The Fed Disappoints

222
Tue, Dec 13, 2011 - 3:48pm

HAHAHAHAHA! That's a good one! As if having the Fed overtly printing money would solve all the worlds ills.

Once again the media incorrectly spins today's FOMC minutes as a postponement or even a (gasp!) cancelation of further quantitative easing. Buy the dollar! Your evil Sith masters are such responsible stewards of the economy that they are prepared stop the presses and enforce credit discipline upon a spoiled, bloated populace.

What a joke. Up goes the dollar and down goes nearly everything else. Please, I hope you are able to see through the fog of this nonsense. Again I ask you, from where is this year's $1.5T U.S. budget deficit getting its funding? From where did the U.S. government get their funding last year? From where will they get it next year?

Oh, whatever. I'm not going to go through all this stuff again. QE to infinity is the only possible option, whether or not Maria Headiromo and Bob Pissonme agree makes no difference, whatsoever.

Anyway, back to important matters. I trust that the continued weakness in the metals is not catching anyone by surprise. Nothing has changed from yesterday or last week and the selling continues. Gold looks almost certain to head toward its 200 day moving average near 1615 and silver looks to be headed to 30. The big question is:

WILL THEY STOP THERE?

Maybe. However, I've got a sneaky feeling that they won't. I suspect that we will see a capitulation in paper selling when gold doesn't stop at 1610 and silver doesn't stop at 30. I've maintained for some time now that paper gold was vulnerable to a drop to 1550 and that paper silver could drop toward 25. Why change that forecast now?

I just saw the OI numbers for yesterday and they are very interesting to say the least. The Feb11 contract only saw its OI drop 1500 contracts. For a $50 drop in price, this is an extremely surprising number. First of all, this nearly confirms for me that much of the front-month trading is done by WOPR. There seem to be very few, human holders of these contracts. Also, it's clear that much of the decline yesterday was due to the initiation of new short positions by The Cartel. Again, with lease rates at -0.5%, this shouldn't surprise anyone. The BIG story is the rise in Dec11 open interest by a net of nearly 500 contracts, from 1545 to 2034! The question is: Who is jumping the queue and why? Is global demand for physical metal this month finally going to be sufficient to explode the Death Star? Is this why The Cartel has desperately suppressed price over $300 in the past 3 months? I sure can't wait to see what tomorrow's numbers are.

As I wrap up, gold is 1633 and silver is 30.65. I sincerely hope that the discussions here over the past week have helped prepare you, financially and mentally, for this brutal selloff. Keep the faith. The only thing truly declining in value is paper gold and silver. I say this with confidence because thephysical gold and silver you have in your possession is invaluable and thus insulated from the day-to-day shenanigans of the paper market.

I'd like to type more but the LTs are planning a birthday party tonight for Taylor Swift and I have to go bake a cake. I hope to have more commentary this evening. TF

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  222 Comments

Stormdancer
Dec 13, 2011 - 9:52pm

Shnozzberries

That is the most depressing picture I have seen in a decade. You mean to tell me that derivatives have become so ubiquitous that even Turd's hat has been turned into a synthetic yellow hat squared???

Freak me out...I bet it's been rehypothecated too....nothing is safe...nothing...

*snicker*

pforth
Dec 13, 2011 - 10:00pm

Excuse my venting...

Sometimes the frustration just boils up. I'm actually luckier than some because (as of this moment) I haven't lost any money. That being said, I'd have had a whole lot less stress and a fairly similar outcome if I'd just put everything in cash for the last 6 years.

bbacq CauseChange
Dec 13, 2011 - 10:02pm

@CauseChange, others, re Dragon Gold

Thanks for that link CC. Anyone got any history on this Ben Fulford fellow? I had almost let the Italian Job slip from my mind. Fascinating read, some, maybe most might even be true!

I would have put it all down to mad conspiracy theories if I hadn't had some personal interaction with someone who told a very similar tale, though he spoke of "the Chinese Elders", not the "Dragons".

