WARNING

611
154
Wed, Sep 7, 2011 - 9:13am

I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.

We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today. Check out this chart that posted in the overnight comments of the previous thread (thanks, pmahler!):

Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity.

This all wreaks of malicious manipulation. If you are trading, be prepared for anything. If looking to buy, throw all of the charts I gave you yesterday out the window and wait for at least 1725 in gold, maybe even a gap-filling 1650. Since silver is not the object of attack, it shouldn't drop as far but it looks almost certain to drop to the bottom of the channel we've been following, near $40.

Also, it appears likely that we are entering another 4-6 day downshaft in the Continuous Commodity Index. You'll recall we found this pattern last month and it was one of the factors that allowed me to correctly forecast $44 silver by Labor Day. I asked my pal Trader Dan to send me an updated chart and he obliged. Thanks, Dan!

Count the days between moves. Peak early April. Nine day decline. Peak early May. 9 days down. Peak mid-June. 12 days down. Peak early August. 4 days down. Peak early September. Next decline takes it back down to 620-630?

By the way, I just looked at Dan's site. Looks like he agrees with me. I suggest you read this now:

https://traderdannorcini.blogspot.com/2011/09/central-banks-waging-war-on-gold-at.html

So, look, you've been warned. If you're not trading, just sit back and enjoy the free fireworks show. Maybe use the next central bank raid to accumulate some more physical. If you are trading, my advice is to avoid being a hero. Do not try to get cute and "catch the knife". The next few days are going to be extremely volatile. Save your powder for after the dust has settled, when we can all see a bit more clearly.

TF

12:00 noon EDT UPDATE:

Turdite "Zagio" just posted this chart in the comments of this post. It perfectly explains why anyone trying to "catch the knife" should hold off for a while longer.

If you believe as I do that this current beatdown in gold is being engineered by the SNB, then why would you think they would rest before pushing gold all the way back down to the level it was before the devaluation announcement? That level is around 1500 francs/ounce. Additionally, this is a level that would correspond to my potential target buying point of somewhere between 1700 and 1750. It may take till tomorrow or Friday but confidence is high that gold is headed there.

Patience is warranted here. Also, it's now noon EDT which is the hour when follow-through selling usually materializes on the Comex. I for one, am not buying the dip....yet. TF

About the Author

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

  611 Comments

Keg
Sep 7, 2011 - 12:51pm

Why would SNB drive down gold?

Turd, I greatly admire your skills. But I don't understand why the SNB would benefit by driving gold down. But maybe it is just my thick head and weak mind.........

proformatrillionaire OC15
Sep 7, 2011 - 12:51pm

OC15

My sentiments exactly. Every time I see gold & silver go down, which during Comex hours it is more often than not, I ask myself what has changed. The answer is nothing except that there is more fiat in existence than ever before and that only bodes well for PM owners.

Mickey
Sep 7, 2011 - 12:53pm

timing

it looks like pm sector reversed right around when London closed (duh, thats news)

now to see what happens when comex closes.

keep your audibles clear and trading and positions simple.

Tom L
Sep 7, 2011 - 12:53pm

OC15: NGD

For less money, NGD Nov $14's are currently $1.00/$1.15. Now, sir, do you really think if the HUI goes up to 660 that those won't be close to in-the-money?

Building a nice base between $13.25 and $13.80. A busto f that and this thing will be $14.50 before you can say BOO!

I love EXK as well, I just like the option chain on NGD better.

Ta,

Harald
Sep 7, 2011 - 12:54pm

Darn it

I haven't had the chance to get to the coin shop yet.

Shill
Sep 7, 2011 - 12:56pm

I'm no expert on option

I'm no expert on option pricing but do the EXK $15 Feb12 Calls look like a no brainer at $1.40-1.50?

OC I own both what TOM just stated. I think TOM has been looking at my account ha ha ha.

cascabel
Sep 7, 2011 - 12:58pm

If Gold goes all the way to 1,700 that should ...

.... be a good BTFD. But most likely it won't. Too many buyers out there.

Tom L
Sep 7, 2011 - 12:59pm

@shill:

well, you did confide in me your password the other night when drunk... oh, SHIT!

