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

About the Author

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turd [at] tfmetalsreport [dot] com ()

  222 Comments

sixdollarsilver
Dec 14, 2011 - 6:26am

great thread

And great posts everyone, thanks. Especially you vamoose1, your anecdotes are priceless. Like your goodself I've had the good fortune to have been in Ag since 6 and it seems like every time the violence increases, I get less worried.

pforth - that post was dead on, good vent.

And stratagema, strongsidejedi, dr durden et al. - ABSOLUTELY.

​When a ship comes into port, it must line up with the dock.

austrian12874
Dec 14, 2011 - 7:07am

Man I feel I shit

Silver has broken down....29.88. 24 dollars here we come.

Shill
Dec 14, 2011 - 7:07am

Euro @ 1.29 goodbye Euro we

Euro @ 1.29 goodbye Euro we hardly knew ye.

tpbeta austrian12874
Dec 14, 2011 - 7:10am
Senseosensei
Dec 14, 2011 - 7:10am

Thank you...

bankers for this great opportunity to buy more PM's at a discount price.

boatman GSFL
Dec 14, 2011 - 7:35am

@GSFL

look in your profile page in your trading account u don't have margin enabled

even if u don't use margin(don't) if u don't have margin enabled on your trading account u must wait 3 days for settlement on any stock you own, after u sold it to buy another.....w/enabled they ,in effect, loan u the money until things are settled.

they call that the t-3 rule.

call your trading co. n enable margin.,....its a formality.

**********************************************************************************

6AM BEATDOWN?....u can thank the blokes at the LBME for that......and the AM LBME morning gold price 'fix'

roadtoruin
Dec 14, 2011 - 7:35am

The D has been F'in B! come

The D has been F'in B!

come on silver, bounce!

Dr Durden
Dec 14, 2011 - 7:55am

Miners

The best one to own is DUST. ;)

I've had this contention since day 1: if equities go, so will they. I hope I'm wrong, but nothing says otherwise to me other than maybe a few juniors catching fire (ie you're one lucky or really good mofo) or the HUI finally bumping out of it's big sideways grind in the mother of all divergences in the broad equity sectors.

Don't get me wrong, I've been tempted may times, but I've chosen to funnel any additional capital into fruits of the Earth rather than fruits of the algo's.

Shill
Dec 14, 2011 - 7:55am

Ben Bernanke Will Go Down In

Ben Bernanke Will Go Down In History As The Fed Chairman Who Destroyed The Country

https://goldsilver.com/video/ben-bernanke-will-go-down-in-history-as-the...

Vince Bay of Pigs
Dec 14, 2011 - 7:57am

@Bay of Pigs

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.

Don't worry, I do not take anything personally. I have no wish however, to join groups where all I can do is reward a confirmation bias. When I agreed with posters here I never felt the urge to post here, only when I began disagreeing.

I will console my unpopularity on this site with the knowledge that Europeans do not seem to like silver lately, and will sell it in favor of Euros. This results in nearly every morning being like Christmas to me, as I awake and look to see the European elves have stuffed into my stocking.

stoneeh
Dec 14, 2011 - 8:09am

With all the discussion about trading, losses etc

"Taking profits has never made anyone poor".

"Buy when there is blood in the street, even if the blood is your own"

If you know to interpret those two right, that's all you need to know in investing right there.

LMR
Dec 14, 2011 - 8:19am
Shill
Dec 14, 2011 - 8:53am

How is the American

How is the American consumer?
U.S. total revolving credit outstanding has been flat all year:

https://ycharts.com/indicators/total_revolving_credit_outstanding#zoom=5

Smiddywesson GSFL
Dec 14, 2011 - 8:56am

Why no execution of orders by the gold venders

My explanation why you couldn't get a gold order executed was because the venders you were using were panicking. When gold and silver were smacked down in September, some PM sellers experienced "technical problems" with their web sites, and others just refused to take an order until later. A less suspicious mind could also say the confusion is because of high volume dip buying. In any event, this phenomenon will probably get worse now that the MF Global incident has taught the venders the dangers of hedging in paper gold. Some of them got killed. (Expect much higher spreads in the future and slower delivery).

This is a good example of the dangers of the gold suppression game. If gold rises too steeply, it's game over for TPTB. Similarly, if gold drops too far, it is also game over. In that case, nobody will sell their stock of gold, premiums will widen, and paper prices will separate from physical prices. So TPTB only manipulate within a range or they risk destroying the suppression game, which I believe they came close to doing when gold spiked down to $1534 in overnight session.