Surprised no-one picked up on the "there are ten times the amount of above-ground gold than is admitted" theme. Maybe that interview linked was too long for y'all to read?

I'm going to suppose for a moment I was an ancient asian secret society, with 90% of the world's above-ground gold, that hardly anyone knew existed, and I had been held hostage by the western financial system for a hundred years or so. Mightn't dumping say, just one itsy-bitsy olympic-sized swimming pool of gold onto the market cause some serious chaos? Despite that it's all fiat, the central bankers still hold to the claim that there are billions in bullion in their vaults, right? Not if there is suddenly a doubling in supply!

I dunno about some of those details ("5 by 7 miles, 7 stories deep, half full of gold") but it makes for some interesting reading!

So, what does Mainstreet think? Is Fulford a flake, or legit?

PS: @CaliforniaLawyer - it's a suit, there is a PDF if you'd like to read and comment...

tread_w_care
Dec 13, 2011 - 10:03pm

times like these, look to the long term charts

and have faith, and hope

https://charts.kitco.com/KitcoCharts/?utm_source=kitco&utm_medium=banner...

https://www.patternstocks.com/2009/03/gold-long-term-charts.html

look at the decade trend

look at the adjusted highs of 1980-81, we're not even close to that again and you're telling me it was worse in 80? psshaw puh-lease

get some metal in your hands. don't put all your eggs in one basket either. I play PHYS, PSLV, CEF, GDX and -J, who knows how long the paper ponzi continues. also put some metal insurance within reach.

remember in times like these, NOTHING HAS CHANGED!

Europe? Still totally busted and going down.
US? Are we at 100% Debt to GDP yet? I quit bothering to keep track. Housing? whoops we just found out it suxxors 2x worse than thought.

Silver and gold coming out of the ground any faster? Ummm, no.

NOTHING HAS CHANGED!

BTFD and chill out, go spend some FIAT on some good beer, wine, (made in America please), or hell, kind, and spend time with your family, friends. Relationships, family, doing unto others, the least of us, that's what really matters.

redwood
Dec 13, 2011 - 10:04pm

pforth

No apologies necessary. You get to hear other points of view and that alone helps in my experience. Good to hear you haven't lost except your sanity? Join the club.

tread_w_care
Dec 13, 2011 - 10:05pm

p.s Cheney

is just talking his book - still on the board of Haliburton, is he not? What's that old Darth Vader muther-effer up to now anyways?

redwood
Dec 13, 2011 - 10:08pm

Nobody else has mentioned

Nobody else has mentioned this so I will. Today is the 13th. Was that the Fed's idea of a sick joke, or was it just business as usual. Probably b.a.u. but the FOMC was a sick joke anyway, so either way.

SilverLeaf pforth
Dec 13, 2011 - 10:14pm

Interesting article: Gresham's Law at work

https://www.thenewamerican.com/economy/commentary-mainmenu-43/10173-greshams-law-at-work-pennies-and-nickels-are-disappearing

When Kyle Bass defended his decision on BBC Radio Hard Talk on November 17th to purchase 20 million nickels, he was just putting Gresham’s Law into operation. Bass, the founder and principal of the hedge fund Hayman Advisors, did the math and discovered that he could purchase 6.8 cents worth of copper in each nickel for just 5 cents. Nickels are 75 percent copper while pennies (minted between 1909 and 1982) are 95 percent copper and the recent spike in copper’s price simply made it too good a deal for Bass to pass up.

This is Gresham’s Law in action. The standard definition is that “bad money drives out good.” Simply put, when coins of lesser value are forced to be accepted alongside coins of greater value, the more highly valued coins will be hoarded. In other words, Gresham’s Law reflects the price-fixing disruption always inherent in legal tender laws. A better definition of Gresham’s Law might be “When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.”

