Welcome to the updated TF Metals Report! We hope you enjoy the new experience.

We've changed payment processors, so any existing renewals will need to be re-subscribed after expiration. You will receive an email when this happens. If you have any questions, send a message through the Contact page.

Nostradumbass

843
Fri, May 10, 2013 - 11:50am

I know what you're thinking. How can I guy who is dead wrong all the time have his own website? Good question! Maybe it has something to do with this:

But, seriously, it's a good question. How can I be so freaking wrong all of the time? I mean, it's not like I just fell off the turnip truck and began drawing lines on charts. I'd been pretty good at this stuff for quite a while. So what has happened, aside from the obvious Jack Daniels, methamphetamine, valium and glue-sniffing addictions?

I think the answer lies with three things:

  1. Fed/PD involvement in manipulating nearly all markets
  2. The predominance of High Frequency Trading in nearly all markets
  3. And the coordination of numbers 1 and 2 above

For example, many wonder at how the U.S. stock market can keep going up. That's easy! The Fed's Primary Dealers receive, on average, about $2,000,000,000 each business day, direct from The Fed. Now most of this gets reinvested into treasuries in order to prop up the bond market but a considerable amount is left over each day and the majority of that money gets plowed into S&P futures where the attendant leverage multiplies the buying effect as much as 20 to 30 times. As Ruprecht would say: "That's a lot."

So, of course, the stock market isn't going up because your neighbor just put $10,000 into The Growth Fund of America or some old lady just bought 200 shares of ConEd. It's going up because The Fed is giving free money to the banks in order to prop it up. From there, the HFTs which represent about 80% of the daily volume, take over and bada-bing, bada-boom, you're at Dow 15,000.

And with all this free money sloshing around and being driven by mindless computers, technicals and fundamentals get thrown out the window. Technical analysis only works if a group of relatively risk-averse human beings actually see the same formations and lines and then choose to act in those certain spots. When you're dealing with computers and risk-free cash, you can do anything you want!

Sure, two days ago the POSX looked like it was headed lower. It doesn't matter. The euro looked stable to higher then, too. So what? Crude, the grains, copper...all the same. All driven by momo-chasing HFT computer algos which haphazardly buy one day and sell the next.

So what does this mean? Well, I'm still going to tell you what I think and what I expect but I must warn you again: Attempting to profit by trading in this environment is suicidal. You will think you are doing the right thing and then, for example, a baseless rumor gets floated after the Comex close and gold is whacked for $40 before it can re-open. How's that stop order treating ya? Brutal, just brutal.

(Of course, none of this is new. For those die-hards that want to keep trading, I set up the service with Andrew Maguire over a year ago. You might think it's too expensive but in return I'll ask you how much money you've lost over the past 30 days alone? Considering Andy's performance, I'd say his fee is pretty cheap. If you want to learn more, just click the ad on the right side of this page.)

So here we are. The machines have pounded us all the way to $1425 and $23.30. Ugh. Never mind that The Bernank made no mention of "tapering" today. Never mind that Andy reported that today was the largest physical allocation month-to-date in London. Never mind the CoT reports. Never mind the 300 tonnes taken out of the GLD YTD. Never mind the 100 tonnes taken out of Comex vaults YTD. Just...never mind. The machines are in charge and they will continue to be in charge...until they're not.

And when might that happen? Lots of talk out there about imminent collapses and paper disconnects. Chatter galore on force majeure and cash settlement. Oh sure, this is going to happen one day. No doubt about it. But just don't go getting your hopes up that that day is going to be next Tuesday. If we've learned anything these past three years or so it's this: The main power possessed by The Powers That Be is the power to put off the inevitable. The music will keep playing and the party will continue until the day comes when it simply doesn't. That day is coming and it will likely be at a moment not of TPTB's choosing. Clinging to power and the Old Order, the bullion banks will likely create paper metal until there simply isn't an ounce left that they can steal hypothecate and leverage.

Your only winning move remains the acquisition and storage of physical precious metal. And I don't mean the CEF or the PHYS or a certificate from an LBMA vault. I mean metal that you hold in your own two hands. The real stuff. Period. I know there are production and delivery delays. Who cares. Acquire it and deliver it, while you still can. In order to make this easier, I've assembled a list of "affiliates" for you. They can be found here: https://www.tfmetalsreport.com/precious-metals-store and here: https://www.hardassetsalliance.com/cm/precious-metals-breakthrough. If you want to hasten the decline of TPTB, go to these businesses today and order some metal. 