:)

KGC is breaking out of a huge consolidation pattern in the $17.70 area guys. Like 2 years worth. It's a serious no-brainer at $20-22. Anything in that chain in the 60-120 period should make you good money.

If you are short-term bullish on G&S then think KGC at $24 by Dec. then go shopping.

Ta,

¤
Sep 7, 2011 - 12:59pm

From ZeroHedge/just out

Guest Post: Commodities Look Set To Rocket Higher

Submitted by Tyler Durden on 09/07/2011 - 12:18

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

dph: they are cranking the info. out over there today again, great job Tyler and co.

I realize Tyler Durden is a pseudonym but it can't be one person cranking the Tyler stuff out, could it? The unattributed stuff under just Tyler's name?

If it is, that person is a super-genious with boundless energy and grey matter . Like a Wiley Coyote, "super genious". (no cartoon of the lump massager, maybe later)

Your doing a fantastic job over there. Thanks

The Vet OC15
Sep 7, 2011 - 12:59pm

Tom L - EXK options

Thanks for pointing that out Tom... I already had a position in EXK and I rarely buy calls, but a synthetic long at the Feb 2012 $12.5 strike looked too good to pass up. I sold the put for $2.23 and bought the call for $2.38.. Net debit just $0.15... Now I just sit wait, and watch...

Shill
Sep 7, 2011 - 1:02pm

well, you did confide in me

well, you did confide in me your password the other night when drunk... oh, SHIT!

:)

Ha ha ha ha, :)

Tom L
Sep 7, 2011 - 1:04pm

Glad to be of help, Vet. 

Glad to be of help, Vet. Don't you love playing with OPM?

I've pulled my entire original stake off the table in the past 2 years and now can say that whatever I have in my trading acct. is pure profit. My physical collection is my savings from the past 10 years.

Ta,

Eric Original
Sep 7, 2011 - 1:04pm

Don't tell Mrs. O

I just brought home another British Sovereign. Physical gold brings me peace and joy. All the miners and options ever bring me is stress.

Tom L
Sep 7, 2011 - 1:05pm

Swiss Stair in Crude

Broken down. Let's see if it can hold $89. (It was on a 10 minute chart).

Ta,

Tom L
Sep 7, 2011 - 1:08pm

@EricO

Tell her buying gold relieves stress and lowers your Blood Pressure.

Problem solved.

Ta,

Eric Original
Sep 7, 2011 - 1:11pm

Tom

Ha!!

TF
Sep 7, 2011 - 1:12pm

You "first" callers....

You "first" callers need to grow up. We come here for the Turdliness, not your adolescent games.

:)

p.s. Love you, Turd.

FriedEggs
Sep 7, 2011 - 1:12pm

I think what is...

happening is that GOLD Bull Train took off so fast lately - that the caboose is starting to get ahead of the fundamental engine at the moment... needs a bit of a 'straightening'

But its still full steam ahead longterm...Like 'the Little Engine that could.'

If anything - this should help ease the 'gold is in a bubble' fears for those few that may still think that way.

Choo-Choo and puff*puff

Fried(e)

Ranch
Sep 7, 2011 - 1:14pm

Head Spinning!!!

TF & Norcini - bad tidings next few days Atlee & Tyler Durden (reports) that all is well To say the least...I'm lost. At this point it appears the latter to be correct but who knows overnight. Damn, I wish I hadn't traded my crystal ball in.. I could really use it right about now. At this point I'll sit and watch for a while and try tocatch my breathe.

The Vet Tom L
Sep 7, 2011 - 1:15pm

Tom L - OPM

Well it's your money now!

I do prefer synthetics that give me net credits (OPM), but getting an in the money by 9 cents call with 7 months of time for 15 cents seemed like a bargain. Of course I have to hold the put for a while but I find that I can often close it out for peanuts well before expiry and let the call run to the bitter end.

I have been trading exclusively since 1997 (no other income source) and have taken out my original stake many years ago... It has been a wild ride at times, but I still eat well and sleep at nights (that's something all traders should work at - it's just numbers on a screen until you cash out).

OC15
Sep 7, 2011 - 1:18pm

I love this headline

"Stocks bounce back as worries ease about Europe"

Why in the world would worries ease about Europe? Yahoo finance headlines are hilarious.