Prior to 1965 dimes and quarters were made of 90 percent silver and 10 percent nickel but with the Coinage Act of 1965 the silver content was removed and replaced with 75 percent copper and 25 percent nickel. Almost immediately the high intrinsic value dimes and quarters began to be hoarded as Gresham’s Law kicked in. Today a pre-1965 silver dime is worth about $2.40 in inflated Federal Reserve Notes..."

Shill
Dec 13, 2011 - 10:15pm

Pforth Vent man this is why

Pforth Vent man this is why we are all here and this is the premise of this place.

A place to vent.

Vent away brother!

And use this new price discovery to your advantage if possible.

Stormdancer
Dec 13, 2011 - 10:18pm

bbacq

I have personally seen many breathless pronouncements of impending, imminent events from both Fulford and Wilcox. For years. I can't remember a single prediction or report that actually played out. They seem to take a single grain of truth and then stretch it to cover square miles of speculation.

This particular story sounds more plausible than most of the stuff I've seen them come up with. Usually their whole schtick is "deep inside" sources they can never name....

At least there's some kind of public document behind this latest ...

Anyway...IMO neither of those two is worth the time it takes to read their drivel. If it's a "real" story we'll probably be hearing about it from much more reliable sources soon enough.

punchbowl
Dec 13, 2011 - 10:20pm

Benji Fulford

is a whackjob. He once worked for Forbes Asia and got an exclusive interview with David Rockefeller somehow. At one point a couple years back he warned the NWO that the asian triads were going to send 6000 ninjas to assassinate them individually if they didnt stop their world conquest. He is quite entertaining and has a remarkable imagination but his calls have all been hooey.

Shill
Dec 13, 2011 - 10:36pm
Vince
Dec 13, 2011 - 10:41pm

@pforth and zenith

Sorry that you have lost money. The hardest, but best lesson to learn in investing is when a successful investment strategy has stopped working. No strategy lasts forever, and one can lose a lot of one's gains by not realizing the rules have changed. I have been following/investing in silver for over two years now. It used to be easy, up until May, to just be long silver. That plan no longer works, and I lost money until I realized it wasn't just a small setback.

It might be heresy on boards like this, but I am no longer a silver bull. There are some silver bulls who define "victory" as silver going to $50, or JP Morgan going out of business, etc. "Victory" for me is to have a comfortable retirement. If I get that retirement from $50 silver then fine, if not, then I still want the comfortable retirement some other way. I don't consider myself pro or anti silver, just pro me.

Right now, my outlook is that silver will be in a long correction, and my strategy is to be mostly, when I have a position, short in silver. While I am no longer a bull, the volatility of silver does appeal to me. While going from $30 to $50 is $20 of movement, an investor can get $20 of movement now, just not in all one long trade.

My outlook is based on the macro economic situation in both the US and Europe, and whether they would choose inflation or deflation. Three weeks ago I posted my position in a thread called "An Absolute Farce", that as of then the US and EU were in a deflationary mode, and that silver will decline dramatically. Nothing has changed my mind since. On Friday and today, I feel the US and EU have indeed chosen deflation. The drops in silver this week did not surprise me, and I was prepared for them.

I hope this helps.

Yooper Rick
Dec 13, 2011 - 10:51pm

Vince

Is your real name Jeff Christian?

Vince Yooper Rick
Dec 13, 2011 - 10:55pm

@Yooper Rick

Is your real name Jeff Christian?

No.

Yooper Rick
Dec 13, 2011 - 10:58pm

.

John Nadler?

NW VIEW
Dec 13, 2011 - 10:58pm

Fossil Fuel Hoax

The EE and all their wealth builders have given the public their views on the way this world works. It always lines their pockets. I remember in the 70's when diamonds were being bought by the bag full because they were so rare. The truth is that they are poured into the nations of the world from those who have mountains of them. Then there is the fossil fuel hoax to line there pockets. For millions of years, Fluffy the dinosaur and family died and sank six miles into the earth making fossil oil. I have never believed that one. The volume of Fluffies would make an ocean. I hope that later on we do not find out that there are underground rivers of silver and gold coming up through a crack in the earth that JPM owns.

https://specialguests.com/guests/viewnews.cgi?id=EEFFuZZZlpQMjFmQcd&styl...