Here are your mostly-worthless charts. Again, you and I can see where there should be support and buying pressure against the shorts. But that hardly matters when some goon no one has ever heard of can float a rumor and whack the global price of gold for $40.

And I know this is painful but I'm going to give you a CoT update later today, nonetheless. Cast it aside if you want. Claim that it's just fudged-up and manipulated, too, if you want. But...we are talking about levels of Spec shorting that we haven't seen since 2001 and, in some cases, even longer. This fundamental market structure will sometime soon show itself as a bullish indicator once again. It's just a matter of when. Now "when" might be when the banks are finally net long both gold and silver. We'll see. But for now, we'll just keep monitoring the levels in each category and discussing it every Friday.

Anyway, that's all for today. I hope you are able to have an enjoyable and relaxing weekend, regardless of all this nonsense. Keep calm and add to your stack.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  843 Comments

SilverSurfers · May 10, 2013 - 2:02pm

chit hit the fan, all paper will be suspect, and only bullion is trusted, and rickards first estimate of 44,000 gold is legitimate, but dont tell him, he has to lure seduce entice persade wu whue phew TPTB to get a freaking job.

Jim Grant is on all fours, and definitely a keeper.

Redneck_Rampage القراع عصفور · May 10, 2013 - 2:04pm

Thank you Sir!

The Watchman · May 10, 2013 - 2:04pm

Yes, I am acutely aware of this. Andy is, too. Hope to have more on this next week.

Silverivalist · May 10, 2013 - 2:09pm

GLD adds gold to reserves for the first time in months. Huge pm smack down this morning with FUBM underway now. Japanese bond markets ready to trigger domino effect. Conditions worsening in Syria. All these indicators point to one thing in my opinion. The EE is getting desperate and is getting ready to pull out all the stops.

and now this from ZeroHedge

US Alerts Two "Elite Military Units" To Be On Standby Over Deteriorating Libyan Situation

pforth · May 10, 2013 - 2:12pm

I've had the pleasure to hang out with Rob a couple of times. Here's a great interview he just did on Silver doctors: https://silverdoctors.com/rob-kirby-full-spectrum-bankster-dominance/

Redneck_Rampage ggnewmex · May 10, 2013 - 2:16pm

You have to remember, that Pascua was years away from ever putting a shovel into the ground. Also, the impact from disruptions such as Kennecott and in Idaho due to low prices won't be felt immediately. Kennecott still has stockpiled ore to process, and the mine in Idaho is balanced by other mines re-opening....

Frustrating as it is, the pressure on mines to close due to low metal prices takes a while to build, as it's expensive to put a facility on care and maintenance or fully close. Often in the past, mines run for 6-7 years losing money in the low of price cycles, before making it back in 1 or 2 good years... so it gives you a sense of time frames.

IMO, it's going to be the financial risks in the world that are going to be the movers for gold/silver - it's what's making the big boys buy in wholesale, which will eventually pressure prices. The mine closures / regulatory risks, etc. tend to be distractions.

just my 2-bits

· May 10, 2013 - 2:24pm

My wife's sister just called and warned us to pull all our cash out of the bank--that the banking system was going to crash later today... Hmmm.

Anyone hearing rumors out there?

J

TomMack · May 10, 2013 - 2:33pm

i am in the same boat. what can i do with my ira? sprott silver and gold is what i have available. i know i've heard that an LLC with a disinterested manager may be a way to get the money from the IRA to buy physical coins/bars without paying the taxes and penalty (since i am not 59+). i guess i have to do research. 

I was wondering why large owners of sprott funds could not take the gold and silver in a similar way as they are doing from GLD?

edit: punctuation

Watcher · May 10, 2013 - 2:35pm

Who is your wife's sister? And could her source be credible?

· May 10, 2013 - 2:36pm

My own position was similar in 2011 (I have since changed jobs and liquidated the account), except I ONLY had craptastic Fidelity 'target funds' to choose from.

I took a loan from the account, which was used to buy phyz, then gradually 'repaid' using pre-tax dollar. Not a GREAT solution, but the best available to me at the time. It technically allowed me to keep contributing (just changed the investment allocation to go towards repaying the loan) while still remaining in the system. There are risks involved, as repayment of the loan needs to continue regardless of whether you are employed and can contribute pre-tax $ to the account. And indeed I took the tax hit later, when I removed all funds from the account upon successfully landing a new job.

For other options/thoughts on how to manage 401k, you can do a targeted search in Google Advanced Search, and put in https://www.tfmetalsreport.com/forums into the 'site or domain' field. The query would yield something like this.

