1575, it was aggressively bought back up. No reason to think that this won't happen again.

And let's take a more long-term look at silver. On these weekly charts, you can plainly see that we are:

  • Once again at the bottom of the range
  • In our third ultwa-scahwey "declining triangle"
  • Expecting strong buying interest again at $27-27.50

Finally and fwiw, earlier today I "put my money where my keyboard is". I had a pretty good night at an actual casino a few weeks ago so I thought I'd roll some profits into the Comex casino. I am now the proud owner of three July silver $35 calls. (Astute Turdites will note both the strike price AND the contract month.) I'm also hoping to pick up some AGQ again very soon. I'll keep you posted if and when I do. I'm looking to move when silver approaches $27 and obviously we're getting close.

Have a great day and keep smiling. I know this is painful and doubt is a much easier human state than confidence. Do your best to keep you chin up, though. We are on the right side.


3:30 pm EDT UPDATE:

Just a few points of order as the day closes:

  • Always keep in mind that CME-reported OI figures are 24 hours delayed. That stated, note that total gold OI fell again yesterday, this time by 1,400 contracts to just 407,112. Again, this is lowest level since 8/22/12. Also, do you suppose the number reported tomorrow (for today) will show a further drop or an increase?
  • In contrast, silver OI ROSE again yesterday, by 1,200 contracts to 155,109. This is the highest level since the multi-year high of 157,030 seen on 2/22/13. I have no doubt that all of the Greatest Fool spec shorts that were added today will bring today's OI back up to the 157,000 level tomorrow.
  • Because the U.S. mint fails to report sales figures daily, two things have happened. First, March has magically come in with a lower ASE sales total than February. January was 7,498,000. February was 3,368,500 and March was 3,356,500. However, because late March sales were posted to April, total April sales (after just one day) are shown as 812,000. WOW! And I wonder how many they'll sell today and tomorrow? Again, just another sign of paper market FUBAR.
  • Both metals fell almost exactly to where I thought they would today. Though there may still be some weakness, I expect any dip toward $27 in silver and $1565 in gold to be aggressively bought and a quick rebound will follow. We may bang around this area for a couple of days but I'm confident that these levels will hold.
  • This week's CoT will be spectacularly bullish, particularly for silver. We'll see a silver LargeSpec net long ratio that could come in as low as 1.2:1. This would put the Silver Cartel net short ratio near 1.30-1.35:1. Both levels extremely and extraordinarily bullish.
  • And I just got today's GLD update...DOWN another 8.13 mts or 261,385 troy ounces, the equivalent of 653 more London bars removed. This brings the total "inventory" decline YTD to 10.44%.

More later if necessary but likely not until tomorrow. I'll continue adding comments into this thread, though.


About the Author

turd [at] tfmetalsreport [dot] com ()


Apr 3, 2013 - 5:30am

The case against patience

If you are forcing yourself to be patient, it means that something you want is perceived to be out of reach at the moment. This means that you have given some of your power away. It is always within your power to act on something that excites you, even if it is a small thing. When you are doing something you love, there is no need for patience. Small actions lead to greater actions, overcoming perceived limitations and leading to greater abundance. True wealth is getting what you need, when you need it, to do that which you love to do. Requiring that wealth come first in the form of money is a limiting belief, as is the belief that banksters have power over your happiness.

I was recently inspired to drop some limiting beliefs and almost immediately substantial opportunity came my way from an unexpected direction, not immediately in the form of money. I had put my life on hold, waiting for the banksters to be defeated, and that does require patience. After several stressful years, I realized I had a victim mentality and had given my power to the banksters. I no longer need patience because I am doing what I love. My stash is still there, but now I view it simply as insurance that I might never actually need, having seen what can happen simply through self-empowerment. Inspiration came in part from the Serenity Prayer, which mentions several virtues but patience is not among them: God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.

Apr 3, 2013 - 5:31am


"I just made sure another two Canadian Silver Maple Mint boxes disappear from the market"

After yesterday's post, that's great to hear!

Things are nicely back on track then...

Apr 3, 2013 - 5:35am
Apr 3, 2013 - 5:40am

If You Thought He Was Bad At Basketball...

...wait until you see him throw a baseball

Obama Goes 2 For 22 On Basketball Court


Apr 3, 2013 - 6:14am


What do you expect in countries that drive on the wrong side of the road??

Apr 3, 2013 - 6:26am

MSM - always telling the truth.

Gold ‘Bubble’ Seen Turning to Bear Market by SocGen on Recovery

Gold is in a “bubble” after the best annual run in at least nine decades and will head into a so-called bear market as a stronger U.S. economy helps increase interest rates and cut bullion demand, Societe Generale SA said.