Bay of Pigs
Dec 13, 2011 - 11:02pm

Head on over

Mish's board Vince. You'll have plenty of company over there on deflation and lots of gold and silver bears to talk to.

So the US and EU have "chosen deflation" in the last two days?

You do know gold and silver are in 11 year bull markets, right?

vamoose1 Bay of Pigs
Dec 13, 2011 - 11:11pm

hi bop

youre in fine form tonite. The CFTC?? hahahaha, in so jaded that im extremely dubious even of Chilton, i have thought from his appointment that he is the good cop in a good copp bad cop hustle, if so, he is superb. And as for that fucking ferret face ex Goldman gensler, its a good thing im old and far far away.

Something good did happen in the last few days, Goldman was at Princeton, Brown, harvard etc , trolling the rich kids for the next generation of Wall Street psychopaths, usually a laydown...and the kids ran the recruiters off campus!!yeah baby. Thats their own turning against them, these are their children I was surprised, could there be hope. Naw, but for a brief moment I remembered kent State and SDS

redwood
Dec 13, 2011 - 11:23pm

" Thats their own  turning

" Thats their own turning against them, these are their children I was surprised, could there be hope. Naw, but for a brief moment I remembered kent State and SDS".

Vamoose1, I wouldn't be too quick to dismiss these kids. They are not like baby boomers accustomed to the opportunities. That creates a laser sharp motivation for self preservation and I don't think TPTB know what they're up against, just like the scenario you created. Give it a bit of time. If Iceland had the hootspa, so could the rest of the world and this generation going forward.

Bay of Pigs
Dec 13, 2011 - 11:26pm

@vamoose1

Just having some fun. Nothing personal Vince. I spent years over at Mish's debating gold trolls that used to take shots at me. I have a thick hide from all their abuse. LOL.

Seriously, QE is still running...with swap lines and Operation Twist both still going strong. It's all MOPE, so keep that in mind when looking at the whole picture.

And vamoose, you're one of my favorites here when it comes to the topic of SILVER...and the Sprott connection with his Billion Five of Phizz purchase coming down the pike. Please keep up the posts for us.

vamoose1 Shill
Dec 13, 2011 - 11:31pm

shill

never agreed with cheney in my life , but here, hmmmmm

Velocity
Dec 13, 2011 - 11:34pm

@ Shaz ...what happens without Govt?

Your question is a fair one, what happens after zero tax, Govt collapses without citizens funding it. What happens without State...

i). Police: firstly let's give credit to citizens collapsing Govt which in itself stops 3 false murdering foreign wars, reduces any miniscule threat of terrorism in the US too. See the massive benefits, and massive collapse in violence already without Govt?

So first question to ask is what do the State Police do that you'd miss? Will you miss the fact you're more under daily threat from the Police fining you or threatening your liberty with jail with 2,000 petty fines or laws?

Next when a crime does happen, because the myth, the big fat lie, is that the Police prevent crime, which it never has and never will. All the Police do when a crime is committed is take your statement, shrug their shoulders and file the report in a drawer never to be seen again.

What will you miss when the Police are gone? Fuk all.

Please note all businesses already have their own security and guards. Because the State Police are fuking useless. Shopping malls, warehouses, clubs and many communities already have their own private security. Without State police you might want to beef yours up a bit in the microscopic chance a criminal will pick on you

You will do what you should have done before, look after yourself. Instead of being creamed of your hard earned by snake oil salesmen promising to protect and serve you when all they provide is a Police State to oppress you.

I could address all your other missed Govt services but you'd get the same answers.