Some existing TFMR threads on the topic:

https://www.tfmetalsreport.com/forum/1910/self-managed-401k-advice

I was going to recommend this one, then realized you had already not only READ it, but also already tried the loan option... :-).

https://www.tfmetalsreport.com/forum/great-401k-expirement/287?page=1

Great minds think alike, apparently.

My only other suggestion would be to gently nudge my better half towards information on what happens to private accounts (retirement or otherwise) in insolvent nations:

Argentina, Ireland & Hungary nationalize pension funds, France & UK drifting in same direction

https://www.bloomberg.com/news/2010-11-25/hungary-follows-argentina-in-pension-fund-ultimatum-nightmare-for-some.html

https://blogs.reuters.com/james-saft/2010/11/30/pension-savers-get-the-boot/

https://www.zerohedge.com/article/following-hungary-and-ireland-france-next-seize-pension-funds

Cyprus (need I say more?)

OECD has some pretty detailed studies on what has happened and what is likely to happen to pension systems: https://www.oecd.org/finance/private-pensions/

· May 10, 2013 - 2:37pm

Re the G20 meeting in Turkey (for which news is still very un-forthcoming):

It’s strange, of course, why the complete re-architecturing of the global financial system has been entirely missed by the mainstream media, despite being right in front of them. Alas, they have more important stories to cover, such as retiring soccer managers, boys with pet cheetahs, and Britney Spears finding dieting tough.

Well, I suppose such frothy bubbles keeps us proles happy, but investigative journalism certainly is a lot less challenging these days than it once aspired to be.

If we see any more emerge from this apparent non-story, we’ll be sure to let you know.

https://theeurovigilante.com

· May 10, 2013 - 2:37pm

Be sure to watch this: https://play.goldmail.com/15z410mdwsrx

· May 10, 2013 - 2:41pm

I've been looking for a while for indicators of this type -- could you provide a bit more context about your source?

Incidentally, Google indexes this site REALLY frigging fast:

Nostradumbass | TF Metals Report

www.tfmetalsreport.com/comment/196971 53 secs ago – My wife's sister just called and warned us to pull all our cash out of thebank--that the banking system was going to crash later today... Hmmm. Anyone hearing ...
· May 10, 2013 - 2:42pm

What kind of conspiracy theory tinfoil hat site are we running here? A poor one, evidently. A good bank run rumor is apparently out there somewhere, yet TFMR has to hear it from Doc J's wife's sister before it is even mentioned in a post? We nut jobs should be ashamed of ourselves.

Either we turn in our tinfoil hats, or we try to do better in the future. The next time there is a rumor of bank runs, Federales going door to door, etc. I expect to hear it here first, dammit- not have to wait for some distant relative to send smoke signals. Get on the ball, people.

ggnewmex Redneck_Rampage · May 10, 2013 - 2:43pm

Hey, your points are well taken, and surely credible. It is just the fact that it had no material effect on things, and as for Pascau Lama, I understand that stuff was all sold into the market effectively by Barrick. Yes, can understand it will be a few years down the road, but a few years down the road, this will not be there. ALl points to big problems

Good point!!

Iceberg Slim · May 10, 2013 - 2:45pm

Like a boss.

Au & Ag.

pulled the trigger very close to today's lows (lucky timing, now I see a FUMB in full swing)

stack is looking healthy.

if it dips more on monday per Bo Pelini, i'll buy some more again.

benque · May 10, 2013 - 2:45pm

Having just today received the dreaded "pay or die" letters from the bank, I hope your sister-in-law is right.

GM Jenkins · May 10, 2013 - 2:46pm

Don't be hard on yourself Turd. I think I speak for a lot of your many visitors when I say we come here primarily for your commentary (though we enjoy your predictions and hope you won't stop calling it as you see it). There's a slow motion train wreck in progress, but it's hard to tell how slow ... because we're all on the goddamn train. You're doing your best.

pontiac · May 10, 2013 - 2:49pm

If most of your assets are in US dollars, gold and silver are the most obvious answers.

One other possible suggestion is Chinese Remimbi. In late 2007 seeing a possible financial disaster, I shot gunned some money in a half dozen directions. I had some big losers, but my gold and silver cushioned them. A notable success was the Chinese currency to which I am still adding . The only way I know to buy Yuan is through Everbank.

Save_America1st · May 10, 2013 - 2:49pm

The FUBM is strong with you today Turd...

