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TFMR Podcast - Wednesday, July 11

56

It's not every day that we urge you to listen to the podcast. However, as we struggle to understand the now-obvious correlation between Comex gold and the Chinese yuan, today's discussion is something you need to hear and consider.

We begin by noting that today was the worst day in nearly three years for commodities in general:

So then we try to connect the dots. Maybe we're onto something, maybe we're just chasing ghosts. Either way, I urge you to listen to the discussion, study these charts and give this information your consideration.

Comex silver was also taken to the woodshed today, falling another 1.6% and hanging perilously close to last week's lows:

And finally, after laying out a lengthy case, we close with these two charts. They're no fun to consider but, given all of the extraneous circumstances here in the summer of 2018, a look back at the summer of 2008 seemed appropriate and necessary.

Thanks for listening,

TF

  56 Comments

Harley · Jul 11, 2018 - 5:04pm

Golden!

· Jul 11, 2018 - 5:06pm

willsilvaa · Jul 11, 2018 - 5:06pm

now to listen cheers

Mikey Riley · Jul 11, 2018 - 5:18pm

Pulled the trigger, got 500 silver krugerrands from SD Bullion for $1.79 over spot 

chocolatechiphorses · Jul 11, 2018 - 5:22pm

Gold not listed that I saw. But Silver was.

The new tariff list broadens the types of goods caught up in the trade war by targeting items like seafood, minerals, chemicals, and personal care items, such as shampoo and soap. It also includes a number of consumer products such as handbags, luggage, gloves and paper.

Manganese ores and concentrates including ferruginous manganese ores & concentrates with manganese content over 20% calculated on dry weight 2603.00.00 Copper ores and concentrates

2604.00.00 Nickel ores and concentrates

2605.00.00 Cobalt ores and concentrates

2606.00.00 Aluminum ores and concentrates

2607.00.00 Lead ores and concentrates

2608.00.00 Zinc ores and concentrates 2

609.00.00 Tin ores and concentrates

2610.00.00 Chromium ores and concentrates

2611.00.30 Tungsten ores 2611.00.60 Tungsten concentrates

2612.10.00 Uranium ores and concentrates 2612.20.00 Thorium ores and concentrates

2613.10.00 Molybdenum ores and concentrates, roasted

2613.90.00 Molybdenum ores and concentrates, not roasted

2614.00.30 Synthetic rutile

2614.00.60 Titanium ores and concentrates, other than synthetic rutile

2615.10.00 Zirconium ores and concentrates

2615.90.30 Synthetic tantalum-niobium concentrates

2615.90.60 Niobium, tantalum or vanadium ores and concentrates, nesoi

2616.10.00 Silver ores and concentrates

2616.90.00 Precious metal (other than silver) ores and concentrates

2617.10.00 Antimony ores and concentrates

2617.90.00 Metal ores and concentrates, 

https://theeconomiccollapseblog.com/archives/an-absolutely-epic-escalati...

Ronnie 666 · Jul 11, 2018 - 5:35pm

A few things to remember 

1. The debt is much bigger and the events that unfold are going to be much worse.

2. When gold and silver prices collapsed in 08 - good luck finding any metals. Premiums soared and made up for any price collapse. 

3. Related to point 2 - the Chinese will not be the only ones loading up on gold so it’s time to perhaps start watching premiums on silver and gold. 

4. WTF is going on with my good friend Rhodium up $60? There may be a real shortage.

thanks Turd great podcast... nothing to fear if you hold metals - everything to fear in paper. 

dangerkitty · Jul 11, 2018 - 6:10pm

JM Bullion, from my past experiences, they're good people, I purchased silver with bitcoin, super lightning fast delivery too. 

chocolatechiphorses · Jul 11, 2018 - 6:15pm

Not sure that China even exports silver. They certainly don't export any gold!

SteveW · Jul 11, 2018 - 6:37pm

eom

scoremore · Jul 11, 2018 - 6:44pm

What the hell happened in the CME today?

Buy orders not getting filled because of malfunction?

Total joke...

Busy at work...Did I understand that right?

Going to the ball game with the father in law...

Back later to see if Craig and you all comment on this....

https://www.zerohedge.com/news/2018-07-11/cme-exchange-reports-widesprea...