Remember in the 1960's US healthcare was cheap as chips and served you. Now it's the most expensive complex piece of incompetent shit on Gods Earth. The public-private stitch up job monopoly cartel US healthcare is so expensive you need insurance cover and is so inept a few days visit to a US hospital is more dangerous than a lifetimes smoking

Which risk to your health do the Dept of Health and Surgeon general slap health warnings all over? Yep, you've guessed it, NOT the 2,000 times more dangerous to your health US hospitals but the benign and beneficial personal habit of having a smoke (with 300% taxes on it)

Govt is the problem .....stop funding the scum... Pay No Tax

Hammer
Dec 13, 2011 - 11:38pm

Hold on fellow

Hold on fellow Turds............

Video unavailable

Dec 13, 2011 - 11:42pm

This from Zerohedge - HUGE!! Corzine Lied!

Fantastic post and comments, relative to the Duffy remarks. Duffy added three sentences, conclusively proving Corzine lied to Congress.

Here is the analysis why, from a comment:

"1)They cut a deal with Duffy, threw Corzine under the bus, so he'll give someone up from JPMorgan. Then the administration goes after someone there, and Obama is seen as nailing a wallstreet fat cat.

2)Someone @ JPMorgan wants Corzine to go to jail, where he'll quickly get shanked, and the secrets die with him.

JPMorgan wants to bury something. Either trades, or Corzine.

JPMorgan is power. Corzine is muscle."

Another comment:

"To the question of WHY??

Simplest answer is probably correct......the self cannabilization has begun in earnest.

Run with the thought experiment from the previous post: Corzine blew it up on purpose.

Caveat: he didn't realize he was being played by the people on the other side of the bet and that they are NOT going to compensate him, but rather toss him to the wolves. This guy testifying that Corzine lied under oath is on the payroll for those on the other side of the bet, and he said exactly what they told him to say.

To say that he veered from his script assumes his script was supposed to support Corzine. In reality, he read his script just the way it was planned."

ragandbone NW VIEW
Dec 13, 2011 - 11:54pm

The Fossil Fuel Hoax

Dear NW VIEW,

I have to clarify some facts for you regarding fossil fuels. First of all hydrocarbons " oil +gas" are generated under very specific conditions which require a certain temperature, pressure and time. The source of hydrocarbons are commonly algae and plant debris deposited in unoxidised environments... fluffy the dinosaur doesn't come into it and in terms of time ( fluffy was many millions of years extinct by the time we got round to deposition of the source rocks ). Suffice to say... fossil fuel is no hoax, oil scarcity in easy to find reservoirs is very real. The complications and money required to find and develop new discoveries is so difficult that most small tier exploration companies expire without ever making a discovery. So many things go wrong in trying to explore for oil, not the least of which is human error. However beyond even human error is the complexity of the geology that although may have allowed for hydrocarbon generation, factors such as charge, migration and reservoir seal can completely f*ck up a good prospect. This is why the statistics of 1 in 8 exploration wells is a discovery is the current norm, and when you look at how much it cost to drill an offshore well these days ( 50 million dollars plus ) you must appreciate that oil has only one direction to go in terms of price. Take it from someone who is trying to find that oil for a living... this is no hoax....

My comments also relate to mining too... depletion is a real fact. I wish it weren't so but there really is a limit to the amount of natural resources we have... Fiat on the other hand... infinite ...

Stratajema
Dec 13, 2011 - 11:58pm

I remember...

I remember in late 2008 when paper gold was trading at $875/ounce, most all U.S. coin dealers were out of stock or hiding their coin stock. After spending 2 full days of calling coin dealers I found only 1 dealer willing to sell me gold... numismatic coins for $1,200/ounce. However, just FYI, Scotiabank in Canada did have gold maple leafs to sell at that time at 4% over spot. They were rationing coins under a 5 per day per customer policy.

I remember in late 2008 when paper gold was trading at $875/ounce, as a newbie I was confused about why GTU's stock price was trading at a 22% to 26% premium to its NAV. Now I understand.