Caveat: There's a difference between a manipulated drop in PM prices and PMs naturally following the whole market down during a sell off. In the former case, TPTB can't push PMs down too far without the risk of decoupling. In the latter case, there's no risk of decoupling and prices can fall as long and as low as the general sell off leads. That being said, PMs will eventually rise from any such sell off, but stocks and bonds won't.

Astro_Phyz
Dec 14, 2011 - 9:16am

@Vince

I will console my unpopularity on this site with the knowledge that Europeans do not seem to like silver lately, and will sell it in favor of Euros.

Who would trade anything, especially silver, for Euros right now?!? I doubt Europeans are that delusional, your currency is crumbling. Not saying that the US is not far behind, but damn, what a ridiculous statement.

Astro_Phyz


Dec 14, 2011 - 9:23am

Please Don't Panic

Lots of wailing and grinding of teeth. Please don't panic.

What good am I? Why do you even come to this site? I told you one week ago that gold could soon fall to 1550 and silver to 25. It now looks to be happening and everyone is stunned. Some seem ready to listen to the fool Gartman and sell everything. You do so at your peril. IF gold breaks down through 1500, THEN you can get nervous. Same with silver. IF it breaks down through 24-25, feel free to panic.

I am working on a new post right now. Please relax and be patient. This brutality will soon end.

Shill
Dec 14, 2011 - 9:26am

Not saying that the US is not

Not saying that the US is not far behind, but damn, what a ridiculous statement.

Agreed, boarder line uninformative, but I'll give Vince the benefit of the doubt since he is new here.

Sell your silver ( to me ) all and buy Euro..LMFAO.

Sterling
Dec 14, 2011 - 9:26am

Let's just get it over with!

Let's just get it over with!

Shill
Dec 14, 2011 - 9:28am

Thanks Turd all good, and I

Thanks Turd all good, and I also warned everyone too buy Puts in IBM lol

https://www.marketwatch.com/investing/stock/ibm

Zenith TF
Dec 14, 2011 - 9:30am

Glad I sold all my PHYS and PSLV yesterday

I did the same in September in the middle of the falldown. Then I repurchased when double bottom was reached @ 1702. But I still have my miners.... arghhh.

Should have listened to Turd in the first place! Thanks Turd.

Orange
Dec 14, 2011 - 9:31am
GoldMania3000
Dec 14, 2011 - 9:33am

Panicing?

This is why i have liquidity..the markets, all of them, are going down. Listen , Jim Ricards said it as well. Watch him on Twitter. Smile...blood in the street

FriedEggs
Dec 14, 2011 - 9:34am

I still

say that the European Union can't fail. 'They' put that together spending a lot of time, work and effort to make it happen. They need that to survive in order to further carry out there agenda... How do you now regain control of those countries if they all break apart? Start the damn process over again? No way - the process is here, now.

The currency, financial aspect of EU - im not sure how that will work?, but as for the EU breaking apart - i dont think so... If people are predicting its a matter of time (for EU to fail) based on the info - then why cant we think it might NOT break apart... Again, they are smarter than us - even though us Turdites collectively -are pretty smart;)

.

Germans are smart - they are 'invading' Europe (again) but this time, without firing a single shell. Do you think Germany would set themselves up for this to fail? Are they that stupid? If they aren't than we have to think outside of the box. When dealing with 'them' - always think outside the box. There events they create are outside of the box.

.

I say some members will get bounced, and others will join in to replace.

.

Fried(e)

sevin
Dec 14, 2011 - 9:35am

Crazy

Turd every time you are going to write a new post it seems like the EE decide to smack down the price. I hope they don't ruin your upcoming post

DaddyO
Dec 14, 2011 - 9:37am

Shooting Sacred Cows...

I just love reading blogs and comment strings of financial and metals blogs!

I just love the statements that say "My way or this way is the only way" or "If you do this, it will yield this"!

My email box fills up every day with tips on this stock and that fund, always guaranteeing 2x,3x or even 10x returns.

File 13, next!!!

I have been trying to grow my meager fortune for as many years as I can remember, haven't you? And what I've learned is that if you only have one avenue to invest in your not looking hard enough. Stocks, Real Estate, Business Ventures and Precious Metals have given me modest returns over the years. And they have taught me a bunch about how to win and how to lose.

The main lesson I've learned is that there are cycles for different asset classes! Period. I rode the RE cycle from about 1991 until 2005 and profited quite handsomely. I have been on the PM train now for about 6 years, loaded up early with ASEs and other bullion bars. Even with today's beat down, I'm still way in the money. In fact yesterday was the first purchase I had made in the PMs in 2 years. And I only made that deal for some Christmas gifts for my kids, they will love the feel of real money in the hands.

