All Eyes On The Pig

Mon, Feb 6, 2012 - 4:08pm

Lots of thisses and thats today regarding the precious metals. I suppose that some commentary has merit but, really, it's all about The Pig.

First, though, I'm confident that there is a concerted effort being taken to "correct" the price of gold. Last week's CoT was lousy and I'm sure that the brief rally through 1750 late last week was allowed by The Cartel as an attempt to suck in a few more spec longs before putting the hammer down...and the hammer is falling as I type. Gold was first savagely attacked after the spectacularly manipulated BLSBS number on Friday. Then, as gold was attempting to rally overnight, the goons on the LBMA put the wood to it. Gold would have certainly fallen even farther on the Comex today had it not been for a pesky little Pig that failed to cooperate.

As stated in the last post, gold has risen almost 15% from the low of 1535 in late December to the high last week of 1765. A 5% correction should not only be expected, it should be welcomed. Though I expect support between 1705 and 1720, I am hoping for a quick drop to 1680 or so. At that point, we would have our 5% correction and I would be a ready and willing buyer.

OK, back to The Pig. After falling sharply eight days ago after the FOMC "QE to Infinity" announcement, the March POSX has stabilized and is now rangebound between 78.80 and 79.60. Which way this range breaks will be the directional determinant of the next leg of the PM trade. Note that while Pigatha has been stuck for 8 days so, too, has silver been stuck in a similar range. Silver is trading as a simple inverse of The POSX. You saw it today. Silver was falling sharply right after the Comex open but turned and reversed in a nice little FUBM as soon as The Pig rolled over at 9:00 am. Pigatha's rally saved silver today. Tomorrow or Wednesday we may not be so lucky. Additionally, using the same math as we did on gold, silver rallied almost 30% from late December to last week ($26 to $34). A 10% correction in silver would certainly be possible here. That would take us back to maybe 31 or 31.50.

So, here's what we know:

  1. The Cartel wants to force a gold correction.
  2. Silver is trading as a nearly perfect inverse to the POSX.
  3. POSX is rangebound, waiting on news to break it higher or lower.

My best guess is that the POSX will break higher at some point later this week (Greece, Syria, Iran...something causes a flight to The Pig). This will cause the PMs to break lower. Gold trades thru 1705 and trips some sell stops. It falls all the way to 1680 before stopping. Silver drops through 33 and 32.80, trips some stops and declines all the way through 32 before slowing.

One last thing before I sign off. The article below I found on Harvey's site late last week. I can't find a link and, since he reprinted the entire thing, it must be OK for me to do the same. The report is a rather interesting detail of the history of the region around the Mediterranean. Given that the headlines deteriorated again today, I thought that tonight would be a good time to post it. Here you go:

From Don Coxe, Coxe Advisors, LLP
The Mediterranean in History
History buffs would argue that it is impossible to understand the effects on the world from a Mediterranean roiled by crises occurring simultaneously within both the eurozone and the Arab nations today without looking back to the Mediterranean in history.
The "Arab Spring" has focused the world's attention on the South Shore of the Mediterranean. However, most commentators on the successive revolutions supply maps of each of the states, but almost never a map of Mediterranean civilization. This is both non-historical and misleading.

