TFMR Podcast - Friday, February 26


The pullback that we've been expecting has begun in earnest but that doesn't mean its all bad and it certainly doesn't mean that we're now headed to new lows. So, come on in and let's discuss what will likely happen next.

We begin today with another updated look at the all-important USDJPY:

We then review these three charts of gold:

These two charts of silver:

And though it may not feel like it, the HUI was actually UP for the fifth week in a row:

Finally, we discuss the latest CoT: And these two charts which accompany it:

Have a great weekend!



J Siefert
Feb 28, 2016 - 12:34am

Lone Ranger's horse

As a kid I was always concerned about that prat on the horse shooting his gun all over the place but ALWAYS right next to Silver's ears. That poor horse must be stone deaf the poor blighter.

Feb 28, 2016 - 12:35am

@Clarki Re: Armenia

I started that article you just posted and in the very first paragraph I read:

"Turkey, an indispensable U.S. ally and partner in the fight against the Islamic State."

Hardy har har har! Makes me seriously wonder about the rest, but I'll continue...

Just more laughs and giggles... should have known, it's the Washington Post!

More seriously, it is clear what Russia could be up to when considering this:

Feb 28, 2016 - 12:55am

Another example of how people can't connect the dots

Anyone who can't see that the launch wasn't delayed so Reagan could crow about it in his state of the union address and praise Christa McAuliffe is a complete and utter idiot. Two plus two equals four, people.

J Siefert infometron
Feb 28, 2016 - 1:36am

indispensable ??

When I read the statement: "Turkey, an indispensable U.S. ally blah, blah, blah..."

...I understand that most US allies are dispensable but for some special reason in this case Turkey is not. The truth is the present day US would dispense with any and every ally if it was clearly to the US's advantage.

Safety Dan
Feb 28, 2016 - 1:53am

Is The US Next? See Venezuela Crumble

Can Maduro Mayhem Last to 2017

Things are turning increasingly ugly in Venezuela between President Maduro and the opposition MUD. The core political problem after December 2015 elections is the PSUV are now using the courts to neuter any opposition voices that formally hold a legislative majority to start holding the government to account. Right on cue, Mr. Maduro just railed a decree through the Supreme Court (TSJ) giving him total control over budgetary measures, utilize any property, suspect constitutional rights and if needs be mobilize the military for a period of 60 days (effective from 15th January) with another 60 day extension not only ‘Constitutionally possible’, but increasingly likely. The ‘good news’ from that, is President Maduro is at least starting to take some tepid measures that might help to get Venezuela onto a more realistic track, including 37% devaluation with a view to bringing Venezuela’s three tiered exchange rate into a dual system. Looks good on ‘paper’, but don’t be fooled. It merely leaves official rates of 10 bolivares to the US dollar, 200 bolivares (likely floated as the second tranche), compared to black market rates that’s more like 1000 to the greenback. Unsurprisingly, domestic price reforms got similarly ‘piecemeal treatment’, where memories of the 1989 Caracozo riots still ring loud in the PSUV’s ears. Going from 0.07 bolivar a litre to 1 bolivar sounds huge at 1,329% price hikes for 91 octane, but it still makes Venezuelan gasoline the cheapest in the world. PDVSA will only save around $800m from the move, and that’s assuming the government continues to adjust prices give Mr. Maduro’s measures will send inflation into the 1000% stratosphere. The IMF was already being very polite with 720% estimates on basic goods, including fabled toilet paper and condoms in increasingly short Venezuelan supply these days.

A third of that is owed by the Central Bank, a third owed by PDVSA, and another tranche directly payable to China under oil for loans. To its ‘credit’ Venezuela has tried to honour its international obligations, even to the point of squeezing imports to avoid the political embarrassment of tanker seizures to date. But under current benchmark prices, Venezuela will have to spend around 90% of oil export revenues purely servicing debts to get through the year. Our take is that’s going to be politically impossible to do given some of those scarce dollars will be needed to provide the most basic of basic goods. That means structural default is inevitable sooner or later, at least without any fundamental regime change to try and chart a new course.