If you spend anytime reading the comments here in Turdville, it becomes appearant that many posters are traders in the commodities and equities markets. Their world view revolves around how to play and win in those realms of investing. I used to live in that realm. No beef with those who still reside there.

But let's step out of that world for a second and consider the alternative. If and when the markets and the world we live in start to unravel to the point of crashing, wouldn't you want to know how to get along in a different realm, say barter or wheeling and dealing as some may call it.

Back in the late '90s, I sold a manufacturing business, part of the deal was for me to stay on and manage the larger manufacturing operation of the company who bought me out. I had arranged an installment sale to help defray some of the immediate tax consequences and was drawing a nice salary from the new owners. Having quite a bit of new working capital, I began to play in the commodities world with a well known broker in Chicago who will go unnamed for good reason, crooks! I will say I made more than I lost but only out of shear luck. I did however learn some valuable lessons, the most important being to be my own broker, central banker or whatever you want to call it. I became aware that no one is going to look out for me and my money better than me.

This brings me to the point of this post, it may be time for many of you to learn how to go local with your investing efforts. Right now PMs seem to be a good vehicle to move us towards some profits and some safety. But what are you going to do when PMs become the transition article into a new avenue or cycle of profit?

When I made the decision to close out my trading accounts I had some capital to redeploy and not a lot of opportunities. This was actually a good thing because it forced me to discover the "Why" of my motivation and not the "How". Out of that journey has sprung up so many different avenues of opportunity that I can be easily overwhelmed and paralyzed.

What became of that exercise is a very diverse menu of how to profit in a turbulent market. I don't have a one horse view of profit any more. Sometimes I may consider writing a mortgage, buying a rehab buying PMs, investing in a business looking to grow their inventory or scale of operations. Any number of things come up in a day, for instance, my wife was looking for Christmas gifts and found a design company with some really cool products. She placed a call to them to inquire about buying some and in the course of the conversation she found out they do not have a distributor or dealer network on the East Coast of the US. The long story made short, we just received a sample of there complete line and Ms. DaddyO is setting up a company to distribute their products on the East Coast.

This deal flow becomes a way of living once your paradigm gets shifted away from what you think you know and moves towards what you should know.

I'll end with this, what happens when PMs or RE or the equities markets or whatever is no longer a viable outlet?

Are you ready for that inevitability?

DaddyO

arcanix
Dec 14, 2011 - 9:37am

Feeling tempted...

...to take some paper profits on the downward silver movement. And let's see when the coin dealers start to shut down their sites due to "maintenance", then its time to load the boat again. Or at least then you should try to buy...you can never know if they will let you do so!

Violent Rhetoric
Dec 14, 2011 - 9:42am

I'll start catching falling

I'll start catching falling knives at 24.23 and 1526 in physical form

Silver_investor
Dec 14, 2011 - 9:42am

Ugh

Earlier this year when silver dropped into the $20s it didn't stay there long. But this time, if it drops a few more dollars, how long will be it be before it bounces back above $30? Will The Powers That Be keep it in the $20s for quite some time so as to try and shake us all out? Don't misunderstand me, I'm not selling any of my PMs. But if the price drops further, should we buy more only to see the price not rebound? I think they're really messing with our minds. So frustrating. In a recent interview, Andy Hoffman, the Marketing Director at Miles Franklin, said that they rarely have customers sell back to them.

napa698
Dec 14, 2011 - 9:49am

Interesting

I have just been doing a little research and have come up with something that i think is very interesting.A weekly chart of the USD/EUR shows the almost exact same pattern as last years Nov/Dec pattern.With things being worse this year vs last one would think that the Eur would be making new 52 week lows but in fact it is not the 52 week low is 1.28730.Last Nov. high was app.1.42800 and fell to 1.28730 by the end of the year,this year the last week of Oct had a high of app.1.4200 and is now at 1.29690 still higher for the year.The Eur then took off Jan.of this yearand the Usd went down,could we see the same pattern this year?Will QE be announced after the first of the year?I will not become to bearish on the Eur until it breaks below the 1.28730 on the weekly charts,and as the Eur goes so does the dow

opticsguy
Dec 14, 2011 - 9:49am

Mining stocks are an investment, PMs are wealth

wealth preservation articles and speculation. Miners actually produce something with capital (hopefully). Daddy O is right that investment is putting capital to work at productive activity. I expect to use my PMs to outifit a factory to produce socks or garden hoses in the US, when we can no longer afford such articles from China. In the mean-time, the stock market and miners/GLD/SLV are hedging articles.

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