Because none of the city states or countries bordering on the Mediterranean was self-sufficient in everything necessary for a secure and civilized existence—food, wine, weaponry, tools, clothing, papyruses with texts of literature, poetry, military strategy, and agriculture, and the best artefacts for praising the gods—trade was a necessity.
Since ancient times, the states and empires of the Mediterranean region have not just fought and conquered each other—but have traded with, and influenced each other.
The Cradle of Western Civilization—Then and Now
For nearly two millennia, such significance as Greece enjoyed internationally was mostly for its beautiful isles and ruins, and the Romantic dream that the gods, heroes and geniuses embodied in "The Glory That Was Greece" somehow lingered in Olympus, Delphi, and Athens. Recently, it became the source of the Olympic Flame. Even more recently, it became the first of the overindebted underachievers to go broke because of its own profligacy.
In the six centuries before the Christian era, Greece was the leading intellectual and cultural force of the Northern Mediterranean. Alexander the Great spread that influence as far East as the borders of India. His legacy also proved decisive for Egypt.
The Ptolemy dynasty which continued to Egypt after his death until the suicide of Cleopatra, staked its claim to divinity through descent from his mother. In the three centuries of Ptolemaic rule, Alexandria became the intellectual and artistic capital of the Mediterranean and, in its library, the pre-eminent storehouse of Greek culture.
When Julius Caesar's nephew Octavian was given the title of Emperor Augustus, there were three major culture centers—Athens, Alexandria and Rome—of which Rome was the least distinguished. His rule ended the Hellenistic era which had begun with Alexander—the golden age of Grecian cultural dominance of the Mediterranean.
The Romans called the Mediterranean "Mare Nostrum" (Our Sea)—both as an assertion of Rome's ability to project military power across it, and their hope that Poseidon would treat Roman shipping favorably—the Mediterranean being notably storm-tossed, particularly during the winds of winter.
Julius Caesar conquered Britain and Gaul, but could hardly wait to come to Egypt, staying in Alexandria for nearly two years. It was not only the near-divine cultural center of the Mediterranean—but was Rome's biggest grain supplier. Rome hadn't been able to feed its citizens and legions for centuries. It relied on conquests and trade—and trade was usually more reliable.
Rome annexed Egypt when Octavian won the sea battle over Antony and Cleopatra's fleet at Actium in 31 BC. Until then, Rome had to form shifting alliances with the powers in Egypt and the Near East.
Prior to the rise of Islam, the Mediterranean was the center of the known world, and could be described as one huge—albeit diverse—community, which included citizens resident across the region. That was how Saint Paul saw it: when captured, he announced, "Civis Romanus Sum"—gaining the right to trial in Rome. The Catholic Church became the great unifying force across the region when Rome entered decline.
Then Islam swept through the South shore, and West and East shores, being thrown back only after centuries of struggle.
Today, the Mediterranean is two civilizations in simultaneous, rapidly unfolding crises. To date, those crises have been largely unrelated. That may well be about to change.
On the North and West shores, it is a nominally Christian community in which the church is a declining force. On the South and East shores, apart from Israel, it is an Islamic community in which religion is a stronger political and social force than at any time since the Ottoman Empire entered decline.
An equally important divide is demography. Europe is in the middle stages of demographic collapse on the Japanese model, with a fertility rate of approximately 1.3 babies per female—far below the replacement rate of 2.1—each new generation is roughly 60% of its predecessor, making the third generation roughly 40% the size of the first. That loss of the basic dynamism of human progress is an insuperable force for declining economic activity: GDP is output per worker multiplied by the number of workers. During and after the Baby Boom years, this meant annual growth in the number of potential workers and first-time home buyers. Today, that shrinking and aging population is a downward drag on real estate prices and employment opportunities, since home building and servicing are such huge job contributors.
For many years, tourism was the most reliable source of income of Mediterranean PIIGS as their economies became less competitive, but the demographic decline among the Northern European nations and the strong euro have proved painful for hotels, tour operators, sailboat charterers and restaurants. La dolce vita rests on reliable cash flows.
The third major divide within the Mediterranean region is education. On the North shore, literacy is near-universal and higher education trains millions of young people for the jobs global economic growth offers. That so many millions of them are unemployed is due to slow economic growth, guild and union laws, and other over-regulation that stultifies competition and progress.
In the South, education is a double-edged scimitar. Illiteracy is widespread, which means a huge percentage of the population is destitute or on the edge of economic disaster—like the poor Tunisian street vendor whose self immolation launched the most dramatic geopolitical developments in the Mediterranean since a Serbian anarchist killed Austria's Grand-Duke.
However, most of the Arab revolutions were launched by educated young people who could not find worthwhile employment in their largely dysfunctional economies. Cell phones and computers are ubiquitous, but there are few new manufacturing and service industries emerging. Young people envy the fast-developing prosperity of their generation across so many emerging economies, and blame their sclerotic regimes for their lack of opportunities.
Paradoxically, the biggest political winners from the sacrifices of the local youthful educated elites are the parties with no coherent economic growth agenda, just the mantra that "Islam is the answer." These parties were minor contributors to the miracles of Tahrir Square and its neighboring countries. But the dedication and organization of the Islamist parties, including the 8th Century purist version called Salafists, has meant that the divisions among the varying liberal or moderate factions have given power to them in Egypt.
