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

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

  222 Comments

Looner
Dec 14, 2011 - 9:50am

Where we are...

I went to APMEX this morning and looked at prices. I went just now seeing the spot had fallen more and the price of a ASE went up! They are raising premiums faster than paper price goes down! Something is wrong with this picture.

Sterling Looner
Dec 14, 2011 - 9:53am

@Looner

That's the separation between paper and phyz that everyone's talking about.

Strongsidejedi
Dec 14, 2011 - 10:00am

Nigel Farage UKIP at EuroParl 12-13-2011

Nigel Farage: On the Titanic towards Economic and Democratic Disaster
Looner
Dec 14, 2011 - 10:02am

@Sterling

Well, it is here, right now. Does that mean we are officially over the edge?


Dec 14, 2011 - 10:02am

No regrets

6 months ago how many of us were wishing we could buy silver in the 20's again? I have some $45 silver that I will just count as an overpriced insurance policy. I am not the best at buying dips (clearly), but I'll pull the trigger again at the 25 level. This fiat system will someday crumble. Even if I never profit from silver (and I think we all will later in 2012), I sleep better at night knowing that if the economy implodes that I will have a fighting chance at rebuilding our lives. And maybe I'll just pass that silver on to my kids and grandkids one day.

FriedEggs
Dec 14, 2011 - 10:04am

$=bear market rally

Our friend Chuck the currency guy (bullish for Au&Ag)

Speaking of drying up… that would best describe the willingness of investors to back the risk assets… It’s all about the dollar, right now… and of course, in September I told you that the perfect storm was building for dollar strength, so this comes as no surprise… What does surprise me though is the myopic view of debt that the markets’ participants have taken… It’s as if all the debt in the world belongs to the Eurozone, and the U.S. has a picture perfect balance sheet…

Which leads me to believe that this dollar strength is nothing more than a bear market rally, and not an end to the weak dollar trend, that began because of a fundamental reason (rising debt), and won’t end until that fundamental reason has been reversed, or is at least on the way to being reversed. So… like I told you in September… batten down the hatches, and keep an eye on buying opportunities to pick up some additional diversification at cheaper prices…

Those that don’t believe in any of this, will panic, and sell… OK… They obviously haven’t been through a period of dollar strength or a bear market rally before… Let’s see… there was 2005… And then there was late 2008 thru early 2009, and then there was even the run on the euro in 2010 when it fell to 1.18… But, eventually, the ball comes back to the U.S.’s court… and when it does risk aversion goes out the window, and is wrapped in yesterday’s newspaper!

https://www.kitco.com/ind/Butler/dec142011.html

.

Fried(e)

Shill
Dec 14, 2011 - 10:08am

I see the bank runs on Soc

I see the bank runs on Soc Gen and BNP Paribas continue.

Sterling
Dec 14, 2011 - 10:08am

@Looner

Possibly - but who knows how far we have to go to see this through.

This kind of volatility separates the men from the boys. Hard to tell when the bleeding will stop - at least as far as paper is concerned.

Strongsidejedi Shill
Dec 14, 2011 - 10:12am

@Shill - Please clarify

Are you saying that the French people are running on Soc Gen and BNP Paribas now?

Or, are you saying that you are predicting that it is coming?

Do you have an objective datapoint that can provide an independent verification of withdraw of customer / client accounts?

Smiddywesson pforth
Dec 14, 2011 - 10:13am

Intestinal fortitude

4. Gold and silver prices have been expertly capped and controlled through the worst of the crises during the last 6 months. If the recent blowups aren't enough to break them free, what is? Unless the entire system is completely obliterated, will they ever break free of their current trading ranges?

Pforth,

Sorry to hear about your investing experiences, but I think we have shared the same mindset until recently. I thought that gold and silver would break out and keep on climbing at an accelerated rate as we approached a systemic collapse. I was wrong and it cost me a lot of money, but I learned a good lesson. I failed to recognize that gold and silver ARE the system, and they cannot ever explode in value under that system without the system crashing. So, in my opinion, you are not going to feel the love until the system breaks. In fact, we PM bugs are likely to feel the pain of our equity trading counterparts as the market experiences a general sell off. I also cannot imagine that when the end is nearing TPTB won't perform one last massive assault on gold and silver prices, throwing all remaining margin hikes and threatening confiscation, knowing the price suppression mechanism is doomed anyway. You can either stay hedged against an inevitable collapse, or exchange into paper and lay awake at night worrying about the end of fiat.

