Wednesday, December 8, 2010

Silver Quickie

Silver looks to move quite a bit overnight. Let's watch and see which direction. Consider this chart:
Hang in there with me on this. I realize this is a 3-minute chart and, frankly, I don't like 3-minute charts. However, as noted earlier, we seemed to find pretty solid buying support in silver earlier today at the $28 level. You can see that support here. As ranges like the one depicted here narrow, eventually you get a break out toward the end (in this case, overnight). The question is: which direction will we break.
To me, the evidence points to higher for these reasons:
1) Support at 28 is real and significant
2) I still think the $ bounce has run its course and a breakdown thru 79.90 USDX will support silver

If we do, in fact, break higher, we need to then consider this daily chart:
Again, note all the support near $28. If we can get rolling tonight, we should see 29-29.20 pretty quick. From there, imagine a pullback to 28.60-80 and you have the makings of a reverse head-and-shoulder bottom...a very bullish short-term technical feature.
For now, this is all hyperbole and conjecture. We'll just have to wait and see. However, keep an eye on that USDX tonight. If it breaks 79.90, things could start going our way very quickly.


  1. I just can't imagine who the hell is touching the currency with the baloney that Dictator Dollar spewed on 60 minutes over the weekend. You don't have to be a lie detector to tell that guy is full of it and has absolutely no idea how to unwind the mess he's made. I think I agree with your assessment that the dollar was just a cover story to make the rout in the metals look plausible. The metals actually broke the link to the dollar index awhile back, so this action smells of manipulation.

  2. Hi Turd

    Do you have a view on which direction the Gold Silver ratio is heading?

  3. I meant to post this here on this thread....

    Thanks Turd:
    I was at first pretty bummed losing about 3.5% in my mining stocks yesterday and another 2% today thanks to the EE and all the panic selling that took place... but then I have to remind myself why I am in PM's... and so I have to take a step back and remember how I consider myself lucky/blessed enough to be like you fine folks and have a good grasp on the macro and fundumentals of PM's. There are so many investors who have no clue what is happening and what is about to happen on a macro scale. So even though it is one crazy ride at times, I just remind myself that we will be seeing triple digit silver eventually and we will all look back and be grateful that we discovered or were led to PM's and commodities as a hedge against coming hyper-inflation.
    In the meantime, your reads on everything has proven immensely helpful Turd. Rich

  4. This is just the typical takedown while Tim sells some T-Bills... add some year end profit taking by the weaker PM holders.

    SRV - ES339

  5. Turd:

    Thanks for the very frequent posts. Even little notes are much appreciated. I thought the support at 28 was a big deal. I'd look for a 25 cent break to the upside by 10:30 a.m. tomorrow.

  6. Dear Turd

    I have in the past been guilty of betting the farm. And thanks to you, I've done it again! Obviously I am responsible for whatever happens, but your help and assistance in understand the PM game is of immense value to me and ultimately, my family.

    Thankyou so much for your blog - as per Dan above - every little post is read with gratitude. 12 months ago my first port of call when I jumped online would have been a MSM site, then another MSM site, then probably some stupid video about a cat. Thanks to firstly Michael Ruppert leading me to ZH, I am now here first and foremost, refreshing with anticipation.

    All the best to you and Mrs Turd.


  7. Bill, well said...great effort and personal time goes into making such a valuable blog.

    Feed the Turd.

  8. Please retest of 28.

  9. Me thinks we go lower in Asia and/or Europe.
    A few more gifts from Blythe.

  10. "I'm sick and tired of hearing things
    From uptight, short-sighted, narrow-minded hypocritics
    All I want is the truth
    Just gimme some truth
    I've had enough of reading things
    By neurotic, psychotic, pig-headed politicians
    All I want is the truth
    Just gimme some truth

    No short-haired, yellow-bellied, son of tricky dicky
    Is gonna mother hubbard soft soap me
    With just a pocketful of hope
    Money for dope
    Money for rope

    I'm sick to death of seeing things
    From tight-lipped, condescending, mama's little chauvinists
    All I want is the truth
    Just gimme some truth now

    I've had enough of watching scenes
    Of schizophrenic, ego-centric, paranoiac, prima-donnas
    All I want is the truth now
    Just gimme some truth"

    On the 30th anniversary of the death of John Lennon, I dedicate his words to Turd and all of us here, who merely seek the TRUTH amidst the hypocrisy & lies. Thirty years, waking up one person at a time, holding physical because it's REAL.