FriedEggs
Sep 7, 2011 - 1:20pm

Flowerz

I was in a good mood the other day and randomly brought home a bouquet of flowers for my girl friend...

She says to me, "Oh great, i guess you want me to spread my legs now?"

I reply, "Why, don't we have a vase in the house?"

.

ok, carry on...

.

Fried(e)

Tom L
Sep 7, 2011 - 1:22pm

Small Gap

on the 5 minute Gold chart they may try and fill in the next 9 minutes.

Ta,

Orange
Sep 7, 2011 - 1:24pm

Paul vs Perry

You have got to give it to Paul for being consistent and direct.

Governor Perry, let me be clear: It is not that you supported Al Gore that worries us.

It is that you supported Hillary Clinton's health care plan.

You pushed for federal bailout and stimulus funds.

You support welfare for illegal immigrants.

You tried to forcibly vaccinate12-year-old girls against sexually transmitted diseases by executive order.

You raised taxes twice.

And, state debt has more than doubled in your tenure as governor, pushing Texas to the brink of our constitutional debt limit.

It's that you supported ALL of these bad ideas that are inconsistent with how most Republicans understand conservatism, yet you now try to swagger your way into the Tea Party.



Read more: https://www.politico.com/news/stories/0911/62830.html#ixzz1XHwi4Qjg

https://www.politico.com/news/stories/0911/62830.html

treefrog
Sep 7, 2011 - 1:25pm
Orange
Sep 7, 2011 - 1:31pm

Wynter Benton

Not sure if this was posted. Wynter states you should not have stop losses.

https://silverdoctors.blogspot.com/2011/09/gold-and-silver-raid-in-proce...

Shill
Sep 7, 2011 - 1:31pm
proformatrillionaire Orange
Sep 7, 2011 - 1:32pm

Orange

All politicians know how to do is to throw money around. Who needs an Ivy League degree to figure out how to do that? We are one entire generation of politicians (30 years) into people that only know how to throw money at the squeeky wheel. That is the kind of brilliance I can do without. That kind of leadership can be found at your local zoo.

argent rampant
Sep 7, 2011 - 1:33pm

@OC15

You and I have no real disagreement. The PM's are manipulated and it is obvious that many smashdowns occur. If the price suppression were removed (and it may be sometime soon) they would absolutely shoot to the moon... and then violently correct as all parabolic markets do. This process would repeat until they find their true price level and the market "normalizes". My personal, unscientific guess is perhaps $600 for silver eventually (if we still measure anything in USD then).

The EE has actually done most of us a perverse favor by keeping prices suppressed as long as they have. Without that, I for one would have been left in the dust before I ever heard of buying silver. All stackers should thank JPM every time they buy more phyz.

All I was saying is that, despite the fact that much of the "warnings" are MOPE, it is also true that market corrections are a normal phenomenon. Markets do become over heated and over bought and there will be times, perhaps several in the next few months, when we need to be aware of that and always take some money off the table on the way up, especially when rapid increases occur. Of course, we need to temper that analysis with the knowledge that there is a shortage of supply in the PM's, particularly for silver. I believe the Ted Butler piece posted earlier was talking about a CSF or commercial signal failure. That will probably occur in silver.

To sum up my point: no one, especially noobs reading these comments, should ignore talk of a "correction" without looking at the situation objectively and asking if it reasonably could happen.

There are five categories of wealth: Spiritual, Physical, Intellectual, Relationships, and Financial. Pay attention to them all!
R man J
Sep 7, 2011 - 1:33pm

What's Next? Europe Implosion- followed by

Europe implosion followed by MASSIVE TRILLIONS IN Int'l Central Bank's/FED bailout. This is the wildcard...

This will "save the world", stock market rally, gold $3000.

https://www.newsmax.com/WayneAllynRoot/Economists-Obama-recovery-recession/2011/09/06/id/409865

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 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)

Recent Comments

by NW VIEW, 18 min 34 sec ago
by imfd, 1 hour 5 min ago
by lakedweller2, 1 hour 8 min ago
by Trail Trekker, 1 hour 44 min ago
randomness