You are going to have to forget market opportunities you missed in the past and make the smart move today. In my case, before I completed purchasing my core insurance position in PMs, I became aware of the probability they would decrease in value before I got my big payout. So why did I continue to purchase PMs? Because with this much leverage, this much corruption, this many derivatives, and so many nations, with too many young men and not enough jobs, threatening war, I know I can't time the collapse and all my paper assets will be worthless, or next to worthless, after the fall. I saved some of my powder for this late stage game. If I mistime it, that last bit of buying power will be lost, but at least I have my core position which will greatly outweigh the value of the fiat that was destroyed with the collapse. It's a win-win situation.

So you are basically in my situation, but have more % wealth invested in PMs today. That's ok because your basic theory of the trade was not to get rich quick, but to survive the collapse with a huge gain. Unfortunately, you are approaching your cost basis and are starting to panic that the trade may wander into the red. I EXPECT my PM trade to go into the red. Gold and silver will continue to melt up to the tune of 20%-25% a year until a big market sell off, and then any PM bug who didn't join the trade early will show a paper loss. Big deal. The system is not salvageable. That's why they are doing absolutely nothing to fix it. That's why they are spending untold amounts of fiat to stall and stack gold in their vaults.

Meanwhile, you are distraught that you missed out on other opportunities (the March 09' stock rally?). It's irrelevant what other traders are doing. They are getting paid for taking risks, and if they win, they deserve the gains. Do you envy the winners at Vegas? Looking at it with hindsight doesn't erase the fact that winning traders today are gamblers. Stop trading. If you hadn't jumped into and out of the market (in a long term position trade) you would have racked up 20%-25% gains each year and outperformed the market. With a little more discipline, you would have outperformed almost all the traders in the world. Now you are questioning yourself and contemplating the same jumping in and out of the market. Normally, I would say if you can't sleep at night, sell. However, since you already lost so much in the miners, and the miners are at ridiculously low levels, I'd hesitate to touch the trade because all the opportunity is to the high side.

This is getting too long, so I'll end it here with a few observations. You are outperforming almost all of your peers, and very nearly beat almost all the professional traders out there if you left the trade alone. You are afraid of showing a loss in the most volatile market in human history on the brink of a systemic collapse. You know the system is completely unsalvageable, even if our leaders had the capacity to save it, or demonstrated any will at all to attempt to fix it. TPTB have tipped their hand that gold figures prominently in the new system to come. Your position will make you a very wealthy man when the unavoidable collapse comes, or utterly bankrupt if you stay in paper. In short, you are going to have to stay in PMs and probably experience a little pain, listening to your idiot brother in law gloat about his "earnings" in the stock market, or move into paper and lay awake at night worrying about a collapse. There's no in between. We are all likely to take a thumping before this is over, but that's how markets work. If you bolt with the sheep, you will meet the same end as most of the flock, and history shows that is bankruptcy.

Vince Astro_Phyz
Dec 14, 2011 - 10:14am

@Astro_Phyz and Shill

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.

Any European in a country which may leave the Euro, including Greece, Italy, Spain, France, and who also has a debt denominated in Euros, which is about 90% of any European country, should be raising as many Euros in cash as possible. If their country leaves the Euro and they are switched to another currency which is devauled against the Euro, but their debt remains in Euros, they may not be able to pay off their debt. European banks need to recapitalize, they need Euros, not an asset that is falling in value like silver.

Strongsidejedi
Dec 14, 2011 - 10:15am

@sterling - paper vs. physical

Do you know anyone who would sell 1 ounce gold bullion at 1600?

I don't.

All of the guys I know who are active buyers have been going to the local shops and emptying the shop of gold.

The local gold shops are withholding selling inventory and are churning the gold sold by weak longs.

More importantly, it looks to me like sales of gold by "entities" on the broke CME is responsible for the price point.

Who cares what the CME gold spot is?

