This Ain't Horseshoes

272
Thu, Aug 25, 2011 - 9:04am

They say close only counts in horseshoes and hand grenades. That certainly applies here. Monday evening, I projected that a margin hike was coming this week in gold. I thought (hoped?) that gold would be allowed to run a little bit farther before the smashdown began. I was looking for the margin hike to be tonight, not last night. If it had been, we'd have had Tuesday as a peak, not Monday, and many of us would have been able to lock in gains before the fireworks began. Alas, I was off by a day. Nuts. Close. But close doesn't count.

The pain for The Cartel had become too great by Monday evening. Their paper shorts were getting slaughtered and, with the technical picture so rosy in both metals, they were looking to really take it up the bahooty on Tuesday. When the Forces of Darkness saw the OI in gold rise by an incredible 10,000+ contracts on Monday, they knew it was time to strike. First, coincidence or no, the C/C/C sees their friends(?) in Shanghai raise their gold margins by 9%. This is enough to stop the runaway train at 1918 and bring it back below 1900. Then, before the Comex opens and momentum starts anew, the criminal C/C/C gets the ball rolling on their diabolical plan. They let word out to a few of their friends (traders, hedgies and algos) that "there might be some headlines that will interest you after the close on Wednesday". Down goes gold. Gold begins to recover mid-morning and it looks like there might be hope. At about noon, you drop the hammer by telling a few more "friends". Gold seriously drops and, when it's all said and done, it finishes the day down about 5% from the overnight highs of the previous day.

I wrote Tuesday afternoon that I would be "flabbergasted" if a margin hike wasn't announced that evening. I felt this way because the C/C/C had already created the necessary volatility to justify one. Ahh...but they weren't done. Why hike margins Tuesday when you can use the fear of the hike to scalp another $100 from gold on Wednesday? And that's exactly what they did.

So, where do we go from here? I may end up looking foolish but I think they're done. I don't expect 3 more hikes over the next 5 days like we saw in silver in May. Why, you ask? Purpose and mission.

In late April, speculators were the primary drivers of price and had squeezed The Evil Empire into a corner. The specs had to be driven out and taught a lesson. The EE also needed time to regroup. This led to the 5 hikes in 9 days and a 35% drop in silver from which it is still recovering. This last run in gold was entirely different. As pointed out here and by others much smarter than I, the OI and CoT numbers for gold over the past three weeks have shown that the primary driver of the last $250+ in gold has been short-covering by The Cartel, not specs. As stated last week, this is why all of the "bubble" talk in gold is nonsense and those spouting it should be permanently ignored. Bubbles form in excess speculation, not short covering, and the data clearly showed that this was a short-covering rally. Given that gold rallied $250+ on the backs of Cartel short-covering and given that The Cartel is a primary member of the C/C/C and given that this entire episode was designed and implemented to relieve the short-covering pressure on The Cartel, it is logical to assume that the target of this attack is to get gold back down to where all the pain began.

Where is that? Well, you can clearly see it on the charts. Three weeks ago tomorrow, S&P announced they were downgrading U.S. debt to AA+. Recall that this even caught The Turd by surprise. On Sunday night, the 7th, gold gapped open higher and never looked back. (Except for the period around the first, damage-control margin hike on the 11th.) The banks know the true significance of the ratings downgrade and they began to furiously cover their long-held short positions in gold. However, it got away from them and, by late last week, the technical picture in both gold and silver had begun to look so swell that hedgie and WOPR money was beginning to rapidly stream into the pits. It had all the markings of a serious short squeeze and the C/C/C was forced to act. Unfortunately, they acted one day too soon.