Doople · Jul 11, 2018 - 6:46pm

Enough of this gloom and doom. I am reading and recommend a brand new book "The Bonanza King" by Gregory Crouch. This is the story of an Irish immigrant, John Mackay who toiled for years in the Sierra Nevada gold fields to no avail and then wandered over to western Nevada, got involved in the new mining around the Comstock Lode, after nine years controlled the Comstock Lode and created a bonanza. Only a couple of hours into this but it is fascinating so far.

tedc · Jul 11, 2018 - 7:06pm

KL vs. MUX

Unfortunately I didn't have the foresight to jump on the KL train.

As my account is getting crushed daily I have been fantasizing how "life changing" it would have been to turn $70k of KL into $220k over the last 14 months!

The only thing I can do at this point is try to find another KL.

Though I'd be grateful if I had a $700 position in KL which was now worth $2200 - to achieve a "life changing" gain I'll need begin with a substantial investment.

For me to invest a substantial amount - I'll only be looking at miners with real revenues, profits, growth, and solid balance sheets etc. No exploration companies!

Are there still any "established" mining stocks with KL potential? Yes and No.

Yes - if Gold/Silver rally substantially.

No - if Gold/Silver remain range bound.

(Incidentally, KL performed amazing in a flat, range bound, Gold/Silver market - imagine KL's performance if Gold/Silver rallied over the last 14 months!)

Currently, KL market cap is approx $4.7B and MUX market cap is approx $755m (KL is 6.23x greater)

However, KL is estimated to produce approx 620K Gold eq. Oz in 2018 and MUX is estimated to produce approx 171K Gold eq. Oz..in 2018 (KL is 3.63x greater)

In other words, KL is priced 6.23x greater but only producing 3.63x greater.

I'm NOT saying KL is overvalued, however, I am saying that I believe that MUX is undervalued!

Why was MUX the only miner UP on my screen today?

Short Covering!!!

https://shortsqueeze.com/?symbol=mux&submit=Short+Quote%E2%84%A2

I think that the rats that manipulate the Gold/Silver markets are the same rats with a 20% short position in MUX and

they covered today because the "rats are leaving the ship" in advance of the forthcoming Gold, Silver, and MUX rally!

fluxplus · Jul 11, 2018 - 7:16pm

We better hold here at this weekly long time trend line support. If not $1200 may be next stop.

Outback · Jul 11, 2018 - 7:35pm

After listening twice to the Pod Cast, do not want to be exposed to 2013 again with the Miners I currently hold. So have put STOPS GTC in place for insurance.

My concern was put on High Alert today going forward thru the end of the year.

thanks Turd.

outback

GoldHermit · Jul 11, 2018 - 7:49pm

I concur with your China theory. Here are some things I also think about...

1. They can weaken the Yuan, which may strengthen the dollar and hammer the gold price. They have a shit-ton number of dollars and treasuries that they can use to pay for the gold, so no worries on spending more Yuan. For now. They are just converting their reserves from dollars to gold.

2. Russia and maybe others are in cahoots with them. Russia dumped a ton of treasuries recently. Russia sells a ton of oil to China. Hmmmm

3. The Yuan could morph into some other form. Maybe, maybe a fractional gold backing, if the IMF doesn't cooperate.

4. If the additional tariffs are enacted, you can bet the family dog the Yuan is going to be depreciated further.

5. I still maintain that countries might as well print fiat and use it to buy real assets because a change is afoot.

If you buy physical - I do not recommend waiting until SHTF, it will quickly become a no ask market. Buy on a schedule and average in.

fluxplus · Jul 11, 2018 - 7:49pm

I think better strategy than STOPS GTC would be to buy puts on S&P 500 index (November or Decemver expiration).

Ag027 · Jul 11, 2018 - 7:49pm

Hi Craig, 

I feel, this podcast I will keep in my archives for the future. Thank you for showing real picture and all possibilities down the line.

cheers..!!

infometron · Jul 11, 2018 - 7:49pm

Thank you for alerting us to the fact that something doesn't smell right, and that in fact, something is starting to smell somewhat redolent of 2007/2008.

If China is pegging the yuan to gold, or gold to the SDR, wouldn't we expect gold to be acting differently from all other commodities (of course we here all know gold isn't a commodity, it is money, but let's play along)? I'll answer that question: not necessarily.