I remember earlier this year when the Bernak forgot to tell everyone about the $16 trillion in emergency loans at the end of 2008. And now a 0% policy, swaps, are not considered stimulus. Yeah, right

I own physical and I own GTU and CEF shares in U.S. brokerage accounts. After the 1st of the year, to push capital gains to next year, I'm closing those accounts and moving funds into physical at goldmoney.com Because soon there will be capital controls in the U.S.

psychofun
Dec 13, 2011 - 11:58pm
Monedas
Dec 13, 2011 - 11:59pm

Panty Liners with imbedded micro chips !

Sense dermal humidity due to future tax liability anxiety ! Alarm does not go off until you wire the IRS some money ! Monedas 2011 Comedy Jihad Free At Last ! PSA: I include fresh panty liners in all my buried stash containers.....it's my poor man's Silica Gel ! PSB: Why don't girls ever share their panty liner jokes....you just gotta believe they got some good ones ? PSC: The panty liner was invented by a man....Drexel Scheiner, a Latvian Jew, who emigrated to the Bronx in 1936 ! He stowed away with visitors returning from the Olympic Games in Berlin ! He was a coach for the Latvian Female Wrestling Team ! They failed to place in the competition but were lauded for their clean wrestling togs !

vamoose1 Bay of Pigs
Dec 14, 2011 - 12:09am

@bop

thanks , delighted.

Ok, our best guess with my friends in Toronto, is (other things equal) January for Sprott to detonate that 1.5 billion dollar silver bomb, do you have any privileged information nope, we are guessing. We only have 12 business days left in 2011, so, its most likely a 2012 item.

Does he have the orders? Dont know that either , but he is sure as shit trying , the guy lives in airplanes these days , he is promoting everywhere, and i for one am bloody grateful. Its also very unlike Eric Sprott, he is in a flat range war with JPM. Its very seriously personal, thats apparent. These raids are pure retaliation for almost sinking JPM.

As it turned out that supposition that PSLV had some kind of a time hold on it turned out to be quite right, he had by securities law to wait 365 days to re open that prospectus, which he has now done. Posthaste. He can go boom, literally overnight if its propitious, i wonder if this might be why silver is a bit stubborn here at 30 ...JINX!!

The other proposition that he would be tripped up by political pressure from da boyz has not apparently materialized.

This may not be the apparent positive that it appears to be.

l

Lets recall what happened 365days ago post the issue when Sprott did PSLV, he exposed the fact that there IS NO MATERIAL PHYS SILVER IN THE WORLD, siilver tripled from 18 to 49 in the 5 months post issue, he caught JPM naked short, its my opinion that at 49 dollar silver JPM was in fact insolvent maybe 20 billion or so.it took him 3 months to get 500 million dollars in silver bars delivered ,they didnt eexis of course, and the bars arrived still warm from the refinery. They were also dated POST ISSUE!! proving the scarcity argument if anyone here needs proof.

Point number two is 500 million in PHYS tripled the silver price from18 to 50, god help them if we ever take out a 31 year double top at 50 . Furthermore whats a billion five going to do if the kickoff price is 30 raather than 18, it could get a bit interesting.

Final point is this, why didnt TPTB somehow prevent approval of this billion five which is in fact ready to go. I have a theory about this insane 20 percent premium at which PSLV trades, sometimes its 16, sometimes as high as 23. I would love the board to weigh in here. And its this ... how can he even do a reopened issue, and ask the new buyers to pay 17 percent over the physical silver price, and i theorize, you dont suppose its being jammed by JPM, held there as a hundred million dollar loss leader, which would make sense if you stood to lose 20 billion if he floats.Its pretty compelling math, since sophisticated investors can buy their own physical at spot right?.

Why pay a 17 percent premium.Im pretty sure i would not. But he cannot smash down the PSLV premium without seriously hurting his own existing shareholders and is on record as saying he will not. Is he then hamstrung by this fact? Rock and a hard place? Board?

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