  11. Turd, as we head into the Xmas season, and trading volumes thin out, what sort of price action in PMs do you expect?

    Higher volatility? Lower?

  12. Turd, sometimes I want to polish you like a magic lamp.

    I have a layman's question for you:

    The Interweb is exploding right now and the Hacktivistas arrived on the scene in a big way this week. In short, consumer confidence is going to take a big hit if MSM picks up tonight's Mastercard leaks.

    What's your take on the herd rumbling ever quicker towards PMs?

    Thanks as ever, your blog rules.

  13. rmcclainxenergy said everything you need to know. Being here means you "get it".You're so far ahead of the masses that tune into "dancing with the stars"...Movements like these last 2 days used to really get to me. Expect it and you've taken it's bite away...

  14. There is a revolution going on....
    I agree with this analysis and am blogging about similar things... get informed!

    Ron Paul Revolution!

  15. Love your blog.

    Thought you might be interested in this...

    I heard Bart Chilton, head of the CFTC, on Fox Business tonight say that the CFTC wants to place limits on how much people can invest in commodities because he says all of the run-ups in the various commodity groups are driven by a lot of speculation & it isn't fair to Americans who are having to pay higher prices because of this.

    The CFTC is so corrupt.

  16. The 3-minute upside breakout! Phew...

  17. USDX down to 79.8, EUR spiking through 1.33, oil back up through 89, gold and silver moving on up, to 1,386 and 28.52. All good so far today.

    (Thanks Eric De Groot for great analysis of USDX)

  18. Hey, GG, how bout a little Turd love, too?

  19. Yes, so far so good.
    USDX broke 79.90 and is now around 79.80. This has caused the PMs to trade fractionally higher. This post is looking better by the minute.

  20. Turd, very sorry to neglect you! You know you are the man! Eric plays a nice supporting role.

  21. From the top...

    Mark: The ratio is closing and continues to close as silver is now leading gold higher due to the incredibly positive fundos.

    Rich: On days like these, I envision that picture of Santa I've seen a million times, sitting behind his desk that is stacked high with gold bars. He could give a shit about the day-to -day EE machinations. He just sits back and watches the value of his physical go up and up.

    Bill: I'm with ya. Long and strong. We'll sink or prosper together.

    Silver: I love it. Great stuff. That reminds me...30 years ago tonight, what did John say to Yoko? "Looks like you're on your Ono".

    Sumo: Thinner volume generally makes for higher volatility. This year, not so much. The PMs will cook right thru the holidays.

    James: I really don't think there is much of a herd yet. Folks like us are still WAY outside the mainstream of investment thought.

    Scott: I love Ron, too. He's got to be careful, though, because he sometimes comes across as a goofy, little dude. Kind of like Perot. Otherwise, he's more and more popular almost every day.

    Dryam: It may sound strange, but on your point, I actually agree with Chilton. Most commodity markets are puny, iyyt-bitty things compared to treasuries or forex or stocks. Also,because of the tremendous leverage most traders use, a little bit of money goes a long way. There used to be a legitimate balance between hedgers and speculators so you had reasonably efficient markets. Now, there's so much freaking money floating around that its pretty easy for the speculators to overrun the natural hedgers (forward sellers) and you get massive increases that hurt consumers. Think crude in 2008 or, more recently, cotton. Something needs to be done but what that something is, I have no idea.

    Turd; You're right! Turd Ferguson is an absolute genius and, perhaps, the greatest precious metal timer and trader of our generation. Spread the word that he has started a blog and he's doing it for FREE. What a great guy!!!