So, then, why are all the commodities moving in lockstep with the yuan?

For the same reason? All commodities remain affordable for China as they devalue? But, then, how could they possibly be fixing all the commodities to the yuan?

Is it possible something else is going on? Mass liquidations?

Is an impending credit crisis fast approaching?

onesong · Jul 11, 2018 - 7:49pm

if this thing does look to be turning out like 2008? I know you have nice profits since 2015... so do you know when enough will be enough for you? I know you swore off miners along time ago until the end of 2015, so how low can you lets them go until you have to do something and what will that something be? Thanks!

I feel for you this week... your Dad, PM, miners, self assessment and this podcast. Maybe you should add another week to your sabbatical this year.

Good luck Turdville!

Markedtofuture · Jul 11, 2018 - 7:56pm

Jul. 7, 2018 3:56 PM ET

Summary

Jim Rickards has recently opined that the price of gold has been pegged by China at 900 SDRs per ounce.

We provide empirical evidence to support the general idea of gold being pegged at some value.

Gold priced in Chinese yuan has a more flat regression line and has lower volatility than gold priced in SDRs.

This idea was discussed in more depth with members of my private investing community, Commodity Conquest.

Jim Rickards is a Wall Street insider, prolific author and who garners the respect and attention of many elite financiers around the world.

In a recent article, Mr. Rickards outlined why and how he believes that the price of gold has been pegged by China to the supra-national currency of the International Monetary Fund (“IMF”), the Special Drawing Right (“SDR”). In this article, I intend to build upon this general idea, and provide some additional empirical evidence for the reader's consideration.

14584222-15308907045033557.pngGold Priced in SDRs

On October 1st, 2016, the IMF added the Chinese yuan to the currency basket of the SDR. Since that time, we can see how the price of gold – expressed in SDRs – has traded in a compressing range between 850 and 950 SDRs per ounce. In his article, Mr. Rickards opines that China has pegged the price of gold to 900 SDRs per ounce.

14584222_15308902034274_rId6_thumb.jpg

Source: TradingView

The linear regression slope of gold-priced-in-SDRs from October 2016 to the present day shows a slightly upward sloping line. The volatility of this data has steadily declined. The most recent quarterly volatility of gold priced in SDRs is was 9.8%, which is lower than the volatility of gold priced in U.S. dollars at 10.2%.

Gold Priced In Chinese Yuan

Over the same period, the price of gold has a linear regression midpoint near 271 Chinese yuan per gram. The linear regression midpoint is nearly a flat horizontal line. In addition, the most recent quarterly volatility of gold priced in Yuan is only 7.8%.

14584222_15308902034274_rId7_thumb.jpg

Source: TradingView

Questions to Consider

If China has indeed pegged the value of gold to some currency, is it possible that it has pegged the value to its own currency? The regression line for gold priced in yuan is more flat than the regression line for gold priced in SDRs. And the volatility of gold priced in yuan is lower. Wouldn’t it be easier for China to peg the price gold to its own currency rather than a basket of currencies?

Disclaimer: This article was written for information purposes and is not a recommendation to buy or sell any securities. All my articles are subject to the disclaimer found here.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: We are always net long precious metals.

https://seekingalpha.com/article/4185877-china-pegged-gold-price-value-sdrs

streber · Jul 11, 2018 - 7:57pm

I have never heard of this and came up blank looking at 3 goog pages.

Craig said, "It's common knowledge."

abundance · Jul 11, 2018 - 8:00pm

public?

thanks

· Jul 11, 2018 - 8:17pm

Well, considering I believe truth is of great value and prudent advice, based in truth of equal value, then "Yes," I value this podcast.
I am planning to take my retirement funds out of the metals connected securities they are now in, and begin saving my extra dollars, looking toward a metals purchase later this year.

If the Chinese are indeed in control, I think it is prudent to follow their lead, especially since they appear to value gold as much as we here do.

AKA AuAgforever AIJ · Jul 11, 2018 - 8:40pm

In a disaster, Pragmatism takes precedent over theory....as long as there is electricity, the youth will prefer electronic money. That is all they know. Fact of life. Gold and Silver will remain a tremendous store of value and very necessary, but money is that which is easy to use and which flows to the least point of resistance. 