On that ironic note, anyone expecting things to get better under a drastically fractured MUD

Feb 28, 2016 - 3:13am


Dr. Farrell

Feb 28, 2016 - 3:25am
Feb 28, 2016 - 4:28am
Safety Dan
Feb 28, 2016 - 5:42am

The Global Run On Physical

The Global Run On Physical Cash Has Begun: Why It Pays To Panic First

Back in August 2012, when negative interest rates were still merely viewed as sheer monetary lunacy instead of pervasive global monetary reality that has pushed over $6 trillion in global bonds into negative yield territory, the NY Fed mused hypothetically about negative rates and wrote "Be Careful What You Wish For" saying that "if rates go negative, the U.S. Treasury Department’s Bureau of Engraving and Printing will likely be called upon to print a lot more currency as individuals and small businesses substitute cash for at least some of their bank balances."

Well, maybe not... especially if physical currency is gradually phased out in favor of some digital currency "equivalent" as so many "erudite economists" and corporate media have suggested recently, for the simple reason that in a world of negative rates, physical currency - just like physical gold - provides a convenient loophole to the financial repression of keeping one's savings in digital form in a bank where said savings are taxed at -0.1%, or -1% or -10% or more per year by a central bank and government both hoping to force consumers to spend instead of save.

For now cash is still legal, and NIRP - while a reality for the banks - has yet to be fully passed on to depositors.

The bigger problem is that in all countries that have launched NIRP, instead of forcing spending precisely the opposite has happened: as we showed last October, when Bank of America looked at savings patterns in European nations with NIRP, instead of facilitating spending, what has happened is precisely the opposite: "as the BIS have highlighted, ultra-low rates may perversely be driving a greater propensity for consumers to save as retirement income becomes more uncertain."

Call it another massive error on behalf of Keynesian central planners who once again fail to appreciate the nuances of the common sense and the liquidity preference of ordinary consumers.

However, just because negative rates have not been passed on to savers yet or just because cash still has not been made illegal, that doesn't mean it won't be.

The question at this point is twofold: what happens after the savings of ordinary depositors in the bank officially taxed and/or cash becomes phased out, and more importantly, what happens just before.

In other words, will there be a run on physical cash?

The truth is that if society panics and there is a full blown rush out of existing electronic bank deposits and into physical currency to avoid negative rate taxation, only those who panic first will be safe. Why? Because of the "magic" of fractional reserve banking - there is simply not enough physical currency in circulation to satisfy all savers' claims.

Here is HSBC's Steven Major trying to explain the problem:

Based on the evidence so far, households have not rushed to withdraw cash and put it into a safe or, more significantly, pay for someone else to store it for them. This is because retail deposit rates have stayed at or above zero as banks have opted to not pass the lower market rates on.

The assumption that bank deposits can be rapidly converted into cash does not hold up, in our opinion. If everybody wanted to take their cash out of the bank at the same time, the system would soon run out as there are simply not enough notes in circulation. It would take a considerable time to print the currency needed to meet the demand. A central bank could enforce a negative rate for a considerable period of time under these conditions. For example, in the US, even if the production rate is doubled – and assuming the pace of retirement of old notes is unchanged and there is demand for USD3trn of new notes - printing would take 20-years.

To explain this, consider the demand for currency created if savers tried to remove cash from the US banking system. This demand could total anything between USD2.5trn (of excess reserves) and USD4.5trn (the Fed’s total balance sheet). Currently there is USD1.5trn of currency in circulation and the total annual production had a face value USD149bn in 2014, suggesting the 20 years it would take to print the cash.

Currency in circulation is small compared to the potential demand in a negative rate environment. As an example, the Fed’s assets are three times the currency in circulation and the Riksbank’s nearly ten times (see Table 1), but production capacity is limited.

While largely correct, Major is wrong about two critical things.

First, when estimating the potential demand for physical currency in circulation, one has to take into consideration not only the amount of total Fed reserves (or its entire balance sheet) but the entire fractional reserve banking system, and specifically the amount of paperless deposits parked at banks in the form of demand, checking, and savings account, or in other words, all the core components of M2. Not only that, but one must also consider the threat by increasingly more economists that large denomination bills may be outlawed, first in Europe with the €500 bill and then in the US with the $100 bill.

What a ban of Ben ($100 bill) would imply is that the total notional value of US currency in circulation would plunge from $1.35 trillion in the most recent week, to just $271 billion once the total $1.08 trillion value of $100 bills is eliminated. Putting this in context, there are as of this moment, $11.1 trillion in various forms of savings parked at banks as summarized in the chart below.