The CME doesn't have any $$$ to even complete or guaranty the trades on their own floor !

Vince Shill
Dec 14, 2011 - 10:19am

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

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

I already have sold my silver. I have been short since November. I will buy it back later. In the meantime, my retirement will get closer. I do not need Euros, though, as I am American, and Dollars right now are better than Euros, and silver.

Looner
Dec 14, 2011 - 10:19am

I think...

I think APMEX's Christmas special had ASE's at 33.40 yesterday with a cc. Now that silver has dropped over 2 dollars, Provident is beating that price at 33.34. It is like in one of those action police flicks where we were thrown out of the helicopter but we're desperately hanging from the rail by one arm. Oh the drama!

Hepofaus
Dec 14, 2011 - 10:21am

Question regarding the security of Central Fund

Hi,

Longtime reader, first time poster. I see alot of comment about owning physical gold and silver. I hold shares of CEF.A and SBT.UN. Is this the next best thing and is it secure? My house was robbed this year and I am afraid of keeping actual bullion at home.

Thanks

Shill
Dec 14, 2011 - 10:22am

Just passing on the noise I

Just passing on the noise I am hearing, no solid source as of yet.......

Sterling
Dec 14, 2011 - 10:22am

@Strongsidejedi

That's pretty much what I'm saying.

ClinkinKY
Dec 14, 2011 - 10:24am

Thank you EE

I'll be the first to admit that I'm not the "sharpest tool in the shed" when it comes to economics. I'm merely a "stacker", not a trader.

However, it's apparent to even a "dummy" like me that the EE is trying to panic people into selling their gold and silver "before it

drops even further". Sorry EE, I'm not selling. I'm BUYING. Thanks for the discounts!

pforth
Dec 14, 2011 - 10:25am

Thanks for the responses all...

I admit I feel like I'm inches from capitulation...
I'm tired of this shit. Just touched my May lows. I'm inches away from taking my physical silver (25%) and throwing it in a hole and the remaining 75% (PHYS, PSLV, CEF, GDX, GDXJ, SLW) -- some of which I've held for years-- and go completely to cash--never to buy back with it again.

I know it's what the powers that be want. I know it will be a mistake but it's a beautiful day outside today and I'm going to miserable all day because I just lost 3 months pay in 3 days. I've played this buying and holding PM game now for 6 years and all I have to show for it is a lot of miserable days like today.

Shill
Dec 14, 2011 - 10:30am
SuperManny
Dec 14, 2011 - 10:34am

More Nigel

More Nigel for Xty and all. This just out from RT.

Bully Boys in Brussels Building Europrison
Nigel Farage: Bully Boys in Brussels Building Europrison
Jasper
Dec 14, 2011 - 10:36am

Don't be sad in reply to pforth

Enjoy the beautiful day! Don't measure your wealth in declining fiat. Wealth is your internal happiness and the wonderful people in your life and your relationship with God. Your monetary wealth is in real things you own that you can hold and jump up and down on, like plant and equipment, physical gold and silver.

The times they are changing. Today looks like a dollar up day. Tomorrow or the day after will likely be a dollar down day. Dollars are only paper. Volatility is increasing, like an off centered bike tire getting wilder and wilder.

Protect yourself and what is valuable to you. Don't let the EE steal your internal happiness!

roadtoruin
Dec 14, 2011 - 10:40am
Boardwalk
Dec 14, 2011 - 10:46am

pforth

"I admit I feel like I'm inches from capitulation...

I'm tired of this shit. Just touched my May lows. I'm inches away from taking my physical silver (25%) and throwing it in a hole and the remaining 75% (PHYS, PSLV, CEF, GDX, GDXJ, SLW) -- some of which I've held for years-- and go completely to cash--never to buy back with it again."


​You're a buy and holder. When you bought, were you planning on selling today, Dec. 14, 2011? Do you need to sell today? Has something about the fundamentals, or your investment thesis changed since yesterday?

​Why do you want to wallow in self flagellation? I've got soggy paper positions from being underwater too. What works for me is forget them. Forget them because today is not the day to be thinking about doing something with them. The day for that was last week. . . and an other day for thinking about doing something with them will come in the future. The day for doing something is certainly not today.