In Venezuela, Bitcoin Is a Lifeline

"This is where cryptocurrencies come in, especially bitcoin. Hyperinflation has driven some citizens to safeguard the value of their money in foreign currency, goods and cryptocurrencies. In other countries, many people see bitcoin as a speculative and volatile asset. But in Venezuela, bitcoin fulfills its main function of being a currency that is not issued by a central bank nor controlled by a government, and thus is more trusted than the bolivar.

If you check localbitcoins.com in Venezuela, you can see a lot of offers for buying and selling bitcoin, probably more than in other parts of the world. LocalBitcoins is one of the most used platforms for trading bitcoin to bolivars. Given the demand for bitcoin, other platforms have that have also emerged. Uphold and LocalEthereum, for example, can be used for trading other cryptocurrencies.

Bitcoin was the first well-known cryptocurrency in Venezuela, growing organically, without advertising or marketing. It has the greatest liquidity and infrastructure for exchange into another currency, good or service. Though in our current situation, pretty much any cryptocurrency is well received here."

https://www.longhash.com/news/in-venezuela-bitcoin-is-a-lifeline

streber · Jul 11, 2018 - 8:48pm

The $200 billion in tariffs are not happening until after AUG 30, if they ever happen at all.

quote: 
"USTR will hold a hearing on the proposed tariffs Aug. 20-23 as part of a public comment process that ends Aug. 30. A final decision will come sometime after that, the officials said."
https://www.politico.com/story/2018/07/10/trump-china-trade-tariffs-708707

Less than four months to November election day.
Everything will be coming up roses before then.

Katie Rose · Jul 11, 2018 - 8:51pm

I remember when silver came crashing down a few years back. I was this little newby and soooo excited about the market and my silver holdings. Bammmm! Down it all went.

So, it looks to me like we are being set up for another crash. Everywhere I look I am finding articles about the coming crash.

I need more long term food storage. Forget the silver and gold. I certainly do not want to go hungry, or have my goats go hungry.

Not having water for awhile has certainly put things into perspective for me. I'll be building another greenhouse with my allocated silver savings money. My 12 x 24 foot greenhouses give me another month of growing season in the fall.

I can't eat silver, but I can eat food that I grow in my greenhouses.

lakedweller2 · Jul 11, 2018 - 9:00pm

Seems like my miners were up and doing good in that time frame. The expectation was that they would continue to climb while general markets declined. They went down initially but climbed into 2011 and then a smash.

This time we have been suppressed for 7 years...are we ready for another smash while already down and get really oversold or are we possibly ready to separate from this garbage and move forward. Netflix has an RSI of 92 or at least someone said they do. What kind of RSIs are the miners running...30? Does anything matter?

lakedweller2 · Jul 11, 2018 - 9:01pm

dup

boomer sooner · Jul 11, 2018 - 9:10pm

From AIJ's Venezuela Crypto article above.

"It should be noted that I am talking about Caracas, the city that has the best services in the country. There are other regions with continuous power outages, intermittent Internet service, and no drinking water for a week. Just imagine public transport in those regions."

You and I meet for an exchange, no bars! Damn

"Cryptocurrency mining is also a big business in Venezuela, as the costs of electricity are very low. Still, mining is extremely risky if you do it without government permission."

My TRS 80 is robbing all the power for the 20 unit apartment complex, someone complains to the local power allotment official that their hotplate won't get hot and wala, jail time for me.

"For the moment, the Venezuelan government has maintained a “friendly” position on cryptocurrencies,"

I must admit this is true for all governments, for the moment.

Sorry AIJ, just had to. If you are comfortable with the investment, more power to you. I hope you are right, btw, that somehow Cryptos help speed the end of fiat.

Notice: If you do not see your new comment immediately, do not be alarmed. We are currently refreshing new comments approximately every 2 minutes to better manage performance while working on other issues. Thank you for your patience.

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Key Economic Events Week of 11/12

11/14 8:30 ET Consumer Price Index
11/15 8:30 ET Retail Sales
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Key Economic Events week of 11/5

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11/6 US Mid-term Election Day
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10/31 8:15 ET ADP employment
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