In The Woods

312
Thu, Sep 8, 2011 - 9:25am

The overnight action is the PMs is certainly encouraging and it would seem as though the half-life of central bank gold intervention is now about as long as central bank currency intervention. We all know, however, that it is still too soon to let our guards down. The quick recovery in price may only serve to embolden our increasingly desperate adversary, so, much caution is still warranted.

That said, I do not want to minimize the importance of the overnight reaction in price. The SNB attack of early yesterday sent the metals markets reeling. The attacks were timed to have a spillover effect onto the Comex and December gold traded as low as $1794 by mid-morning. In the old days, this would have sent gold into a tailspin as weak-handed longs began to race each other for the exits. They knew they were no match for the central banks and The Cartel.

Note, though, how yesterday was different. Once the Comex was closed, things began to improve almost immediately. Baby steps at first but then a full-blown rally overnight in Asia. Our longs are no longer weak-handed. They are resolute. They are buyers of size and they seem to pounce on discounted prices. This must be very discouraging to The Cartel. They are trapped in an untenable short position and they are being forced to cover at increasingly higher prices. HAHAHA!

To that end, I feel I must state this again. Please be sure you are making note of which "analysts" and "traders" are calling a "bubble". One only needs a cursory understanding of the Commitment of Traders data to deduce that there is no such thing as the CoT data since early August has clearly shown that the primary driver of price to this level has been Cartel short-covering. A bubble presumes retail buying. Average, everyday investors rushing in to buy something. The greater fool theory in action. Think dot com. Think Las Vegas real estate. Cartel short-covering does not create a bubble. As stated ad nauseam, the weekly CoT report is a very important, fundamental statistic. Any serious metals analyst knows this. Accordingly, any serious metals analyst knows that gold is not a bubble. The boneheads calling gold a bubble are, therefore, not serious analysts and should be ignored. Do not forget them, though, as they will most assuredly resurface in the future to once again proclaim an end to the gold bull. Remember who they are so that you can ignore them in the future, too.

The next question we need to ask is: Why are the banks so desperate to cover? Ponder that one for a while. I've got my thoughts on the subject. I'd be curious to hear yours.

Here are your charts for this morning. I see they are already becoming outdated as the metals have continued to rally while I type.

Remember today that my warning of yesterday was not to sell, it was not to buy. I stand by that. With the active central bank intervention of earlier this week, it is still too dangerous to be boldly buying with confidence. For now, I am simply holding my positions. The only trades I made yesterday were to re-cover my October gold calls. You may recall, I have been long October calls but, from time to time, I've been selling some calls against them (creating a spread) whenever I felt that risk was high. I've been taking the "short" side off and "opening up" my calls when I feel that risk is minimal. My current trading portfolio is as follows:

Long Oct 1900 gold calls vs short Oct 2000 gold calls

Long Dec 1900 gold calls vs short Dec 2200 gold calls

Long Dec 50 silver calls vs short Dec 60 silver calls

About 25% cash. Patiently waiting.

Lastly, I would be remiss if I didn't print the chart below. Several Turdites have sent it to me looking for my opinion and I feel it deserves your full consideration.

About the quickest way to go broke trading futures is to go around declaring that "this time is different". However, in this case, I feel this time truly is different.

This chart covers the previous 32 years of Keynesian central banker-dominated thinking. We are at the end of the Great Keynesian Experiment. The current system will not be continuing much longer. A new paradigm will soon be emerging. Therefore, while price will still correct from time to time, historical correlations such as this one are of minimal significance.

I've got lasts of 1862 and 42.42. It will be a very interesting day so try to keep an eye on things. More later. TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  312 Comments

Tom L
Sep 8, 2011 - 12:32pm

@Shill

Just fine. All in all around +$3k. If TRX would break the shorts back, I'd be up even more.

But, absolutely no complaints here.

The bulk of my money is in AUY, NGD, KGC and Dec SVM. So i'm good, very good.

Ta,

olderman SilverWealth
Sep 8, 2011 - 12:32pm

Silver Wealth re BTFD

Silver Wealth

We all seem to believe that China, Russia, India, Mid East, etc. are buying the BTFD and their motivation is to disembowel the $US as the reserve currency.