Investors are unlikely to raise gold holdings because inflation has remained low, signs that the economy is improving may spur the Federal Reserve to curb stimulus and the dollar has strengthened, the bank said today in a report. Bullion is down 4.6 percent this year after 12 straight annual gains and would need to drop another

Prices fell this year as Fed policy makers debated the pace of asset purchases. Billionaire investor George Soros, who called bullion the “ultimate asset bubble” in 2010, cut his stake in the biggest gold exchange-traded product by 55 percent in the fourth quarter. Goldman Sachs Group Inc. said in February that bullion’s cycle has probably turned as the U.S. economy recovers and Credit Suisse Group AG has said the metal is unlikely to return to the 2011 record of $1,921.15 an ounce.

“The gold price is, in our view, in bubble territory,” Societe Generale analysts including London-based Robin Bhar wrote in the report. “Rising interest rates, driven in part by a positive view of the U.S. economy with an associated improvement in the dollar, could be the perfect storm to start a longer-term bear market.”

Gold Price

Gold for immediate delivery traded at $1,597.48 by 11:14 a.m. in London. While gold’s 1.2 percent advance in March was the first monthly gain since September, it posted the first back-to-back quarterly losses since the start of 2001. A close at $1,520.18 would be a 20 percent drop from Sept. 5, 2011, signaling prices entered a bear market.

Prices will slide to $1,375 by December and average $1,500 this year and $1,400 in 2014, Societe Generale estimates. The metal as much as doubled after central banks, led by the Fed, increased stimulus since 2008 to bolster economic growth.

Apr 3, 2013 - 6:37am


is always such a disappointment with his scaredy-cat guerillla sorties into TFMR

Had been looking forward to extensive piffle-jousting....

Apr 3, 2013 - 7:04am

tolerance and being a good member of a community

Speaking of tolerance and not using sarcasm ...

the doom and gloom that was being 'mocked' involved Russian and Chinese troops on the streets of the US by the end of March and Obama nuking the US. This is an opinion perhaps to express once - but it is fair to call it alarmist. And the claims that 90% of the population will die is also alarmist. Even the Black Death, brought on by a pathogen and before people had any notion of what that was, was far less devastating. If we are all to die tomorrow, then good-bye. But having now dealt with that problem, I think we should consider getting through the next few months, and years. And maybe today too.

Good morning.

edit: I would like to put a word in for 'kerfuffle" - a piffling kerfuffle if possible.

Apr 3, 2013 - 7:19am


I must sound like a broken record, but when I see articles like this, it just makes me really irritated.

They say there is no inflation because that is what the government says. But, no one ever seems to ask about the quickly changing metrics used. Has anyone ever been to a grocery store over the last two years!!! There IS inflation!!! Too bad we cannot eat computers.

oh well.. just another day of MOPE


Bill of Rights
Apr 3, 2013 - 7:26am

Obama administration pushes

Obama administration pushes banks to make home loans to people with weaker credit - The Washington Post

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

We have learned NOTHING!

Apr 3, 2013 - 7:29am

piffling kerfuffle

Seems incomplete without considering the aging population.

How about "befuddled piffling kerfuffle"?

"She put her high fiber shake back down on the TV tray, grabbed her walker, and shuffled outside to find her husband and Mr. Donaldson banging their motorized wheel chairs together and arguing about WW2 in a befuddled piffling kerfuffle."

Apr 3, 2013 - 7:55am

Brucie bonus...

I get my (non-banker sized) bonus paid into my bank account tomorrow; I was going to buy a laptop, but at these prices I'm thinking of slinging the whole lot into silver. If the bonus had been paid today, I would have already done so when the price breached $27... which way will the price move between now and then is anyone's guess...

Apr 3, 2013 - 8:03am
Apr 3, 2013 - 8:16am

Silver and Gold

Hi my fellow thinkers,

I think this is my first post here. I really enjoy this site and thank you for that Turd. Well awesome, ahh lol I'm a little shy so.

Just yesterday I purchased 20kg of silver and 5 plus 1 ounces of gold. I have it sitting around at my computer desk. My daughters are 9 and 12. They understand (sort of) my reasoning for buying PM's. Although my eldest's friend thinks it would be wise to buy 15 Ipod 5's instead. We did a test tonight, I told my girls Silver kills bacteria, we all had a turn at putting a kilo bar in our mouths. It is true, what a magical metal!!!! lol

Gold Dog
Apr 3, 2013 - 8:25am
Green Lantern
Apr 3, 2013 - 8:25am

@XTY I think it is fair to


I think it is fair to suggest the great majority of individuals on here are considering living a very long life and doing it with a bit of grace. And there might be a few individuals who are living EXTREME apocalyptic scenario's. You can rest assured that such an individual endures a great amount of stress and are devoid of peace of mind. A self inficted curse of sorts and lving their very own Dante's Inferno Most healthy individuals can laugh it off and give it no further thought in their future calculations. Others abhor it, reject it and attempt to punish it. Why? I can tell you it's not done out of a humane desire to spread peace and love. Some individuals loose balance quicker than they care to admit. Their veneer is thin.