Safety Dan
Feb 28, 2016 - 5:48am

A Chilling Forecast For Those

A Chilling Forecast For Those With 20/10 Vision

At 720 Global we follow a large number of fundamental and macroeconomic indicators to help forecast the markets. In addition we also monitor technical indicators to gain further confidence when making market forecasts and assessing the likelihood of outcomes. Although we do not spend much time writing about technical analysis, we view it as an important tool in evaluating human investment behavior. When technical indicators line up with the fundamental metrics, the reinforcement provides a greater level of confidence in the analysis.

In this article we highlight a simple technical indicator that has proven prescient over the last 15 years. Currently, this indicator supports much that we have posited regarding equity valuations and what they portend for the future direction of prices.

Moving Averages
Moving averages are the average price at which an index or security has traded over the last number of days, weeks, months or even years. For instance, today’s 20­day moving average for the S&P 500 is its average closing price over the prior 20 days. Many investors use moving averages to help gauge where a security or index may encounter support or resistance. Due to the widespread use of moving averagesit is not uncommon to see prices gravitate toward moving averages.

Another way investors employ moving averages is to compare them across different time frames. For example, an investor may compare the 20­day moving average to the 50­day moving average. It is said that when a shorter term moving average is higher than a longer term moving average the underlying stock or index has positive momentum and vice versa. Therefore, when shortterm moving averages crossto the upside or the downside of longer term moving averagesit can signal an inflection point where momentum has changed direction.

The indicator that is currently catching our attention, and may be worthy of your attention, is acomparison of the 10­month and 20­month moving averages on the monthly S&P 500 index. Monthly moving averages are similar to the aforementioned 20­day example but instead of daily closing prices, monthly closing prices are used.

The chart below shows the monthly price of the S&P 500 since 1999 in blue. It is flanked by the 10­ and 20­month moving averages in green and red respectively. Note that when the 10­month moving average rises above the 20­month moving average, it has signaled the early stages of a sustained rally in the S&P 500. Conversely when the 10­month moving average falls below the 20­month moving average it has signaled a prolonged decline.

S&P 500 and 10­ and 20­ Month Moving Averages

In the following graph we drew circles around the 3 instances that the 10­month moving average crossed below the 20­month moving average and “positive momentum stalled”. Alternatively boxes are used to show when the opposite happened and “negative momentum stalled”.

S&P 500 and 10­ and 20­ Month Moving Averages – Crosses Highlighted

The graph below enlarges the past year to show that as of late February 2016 the 10­month moving average dipped below the 20­month moving average – a potential indication of “stalled positive momentum”.

S&P 500 and 10­ and 20­ Month Moving Averages – Prior Year

Important Disclosure: The moving averages shown above are based on the value of the index in late­February 2016. The crossing of the two moving averages will not be “official” until the end of the month. By our calculations, a closing price of 1993 or lower on the S&P 500 on February 29th would cause the 10­month moving average to drop below the 20­month moving average.

[ZH - here is the update as of Friday's close]

Some investors are pure technicians and only use technical analysis to allocate capital. Others disregard it entirely; swearing it off as voodoo. As chart patterns are merely a reflection of capital flows resulting from human decision making, we believe technical analysis offers useful insight and can be helpful in gaining further conviction around an investment idea.

If, by the end of February, there is indeed a crossover of the moving averages, we will have a higher level of confidence that the near­constant march higher in prices since 2009 has reversed trend. If history proves prophetic, buckle up. Stock prices may be in for a precipitous decline.

Texas Sandman
Feb 28, 2016 - 8:31am

Situation with distressed credit

As bad as 2008 right before Lehman hit.

Feb 28, 2016 - 9:20am

2/28/16 - Musings on what it's really worth

I worry that stackers will sell out far too cheaply when the "market" reaches some arbitrary number. How many Turdites would be turning cartwheels in the streets and dishoarding their entire stacks when silver reaches, say $100? What about gold at $5000? I worry that the guys out there who are staking their retirement hopes on a rising price of gold and silver will do exactly the wrong thing at the exactly the wrong time. Let's think about that for a few minutes and let me explain.