¤ · May 10, 2013 - 2:52pm

In my case it's something inbetween while blending into the gray background for awhile and continuing to observe how some things that appeared certain are far from it. What seemed like an out of control and inevitable situation (indebted govts collapsing shortly) has revealed itself to me to be more of one where the exertion of more control by CB /Govts. is going to stave this off for far greater of a timeline then previously anticipated or wanted by many.

Simply put, TPTB have more levers and levels of obfuscation then anyone can or wants to imagine possible. It's always been that way.

None of this is to suggest a capitulation or rethinking (on my part) of the meme here (or in many other places on the web) or in our own collective hearts and minds regarding what many of us believe to be taking place around us in life and the steered/rigged markets, economic/monetary policies of govts. etc. 

On the contrary, my beliefs are still the same with more of a wider open set of eye's on longer timelines while removing the injustice or fairness or the need for immediacy out of the equation of what some might think should take place while watching it not happen. Quite the opposite is occurring as a matter of fact.

In fairness and in complete honesty to all of you and in respectful deference to our gracious host I thought it proper or necessary to let all or some of you know I didn't abandon this ship with a chip or attitude on my shoulder about anyone or anything. Why would I?

Perhaps it's only important for myself to express this and it's what I need to say and not so much what anyone wants or needs to know. I wouldn't know if that's the case as I've always been tolerated and appreciably supported on here. What I believe to be the case is that somewhere along the line while surfing the tangled web known as the internet is that my security or IP seems to have been compromised and that has given me pause to reconsider that which I had engaged in for a long time.....speaking my mind frequently and probably far too often for some people's tastes or tolerances.

While that might seem preposterous or even egocentric of this one small relatively anonymous voice among many here and elsewhere to even imply I'm not naive about some of the difficulties sites like this one or many others have been going through regarding being targeted by hacking or by trollish individuals bent on spreading skepticism or clever messaging from within. 

It struck me fully about 2 weeks ago that some sites and individuals (not me, I'm a small fish) will always be under scrutiny from someone or some group that doesn't appreciate it. Everyone here reads about the increasing funny stuff going on in cyber-land or whatever yourselves have seen firsthand or thought to be the case. The news is loaded with cyber security issues we're all aware of that will increasingly become worse and become the new normal. Fun? Wow.

While having too much time on one's hands is a nice/boring problem it led me to consider and actually start to format a blog of my own to find the full range of my voice while acknowledging the soapbox here that TF provided as the impetus for me even considering such a non-competitive move. Call it the inevitable evolution from here like TF did from ZH thankfully for his and all of our benefits.

The blog is and has been ready to go for a couple weeks. I have my own dedicated domain name, a hosting service and did much of the reformatting on my own (and expenses) from a blank white web page and simple template into something I was excited/proud about. It wasn't until while I was working on it and got lambasted with approx. 35 assorted viruses, malware, trojan horses etc, in a span of 5 minutes that I seriously considered if the energy or 'cost' was all worth it.

My conclusion about that and some other things is....nope!

I'm not out to prove I'm right about something or to bugle my consciousness out into the blogosphere about whatever strikes me as relevant or unjust etc. I've done plenty of that bugling here while being given the gracious opportunity to do so by TF and at probably great cost to him in many ways that I've always been relatively aware of. None of what he's done or accomplished here has been easy and there's always an unseen cost I would imagine. Skin in "the game" is an immeasurable one. One I've decided not to shed for now while my computer tries to untangle the web that happened to it.

So for now, my idea and blog will remain in a cyber Odin's Sleep of sorts while I focus on everyday life and not the injustice of Govt.'s or their markets and the radical change in society and media messaging that is taking place. I see it for what it's becoming and imho we're only seeing the beginning of it.

So in that sense, it's merely a continuation of what it's always been.....business as usual except that it's taking place in our time of our awakening during a period of radical change. Just like it did during our parents time and their parents and their forefathers previous to them in different era's with a different set of circumstances that they had little idea about due to a dearth of real-time information. Something we have plenty of nowadays....including an overload of biased disinformation everywhere 24/7.

At this time the greatest threat to this( and real life relationships and communities) is self-doubt, a closed mind and the insatiable but expected protectionist cannibalization of each other in times of uncertainty and doubt. Keeping your minds and eye's wide open while stacking real life everyday options (kudos to P4 for that one) while not waiting on the immediacy of anything will serve you well. 

Live life today and worry less about everything and extend the timelines of what seems around the corner. That's where I'm at.