In the Egyptian elections, the Islamists won 72% of the votes, with the Muslim Brotherhood receiving 47% and the Salafists 25%. Although the Brotherhood insists it is pluralist and tolerant, its highest-profile liberals who were so visible in its rise to power are now, according to numerous press reports, losing ground to hard-liners.
As we wrote in Basic Points while enthusiasm for the Arab Spring was running high across the world, the record for autocratic regimes toppled by idealistic liberals includes all too many tragedies. Examples: the Girondistes and their liberal allies in France lost power—and, in many cases, their heads, to the Jacobins, who were succeeded by Napoleon, who became Emperor; the Mensheviks and other liberals in Russia who seized power from the tsars in February 1917 were deposed in October by Lenin and his Bolsheviks, and were systematically annihilated thereafter.
Among the most conspicuous Egyptian victims of the Fall of Mubarak are the Coptic Christians (nearly 10% of the population), who were well-established in Egypt centuries before Islam was born, and who form a disproportionately large percentage of the educated and business-oriented citizenry. Their churches have been burnt—sometimes with worshippers inside. They have been brutalized by mobs while soldiers watched placidly. The brazen attack on the Israeli embassy in Cairo also appeared to have been organized with support from elements in the army: soldiers stood by until the mob had broken through all the external barriers.
Predictable effect: tourism, Egypt's biggest foreign-currency earner, is collapsing. Foreign direct investment—heavily tourist-oriented—is on hold. Despite its massive problems, Egypt had been making modest economic progress until the army arrested Mubarak and embarked on an erratic program of crisis management, which has triggered double-digit inflation and a sharp fall in the nation’s modest forex reserves. Its decision to reject an IMF loan in June, because the terms were “insulting” has forced the interim government to borrow locally, thereby draining liquidity from the economy. The new Muslim Brotherhood government talks of modernizing the economy, but long-range planning and investment cannot be implemented in a crisis. The Salafists were elected by the poorest of the poor, and they are adamant that the food and energy subsidies that are draining the treasury must continue.
Remarkably, the other big divide between North and South is faith in democracy.
The unifying cry across the South Shore has been the demand for democracy, for which thousands of mostly young and mostly liberal people suffered imprisonment, torture or death.
Such idealism is at bay on the North Shore: the two cradle nations of Mediterranean democracy—Greece and Italy—which were democratic while Spain and Portugal were still dictatorships, have been forced by the eurocrisis to forsake rule by elections. They have fired their top political leaders in favor of elite Eurocrat replacements acceptable to the European Central Bank and Brussels.
Even when Alexander the Great was conquering the eastern Mediterranean and Southern Asia, the lives and fortunes of most people on earth were unaffected.
Not today. The so-called "Cradle of Western Civilization" is rocking amid strong winds from both sides of the sea; if it falls, the economic and geopolitical effects will be enormous.
The eurozone's problems and the Arab Spring have, to date, been discussed in the media as discrete occurrences.
However, for the first time since the Second World War, most of the nations in the region face crises simultaneously, which suggests huge potential instability.
The key reason Italy broke its long, lucrative Libyan relationship, and enthusiastically supported the NATO attacks was the flood of Libyan refugees pouring into Italy. Libya's cash flow problems could be temporary, because its substantial production of light crude oil should shortly resume, but in its attempts at nation-building it faces the same internal conflicts between liberals and Islamists as Egypt. Already, pro-Gadhafi supporters have taken over one town and proclaimed a rebellion.
Sadly, it is almost inevitable that the North Shore will soon face serious refugee problems as the non-oil South Shore nations are torn with internal divisions the dictators had suppressed, and their fragile, uncompetitive economies implode. Iran managed to survive as a brutal Shia theocracy because it inherited a society of well-educated men and women—with a strong agricultural and trading base in which entrepreneurialism flourished—and because of its immense reserves of oil and gas. (Fortunately, Iran is unlikely to be a major meddler in the Mediterranean crises, because the populations are largely Sunni.)
Beleaguered governments frequently resort to distracting their citizenry by blaming foreign enemies. Israel has been blamed for nearly all Mideast problems for decades—by Arab propagandists and by the global Left. It has peace treaties with two neighbors—Jordan and Egypt. The Egyptian Army rulers were careful not to suggest that the Israel treaty should be torn up, as some of the candidates for office were demanding, partly because of American aid. However, it was to be “reviewed”. We saw Jordan’s King Abdullah being interviewed on US TV and he expressed concern about demands from radicals to revoke the Israel treaty, but said that it was crucial that Israel re-start its negotiations with the Palestinians, because the one issue uniting “all Arabs” was insistence on settling that question for once and for all.
Good luck with that.
The eurocrisis has been front and center for nearly two years, during which time the economic and financial fundamentals have continued to deteriorate. “The Arab Spring” came suddenly, in a series of outbursts of optimism. It may have come at the worst possible time for the beleaguered nations of the North Shore.
The Mediterranean has entered one of the stormiest periods in recorded history. It is the major contributor to risk in global equity markets. It is too soon to predict how these crises will end.
The Cradle of Civilization is rocking amid an array of winds and storms.