Does anyone believe that the US may be doing the same thing covertly in order to thwart this decade long attack on their dominance? Might we be surprised at some point in future to see the gold reserves of the US considerably greater than the 8000+ tons claimed? Opinions?

olderman

Eric Original ewc58
Sep 8, 2011 - 12:34pm

ewc58

I'm not up to speed on Golden/ECU, but I luv, luv, luv AuRico/Northgate. They were my two largest holdings and I'm still holding all my shares in both. I have a bunch of stuff about it on my miner thread starting about here, and continuing on and off pretty much to the end of the thread:

https://www.tfmetalsreport.com/comment/510367#comment-510367

FriedEggs
Sep 8, 2011 - 12:35pm

Its all planned

Dr.G @exiledbear, it's all planned that way. I'm convinced that very few things are coincidence anymore.

.

Exactly - i feel the same way.

Its all planned that way outside of PMs too.

Remember - on every possible front they will attack us... not just financial. They want to break us down mentally, financially, physically, sexually, spiritually, etc...

Fried(e)

silverstool
Sep 8, 2011 - 12:37pm

Spreadbetting

I'm overwhelmed by the sage advice that my post has generated. Many thanks, especially to jorxster, fiends brave victim and death ceiling. A recurring theme that has struck a chord from the posts is time horizon. Insidiously, my trades have become of shorter and shorter duration and I hadn't realised it. I wonder why this has happened? Perhaps it is because my main concern is stacking physical and this is 'the buzz/the excitement, my 'little bit on the side' if you will. I mean stacking can be a bit dull can't it? Death ceiling you have absolutely 'nailed it'. I've cut and paste your reply and will digest it over the coming days but reducing position size with longer time horizons is definitely going to help me sleep easier and allow me to avoid using stops.

cpnscarlet
Sep 8, 2011 - 12:38pm

@Eric O - Thanks for that vid

@Eric O - Thanks for that vid - funny. Reminds me that when silver goes by $75, I'm going to throw all my eagles in a drawer in the living room and pretend I'm Gomez Adams for a while.

Ferd Torgerson Tom L
Sep 8, 2011 - 12:41pm

@ Tom L SVM

Tom:

It was you who got me interested in looking into SVM. Bought some last week and added my final shares to my position this morning before it started today's big move up.

Follow your analyses very closely. Many thanks.

To paraphrase Robert Duvall's surfing colonel in Apocalypse Now - "I love the smell of shorts burning in the morning". (Well, you know, the type of shorts who short mining stocks).

Classic Movie Line #18

Sep 8, 2011 - 12:41pm

Come on down to the Frivolity Forum!

Hey folks! We have set up a new "Frivolity Forum" where you can hang out and post nonsense to your heart's content!

https://www.tfmetalsreport.com/forums/frivolity-forum

Have fun! :-)

Jim-M Tom L
Sep 8, 2011 - 12:43pm

@TomL Reg SVM Breakout

Don't think you'll have to wait. Hit $9.23 a few minutes ago. $9.12 last by Schwab.

Tom L
Sep 8, 2011 - 12:43pm

@Ferd: SVM

You are welcome. I'm here to help, learn, grow and all that happy jazz. If my analysis gave you the courage to make some FRN's then that is freaking fantastic! There's going to be some revenge in SVM. On the next pullback, as it's getting overbought on the hourly chart, let's watch for the RSI to hold 50 on the way down and reverse. If that happens, the shorts are running scared. If it doesn't it'll be more 3 steps forwards, 2 steps back, ie. 61.8% Retracements and not 38.2% or 50%.

Ideally I'd like to see $9.25 today before a reversal, or, of course, $9.60.

Ta,

Shill
Sep 8, 2011 - 12:45pm

All in all around +$3k Great

All in all around +$3k

Great day indeed Tom...Cheers. I am sitting well in my GDX calls as well, no complaints.

Tom L
Sep 8, 2011 - 12:45pm

SVM again

What I'd like to see is that 20/50 hour cross today. That would set up a run to $9.60 or $10.30 tomorrow/monday.

Ta,

Vincent
Sep 8, 2011 - 12:46pm

Gold a bubble? LOL!

Gold a bubble? LOL!

Correct: UBS lifts 2012 gold forecast to $2075-oz.

By Rhiannon Hoyle

("UBS Lifts 2011 Gold Forecast 50% To $2,075/oz On Macro Fears," published at 0804 GMT, misstated the year in the headline.)

LONDON -(MarketWatch)- UBS AG UBS -1.09% has hiked its gold forecast for next year by 50% to $2,075 a troy ounce, citing expectations that further global macroeconomic disappointments, European sovereign debt troubles, and low business, consumer and investor confidence will bolster demand for the precious metal as a "line of defense" against fresh market turmoil.