For now....but not forever....

https://www.youtube.com/watch?v=wNhCSJuZi9A

Lamenting Laverne · May 10, 2013 - 2:54pm

Follow-up to this post: https://www.tfmetalsreport.com/comment/196863#comment-196863

I haven't read the comments on this and previous threads yet, so apologies if these ideas have already been presented. I am not sure that I have got this right, but as mentioned in the short prelude post, I think that it may be really important. 

The background is that I have been intrigued by the reported relationship between Gold and the volatility in the Japanese 10yr, which indicated to me that Gold was somehow used to hedge interest exposure. 

To avoid confusion, here is what I think is normal. The animal spirit of the market is, that US bonds should fall in valuation, rise in interest rates to reflect the monetary expansion, that has been going on for decades. The USD should fall, and Gold should rise, at least as long as the interest rates do not reflect the underlying monetary expansion. 

Although the world reserve currency enjoys some safe haven inflows, which helps keep a natural lit on rates, when there is trouble in the air, it would at some point become necessary to manage rates down in order to keep price inflation at a target of currently around 2% around the world, because the monetary expansion just kept on going. 

Even if the current bond holders did not run away, all that new cash had to find a home - either in stocks or foreign bonds with higher rates, or the option to be avoided - commods - because that would produce cost push inflation.

Being the largest bond market in the world, it would be good to have an incentive to increasingly nervous bond buyers, who might be able to live with a small fixed coupon, but who would not be able to live with bond valuation losses, when interest rates would start to go up - to keep them in the US bond market, so they would not produce price inflation elsewhere. 

I believe, that the answer was a derivatives contract to insure the bond holder from losses, and hence ensuring that the US bond market would stay well bid to help keep rates down - and maybe even help the rates stay low, by making the USD look stronger, than it really is.

I don't know anything about how an Interest Rate Swap is constructed, but this is how I imagine it is done. (Jim Willie described once that an Interest Rate Swap has an underlying sell of a short US Treasury and a buy of a long US Bond, so I will include that it the example. In reality, I think the bank holds lots of those already, which will be used as stand alone bulk hedge if needed instead). The numbers I use, do not all match real compatible levels. They are just examples:

Customer: Institutional Pension Fund Investor, who buys 1B USD worth of US 10 Year Bonds with a fixed coupon of 1,76%. He must hedge the downside risk to his bond valuation in case the interest rate rises, so he buys a derivatives contract from the bank to cover the risk. He pays a fee to the bank for the privilege.

Bank: Puts the nice fee in an account and leverages that XXX times. The bank already has US 10Yr Bonds on the books, that I think has been hedged with USDGold. The bank spends the leveraged fee money plus free cash from the Fed as follows:

5. December 2012:

1) Sell USD/YEN @ 82,24. (In the period before August 2012 many contracts of this kind over time practically ensured a steady managed decline in USD, and almost assured profit – this changed in August last year). 

2) Buy Japanese 10 Year Bonds of 0,72ish % in an amount that will cover the corresponding valuation loss in the US 10 year bond.

3) Buy YenGold @ 140329,073

4) Buy US 10 Year at 1,76% (If not kept in separate bulk hedge)

5) Buy USDGold @ 1706,336 (If not kept in separate bulk hedge) 

If the future ends up being:

Scenario 1) Interest on US10Yr has gone up. USD/YEN @ 72: Yen up, Interest down and Valuation up on JB10Yr, US Dollar down, YenGold down, if only a function of YEN strength. Banker is happy - sells JB10Yr bond to pay insurance payout to pension fund investor, who has not stampeded out of the US bond market and hence not made things worse, and the banker has gained on Yen exposure, which may or may not be offset by YenGold (If YenGold was only looking at Yen, it should be down, but it is probably buoyed by USDGold, that should be up, because of Dollar weakness. The USDGold gain should cover the unrealized valuation loss on the US 10 year Bond. US Bond not sold, because it is hedged, and no selling pressure should be forced on US bond market. Happy Banker! 

Scenario 2) Interest on the US10Yr has fallen. No insurance payout is due, because pension fund investor is happy that his portfolio has gained in value. USD/YEN @ 92: Yen down, Interest up and valuation down on JB10Yr, US Dollar up, YenGold up, if only a function of YEN weakness. Interest down and valuation up on the US 10 year Bond and USDGold is down, due to USD strength, but not much, due to inherent animal spirit upward strength under Gold. Loss on currency position is covered by YenGold. Loss on JP10Year is covered by valuation gain on US 10 Year. However, this would mean actual selling to cover loss - and that is not really allowed in the US Bond market.

So how about devising an alternative and hitting two birds with one stone.

