Passing The Time

Mon, Aug 1, 2011 - 3:07pm

I must admit that days like today are really tough. The PMs are not trading on any rational fundos. They are simply reacting to headlines and the algo gyrations they cause. Yuck.

As mentioned this morning, we should all be prepared to buy any significant dip that develops. IF you get a chance to buy gold close to $1600, consider yourself fortunate. IF gold were to fall through 1600 and approach the significant support near 1585, consider yourself blessed. Silver, on the other hand, is just no fun at all. I'm now firmly in the camp that considers the margin hikes of May to have been so significant that silver can't seem to muster the open interest necessary to sustain a consequential move to the upside. The rallies are real but they don't have the depth necessary to sustain their gains. Once the buying pressure is exhausted, JPM steps in and pushes it back down. Earlier this year, rallies in silver were two-steps-forward-and-one-step-back. Now, it's more like 1:1. We had a very nice run from $34 to $41 but $42 is beginning to look like a real stretch. At this point, a pullback to $38 looks more likely in the short term. IF, by the grace of God we do see $42 this week, I plan to unwind my December call spreads and move to the sideline for a while.

Wrapping up for today, here's some user-inspired content for you to chew on. First up, ScottJ recommended this video series to me last week. Though it appears to be about a year old, you'll likely find it interesting.

Mike Maloney Schools Bankers on Deflation, Oil Price Crash, Gold and Silver (Part 1 of 2)
(PART 2!) Mike Maloney Schools Bankers on Deflation, Oil Price Crash, Gold and Silver


Preparing Accordingly

Lately, I spent a lot of time fashioning posts about the daily machinations of the gold and silver markets. I will, no doubt, continue this practice as it is a hobby/passion of mine. However, the subtitle of this blog refers to the end of The Great Keynesian Experiment and its implications so I feel I need to "get back to basics", so to speak, as it is the "prepare accordingly" part that we all need to practice.

I found this image on Google and it seems to sum up my point of view. We are but children, at once hopeful and optimistic, yet watching our future drain away. The arcade coin drop is a metaphor I've used often in the past and I think it provides a decent visual. In the immortal words of Inigo Montoya: Let me explain. No, there is too much. Let me sum up.

Our "coin" was dropped by the great Texas slimeball politician, LBJ, when he created The Great Society in the 1960s. A new, expanded role of the US federal government was created and politicians learned that they could manipulate government largesse to their own political gain. In 1971, the coin began sinking into the funnel and spinning faster when republocrat President R. Milhous Nixon, realizing that the gold-sponsored money supply of the US could never grow at a pace sufficient to support this ever-expanding government, removed the US from the "gold standard" and the US dollar has been backed by nothing but the full faith and credit of the US government ever since.

Republocrat Jimmy Carter presided over the initial wave of stagflation brought upon by Nixon's decision. The "coin" kept dropping and circling faster and faster during his four years in office. In 1980, suddenly there was hope. Conservative Ronald Wilson Reagan was elected and through a policy of tax-cutting and higher interest rates, the conservative Reagan defied the laws of physics as the coin actually moved up the funnel and slowed. However, having succumbed to old age and senility, even Reagan suffered a "death-bed conversion" to Republocratism and the coin began dropping again in 1986. Republocrat giant, G. H. Walker Bush took the reins of government in 1988 and, by 1992, our coin was spinning faster than ever and dropping at an alarming pace.

With the election of hick republocrat Billy Jeff Clinton in 1992, things began to get out of control. Soon, faced with a rapidly approaching end game, all republocrats in Congress and the Federal Reserve decided to go for broke. By massively inflating the US money supply, an illusion of prosperity took over, not just in the US but globally, too. This mirage held our collective imagination until the year 2000 when, suddenly, we began to realize that all was not well and that the coin was actually spinning faster and was much closer to the bottom than we'd thought.

"Good heavens. We can't have that!" exclaimed the new republocrat president Dubya Bush. With his partners in crime in Congress and the Federal Reserve, Little B reached into the funnel, grabbed the already speeding/dropping coin and actually gave it a push faster. By 2008, the coin was nearing the bottom of the funnel.

Just then, a dangerously under-qualified former street radical republocrat was elected president. President B'rock O'bottom is now presiding over the end of the game. At the end, the "coin" spins faster and faster until the bottom simply drops out. This is where we stand today. Are not events spinning faster and faster? Are your politicians and policymakers not making more rash and spurious decisions with each passing day? Are global leaders not positioning themselves for the next World Order?

The end of US hegemony is near and with it, the end of the US dollar as "world reserve currency". This catastrophe and all in entails could have been avoided with responsible leadership and an educated/involved populace. However, selfishly, we in the US decided it was best to pursue a plan where we foolishly thought our recklessness was beneficial. This attitude was best summarized by republocrat and Keynesian legend, John Connally, who, as the coin was dropped in 1973, told the world that "the dollar is our currency but it is your problem". Sadly, we allowed Mr. Connally to be prescient for almost 40 years but the world is about to turn the tables. Soon...very soon...the coin will finally reach the narrow end of the funnel and the bottom will simply drop out. What happens next will not be fun and games.

