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

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

  312 Comments

Economical Disaster
Sep 8, 2011 - 3:29pm

@margaritatime

CANADA HAS NO GOLD RESERVES I don't quite understand how you don't get it. If CANADA doesn't own the land how can they have any reserves? Where is the conspiracy? DO YOUR OWN RESEARCH..SCARY!

end of discussion.

margaritatime
Sep 8, 2011 - 3:29pm

EcoD

Really? Perhaps I missed something... Your argument is that public lands [monarchy] = no gold reserves? This is a false premise.

Analogous to saying that because CA is a monarchy that is has no gold? So.... all patented and unpatented claims in the US do not produce any gold reserves either, because most of those reside on [leased public] lands with oversight governed by the BLM. Likewise, China does not have gold reserves based on the fact those mines reside on government lands? So your parable is that is that if a gold reserves resides on public lands, there are no gold reserves? Sorry, but this is logic 101. This is an inconclusive argument based on a false premise.

But hey, if you want to believe that - go right ahead. If you are trying to lead me with a Red Herring down the conspiracy theory road - you are going to have to do better that.

The Vet FFF
Sep 8, 2011 - 3:30pm

SVM - buy point...

FFF- If you have option trading permission in a margin account, just sell an October $10 strike put contract for every 100 shares you want. You will get $2.30 or better per share. In October if SVM is below $10 you will be assigned and will have bought the stock for $7.70. If it is over $10 then you have made $2.30 a share profit for zero outlay. Your risk in this strategy is less than actually buying the stock outright, but the gain is limited to the premium.

If you are more bullish on the stock sell the $11 put, but that puts your buy price up by 50 cents or so....

R man J
Sep 8, 2011 - 3:34pm

From ZH: "Gold is Crashing..."

"...oh wait, the monitor is upside down."

Canadub Economical Disaster
Sep 8, 2011 - 3:34pm

Canadian Land Ownership

With all due respect... your using a website called "who owns theworld.com" as your reference? Doesn't scream legitimacy to me... I agree with @MargaritaTime, don't believe everything you read!

Start here: https://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/bp268-e.htm

gc.ca is Government Canada :)

Goofy
Sep 8, 2011 - 3:36pm

If it wasn't for that QE 11 i

If it wasn't for that QE 11 i would have been buying from Perth Mint:(

Orange
Sep 8, 2011 - 3:37pm

Crown Land

Crown Land refers to what is owned by the Canadian Government/people.

Canada

See also: land ownership in Canada

Within Canada, Crown Land is a designated area belonging to the Queen in Right of Canada,[5] the equivalent of an entailed estate that passes with the monarchy and cannot be alienated from it; thus, per constitutional convention, these lands cannot be unilaterally sold by the monarch, instead passing on to the next king or queen unless the sovereign is advised otherwise by the ministers of the Crown. Though the Canadian monarch owns all Crown Land in the country, paralleling the "division" of the Crown amongst the federal and provincial governments, Crown Land is similarly divied so that some lands within the province are administered by the provincial Crown, whereas others are under the federal Crown. About 89% of Canada's land area (8,886,356 km²) is Crown Land, which may either be federal (41%) orprovincial (48%); the remaining 11% is privately-owned.[6] Most federal Crown land is in the Canadian territories (Northwest Territories, Nunavut and Yukon), and is administered by Indian and Northern Affairs Canada. Only 4% of land in the provinces is federally-controlled, largely in the form of National Parks, Indian reserves, or Canadian Forces bases. In contrast, provinces hold much of their territory as provincial Crown Land, which may be held as Provincial Parks or wilderness.