  22. Turd, not sure if you've noticed but people are getting more and more worried at every little drop we see. I think it would be good for those of us that have been dollar cost averaging on this trip up, if we had a couple big drops and shook the pretenders out of the tree so we know the strong hands are there for support and we are rewarded by buying more at a lower cost before the final chapter.

  23. Hi, Turd.
    Harvey posted this tonight. I'm not sure I understand it but it looks like more trouble for JPM.

    The street does not want to talk about the other important feature of a fall in long bond prices and this is the huge derivative losses that are burning inside AIG and JPMorgan tonight. I am going to be very simplistic on this. If you feel up to it, I urge you to see Kirby's paper " The Elephant in the Room" for a complete and thorough analysis of interest rate swaps and what it means.

    Here goes;

    JPMorgan is by far the largest derivative player in the world and they are the largest player in interest rate derivatives. Most of these are in the field of interest rate swaps .In simple terms, our hero JPMorgan, on orders from the Fed buys a trillions of dollars of long bonds in the future and at the same time sells or shorts trillions of dollars of short term money of say 30 days or 90 days also in the future. The long bond was purchased at say a yield of3.4% to 4% and the short term money was shorted at a yield of .05% per annum or roughly par.

    The huge purchases of these swaps (buy long term bonds in the future and short 90 day treasuries in the future) lowers the price of real treasury bonds as this stimulates the purchase of these bonds at the present time. This is why the bond vigilantes were nowhere to be seen in the states. It will also explain why our camp knew it was impossible for interest rates to rise as this would blow up JPMorgan.

    Now we see that the long bond yield is rising which is putting much pressure as losses mount on JPMorgan. They gain nothing from the short end as they shorted at 100 cents on the dollar and that is today's price.

    The real risk to JPMorgan is the speed of which long bond yields rise as they cannot get out of their contracts. This will probably be the spark that ignites inside a coal mine. A yield of say 5% would create a 1.6% loss of over 640 billion dollars (they state, I believe, a notional 90 trillion interest rate swaps so 45 trillion on the long end and 45 trillion on the short end). That would blow up JPMorgan and create havoc and collateral damage equal to a neutron bomb in the financial area of Wall Street.

    I hope this explains in simple terms how significant this is and I will now report on this as the bond yields have been rising exponentially these past few days.

    For those of you who are mathematically inclined, I urge you to read Kirby's paper and you will come to same conclusion as we have on the huge "elephant in the room" ie.

    JPMorgan's huge interest rate swaps. So JPMorgan not only has a silver problem but an interest rate problem!!

  24. Turd, great call on buying at $28. Taught me a lesson.

  25. Text of Kirby's address, "The Elephant in the Room," is available at

    "My name is Rob Kirby – proprietor of, proud GATA supporter and frequent contributor to Bill Murphy’s I would like to extend a warm welcome to GATA delegates from all over the world to Washington, D.C.

    I’d like to delve into the numbers, or math, showing how J.P. Morgan’s derivatives book cannot be ‘hedged’..."

  26. Based on the comments above, it sounds like we need to start shorting JP Morgan!

  27. Yogurt Queen thanks for great breakdown.

    I have traded PM's since gold was $300 oz. The "bubble" is the ERO and the USD.
    Silver is way under valued to gold and both are undervalued to ALL fiat currency.

    The analysis you did was spot on! Keep it coming!

    Thanks Turd! You rock! I love you analysis on ZH!

    Vamos a compar plata! (let's buy Silver!

    When JPM loses it's short we will rock!


    A Swiss bank client has battled for 2 months to withdraw his silver bullion. He has been paying storage fees since the late 1990s. The bank insisted he take cash instead.

    How do you say "Dude, where' my $%#!ing property? And what I been paying storage fees for, all this time?" in German?

  29. Harvey is a good read every night. I loved the JP Morgan tidbit tonight. Holy Cow! I'm surprised that ZH isn't all over it yet. Maybe tomorrow. Anyway, if they go under, the system probably folds up along with them and yes, we have $500 silver by New Years or shortly after.