F**K The Fed - From the Award-Winning "The CONSPIRACY Project"
High School musical - We're all in this together

About the Author

turd [at] tfmetalsreport [dot] com ()


Tom L legerde
Aug 2, 2011 - 7:37am


Absolutely, starve the beast.

I removed all of my money (except for a checking acct.) from the banking system in 2007-08. 403B, liquidated. IRAs, liquidated. The only thing left is the annuity portion of my TIAA-CREF 403B, which pays me $500 / yr for the next 8 years. I don't expect to get much from it, but it'll make most of a mortgage payment.

If you can figure out how you need to move your activities into cash-only agreements that cannot be declared as income. Grow your own food and strengthen your local economy by being less dependent on outside sources of energy, if possible. It's imperative to not only prepare yourself for what's coming but to prepare in such a way as to be a resource for others as well. An eye in the storm.

I can't tell you how important my 2 dairy goats have become to our family. They provide a significant percentage of our daily food as well as the potential for commerce directly with friends.

Simplify your life. Figure our ways to use the energy you have as close to your home as possible. This will result in lowered needs for the things the EE controls and taxes.

If you can:

1) Heat your house with wood, preferably wood you grow on your property.

2) Build a solar oven to cook some of your food with.

3) Build and add in some form of energy source: solar, wind, hydro ... whatever. It won't be cost-effective in the short run, but it will lower your cash-flow. If you make your own solar cells for <$1/watt then it will be. That's one of my next projects once I'm past my current cash flow issues.

4) Grow a garden for yourself/family or forage for your dairy animal. The les dependent you are on outside sources of food, the better. This is where the inflation will hit the hardest.

5) get a couple of chickens, feed them your table scraps and backyard. Supplement with grain.


murphy TheGoodDoctor
Aug 2, 2011 - 7:40am

@ Good Doc re Madoff

Not that it matters but of course he was a patsy and a sacrifice. His problem was that he stole from rich people. More importantly there is NO way that he didn't have partners in the gov't. No one steals $50B over 40 years. Especially after being investigated by the SEC for almost the last 10 of them. How do the banks and all of our covert operations really run?

ANSWER: Laundered drug/crime money. Another reason why I agree with you that a hyperinflation could happen very quickly? Have you ever seen the rooms filled with cash from the drug busts? With drug money so cheap to those types how fast would they dump their paper for gold? We already know they get their guns from the ATF but that's another topic.

Tom L legerde
Aug 2, 2011 - 7:42am

Damn Double Post

I put a lot of these thoughts into a couple of LRC articles last year:


maravich44 Tom L
Aug 2, 2011 - 7:53am

@ Tom L

Thank You for all the great info and input, you are very generous with your knowledge and time.

Aug 2, 2011 - 7:54am

Gold $1630.06

Go Go Go!

boil_in_the_bag_rice donnojackshit
Aug 2, 2011 - 8:04am

Now $1634.68

Now $1634.68 (ask)


Aug 2, 2011 - 8:10am

@Tom L - Keynesian celery

Read your post on Rockwell. Good stuff. Celery = Keynesian food... lol.

Aug 2, 2011 - 8:11am


Debt implosion both here and abroad. Markets are not liking any of it. Globally.

Reason is everyone is starting to realize this fixes nothing. The US is in a real bind here if sentiment does not change. The US assumes the world is going to continue to let it print its way out of debt, and from the looks of this mornings Fut's the world is saying FU.

Sure the US has the market in its grasp, but for how long?

Aug 2, 2011 - 8:11am

Gold just seems untouchable lately

They kept silver easily below $40 but they cannot even get gold below $1,620 for more than a minute. I wanted to buy some more at $1610 but I missed it and it seems like it is very, very strong to me.

Aug 2, 2011 - 8:19am


GDX looks fantastic as well. Think about where we would be right now without the obvious criminal beat downs the last week or so. GDX would be scaling $70 easy.

Aug 2, 2011 - 8:24am

Speaking of Keynesian...

TF Metals Report is fine, but pretty dry and certainly not an apt description of what the site is all about. I sure miss 'All Along The Watchtower' - Preparing For The End of the Great Keynesian Experiment' as the blog masthead. Been meaning to mention.

TF Metals is a "me too" name among many reports, and signifies pure metal content in "report" format.

The old name Watchtower/Keynesian Experiment is a point of view, a state of mind, a description of interactivity and content, a brand promise, a plain truth well told and a call to action. The old title uniquely differentiates the Turd brand.

Just sayin'...

Aug 2, 2011 - 8:26am

Current Volume On Gold?

Not that I normally watch it but is gold running an unusually high volume right now?

Aug 2, 2011 - 8:27am

@Shill - GDX or juniors

Shill, if you had to choose only one at this point, would you be in GDX or GDXJ?