Crown Land provides the country and the provinces with the majority of their profits from natural resources, largely but not exclusively provincial, rented for logging and mineral exploration rights; revenues flow to the relevant government and may constitute a major income stream, such as in Alberta. Crown land may also be rented by individuals wishing to build homes or cottages.

margaritatime
Sep 8, 2011 - 3:37pm

No prob

I simply stated I disagree - you don't need to try to convince me, note I did not say anyone was right or wrong - rather a debate about how one comes to such a conclusion. I have done my research thank you - it included several years of understanding the basics of world government structures with a twist of logic and critical thinking, and a few heavy doses of global economics. But sure, end of discussion - I'll drink to that.

surfeitndearth California Lawyer
Sep 8, 2011 - 3:38pm
FFF The Vet
Sep 8, 2011 - 3:39pm

@The VET

Thank you, VET! Forgive my naitivity, but are you saying I can sell the $10 Oct put and "forget about it"? I lost a bushel basket on options a couple years ago by not knowing when to GET OUT! It seemed like the windows of opportunity to exit were nano seconds in length and if missed, the option expired worthless. However, if you are saying I sell the put and either pocket the premium or buy the shares upon expiration, I am good with that!

Hate to ask for the hand holding, but once burned, twice shy!!

Tom L
Sep 8, 2011 - 3:41pm

@FFF

I like what TheVet told you. As for buy points, nothing beats the hourly chart for entry points. SVM trades off the highs and lows in the hourly chart pretty reliably. It looks to me like it might close above the big downtrend line on the hourly chart today, so that would be a good entry point. We have a 20/50 cross happening as well. This is a good area or a re-test of the 10 hour MA at around $8.75.

Ta,

ohiometalman Economical Disaster
Sep 8, 2011 - 3:44pm

Couldn't agree more!

@Peter Schiff comments :

So many people are still holding blind faith that the game just goes on....this is going to end very badly for most people. I am trying to make the best preps I can to help as many as I can thru this time period. Oh, and those responsible will be hung from the tallest of trees for their part in this fleecing of the sheep. Be glad you are not one of them.

eyeswideopen
Sep 8, 2011 - 3:45pm

@1Dae RE: Tax Bill

I sent you a PM. Hope it helps

Shill
Sep 8, 2011 - 3:47pm
The Vet
Sep 8, 2011 - 3:47pm

SVM - shorts are not novice traders...


They have been playing games to hold down SVM all day, but now with the trading day drawing to a close many just want out of their short position and they will pay.

The die hards may try to paint the tape on the close, but it will be a futile gesture....

FFF - you have that right. If you are comfortable with buying the stock at the strike minus the premium then it's buying at a discount. Even if it goes against you there is always the chance of closing the put early. In that case your loss would still be less than if you bought the stock long at this price.

Mikey California Lawyer
Sep 8, 2011 - 3:48pm

@Ca Lawyer, Best of both

@Ca Lawyer,

Best of both worlds for China. Metals go higher, dollar goes higher. Next thing we'll hear is China forgiving some debt for a million acres of gov't land here in the USSA.

Shill
Sep 8, 2011 - 3:51pm
Phantom
Sep 8, 2011 - 3:55pm

Commonwealth

Hi All,

I notice many questions about the Canada and the Crown. Let me add something else to that story. The United Kingdom, because its a monarchy, the queen owns all of the land except for whatever was treatied to native Indians or other such people at country formation. That's generally the case in all monarchies.

The commonwealth is another group that you should also understand. There are some 50+ countries in it and they are all still under the control of the crown i.e. The laws of the crown supercede all other domestic laws in those countries. Meaning, the queen has the right to remove any government official, including the prime minister of those countries if reason permits. See the case of Turks and Caicos, 2 years ago, where the prime minister and his cabinet were fired for corruption. https://www.timesonline.co.uk/tol/news/world/article5964728.ece

One benefit of having a passport or citizenship from the commonwealth or UK is that those passports are interchangeable. Meaning, a Cayman citizen can move to South Africa and just exchange citizenry without difficulty. Same goes for all the other countries within. I exchanged my Canadian citizenship (got from my first wife) for Mauritius a few years ago. That's all a part of my SHTF plan.

Phantom

Lord Koos
Sep 8, 2011 - 3:59pm

I love Swiss Francs, as long

I love Swiss Francs, as long as they look like this!