Sarcarsm is a sharp sword. It has it's place and used sparingly it is a indeed a powerful method of self-defense that can punish a weak psyche. Those who consume it as part of their daily diet are probably no better off then the individual they wish to bludgeon. Intellegent angry people love to use it to show of their fighting skill. Makes them feel better about themselves.

Given a preference, I'd rather have a beer with the doomer. I can work with that ailment. The other is generally hopeless and carries more shields than a Roman platoon.

Apr 3, 2013 - 8:29am

@Turd re: what's going on . . .

You asked for opinions, so here's mine.

For a long time, the silver comex has been essentially the commercials vs. the hedge funds. The commercials would draw in the hedgies to go long, then when they are extremely bullish as prices rose a few bucks, the commercials would jointly short the hell out of the market, dropping price and picking the hedgies' pockets. Over and over and over.

Lately, though, there has been a different alignment. All-the-commercials-except-JPM have aligned with the hedgies, who are now net-long. JPM is now 96% of the net short position in comex silver, which is an amazing feat of concentrated manipulation.

Why might this be happening, and why now?

My thinking is that they all know that silver is getting difficult to find. That is why the other commercials have abandoned the fiat gravy train that was formerly the short position headed by JPM. They feel that long is the place to make money.

However, JPM=Fed, so while they want to make money anywhere they exist, their overriding raison de etre is to keep the fiat game going. Letting silver show its true fundamentals through proper pricing would kill that ability. Pure and simple.

I have said many times that the endgame will be an announcement that silver trading will be halted, and all contracts paid out in fiat based on the last closing price, which will be in the shitter--maybe real close to where we are now. Some currency/PM controls will be concurrently announced, for the security of the children of course, and anyone who does not have silver or gold will not have it at anything close to current prices.

The SLV will no longer need to exist, and will be wound down, its shareholders likewise paid out in fiat. JPM, as custodian, will claim the physical that might remain. This is all laid out in its prospectus.

Apr 3, 2013 - 8:32am

Fuckin Amazing

Look at the ADP NFP data....metals hardly moved..guess we'll have to wait till Friday's NFP Data for the pain to i m dying to see the Shorts Shit their Pants.

Apr 3, 2013 - 8:36am


I really think you are taking umbrage at the wrong person here, and defending people in a very condescending way as well.

Intellegent angry people love to use it to show of their fighting skill.

Yes, that is very true, and perhaps more applicable than you realize. The apocalyptic doomers have no problem defending themselves, and I am a bit surprised to see you taking such a high hand here.

Gold Dog
Apr 3, 2013 - 8:38am

Waiting for a 26 handle in SI..... load up like Michael Moore at the all you can eat buffet!!!!


Mr. Fix
Apr 3, 2013 - 8:39am

@ ancientmoney

That's what's happening.

Apr 3, 2013 - 8:39am

Gold and silver on sale again today kids.

Miners too.. yeah.. yeah right..

MSM says gold is in a bubble..

Talk about lame reasoning for the sheeple..

This has to be close to the last time we will see the metals this cheap..

Anyday we could hear of another raid from the crooked banksters hitting Italy, Spain or Portugal stealing deposits..

That would tip the dominos over for sure.

Apr 3, 2013 - 8:40am

Meltdown: The Golden Crucible

Insight: Young nation Kyrgyzstan fights over gold at top of the world

A worker holds a polished gold alloy bar in a workshop at Kumtor gold mine extraction factory in the Tien Shan mountains, some 350 kilometres (218 miles) southeast of the capital Bishkek near the Chinese border March 14, 2013.

Credit: Reuters/Shamil Zhumatov

KUMTOR, Kyrgyzstan | Wed Apr 3, 2013 6:57am EDT

KUMTOR, Kyrgyzstan (Reuters) - In an impoverished young nation with a habit of overthrowing its rulers, the future now balances on a mountain of gold at the top of the world, where the air is so thin collapsing visitors may be rushed to a pressure chamber for oxygen.

After two revolutions in eight years, nationalists in Kyrgyzstan are threatening to return to the streets to topple another government unless it expropriates the Kumtor goldmine, a treasure they say was sold off too cheaply to foreigners.

Parliament in the remote ex-Soviet Central Asian state has set a deadline of June 1 for the government to renegotiate - or repudiate - a deal struck in 2009 with Canadian firm Centerra Gold to operate the mine.

A state commission said the Canadian firm has been paying too little to run the mine, and accused it of inflicting environmental damage leading to $457 million in fines.

Three lawmakers were convicted last week of trying to seize power in the country by force after leading demonstrations late last year demanding the mine be renationalized.