The Swiss bank has also revised its expected average gold price for this year up to $1,665/oz, from $1,500/oz previously, ahead of a likely "strong fourth quarter price environment," it said.

Its forecast for 2013 has been lifted significantly as well, and now stands at $1,725/oz--up 44% from a prior forecast of $1,200/oz.

"Given the extraordinary events in financial markets over recent weeks, we re-visit our forecasts for annual gold prices. With the pool of competing asset alternatives sparse, 'new' money will likely flow into the gold market over the months ahead and into 2012, which has significant price implications," UBS said.

Tom L
Sep 8, 2011 - 12:46pm

G&S intraday

Lotsa long tails on ther 10 min chart for Gold and Silver. It looks like they are trying to hold it down for the CRIMEX close and the headlines. Post 1:30pm should be interesting in the miners as they've been trading sideways all day.

Ta,

Tom L
Sep 8, 2011 - 12:48pm

This day could only get better

if Samex posts some stupidly good drill results and the stock jumps to $3.00.

That would be a happy day.

Ta,

Frontal Labottleme
Sep 8, 2011 - 12:49pm

Best line from the debate

From who else, but Ron Paul of course.... when he finally got to say something about "the wall" (mexican border) after everyone else had already spouted the same old same old, Ron Baby (gotta love the guy!) says "Just remember that wall can just as easily be used to keep people IN".

Talk about thinking outside the box lol. Unfortunately everybody gets this look on their ugly mugs like what the F is he talking about, whereas of course he is absolutely right and sees the real dangers our society faces far more clearly than anyone else out there.

p.s. Re your question Turd - they (the EE) know what's coming re the FOMC later this month... they're doing what they can now before it's too late.

cpnscarlet
Sep 8, 2011 - 12:49pm

Funny Gaps

Anyone else see some curious gap activity going on in Au and Ag at the moment? Is it me, the charts, or what?

Chris P. Bacon
Sep 8, 2011 - 12:51pm

@Stephanie

Thanks for the new forum, an idea who's time has come.

Jim-M ewc58
Sep 8, 2011 - 12:54pm

P&F Charts

Glad to see some Point & Figure charts showing up. I've only used them for a short while, and the theoretical uses seem appealing, particularly when trying to determine support and resistance.

P&F Chart for $SILVER - Bullish Target $49 - If only... :-)

ewc58
Sep 8, 2011 - 12:55pm

Thanks for the feedback Eric, I'll check it out on your forum

I really like AuRico/Northgate too bro, it's going to be a big winner. Me gusta AUQ 12/17 $15 call among a few others, watching it closely.

FriedEggs
Sep 8, 2011 - 12:57pm

Obama Tonight - Homeland Investment Act II?

From Chuck B, the currency (bullish for Gold) guy...

Recall that I told you that the Corporations sold this bill of goods to Congress under the guise of the Corporations being able to increase employment in the U.S. Well… do you see the line connecting the dots now? The Corporations are selling that hill of beans again to Congress, that if they can repatriate their earnings at a discounted tax rate, that they would increase employment… And the President is in dire need of a rabbit to pull out of his hat tonight, folks… So… I’m afraid that he will announce that HIA II is on the way… No, it won’t help employment, it didn’t in 2005, why would it now? But that’s not important right now… The President can sell it as the latest, greatest thing for creating jobs, and the public will follow it without asking questions to the edge of the cliff, and jump off if that’s what it takes to prove they are behind the idea…

So… IF HIA II is announced tonight as part of the jobs creation ideas the President has, you can expect some dollar strength to begin… It won’t begin right away, as the bill has to go through Congress, but you can expect the tracks to be greased for this bill… in 2005, around $350 Billion was brought back to the U.S. and the dollar was the belle of the ball for the 9 months that the tax amnesty was in place… Most of the currencies were hurt VS the dollar in 2005, the euro, and franc especially… The only currency to really amass some positive movement VS the dollar in 2005 was the Chinese renminbi, which as you may recall, dropped their peg to the dollar in July of 2005. Oh, and of course Gold continued to rally VS the dollar, during the first HIA…

Maybe, maybe I’m wrong… to sing this song… And it won’t be mentioned tonight… but I’m not holding my breath, because all the signs point to this being the piece de resistance for the President tonight…

https://www.kitco.com/ind/Butler/sep082011.html

.

A possibility?

.