Let's think for a moment about the central premise around why we stack. We know that the entire financial structure of our world is essentially a ponzi scheme. It is fundamentally flawed in it's design with the express purpose that those who designed it could steal the wealth of every other human being on the planet. Nothing that is a unit of exchange can possibly hold its value over any human timescale. Infinite debt can be conjured out of thin air and it's costs are immediately socialized while it's profits are privatized. I could write thousands of words here on the immorality and criminality of such a system and how it victimizes everyone, you and I included, but you get my point.

This system, while it existed beyond the comprehension of most of humanity and stealthily stole their labor and lives, has become visible, at least to some of us. The knowledge of it is present in our minds because it is beginning to fail. Like all ponzi schemes, this one, though very good, relies on ever an expanding resource base in a finite world. It is mathematically doomed to fail. Those who are in charge of, own, manage, and benefit from this rigged sham of an economic system will grow increasingly ever more desperate as their game comes unhinged.

In the next phase of the unraveling, gold and silver will be used to "restore faith and trust" in this unfair and immoral power structure. Those who are at the top will seek to accumulate gold and silver from any source that they can. They will attempt to entice sellers to dishoard their precious metals by offering large sums of worthless fiat currencies, right before they make them even more worthless. The idea has been floating around of a "domestic dollar" and a "international dollar." The "international dollar" would be the one backed with gold but the "domestic dollar" would be effectively prison script. And that's the one they are going to pay you in, or convert your domestic bank account into right after you fork over all your precious metals. Then, they're going to devalue the shit out of it, leaving you with a pile of worthless nothing. Once again, they will work their scams and do the old switcheroo on the unsuspecting suckers who are willing to part with their metal because they buy into the false paradigm of keeping score in dollars.

So, what price should you demand for the one resource that is going to be required by the international community to participate in commerce? Here's a hint. It isn't dollars. The owners of the system are going to be in the hurt locker. Their power and ownership and ability to exploit the citizens of the dead republic that used to be the United States is going to be teetering on the brink of catastrophe. It already is. When they revalue the charts, it will be an act of pure desperation. There are several plays that could be made.

The first and most obvious play is to wait them out. Simply hoard your metal in a place(s) that only you know about and do not dishoard any significant amount of it that isn't absolutely necessary. As a physical precious metal holder, you have the tools to hold out a long, long time. Gold and silver never expire. They don't disappear slowly over time or loose their mass or physical characteristics.

Don't do business with them. Skip the prison script and demand to be paid in another currency. How about piles and piles of those banned $100 bills that aren't printed any longer so they won't be losing value? Those have got to be good on a black market somewhere.

The third play is the most bold. Demand to be cut in. Demand ownership in the bank that is asking you to recapitalize it. Demand ownership of the company that needs your silver to produce their little robot or slave tech mind control device. And I'm not talking about a few hundred shares that pay dividends in that ever devaluing prison script. I'm talking about a significant ownership stake. I'm talking about being on the board of directors. A real place at the table. Profit sharing. Unbreakable legal title. If you're selling to Uncle Sam, how about never paying taxes again? If you demanded blood sacrifice of their children, these psychopathic cunts would probably be so desperate that they'd do it for you. Without you and your metal, it would all come to a grinding halt. Do you think they'd rather share a stake with you, or go down with their ship, so to speak?

That's the real value of your stack. And you shouldn't sell out for cheap. It's taken you years of discipline, determination, mental fortitude and delayed gratification to arrive where you are at this moment in history. The real price for your stack is true freedom and the privilage that comes from ownership of real property and real economy. You should take nothing less. The present owners and decision makers of Western Civilization have squandered their positions and privilege. It is now yours for the taking. You deserve it.

You saw this coming. You were prudent and informed and wise when all those around you were anything but. You will be a far better steward than those who are passing before you because of it.

This is your place in history. It is your destiny, your legacy to your progeny. Your time is soon coming to reach out and take it.

Feb 28, 2016 - 9:24am

Wow, Barfly, really well done

Thank you.

<I'm about to start a new thread. Feel free to copy and paste that comment so that it doesn't get deserted on this one.>

Feb 28, 2016 - 9:35am

Your welcome, Turd.

How about an honorable mention in your new post and a reserved first? I'm departing on errands soon with the Mrs. and will probably miss it....Pretty please. Edit: Nevermind, I grabbed it.