That's all, folks. See you Tuesday. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


ilion Zoltan
Feb 7, 2012 - 12:24pm

The guys at Armada Markets

The guys at Armada Markets nailed it 100% yesterday on their call that EUR/USD to break the 1.32 level today. They also call for SP500 to break the 1350 level this week. They are though bearish on the paper gold/silver and expect the market to crash this year. Anybody reading their daily commentary?

Feb 7, 2012 - 12:26pm

This just in...

I just received my modest monthly stack of Bens (the good ones, as in Franklin, not Bernanke) from Provident--three weeks later than normal. I was worried about shipping loss, so I called and they had been out of stock! Just a coincidence? Or was it many private citizens ordering all at once during that dip? There is something about the smell of old silver coins on your fingers that is not "dirty," but "reassuring."

Feb 7, 2012 - 12:26pm

But But

The dollars keeps going down

Feb 7, 2012 - 12:28pm

turd. whats coming together?

gold to the moon?

Feb 7, 2012 - 12:30pm

Happy Tuesday?

or bernanke or reality

Baxter Bentley SimplyEconomics
Feb 7, 2012 - 12:32pm

RE: SimplyEconomics

My calculations *current as of today* show a better than 70% probability that gold closes 6/1/2012 between $2112-2408, and a better than 70% probability that silver closes 6/1/2012 between $48.17-59.63. I'm not saying I'm necessarily right, since what "should happen" doesn't always, but everything I've seen/calculated points to a dramatic and sustained move upwards starting early-mid March and heading through June/July.

Full disclosure: I don't utilize calculations with gold prices prior to October 2008 and silver prices prior to August 2010.

Feb 7, 2012 - 12:45pm


Not sure if it's just me but I'm very weary of the recent swings in gold and silver.

There is a strong correlation on Euro weakness driving metals prices down yet the correlation is much weaker when Euro is positive. So what's the drag?

Silver seems held down today - it should be flying at the very least around $44.40+ if the correlation was the same as in the past (34.00 as I type). Same with gold - which should be above $1764.. It sure feels like metals are trying to correct but being supported by a lower greenback.

In the short term, if the EUR/USD keeps trending up, I'm thinking we will have to see a gap up in metals soon to catch up.

Feb 7, 2012 - 12:49pm

But Who is Selling Theirs, Anyway?

Here is a news article that might be of interest to the Turd community:

A draft city ordinance calls for any Duluth business that purchases precious metal items from the public to be licensed and equipped to provide daily electronic reports of its transactions to a statewide system. Any business purchasing an item that’s more than 1 percent gold, silver or platinum by weight would need to provide notice of the transaction and furnish a picture of the item or items purchased — as well as a color photo of the seller.”