So, where do we go from here? After reaching down to 1705 a few hours ago, gold has since recovered to about 1730. That could be it. This could easily be a "sell the rumor, buy the news" type of event. Seriously, which fundamentals have changed? The debt? The deficit? Europe? The key number to watch looks to be 1750. A move above there would give me some measure of confidence that the storm has passed. Do not be surprised, however, if gold makes a run down to fill that gap on the chart from Sunday, the 7th.

paper_8-25amgold3.jpgpaper_8-25amgold6.jpg

In silver, I do think the worst is over. It reached down last night and touched the bottom end of the channel we drew for you yesterday. That overnight drop to 38.76 ought to do it. IF gold drops again and tries to fill that gap, I do not expect silver to make new lows. Again, I am very excited about silver here. The C/C/C have evened to great degree the "leverage balance" between silver and gold. This will serve to drive some interest back into silver in the coming days and weeks. I expect we'll see silver eclipse $44 again sometime soon. Not ready to go into full prediction mode yet, though. Let's be 100% certain that this "event" is over before we go there.

paper_8-25amsilv8_0.jpg

That's all for now. More later this afternoon. TF

About the Author

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  272 Comments

bern
Aug 25, 2011 - 9:51am

So basically, physical is on

So basically, physical is on sale for the moment.

margaritatime
Aug 25, 2011 - 9:52am

@defmaybe

I thought about that when I saw your post last night...the 'what if'. I say you did well.. Could have been worse... could have been much worse. I say nice job, and well done at 200%. What you pointed out does worry me.. we think alike there! In the long run it is a good thing, but it is worrisome short term.

Tom L
Aug 25, 2011 - 9:53am

HUI

Looks good this morning after the initial shake out. 572 and my short list is mildly red with the most illiquid makes the biggest moves down, ie. MFN.

Most of then have turned Green as I put this post together. A push back to the 585 region would be phenomenal. It looks like we've got a new channel on the HUI.

https://www.flickr.com/photos/29681681@N06/6079250371/

Re-taking the blue line would be a good result today. The funds will like the 50/200 DMA cross. The Red line has t obe considered resistance until broken, and this morning's low could define the new short-term uptrend within the bigger purple one. If this is the start of a new bull market in gold stocks, then the RSI should turn up from 50 and hold that on all corrections (H/T to Trader Dan for that little insight). Big day today.

Ta,

Tesla
Aug 25, 2011 - 9:54am

@ndmaster

My bad - I thought YOU were being sarcastic - like I said welcome to the board. The cartel is no joke and since you've been around so long you probably realize this. Shorting doesn't make you a member of the cartel or the EE. It just makes you a savvy trader in a correction.

Peace

SRV - ES339
Aug 25, 2011 - 9:54am

DEAR TURD

Not sure why, but listening to the news about Buffet and watching the B of A stock take off (of course select scum get tipped to help the pump... Becky Quick "just got off the phone with Warren and he thought this whole thing up in his bath tub yesterday"... lol) it occurred to me that this community is plenty large enough to make some serious noise about the criminal acts (PMs).

I was ready to bash my computer as Gartman called in to Fast Money yesterday to 'call' the bubble and 'predict' a $300 drop in gold (almost word for word from his 'call' on silver just before the CME did their last two margin hikes... the guys obviously got a crystal ball). So, we all know what we're up against, but I'm thinking that if 20 or 30 thousand angry Turdites channeled that anger, we should be able to find a way to get someone to listen... starting with congress (20,000 emails to a single Senator would be a good start).

As someone who has more than 30 full seasons of hockey behind him, I say why get mad, lets get even, take names, and put some feet to the fire!

Shill
Aug 25, 2011 - 9:56am

GDX

Is on rocket boosters? I thought the world was coming to an end lol

https://www.marketwatch.com/investing/fund/gdx

margaritatime
Aug 25, 2011 - 9:57am

@ScottyJ

Have always appreciated your reasoning. My call was that the Bernanke would say nothing, other than academic hot air and drivel. But after seeing the conceded effort on multiple fronts to hammer down the PMs, I have to wonder if the parrot will speak.

Do you come to this conclusion for the same reason?

silvergoldsilver Justin
Aug 25, 2011 - 9:58am

Sub $18 silver

what does 2008 have anything to do with today?

¤
Aug 25, 2011 - 9:58am

Scott

I'll echo that, thanks for the links and thoughts on all of this.

I think your right also. The Bernank seems so smug and confident that I think he's relishing this whole experience and I also think some type of specific Fed. speak will occur.

I'm not sure about anything drastic and set in stone but who the hell knows at this point. Out of the ordinary things seem to be the new normal so he may just flatly state that their will be no QE3 at this time. Obviously they are doing something stealthy at the moment besides the "low rates for two years" announcement.