Fried(e)

¤
Sep 8, 2011 - 12:58pm

Glad I didn't watch debate

I'm hearing all the talking points on here today instead.

It sickens me to see Perry in that Ron Paul pic with the the arm grab and wagging the finger etc. This is all choreographed and Perry had every intention of trying to visually dominate Paul with his body language at some point. Perry distracted Paul with the finger wag and then went for the arm grab.

Perry is trouble and he gives me a bad vibe. He's a hyper aggressive version of Bush who delights in being abrasive and doesn't care for the subtleties. He's looking to shock, and confrontation seems to be his style. That's worrisome if you can project him into the WH and consider what actions he might take in the issue's that are in front of us.

Would Perry ignore and not take care of the inevitable Iranian situation or would he relish the opportunity to finish overdue business?

I'm not about to immerse myself in another Prez. campaign this early that seems to have never ended from the previous one. I'm focused on our PM stuff and the MENA thing. Obviously, I want Paul but he's not getting his due, again. Hopefully he'll run Independent. Probably so.

That would leave us with Perry or Romney. Perry looks like he would resort to just about anything to gain power. Romney is probably the better overall executive and he is sharp on the issue's. That's regardless of his policies, and I'm just talking about the visual cue's that most people tend to let sway their votes from the beginning.

I see Romney taking the Repub. party. Paul is the Independent and O'bummer is who he is.

Perry commits an overly aggressive gaffe at some point and just comes off as too Bush like and too war like. If Perry is the anointed one from the king makers then he makes it no matter what....(throws hands in air).

Like I said, glad I didn't watch. I'm frustrated just posting this, thinking about it. I think O'bummer has a chance to win in spite of it all. Thing's are that messed up and upside down.

No matter how this jobs speech turns out tonight there is one thing that could get Obama elected. What if Obama goes all out at some point and promises to totally rewrite the tax code and makes it (besides jobs) part of the centerpiece of his next 4 years? Any details he would give during the campaign could generate a lot of interest and there isn't one person here among us that wouldn't love to see the tax code drastically overhauled. Right?

Not that any of us would vote for him, but think of all the other voters who just don't get it and get swayed easily by the shiny object of promises of hope and change.

Paul/Napolitano 2012

Eric Original ewc58
Sep 8, 2011 - 12:58pm

ewc re: AUQ

Yeah, I have all my shares, plus some Dec $14 calls. Let's go AUQ!!

Las Vegas Dave 1Dae
Sep 8, 2011 - 12:59pm

Pop Zing

never give up your Silver (or Gold). Pay your tax bill on credit if necessary. You can stretch the payments out then default then settle up (or not) for pennies on the dollar. Let the bastards take your worthless fiat, but hold your PMs and keep stacking

Goofy
Sep 8, 2011 - 1:03pm

Prepping trout and

Prepping trout and reindeer

Here is my friend with today's fresh trout, and reindeer from last week getting ready:)

Monedas
Sep 8, 2011 - 1:03pm

Ron Paul is a loser !

Sorry to say it ! He should have punched Perry in the mouth ! Even my Hero, Rush, disappoints ! They don't seem to realized how corrupted the system is ! When Obama get's re-elected with unemployment at 12%.....maybe a light bulb will come one ! Every so called "Western Democracy" governs to the left of the people....wherever they happen to be in the political bell curve ! Monedas 2011 They need a little of Stalin's "Balls o' Steel" !

Shill
Sep 8, 2011 - 1:03pm

Has the Housing Market

Has the Housing Market Finally Found Its Footing? - Yahoo! Finance

Wow they are really going to try and pump this aren't they.

The prelude to hyperinflation.

Missiondweller
Sep 8, 2011 - 1:09pm

Why is SNB selling gold?

Maybe I'm a bit slow. I understand why the entire western world central banks would want to keep the price of gold down but why do we think its Switzerland? It seems to me to be more likely to be a coordinated effort by western central banks.

Can anyone explain to me the theory as to why it would be just SNB?

OC15
Sep 8, 2011 - 1:10pm

By my count

Monday is game over day for the Morgue if you believe Wynter Benton. September 11th will be 60 consecutive days that Silver has been above $36.

Tesla
Sep 8, 2011 - 1:14pm

Raid On Silver Starting?

What captscarlet said (one minute w vol chart to see clearly)

[EDIT or maybe just a test?] Don't have a clue cpt. Volume spike + comparatively huge price move down. but no follow through both au / ag... seems like probing for stops type move ...but failed?

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