Libero infometron
Feb 28, 2016 - 9:42am
Feb 28, 2016 - 10:23am


Just to be clear, I'm not saying that I think Reagan was the one who insisted on the launch, but I have no doubt whatsoever that someone between him and the flight director must have insisted the launch go forward because of his intent to highlight the 'first teacher in space' in his state of the union address that evening. Why do I believe that? Because, just like Building 5 on 9/11, such an obvious question to investigate was never raised or discussed in the subsequent inquiry!

Exter's revenge
Feb 28, 2016 - 10:44am

vampire banksters and their unnatural market correlations

The high correlation between various markets is totally unnatural. Even the seeming natural correlation between gold and silver is way to tight. They have very different supply demand variables. The banksters write algos to manipulate markets and HFTs create algos to ride the banksters coattails. These correlations are difficult to trade because they are short term in nature and break down when you look at longer term charts.

I believe the banksters control over the markets is breaking. One example is the stock market. Since the high last May we have had numerous V rallies after market drops. The rallies allways fail and we have been making new lows. The market bubble has a leak that is getting bigger. The only possible benefit to the money printing debt explosion is the asset bubbles they create. With absolutely no tools left except for stealing depositors money (NIRP) the last thing the vampires want is a crashing stock market bubble. Of course the banksters will still use the market crash to suck the sheeples blood anyway.

There is a very small door to exit the collapsing bubbles. Gold and Silver. "There Is No Alternative". With LBMA options expiring Monday morning I expect the selloff to be very short lived. The vampires realize TINA too. Bull markets have a tendency to leave as many people behind as possible waiting for pullbacks. The power of the current precious bull will leave even the most hard core Turdites in awe.

The pyramid is collapsing.

Feb 28, 2016 - 11:02am

Good Sunday to All

Thought for the day:

Wash your hands and say your prayers,

germs and Jesus are everywhere.


Feb 28, 2016 - 11:10am


Fantastic post! Great insight!...thx Covey

Feb 28, 2016 - 11:43am

PV 10 (Rose of Bengals)...cancer treatment

Very promising results against melanoma. For 80 patients with advanced skin melanoma, the cancer cells were gone in 50% of cases after 3 months...And the treatment is cheap. But don't expect FDA approval before 2019.

Feb 28, 2016 - 11:54am

Operation Freedom Program Note


The great Craig Hemke will be joining me LIVE today on Operation Freedom from 3:30-4 pm eastern. You can stream at or Tune In radio on your cellphone (WAAM 1600)


Feb 28, 2016 - 12:16pm

@barfly. . . . . . . . . Damn!

Impressively stated Sir (or Madam)! Domestic = Prison Script


James Crighton
Feb 28, 2016 - 2:58pm

100 % of TFMR subscribers....

wish Mark Dice would pay their town a visit ....


(plagiarised from comment section in ZH)

Sound Money Minnow
Feb 28, 2016 - 4:43pm

Thank you Barfly

You are often ahead of us in your thinking. Great post and something we need to vault for the future.

Joseph Warren
Feb 28, 2016 - 8:37pm

@Barfly - Well said ! We're our families ultimate Hedge

Outstanding post Barfly ! Thank you.

I just wanted to add that any of us who have studied history and the nature of the current criminal fiat ponzi system, know where its ultimately heading. We don't know when the scam will collapse, - but collapse is inevitable. It's a mathematical certainty. - - It's also likely that we may be one of the few (only?) members of our extended families that acknowledge this. And we are very possibly the only ones in our families who have acquired PMs as a form of protection against global financial catastrophe.

Yes, I'm irritated at various siblings and other extended family members who have refused to even look at these matters. I have tried to discuss these issues with them for many years. I have provided them books & DVDs explaining the current financial system and why they need to protect themselves. Looking back, that has been a waste of time, money, and aggravation for me. People preferred the comfort of their 'ignore-ance' (spelled this way purposely).

It's easy to think, " Hell with them, they had their chance. They'll get what they deserve." But, my extended family includes many young people. Those in their early 20s, to as young as infants. They didn't create any of this or have any opportunity to understand anything about it. Don't they deserve a chance to have a decent life ?