TF and yourselself have commented or linked to the stories recently about available credit about to become a lot more accessible. I think your right and it ties in with the overall real estate/housing plan they have in mind and that I commented on earlier.

It's been said before that the new QE3 was Bernanks earlier announcement. I believe it was and it's part of this larger housing re-fi program that might be rolled out shortly.

Tomorrow? Idk, but that seems like a plum they would want a politician to lob out there.

I_ate_the_crow
Aug 25, 2011 - 10:01am

Uncle Warren has saved the US

Uncle Warren has saved the US economy, hooray!

¤
Aug 25, 2011 - 10:02am

Shill

GDX....Holy Smokes! That is almost vertical!

I should go check my positions.

damijan
Aug 25, 2011 - 10:03am

I already bought some 2

I already bought some 2 months silver $44 calls.

¤
Aug 25, 2011 - 10:03am

Buffet

Gee, you don't suppose that is what Obummer and Uncle Warren talked about?

This is getting "Godfather" like.

Did they seal it with a kiss and a little Italian just for effect?

survivalwstyle
Aug 25, 2011 - 10:04am

4 the record

i have purchased both metals on saturday, monday, tuesday and wednesday and today i have exactly what i purchased.

Measure you wealth in OZ not POSX.

i think timing monthly metal buys w/ option expirations is a great way to BTFD. today is again that day, so i may be back on the buy. i do not think the EE wiLL let Ag croSS back above 40 before expiration.

then friday of course we get the pleasure of hearing this forecast.....

August 26 Speech--Chairman Ben S. Bernanke
Near- and Long-Term Prospects for the U.S. Economy
At the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming
10 a.m. ET

anyhow i spent over 2 hrs this am reading through the posts from the last 3 blogs. so much quality information mixed in w/ humor and music videos was just what i nEEded to load the chamber with another silver buLLet today. i am about 80% in now. if we break below 38.75 i am a buyer again. if we get 1oo oz bars under 4k again that would be my purchase today, if Au is under 17oo a 50 peso is in my future.

i have read this is the kitchen, the furnace, the wOOdshed. i oFFer you the house of pain. it takes some shiny metal gOOd friends and a shEEt eating grin to roLL through wEEks like this. thx 2 aLL for helping me sEE this for what it is. a tremendous buying oPPortunity.

https://www.youtube.com/watch?v=U9Q0jPyrja0

and now oFF to the pacific for some personal perspective. stay wet, stay ready to act, stay right.

Ferd Torgerson
Aug 25, 2011 - 10:05am

Mining Shares

Is it just me or does it appear that the shares are now outperforming the metals? Only a few weeks ago, I could count on my shares getting hammered whether the metals were up or down.

Toward the close yesterday, I noted that, even as the metals continued to sink, my mining shares dug in their heels and refused to fall further. In fact, a couple rallied a little from their lows toward the end.

This morning, with the metals further down from yesterday’s close, my two gold miners (AUY and CGR) are in the green and the three silvers (EXK, GPL and USSIF) are either flat or slightly green.

Maybe I'm reading too much into this too early but maybe the the miners are finally finding their legs.

Tecumseh
Aug 25, 2011 - 10:11am

So, buy. . .

gold, silver, miners?

MrSteed
Aug 25, 2011 - 10:13am

Itchy trigger finger

Well, this might just be the day to go all in using some cash I've been saving for the occasion! Looks like a really great sale opportunity. I'm mulling the J Hoe event tomorrow and maybe waiting. Decisions decisions!... argh. Thinking about it, no matter what Bernank says, its good for gold.... Also, it seems like frequently when he opens his pie hole, gold goes up... today might be the day!

wisesilverwolf
Aug 25, 2011 - 10:14am

Real-Time Silver Charts? AGQ options charts?

Anyone have a good tip for viewing the LIVE silver price on a graph? Kitco.com needs to be refreshed manually (and seems to be delayed by a few minutes) FreeStockCharts.com is great but I can only view SLV and GLD as proxies for Silver and Gold (OR DID I MISS SOMETHING???) NetDania is a bit clunky with its Java interface Also... any ideas how I can view the prices for options in a chart? Want to check the history of AGQ and compare it to the Silver price but cannot find anything to graph the options prices.

taoJones
Aug 25, 2011 - 10:15am

I have a theory...