Aug 2, 2011 - 8:32am

"And always check with Markus

"And always check with Markus for accuracy on margin hikes. :)"

Hehe. Here's the margin requirements on the CME homepage, if you want to check in the future; filter for Exchange "CMX" and Asset Classes "Metals":

You can also sign yourself up to the CME performance bond (margin) newsletter where you'll always get notified as soon as new margin changes come out. I signed up a while ago so I'm not 100% sure but I believe it's on this page (enter your email address and check the "Performance Bonds (Margins)" box):

- Markus

Aug 2, 2011 - 8:34am


NetDania often gives weird data. The volume data they collect is not from all members on the exchange, but only from some individual banks and does not represent total volume on the exchange(s). So I would take their volume data with a grain of salt.

- Markus

Aug 2, 2011 - 8:37am

Wow look at silver and gold soaring

Silver popped right over $40 and gold at all-time highs in the $1640s

Aug 2, 2011 - 8:37am

@ Larry

fwiw - I felt it was time to add to both of them yesterday. Also, added to the other miners as well. Compared to the physical the miners eventually have to catch up, I hope.

Frontal Labottleme
Aug 2, 2011 - 8:41am

Short covering!   Woohoo!

Short covering! Woohoo!

I reckon all the shorts were hoping for a metals blood bath... whoops!

Aug 2, 2011 - 8:42am


I was always a Senior/majors type investor. go with the top..GDX...but that is me, some are partial to Junior and make a killing doing it.

Aug 2, 2011 - 8:42am

I usually try to keep emotion

I usually try to keep emotion out of investing, but I'll be real happy when gold hits 1650 because that is Santa's target. He is really one of the best and most dedicated out there and I will be very happy when we hit his target.

- Markus

Aug 2, 2011 - 8:43am

Ya ' gotta love it

The early upward price action is always a pleasant thing to see first thing in the a.m.

Hopefully it's not attacked too crazily very shortly. (9:00a.m. sounds about right for them to attack, to curtail any options momentum going into the opening. (bastards!)

Eric Original
Aug 2, 2011 - 8:47am

Shill re: "Satan Sandwich"

I saw that guy on the tube the other night and I was laughing my ass off because it was obvious to me that he was cleaning up another old phrase from "inside politics", namely the "shit sandwich".

When push finally comes to shove, and the deal gets done in the back room, and everybody is going to have to vote for something they find distasteful, all the little guys figure "Here comes the big ol' shit sandwich! Eat hearty boys!"

Aug 2, 2011 - 8:48am


  1. 8:30a

    Consumer spending falls 0.2% in June

  2. 8:30a

    PCE price index declines 0.2% in June

Yup J6P is done.

Aug 2, 2011 - 8:49am

Not out of the woods

not by a long shot:

Sentiment Crumbles On Relentless Euro Crisis, French, Italian And Spanish CDS Hit Records

Submitted by Tyler Durden on 08/02/2011 - 07:10 Belgium CDS Debt Ceiling France Gilts headlines Italy recovery SWIFT Swiss Franc United Kingdom Vigilantes

Despite Congress passing the debt ceiling hike, the market's reaction has been swift, brutal and vicious as ever more attention is being paid to Italy and the unforgiving European crisis. As both Spanish and Italian spreads hit new all time records, while CDS are at all time wides for the two countries plus France, the vigilantes are once again preparing to attack and test the ECB's resolve to keep the Euro alive: at this point it is obviously a losing game although expanding the EFSFS to $2 trillion is inevitable (at which point the reaction to German spreads will be swift). In the meantime the scramble for safety is at 2011 highs, with gold on the verge of another record, while the 10 Year US Treasury touching a low of 2.685%, and UK Gilts touching record lows: remember - this is all to make QE3 more palatable when it does begin. Lastly, Bloomberg's TJ Marta summarizes all the market indicators of a day in which sentiment has truly crumbled and in which we expect Italian bank stocks to be halted at least 3 times before market close.

Aug 2, 2011 - 8:50am


I find it amazing, or maybe, appalling.. that our government views this 2.5Trillion increase in the debt limit, as evidence for the world that we are getting our fiscal house in order. We show them that we can actually cut 21 billion this next fiscal year, with rest coming in 2016 and beyond.

Obviously the rest of the world now sees through our chirade. Now if we can get the people of the USA off of the TV and video games long enough to learn, we will have a chance. Barring that........

I do not know what our next currency will be, but one thing I know for sure..... 1 pound of of gold or silver will still be one pound.



Aug 2, 2011 - 8:51am
Aug 2, 2011 - 8:53am
Violent Rhetoric
Aug 2, 2011 - 9:05am

Personal spending -.02

Personal spending -.02% versus expectations +.01% [consumer not spending]

PCE Core MOM +.01% vs expectations +.02 [less inflation]

negative for GDP -> the debt ceiling will be hit sooner rather than later.

headed for recession my friends

Aug 2, 2011 - 9:08am

We need a FUBM

I would like to see one right about now to know if the buyers are out there with any determination or confidence.

My guess is that by the time Friday is over with and the market has digested the days NFP data (and the debt deal details) that Au will be at $1665 by Fridays 6:00 close.

Aug 2, 2011 - 9:15am



GDX and GDXJ are used to suppress the price of the pulls money OUT of the actual miners.......DON'T support them.

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