Prime Minister Zhantoro Satybaldiyev, who took his job last September as a technocrat pledging to alleviate poverty in the country of 5.5 million, says compromise is vital and banishing Centerra would dash hopes of winning more foreign investment.

"Our investment climate will directly depend on how successfully we resolve the Kumtor issue," the 57-year-old told Reuters in an interview.


A landlocked country half way between Moscow and Beijing, Kyrgyzstan holds its national treasure at the mine 4,000 meters (12,000 feet) up in the Tien Shan mountains, near one of the world's remotest borders, the old Soviet frontier with China.

Trucks the size of three-storey houses chug in a gigantic open pit to deliver rocks to a gold-extracting mill, which runs 365 days a year.

Inside a guarded room, two workers move slowly in silvery heat proof overalls, pouring bright orange molten gold from a crucible into moulds. Minutes later, four shiny bars worth $2.6 million are stamped and sealed in vaults.

Under the deal reached with ousted President Kurmanbek Bakiyev before he was toppled in a 2010 revolution, the mine's operating company pays 14 percent of its gross revenue to the Kyrgyz state.

The state commission that investigated the deal concluded that the royalty is far too low....

Apr 3, 2013 - 8:43am

Lucky Man


Lucky Man by ELP
Mr. Fix
Apr 3, 2013 - 8:43am


"Intellegent angry people love to use it to show of their fighting skill. "


you are fighting with yourself.

Apr 3, 2013 - 8:45am

Another one from the FWIW dept…

…At this very moment, silver is the ONLY metal in the green. I know, it's only by 2¢ and anything could happen, but still, first green I've seen in weeks.

Apr 3, 2013 - 8:48am

Mr Fix

a) I am not sure what you mean, as I am clearly not arguing with myself, and that was GL's phrase I was quoting (and it should read intelligent and off, but I was too polite previously to point this out, as it implies to me that he is typing in a hurry, and might be a bit angry himself);

b) if you are happy being defended as a pathetic guy with a weak psyche, suit yourself. I actually found myself defending your ability to argue for yourself - but perhaps I was premature.

Apr 3, 2013 - 8:49am

Kapooya, Kapooya best describes the take down yesterday

Video unavailable

I could not stop laughing at this for some time.

Apr 3, 2013 - 8:51am

someone has hacked into my webcam

That was me yesterday kapooya, kapooya I did get hit in the head and I did call my mother to see if she was alright.

She told me that she was ok because she never listened to me in 2010 and she kept her savings in the stock market.

kapooya indeed.

Apr 3, 2013 - 9:01am

Silly Turkey. They should be importing bitcoin, surely...

Turkey’s Silver Imports Surge 31% And Gold Imports Climb To 8 Month High

Submitted by Tyler Durden on 04/03/2013 - 08:07

Physical gold and silver demand remains robust in many markets internationally. Demand from the Middle East remains robust as seen in the near record imports of gold and silver into Turkey. Turkey’s gold imports climbed to an eight-month high in March as prices averaged the lowest since May, according to the Istanbul Gold Exchange. Silver imports rose 31% from a month earlier according to Bloomberg. Gold imports increased to 18.26 metric tons, the most since July. That’s up from 17.34 tons in February and compared with 2.91 tons a year earlier, data on the exchange’s website show. The country shipped in 120.8 tons last year. Turkey was the fourth-biggest gold consumer in 2012, according to the London-based World Gold Council. Bullion averaged $1,593.62 an ounce last month and is trading about 17% below the record nominal high of $1,921.15 set in September 2011.


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Key Economic Events Week of 3/18

3/19 10:00 ET Factory Orders (Jan)
3/20 2:00 ET FOMC Fedlines
3/20 2:30 ET CGP presser
3/21 8:30 ET Philly Fed
3/22 9:45 ET Markit PMIs
3/22 10:00 ET Existing Home Sales
3/22 10:00 ET Wholesale Inventories (Jan)

Key Economic Events Week of 3/11

3/11 8:30 ET Retail Sales (Jan)
3/11 10:00 ET Business Inventories (Dec)
3/12 8:30 ET CPI (Feb)
3/13 8:30 ET Durable Goods (Jan)
3/13 8:30 ET PPI (Feb)
3/14 8:30 ET Import Prices (Feb)
3/14 10:00 ET New Home Sales (Jan)
3/15 8:30 ET Empire State Manu Index
3/15 9:15 ET Cap. Util. & Ind. Prod.

Key Economic Events Week of 3/4

3/5 9:45 ET Markit and ISM services PMIs
3/5 10:00 ET New home sales (Dec)
3/6 8:30 ET Trade Balance (Dec)
3/7 8:30 ET Productivity and Unit Labor Costs
3/8 8:30 ET BLSBS
3/8 8:30 ET Housing starts (Jan)

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