It's very likely that we, the PM holders, are the only hedge that our extended families have for what's inevitable. This helps me to keep a Big Picture, long term view in mind. The various gyrations up & down in the daily 'markets' seem less significant when I do this. All the best to you all -

Texas Sandman
Feb 28, 2016 - 9:06pm

Selling gold/silver a gameplan

I'm not selling for an arbitrary price, but at a certain time (fairly far in the future).

Gold has these long term cycles of 40 years from peak to peak and trough to trough. Or 20 years from peak to trough or vice-versa. Stocks (other than PM miners) can be viewed as an alternative investment to gold. So in the grand scheme of things, you should be in PMs for one 20 year half-cycle, then sell out & go to stocks. As you can see, 1960 was a low, 1980 was a high, 2000 was a low and that puts us on for a putative high in the 2020-2021 timeframe. Based on this big picture, it's illogical to think the market had a bull market peak in 2011 or 2013. Rather, the analogue for that historically is the interim peak we saw in 1975 or so. It's best not to overthink this. PMs until 2020-2021. Then stocks, assuming we still have a banking system and a stock market. My assumption is we're still in a PM bull market. There has been no bear market. I know that belief is very fringe and probably hated even on this board.

Feb 28, 2016 - 9:39pm

Peak Prosperity News Update - 2-27-2016

Peak Prosperity News Update - 2-27-2016
Feb 29, 2016 - 1:12am

Michael Durose: Gold is a Negatively Correlated Asset Class

Michael Durose: Gold is a Negatively Correlated Asset Class
lakemike49 Barfly
Feb 29, 2016 - 2:43am

barfly damn good post

and pretty spot on for those of us who are already past retirement age. to me one other option is sell part of your stack at those prices and make sure you have all you would need to live out the balance of your years, and keep the balance to leave to your children.


Feb 29, 2016 - 5:38am

Super barfly: some conversion back ideas

Converting back to fiat at this point is just an extension of the confiscation game. My plan (or my children's plan) is to be your own bank, use gold as collateral in the new system (assuming its revitalized and the start of a new ponzi scheme). Say you wish to purchase a house, median prices for homes used to traditionally sell for around 50-60 ounces of gold or a year's wages. Instead of giving the seller gold outright, offer the seller an escrow account for your gold that can only be released to the seller in the event you fail to make a payment in whatever script the system adopts. Escrows (real old fashion type) will probably be a big business, setup and managed by recognized legal authorities. The authority can only manager the escrow and can only release it when the payment is missed. What the escrow authority can do is offer the house seller a monthly stipend for the right to lease the gold out. Assuming the seller may want the funds for his own needs he can take that offer or sell the gold outright to whoever wants the physical... the new owner then assumes the return of the gold to the house buyer in the event he completes the terms of the loan.

You, the house buyer benefit because the seller will see either immediate script or a fixed income of the gold asset and there fore provide you maximum value for your gold. You, the house buyer can assume the gold is gone but you got maximum value because its a trusted, stable financial asset.

I think bitcoin will play a role here and if it sounds like Antal Feketes real bills concept it should, because it is.

For silver, same model except its the money of the masses so you can also use it outright to buy things as well. At this point I can't see converting back to fiat except for the immediate of purchase some thing tangible.

I think that's the best way to leverage a trusted asset after the Great Pumpkin reset. I think...

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Key Economic Events Week of 6/17

6/18 8:30 ET Housing Starts and Building Permits
6/19 2:00 ET FOMC Fedlines
6/19 2:30 ET CGP presser
6/20 8:30 ET Philly Fed
6/21 9:45 ET Markit flash June PMIs

Key Economic Events Week of 6/10

6/11 8:30 ET Producer Price Index
6/12 8:30 ET Consumer Price Index
6/13 8:30 ET Import Price Index
6/14 8:30 ET Retail Sales
6/14 9:15 ET Cap Ute and Ind Prod
6/14 10:00 ET Business Inventories

Key Economic Events Week of 6/3

6/4 All day Fed conference in Chicago
6/4 10:00 ET Factory Order
6/5 9:45 ET Markit Services PMI
6/5 10:00 ET ISM Services PMI
6/6 8:30 ET US Trace Deficit
6/7 8:30 ET BLSBS
6/7 10:00 ET Wholesale Inventories