Swiss 20 Francs Gold Coin | 1-855-655-GOLD

(disclaimer - not my video, nor have I ever dealt with these people)

stained white shirt
Sep 8, 2011 - 3:59pm
margaritatime
Sep 8, 2011 - 4:01pm

Platinum?

Anyone out there picking up Platinum in the form of coinage?

Several years ago I traded a few but have long since forgotten about them. I have been wanting to pick up a few but have been procrastinating. With all the attention on au and ag lately. I found the recent actions in Zimbabwe[1],[2] interesting for the long term potential price point. It has been neck in neck with gold lately, but I think it is in a position to head much higher.


BillAuAg dziprick
Sep 8, 2011 - 4:02pm

The right hand sells while

Somehow this makes no sense.

Why would a bank with 90 tons of gold (32,150x99 = 3182850 toz) want to depress the price of gold $100? That would mean a loss of $318 million dollars.

​Makes no good sense.

Shill
Sep 8, 2011 - 4:02pm

I hope everyone did well

I hope everyone did well today.

Enjoy your evening, fun time as usual.

Be well.

Till later.

Vincent
Sep 8, 2011 - 4:03pm

@ Shill

@ Shill

LOL! LOL! LOOOOOOOOOOOOOOOOOOOOL!

eyeswideopen
Sep 8, 2011 - 4:03pm

Why We Despise The Morgue....Some history from Bix

Old news for many, but some quality info for many of the new comers here.

One can chew or spit (as DPH would say) the Daley conspiracy stuff. Still worth the read. Peace everybody

https://www.roadtoroota.com/public/592.cfm?awt_l=4zZkA&awt_m=3hRw.3UHmVA...

gray fox
Sep 8, 2011 - 4:05pm

what about the POSX

Nobody's talking about the POSX....PMs rising on a rising POSX.

What could this change in action mean?

FFF
Sep 8, 2011 - 4:05pm

@The VET

Here is where I get "all itchy"...In order to start slow and not be greedy, I entered an order to sell 10 contracts @ $2.30 for a total of $2300. So far, so good. I hit the accept button, and get an error message saying I do not have enough funds to trade this NON-MARGINABLE security.

Did I mis-read your message? One contract for 100 shares, right? 10 contracts should equal 1000 shares. I have more than enough money to buy the 1000 shares outright, much less cover the $2300.

Did I do something wrong, or, was I trying to leverage 10,000 shares instead of 1000?

TIA

33 and a turd
Sep 8, 2011 - 4:13pm

Obama's job speech leaked

load of waffle, as expected

The American Jobs Act is:

  • based on bi-partisan ideas;
  • it is fully paid for by closing corporate tax loopholes and asking the wealthiest Americans to pay their fair share; and
  • it will have an impact on job and economic growth NOW — just as soon as Congress acts.
  • Every day, people in this country are working hard to meet their responsibilities. The question now is whether Washington will meet theirs.
  • The time for obstruction and gridlock is over. Congress needs to put country ahead of politics.
  • The American people know that the economic crisis and the deep recession weren’t created overnight and won’t be solved overnight. The economic security of the American middle class has been under attack for decades.
  • That’s why President Obama believes we need to do more than just recover from this economic crisis.
  • The President is rebuilding the economy the American way — based on balance, fairness and the same set of rules for everyone from Wall Street to Main Street where hard work and responsibility pay and gaming the system is penalized.
  • It’s an American economy that’s built to last and creates the jobs of the future, by forcing Washington to live within its means so we can invest in small business entrepreneurs, education, and making things the world buys, not outsourcing, loopholes and reckless financial deals that put middle class security at risk.

https://www.forexlive.com/blog/2011/09/08/white-house-talking-points-leaked/

¤
Sep 8, 2011 - 4:13pm
¤
Sep 8, 2011 - 4:18pm

Shill

Wow...just saw that Bernank ATM toweling off.

You've just cranked the humor up to a whole new level.

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