The managed descent in the USD (animal spirit strong down) and the managed ascent in Gold (animal spirit strong up) requires periodical smashes of Gold and levitation of the USD to make it look good.

Also, in order to avoid creation of selling pressure on the US Bond market, which will probably bring other derivatives contracts in trouble too, why not try to nudge the JB10Year bond interest downwards, so the Japanese bond loss gets smaller, while preserving relative strength in the USD against USDGold, so the lower US Bond Interest rate is maintained at the same time.

How can that be accomplished, when any strength further in USD relative to Yen will result in higher interest rates on the Japanese Bond? It is a delicate operation, because the animal spirit of the USD/YEN is upwards at least since August last year.

(Interlude: It started probably long before that, as two distinct spikes (4th August 2011 and 31st October 2011) and a gazillion small ones bears witness to. The idea that the animal spirit of the Yen is stronger than the USD for a country that has an aging population, with massive debt, and vaning competitive abilities simply does not fly with me. I would argue that the Yen strength and the “lost decades to deflation” is 100% a product of the US-Fed’s need for an inverse currency to manage the descent of the USD – because Japan was probably was somehow fucked after the 1997 Asian crisis anyway – I haven’t checked the chart for many proof example, but it is likely the operation started on 10. August 1998, when the Yen peaked at 147,63 and the Japanese debt peaked at 345,1% of GDP around the same time - after a loss in value from 80,43 on 17. April 1995 only 3 short years before . The Yen might have been on the verge of hyperinflation, and the Fed recognized that this could be put to good use. By 1999 there were signs of recovery in Asia. (One proof example can be seen on the weekly chart from the 24. May 1999)

Well – back to the delicate operation. It comes in different variaties, but this is an example that takes two steps:

Step 1) First you smash the bejeus out of YenGold. This will send the USD/YEN down some and signal to the Japanese Bond market to demand lower interest rates, because of strengthened Yen. The Gold smash immediately spills over into USDGold, which will be smashed further down to regain just enough upward USD momentum for the next step. This first step accomplished the two desired goals - to make Gold look unattractive for relic loving investors and to lower Japanese interest rate expectation. Now comes the delicate part.

Step 2) In order to make the USD/YEN look good and strengthen the USD without sending Japanese interest rates up again, you have to move in baby steps - so no big signals are sent to the Japanese Bond Market. Such a signal would be big move up in USD/YEN.

Here is the key: Ultimate USD weakness or strength is measured in Gold. If the USD/Yen goes up, but Gold does not go down at the same time, would that signal any move down in Yen and hence a signal to increase bond rates?.

Apparently not, because that is exactly what they appear to be doing. After a good move down in USD/YEN - triggered by a sell off in YenGold and sending a lower interest rate signal to the bond market - they hold the USD/YEN steady on the subsequent Gold retracement up on natural forces powered from USDGold, when it should have gone down.

(Look at Daily Chart for USD/YEN, USDGold and YenGold in Netdania Chart station)

For even more pronounced effect – look at this one, where it runs away from them:

4. April: USD/YEN up – USDGold Flat – YenGold Up

5. April: USD/YEN up – USDGold Up – YenGold Up

8. April: USD/YEN gap up – USDGold Flat – YenGold Up

9-10-11 April: Turning flag with normal inverse behaviour and USDGold/YenGold alignment in the algos.

12-15. April: USD/YEN Down – USDGold Down – YenGold Down

16-19. April: USD/YEN Up – USDGold Up – YenGold Up

22 -23. April: Turning flag

24-25. April: USD/YEN Flat – USDGold and YenGold Up

26. April-1.May: Tension release – back to normal - USD/YEN down, USDGold Flat, YenGold Down

There are different variants of this scheme, e.g:

1) Gold smash - while USD/YEN is kept steady during smash (8. May 2012)

2) Gold no move - while USD/YEN is up (14. September 2012) 

I think this is done to re-calibrate the USD against USDGold and it seems to be done by exploiting that YenGold sometimes moves inverse to the Yen, and sometimes alongside USDGold in response to the USD – How convenient!

I am very bad at math, so I cannot figure out the absolute effects of the way these these three elements move relative to each other – floating in space – maybe these moves are netted out – but they are still really weird and has a distinct purpose I am sure. However, I have recognized pieces of a pattern, that I hope the math geeks here will help us understand the absolute impacts.