Now they want to photograph you if you sell your PM’s. This is a glimpse of what may be coming, in the name of yet another necessary security measure to protect you. Thought they would dare to confiscate PM’s? They know this would be ineffective, so instead they will make it impossible to sell them, and this is just the first step along that path.


Feb 7, 2012 - 12:50pm

your tax dollars at work: new

your tax dollars at work:

new high dollar electric car model named "KARMA" goes belly up. KARMA!! you can't make sh1t like this up!

stimulus funding creates jobs IN FINLAND! in the u.s.? not so much. in fact, LAYOFFS!

Feb 7, 2012 - 12:51pm

It's True...

When God takes a sh*t, he opens a window.

So true. You can apply that truism to anything in reality.


Mariposa de Oro ClinkinKY
Feb 7, 2012 - 12:52pm


Hey ClinkinKY,

I lived Rockledge from 1998-2007. Even during the 'good times' it was a struggle for many folks. I had a good job at the Kennedy Space Center and resigned to come out here to the RMI. Everyone told me I was stupid, nuts, etc., the usual. The Space Shuttle program cancelation had already been announced. When the D's won both Houses of CONgress in 2006, I knew we were in for it, and that the Constellation Program, a Bush-Thing, would get canceled. I still have a house there and some friends. After they got laid off, I received many an email inquiring about jobs. Also, many told me how 'lucky' I am. Luck had very little to do with it. Mostly its been a matter of blessed, with a small amount of wisdom. Oh yeah, most of my friends from the Space Center are STILL unemployed and in debt. They refused to relocate......

Feb 7, 2012 - 12:57pm

Chart-Traders vs. Average Folks

Here are some succinct pointers from a study about personality characteristics of Chart-Traders:

1) One common theme: Successful traders all share a low level of anxiety under stress.

2) It’s essential to quickly pick out chart patterns in whatever time period you are using.

3) You need to do hours and hours of homework after market close on both winning and losing trades, to understand why you made them. You need to be fully aware of both what you did right, and when you made mistakes.

4) It is essential to keep emotions in check so you trade logically based on what you’ve learned, rather than how you are feeling that day.

5) One of the biggest surprises in the research was how consistent the personality traits between successful traders were.

Reading these points, I realize that I am not a trader. Although we can modify our behavior, we simply can not change our personality characteristics. It is important for people to recognize their limitations. Stick with what you know, and be careful with what you do not fully understand.

This helps me to understand why I am comfortable with physical PM’s. Owning an object of value which I can hold in my hand; this suits my personality. I will never be a trader like the Chartists, and that’s okay.

And aside from PM’s I also own arable land and have the skills (if not adequate time) to produce food & income from this. In addition to this – I have a barn which I rent out for boarding horses, and plan to put in a manufactured home as another source of rental income.

Might have gotten off-track from this blog’s original intent; I guess my point is there are different ways for people to derive income from their investments, and the methodology for doing so is dependent upon the individual’s personality.


Feb 7, 2012 - 12:57pm

Cartel on lunch hour, letting PM's rise until after 1:30

where they will inevitably take it down on globex. Allowing silver to rise to 34.20 and gold to 1750. I'm out waiting for 1740 and 33.65

Dr G
Feb 7, 2012 - 12:58pm

Baltic Dry Index is up off

Baltic Dry Index is up off it's lows by 0.15%. We are saved, the depression is over.

Also note:

clueless one
Feb 7, 2012 - 1:01pm


here it comes!

Dr G clueless one
Feb 7, 2012 - 1:03pm

here it comes! ​Oh ye of

here it comes!

​Oh ye of little faith.

clueless one
Feb 7, 2012 - 1:07pm

@ Dr G

lots of faith, my good man. I don't trade. I don't worry about it.

best wishes to those that do... I hope you make a killing! I truly do.

Feb 7, 2012 - 1:13pm


Moon tonight.

Also, the only thing that 'they' can not confiscate - is our will and our soul... unless you give it to them.

So a big FU to the EE!


And if they do try to confiscate our G&S...

Than that is the point where I'll meet you other 'Wolverines' in the forest with G&A...



Feb 7, 2012 - 1:17pm

Greece Memorandum of Understanding

Anyone got a clue when we can expect this?