...perhaps the recent beat-down is in preparation for a large surge higher on the horizon on the heels of some dramatic news, i.e. Jackson-Hole, BAC, you name it...

If the surge had occurred without this pull-back, then the jig would truly be up for the Banksters, and Gold/Silver would go astronomical...

But with the pull-back, the surge may put it back to the recent highs, and thus mask to the general public how dire things really are, and thereby keep the charade going just a little bit longer...

As a side note - thanks to all who post here - this is truly an informative & enjoyable community...

In the mean-time...

ScottJ
Aug 25, 2011 - 10:17am

Re: Bernanke and Precious Metals

Many here are thinking that the Bernanke is the cause for this beat-down, and there may very well be some truth to that, but there are many facets at play here. It is interesting to note that Comex Contract Expiration days change days of the week (Thursday this time), almost as if the macro agenda has been carefully mapped with respect to "set in stone" date to advance to the next phase. In knowing what the directional movement of certain assets/equity markets are, one can control the perception of the market (which corresponds to psychological moods of "investors/the market/the public").

For those paranoid that the Bernanke is going to say something that just knocks gold down to oblivion, I would stop worrying... as there is no policy/words he can say that are medium/long term bearish for gold, especially considering this is a WORLDWIDE currency devaluation race, and Bernanke has been a champion of currency devaluation in his tenure. As noted in a previous article, gold has hit a high recently against The Dollar, The Euro, The Aussie Dollar, The Canadian Dollar, the Great Britain Pound, and even the Swiss Franc. And, last time I checked, this world financial system was interconnected.... as it is the same gold price for each currency, with respect to current currency valuations.

This knocking down of gold (and silver) in dramatic fashion occurred in TWO-THREE days, giving way for all the propaganda and non-believers in gold that it is "too-volatile," and "not in my risk appetite." (I even had one family member tell me how the US Economy was recovering b/c gold was down 90$).

How quickly we are to forget the last month and a half of straight gains.... Doesn't it make you feel good that the only way that your investment goes down if there is artificial selling (forced in some cases) of paper contracts, when you are eventually betting that the physical will be king? I look at trends, and the trend is buy buy buy, with occasional beatdowns which usually can be foreseen through technical "inflection points" and ritualistic attacks (before comex expiration, before unemployment numbers, before london close, before comex close).

As for what the Bernanke says... I am with Turd, as I have been spouting I think the next move looks to be something even more radical and keynesian, to the likes of the Article Turd keeps putting out there.

https://www.financeandeconomics.org/Articles%20archive/2011.08.17%20Bank...

--

When in doubt, think bigger picture. This is a very large scale operation going on, and PM's are not the only object of desire to keep in control. The most important thing they are after is your psyche, as if we ever were to understand, reject the corruption, and work together....

Who knows what the world could be like...

BlackHawk ¤
Aug 25, 2011 - 10:20am

DPH, Nobody Had Five Dollars

About housing being a great buy, I have to respectfully disagree, mostly because commercial failures are only so far warming up. There is still no job growth, so people can't pay house payments and tax bills. Local governments are selling property for back taxes meaning the mortgage lenders are screwed. We can't get out of that downward spiral without massive numbers of sheeple finding work that pays well enough to get and pay off the mortgage.

I agree that real estate prices look attractive now, but I think they will still go down more. For me, it's way better to rent. My dad told me that during the Great Depression, people would try to peddle fantastic valuable objects for $5. But nobody had five dollars.

SilverWealth
Aug 25, 2011 - 10:20am

good stuff

good stuff but some observations: it is impossible to consistently predict the timing of criminal behavior and this is twice now that the Turd has been just a few days late in forensic prediction. The gist is there but doing the timing is impossible. Best to clear out of Dodge too early than too late.