Another good one to examine in detail is 13. September 2012 to 24. October 2012 (I didn’t compare with YenGold on this one – only USD/YEN and USDGold):

13. September: Gold Up – USD/YEN Flat

14. September: USD/YEN Up – Gold Flat

17. September: Normal inverse moves

18. September: Both up together

19. September: USD/YEN Down (wants to go higher but fails)– USDGold flat

20. September: USD/YEN Down - USDGold flat

21. September: No move – The small crosses – Open = Close seems to signal algo Modus Operandi reversals, I think.

24-26. September: Both down together

27. September: USD/YEN Down – USDGold step up – Tension release

28. September-5. October: USD/YEN Up – USDGold steady to slight up

8-10. October: Both Down

11. October: Both Up

12. October: USD/YEN flat – USDGold Down – Tension release

15. October: USD/YEN Up – Gold gap down (normal inverse, except gap, tension release)

16. October: Both Up

17-18. October: USD/Yen Up – USDGold Flat or steady

19. October: USD/Yen Flat/Steady – USDGold Down – Tension release

22. October: Both Up

23. October: Both Down

24. October: USD/YEN Flat/Steady – USDGold Down – Tension release

There are numerous other examples in the charts, some less clear – but many many of these.

I think that all these stealth moves up in the USD relative to USDGold has the purpose of bringing interest rates down in both the US Bond market and the Japanese Bond market. The latter to reduce losses on the JB10Year hedge, when US Bond rates fall.

ZH commented after the 12. April that Gold smashes seemed to become worse in periods with higher interest rate volatility in the Japanese Bond market. This makes sense, because the Japanese interest rates naturally rise with a big jump in Yen weakness, which also brings the “Sell USD/Buy Yen” currency position further under water, with risk of margin calls, so the way to bring the situation under control – aka calm the interest rate volatility – is to switch YenGold to inverse Yen – smash YenGold bigtime – return YenGold to USDGold alignment and then return to baby steps stealth strengthening USD against Gold.

Ok – cool – this seems to have been working very well, because the japanese rates have been declining since January 2013 – despite the much discussed Yen weakness – with a massive drop in early April.

Why do I think that it is blowing up / is disorderly now? 

Well first of all – the massive drop in japanese rates that happened in April – was I believe at the time of the Gold smash – signalling that the YenGold smash had sent Yen higher and hence rates lower. That is logical – but just days before on the 4-5. April, the USD/YEN had a massive spike up – which had not produced a similar spike up in Japanese rates. Any serious bond investor has to look at that and think – WTF???

(Massive USD spike-ups like that have been seen before (aug/oct 2011) – looks like manipulative up-candles, where momentum took over and won – but it could also be USD shorts forced to sell, because their positions are margin called, and hence destroying Fed manipulation moves, that was supposed for have a controlled up flag, while Gold is flat, with subsequent small down ticks in tandem with Gold.)

Back to the Japanese Bond Investor WTF and why disorderly now. If something artificial is keeping the rates down – would I, as a Japanese bond investor, be in risk of being caught on the wrong side of this thing, when that artificial mechanism breaks – as they always do eventually? That was what the massive down move in rates said. Could it be that this Japanese Bond investor decided to get the f*** out.

That would put serious pressure upwards on rates, and hence all the near prices hedges of the Fed/Derivatives constructs, that are already pressured by the spikes in USD that sends their currency positions further under water.

What would indicate a run for the exits? If there was a sell off in 10 Year bonds in BOTH US and japanese markets, would be one. We had that yesterday. Look at the chart in this link – it reveals something else, that is important.

https://briefing.com/investor/markets/bond-market-update/2013/5/9/treasuries-close-on-lows.htm

The yield curve steepened yesterday. That means that the larger selling pressure is in long bonds. It is the long bonds that have been bought in the derivatives babel tower according to JW. Now they are selling off.

Ok – that could be normal – but look at the chart in the link. Yesterday was a big UP day in the USD/YEN pair. That should have resulted in lower yields. At the chart you see that this is exactly what happenes with the US-20yr and US-5yr. Right out of the gate they behave normal – they only turn later, when they take the cue from the 10 Yr.

However, the US 10-Year spikes up – right out of the gate – despite a stronger USD - which tells me this is unplanned/forced/panic selling – and that it therefore is very likely related to the interest rise in Japan and the babel tower of derivatives holding up the US Bond market – and the more than decade long Sell USD-Buy Yen carry trade, that started unwinding in August of 2012.

If true – then this is, as we all have suspected since early this year – big.

Timeline – Announcements of Bernanke not at Jackson Hole in August, and Gold Dollar circulation in October. My bet is that the Treasury will tender the new Gold Dollars for US Gold at a much different exchange rate sometime over the summer and latest by October.