Or do we need to wait for the Greeks to have an afternoon nap and some Bakalva first?

Alijo RaRaRasputin
Feb 7, 2012 - 1:17pm

History Repeats...

Very Likely... As they've been doing for the past century!

Feb 7, 2012 - 1:18pm

false flag running up the pole?

i'm really glad i don't have any relatives stationed aboard the uss enterprise. i've seen several worrying news/gossip/speculation items going past.

the possibility of a false flag event to kick off the iranian phase of the on-going u.s. mideast war games,

a mention of the possibility of the loss of a ship (ships) with many naval casualties,

a mention of the difficulty inherent in decommissioning a nuclear powered ship and its reactors after long service, and how convenient it might be just to lose it instead, (the enterprise is about 50 years old)

the dispatch of the enterprise to the mideast,

it may be nothing, it may be just a jittery hunch, but again, i'm glad i don't have any close relatives aboard the big e.

god, help us.

Feb 7, 2012 - 1:33pm


Hello folks, I'm looking for help with predictions on how the Greek situation will play out. Currently, I've got money in a 401k and I want to try to play it right. The only reason I have a 401k right now is because its my hedge against my physical. While most of you guys were closing out your 401k last year, I decided to open one at my new job to take advantage of pre tax deductions and employer match, but more importantly, I have self directed my funds into the mutual fund that buys all gold and silver miners. Currently, its up 12% on the year, but I sense a correction in stocks is coming soon. The question is whether this will be a minor correction, or will Greece blow up the world markets next month like many people seem to believe (including Bix Weir). If this happens, what will be the effect on large gold and silver miners? Will it be another 2008 type correction where commodities get murdered while people flee to dollars, before snapping back and propelling to new highs, or will gold and silver be finally be recognized as the de facto safe haven?

Here is what I'm thinking, and this is how I will play this. I will keep my elections the same until the end of the month, because I think the DJIA still has another couple 100 points left in it. In about a month, I will move half of my money from the minor fund into another fund that buys medium length bonds. Specifically, this fund did well in 2008. I think towards the end of March we will see a crash or correction all the way through April and possibly May. I think the miners will correct and the bonds will gain and while I probably wont profit during this time, I probably wont lose too much. Once pessimism is high and I sense a bottom in the market, I will transfer back into the miner fund for the next leg up in this bull which promises to be a moon shot. What do you guys think of this strategy?

Feb 7, 2012 - 1:35pm

New Thread

theres a new thread on the main page

BrentLawrence Senseosensei
Feb 7, 2012 - 2:14pm

James Cameron moves to New Zeland. Not like rats leaving a sinking ship but.....another elite expatriating.


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 4/15

4/16 9:15 ET Cap Util and Ind Prod
4/17 8:30 ET Trade Deficit (Feb)
4/17 10:00 ET Wholesale Inventories
4/18 8:30 ET Retail Sales (March)
4/18 8:30 ET Philly Fed
4/18 10:00 ET Business Inventories (Feb)
4/19 8:30 ET Housing Starts and Building Permits

Key Economic Events Week of 4/1

4/1 8:30 ET Retail Sales (Feb)
4/1 9:45 ET Markit & ISM Manu PMIs
4/1 10:00 ET Construction Spending (Feb)
4/1 10:00 ET Business Inventories (Jan)
4/2 8:30 ET Durable Goods (Feb)
4/3 9:45 ET Markit & ISM Services PMIs
4/5 8:30 ET BLSBS

Key Economic Events Week of 3/25

3/26 8:30 ET Housing Starts (Feb)
3/27 8:30 ET Trade Deficit (Jan)
3/28 8:30 ET Q4 GDP final guess
3/28 10:00 ET Pending Home Sales (Feb)
3/29 8:30 ET Personal Income (Feb)
3/29 8:30 ET Consumer Spending and Core Infl. (Jan)
3/29 9:45 ET Chicago PMI
3/29 10:00 ET New Home Sales (Feb)

Recent Comments

by NW VIEW, 7 min 50 sec ago
by cashonly, 2 hours 34 min ago
by canary, 2 hours 35 min ago