Secondly, anyone trading for a longer than 2 week period going into the Fall season would best be served accumulating at this level. Sure we could go lower but it is unwise to try and pick the very bottom imo and many have lost great opportunity doing so time and time again because they overemphasize the virtues of TA. I remember back at 1478. It was supposed to go to 1425 remember. The greed and fear is what keeps people from responding to what is given. We have 200 pts down in Gold. Its a gift in my estimation and anyone Joe-timing this thing to the exact bottom, well.... more power to you. For now I am buying and then selling directly into large spikes when they come to maintain a fresh supply of capital should we go lower. I have no idea where it goes from here and don't really care, at this juncture its all about good money management imo. Others will disagree and whichever way really works consistently for them, that is great. I am no genius. But a sale is a sale as Granny would say.

best to everyone

ohiometalman
Aug 25, 2011 - 10:21am

I pulled the trigger on PSLV this morning

I agree with Turd, looks like we hit the bottom and I used 75% of my powder for PSLV this morning. I will use the other 25% on SVM after the Friday announcement, I still think the news will disappoint and the market (miners included) will get monkey hammered which should make for a dirt low entry point. Now going to go to my coin dealer and pick up some morgan dollars on sale :) Thanks be to all who contribute in this world of the Turd, I have learned much over the years!

Shill
Aug 25, 2011 - 10:23am
bacala jones
Aug 25, 2011 - 10:24am

TO THE CHAVEZ'S OF THE WORLD...

...have no fear cesar's. we here at tf's are calloused from these scheduled kicks in the nuts. your belly feels a little funny at the time, but hang out here with these guys and you'll be shown all the hocus pocus that the bubble blowers use in an attempt to make you feel like you are nuckin' futs for taking delivery and protecting the ones you care about.

THESE GUYS HERE AT TURD'S KNOW THEIR SHIT CESAR!

transparent bubble blowers beware! we see you!

doughbot
Aug 25, 2011 - 10:25am

end of month

What about the end of month contract fulfillment. Do you think that might drive down PMs more?

Shill
Aug 25, 2011 - 10:26am

And In The Meantime, The

And In The Meantime, The German Stock Market Plummets | ZeroHedge

Not a recommendation to buy.

FXE Oct Puts 141 strike. Play at your own risk.

The Vet
Aug 25, 2011 - 10:26am

Odd Posting Styles.

The complaints about strange styles of posting information arise not because it is a matter of individuality, but it is a matter of reading patterns of the audience. Some readers have no issue with these distractions because of their personal reading and comprehension patterns; others see them as meaningless distractions in the style which take their attention off the message the author is attempting to transmit. It’s not a matter of conforming to the norm. It’s a matter of communicating in a way that everybody can read and comprehend quickly. Just because one reader finds it of no consequence, it doesn’t mean that another can pass over an aberrant style without distraction. Using “attention seeking” idiosyncratic constructs does nothing to impart the message, but it does make a statement about the messenger....

mrgneiss
Aug 25, 2011 - 10:26am

@ $18 Silver??????????? I

@ $18 Silver???????????

I will come out and predict that this is the last time we see sub $40 silver. Do you know how out of range gold is getting for the middle classes in India and China? India is just starting to become a major silver player due to high gold prices and the Chinese haven't been able to buy silver for 50 years and both cultures love precious metals? Hello? And their goal is to pass it onto the next generation, not to flip it. Biggest silver producing country in the world, Peru, dropped it's production by 5% last year, just elected a leftist government and also just suffered a big earthquake. Are people in the US or Europe more or less worried about fiat debasement and economic conditions, and how many of them can afford gold?

Are the industrial uses for silver tapering off or growing phenomenally every year? Did they just open a shitload of new silver mines or are all the silver miners running full out with new mines years away from production? Has the COMEX registered silver dropped to record lows or not? Is the COMEX paying the majority of those standing for delivery cash premiums because they are so short on silver or not? Is there still a massive short position in silver or not? Since 2/3 of all silver comes from base metal miners which scale back production in a recession, will a recession be bad for silver or not? If we get a recession do you think Ben will let the US slide into severe deflation, or will he print his way out as he has actually stated many times?

Buddy, you should do some research before making statements like that.

Eric Original
Aug 25, 2011 - 10:30am

Something is happening in Europe

German stocks taking a hit, Greek bonds taking a hit. Could mark the floor for our precious?

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