As usual – really sorry for lack of brevity. Now I will go back and read posts and comments.

Down Range The Watchman · May 10, 2013 - 2:56pm

Or maybe the iceberg the Titanic hit??

stealthbear Be Prepared · May 10, 2013 - 2:57pm

You have a way with words, sir. I nominate this for best post of the year. Awesome.

Texas Sandman · May 10, 2013 - 2:57pm

Silver went green on my terminal?

Maybe the red pixels are burned out. Yeah, that must be it...

Oldhat · May 10, 2013 - 3:00pm

About prediction.

Sure we are all stackers and one day we will have our day in the sun. TPTB have played everyone like a fiddle and we were naive enough to think they couldn't, or wouldn't?

I ponder a group like this and think that we should have pooled resources and played the game along with the EE.

There is a "Big Picture" and then there is the "NOW" picture; one needs to be able to view and understand both. The brain trust is here at TFMetals in it's posters, it's just about getting it organized.

Fool me once, shame on you. Fool me twice, shame on me! (Directed towards TPTB)

goldenbear NonoverlappingMagicCereal · May 10, 2013 - 3:00pm

I don't speak for others, just myself. I watch premiums for anecdotal evidence of supply and demand domestically. Are there other reasons why retailers raise premiums? Obviously. Do I blame others for getting excited about the possibility of decoupling from paper prices? Nope. Amnesia? I don't think so. Physical holders are understandably looking for that long awaited event. Which makes me curious if you are a longtime holder of physical yourself? Reasonable market based explanations? Of premiums, sure. How about just about everything else in the whole entire world. So I'm willing to grant physical holders a little bit of allowance to hope that rising premiums will stay and offset paper declines. I choose not to fault others for eagerly waiting to be rewarded for making right choices. On the flip side the pain is more acute for newcomers, there should not be an expectation of quick and easy gains. Not in PM's. But I suspect that many have been and are. Fundamentals take time to play out and are excruciating to sit through. I've been around long enough to know that this is nothing new. During the housing bubble I was fortunate enough to exit before the stampede. But it was in some ways a painful experience. Being right is one thing, sitting tight is another thing entirely. I learned a lot in my time in the old GIM forum. So I just want to return the favor. I applaud the work that is done here by those that make it possible and enlightening. It might not be world changing, but it can give a few a chance at financial freedom. (Applause now)

murphy · May 10, 2013 - 3:03pm

Exactly!

Turkey occupies almost half of Cyprus. I only need a conspiracy theorist to tell me that there is an underground headquarters beneath the Mediterranean, with some entrance guarded by an ancient Minotaur, in which a descendant of King Midas sits, rubbing his hands with glee while ruling the world. So much for the Denver airport.

Something is up, and it isn't my net worth.

You're in good companycrying.

As a goof I googled minatar (misspelled by accident) . Came up with this

https://minatar.com/?page_id=18

Mr. Zarko Taric, Minatar CEO, participated at 16th Eurasian Summit in Istanbul, Turkey

I can't seem to get out of the Turkey rabbit hole today.

Notice: If you do not see your new comment immediately, do not be alarmed. We are currently refreshing new comments approximately every 2 minutes to better manage performance while working on other issues. Thank you for your patience.

Become a gold member and subscribe to Turd's Vault

Contribute

Donate  Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 11/12

11/14 8:30 ET Consumer Price Index
11/15 8:30 ET Retail Sales
11/15 8:30 ET Philly Fed
11/15 8:30 ET Empire State Fed
11/15 10:00 ET Business Inventories
11/16 9:15 ET Industrial Prod and Cap Utilization

Key Economic Events week of 11/5

11/5 9:45 ET PMI Services
11/5 10:00 ET ISM Services
11/6 US Mid-term Election Day
11/8 2:00 ET FOMC Fedlines
11/9 8:30 ET Producer Price Index
11/9 10:00 ET Wholesale Inventories

Key Economic Events week of 10/29

10/31 8:15 ET ADP employment
10/31 8:30 ET Employment Cost Index
11/1 8:30 ET Productivity
11/1 10:00 ET ISM Manu Index
11/2 8:30 ET BLSBS
11/2 8:30 ET Balance of Trade
11/2 10:00 ET Factory Orders

Recent Comments

by Island Teal, 1 hour 5 min ago
AGIXX: ...
by Mickey, 1 hour 59 min ago
by silver66, 2 hours 30 min ago
by Angry Chef, 3 hours 5 min ago