​The day that I've picked for me to start selling is the day when PM's have been on a multimonth tear and everybody is giddy with excitement and projecting linear hockey stick charts. That's when I'll be selling my paper and like you, never to buy back into paper again.

That day is not now. Turn off your computer. Go outside and enjoy the day. You'll be glad you did.

Jimbio
Dec 14, 2011 - 10:56am

@roadtoruin

Where were that picture back in april?

Very good illustration. Everyone should scroll back up and have another look.

Economical Disaster
Dec 14, 2011 - 10:58am

11 Years in this

I began collecting silver and gold since 2000. I have watched these events EVERY year, sometimes 2 and 3 times. Its a non event for me, but for some people its catastrophic. YOU WILL NOT REMEMBER THIS in a few months! You will grapple in your mind, when this crash actually occurred! Unless you desperately need the cash to eat, then sell.

I would live under a bridge cold and hungry before I part with my stash.

Jimbio
Dec 14, 2011 - 10:59am

Wow. This is like tearing of

Wow. This is like tearing of a bandaid! 1550 looks like its getting here sooner rather than later.

Could we get a show of hands on how many are pulling the trigger/waiting?

Im pulling at 1550.

Shill
Dec 14, 2011 - 10:59am

Corzine Knew MF Used Client

Corzine Knew MF Used Client Accounts: Duffy - Bloomberg

A disastrous failure at the summit - The Globe and Mail

December 14, 2011 - MARTIN WOLF

"Whom the gods wish to destroy they first make mad. That was my reaction to the outcome of last week’s meeting of the European Union’s Council. Many focused their attention, understandably, on the decision by David Cameron, UK prime minister, to veto a new treaty.

Oh and thE third French bank to be downgraded news:
AFP: Credit Agricole 'to cut 2,350 global jobs'

PARIS — French banking group Credit Agricole is to cut 2,350 jobs around the world, including 850 positions in France, mainly at its Cacib investment bank, the Force Ouvriere (FO) union said on Wednesday.
At Cacib, 1,750 jobs will be cut globally, including 550 in France, said FO's representative for the bank, Bernard Pechard.

Shill
Dec 14, 2011 - 11:19am

Everyone ok or what?

Everyone ok or what?

Clubfoolish
Dec 14, 2011 - 11:33am

It's gotta be said...

I've been as resolute over the past 3 years as anybody you've seen, buying almost every dip along the way, physical and miners. I've influenced no fewer than ~30 friends and family (but nowhere near ALL...yet) to buy some combo of physical and/or miners...many are now in the red and are probably fretting more than 'we' here are. I found myself nearing an emotional crack in my armor this morning, when I came upon the piece by pforth...my sentiments exactly! I decided to buy physical more instead of capitulating.
: )


That said...today requires something special.

Turn it up, listen, smile, then go out to shoot baskets, ride a bike, walk, swim, catch a great movie, sip of wine...eat chocolate (ok, mass quantities might be required)...whatever. Then get ready (and even start later tonight) to BTFD again:

Right Said Fred - I`m Too Sexy (The Original)

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 5/20

5/20 7:00 pm ET CGP speech
5/21 10:00 ET Existing Home Sales
5/22 2:00 ET FOMC minutes
5/23 9:45 ET Markit PMIs
5/24 8:30 ET Durable Goods

Key Economic Events Week of 5/13

TWELVE Goon speeches through the week
5/14 8:30 ET Import Price Index
5/15 8:30 ET Retail Sales and Empire State Manu. Idx.
5/15 9:15 ET Cap. Ute. and Ind. Prod.
5/15 10:00 ET Business Inventories
5/16 10:00 ET Housing Starts and Philly Fed
5/17 10:00 ET Consumer Sentiment

Key Economic Events Week of 5/6

5/9 8:30 ET US Trade Deficit
5/9 8:30 ET Producer Price Index (PPI)
5/9 10:00 ET Wholesale Inventories
5/10 8:30 ET Consumer Price Index (CPI)

Recent Comments

by Outback, 27 min 47 sec ago
by Outback, 37 min 29 sec ago
by Outback, 46 min 43 sec ago
by Joseph Warren, 57 min 38 sec ago
randomness