  30. pennants, H+S, triangles. Your last appears to be a shopping cart. Is that meaningful or what?

  31. I started buying silver at a $11.00 per ounce. I'm not sure except it seemed to be a good play. A lousy 10 oz. but it made feel better this item does have a multitude of uses and since I suck at saving cash it gives me options. The more I learn the more I think I made the right move. I'm certainly not a big investor. If I get 5 oz. a month I'm happy but I do it every month all physical.
    Thanks to you and zerohedge I'm getting a feel/knowledge for the market. I and any one knows the PM market should go up. Hell I'm not worried about a dollar or so dip. Heck the manipulators can do that in a day. Profit takers also no sweat.
    Drop the price down to $10.00 an ounce and I can afford to buy more physical and take delivery. Let's say gold and silver is a bubble and the fed can convince the average Joe that the stock market is the best place for his money. All that means is I buy more physical metals. It's not a loser, You could anticipate highs but PM's are not a loser in the long run.
    If the congeress and Feds go to sound money I may lose a bit, But I gain cause the go to sound money.

  32. "Kollege, wo ist mein verdammtes Eigentum! Wofür hab ich denn die ganze Zeit Lagergebühren bezahlt, oder wat?" ;)

    Besides the usual thanks, I still feel that the Empire has something big in store. I mean, unless I am very self-confident, I wouldn't suppress prices in the public as done on Tuesday when a limit on naked shorts is about to be imposed. This would be Kamikaze, and I don't think that Blythe is that angry, even in the face of hardcore PMS and silver > 30.

    On the other hand, I am thinking of the manipulativity of the market, and right now it seems there are some major events that may change the game:
    - bond bubble burst + liquidity squeeze (=bearish)
    - stock market crash + liquidity squeeze (=bearish)
    - China interest rate hike (short term bearish, maybe already priced in)
    - COMEX default / silver short squeeze (=bullish)
    - ramped up QE2.5 in the face of threats 1 and 2 and all the mess in US economy data (=bullish)
    - ECB bond purchases (=bullish)

    What do you think about these points?

    Best regards, and thanks again! Keep it up, Turd!

  33. DX is back above 80 (80.315 atm) ... wait until europe session is finished and NY opens - if we are still heading north then and 1397 is convincingly taken out - then I'm in your boat too. Though until then capital protection is more important.

  34. I don't understand folks that freak on a little 2 dollar adjustment. We know silver is being manipulated by JPM, you know they will try and crash the price. Why are you surprised when they do what you expect them to do? It's all on you. Even if the price tank to $15.00 an ounce I just buy more physical. Nothing has changed except price per ounce. JPM is still short silver no matter how they have hedged.

  35. Hi Daniel.

    bond bubble burst = bearish ?

    The big money is managed by fund managers. Lets assume, that a bond bubble burst, involves many holders selling some bonds (I might be wrong, my argument might unravel here, but bond holders are not just americans, and include China).

    Where does this money, which was looking for a safe home, go? The stock market? a deposit account in a bank? ..................... mebbee gold?

  36. AiSR, good point. It also looks like some banks are illegally short customers' physical metal, which is supposed to be sitting in bank vaults.

  37. Not to mention that JPM is long half the copper in London. Doesn't make sense to me but then, I didn't attend an Ivy League school.

    I don't think Blythe will send another "don't panic" email this time.

  38. Harold, traders think JPMorgue is front-running its copper ETF:

    "...Traders said JP Morgan's name had been circulating the market all day as the most likely buyer, especially since it is about to launch a physically-backed "exchange-traded fund" (ETF) in copper imminently.

    One metals broker dealing on the LME said: "The story is that they're positioning themselves in front of the ETF. There's been a lot of speculation it's them."

  39. one further point about the potential bursting of the bond bubble;

    this was the subject if memory serves me correct, of Gonzalo Lira's excellent piece on ZH, of how hyperinflation could be ignited. Existing bond holders seek out, Fed wants to keep rates low. Fed therefore keeps bond prices artificially high thus facilitating the escape route. Fed ends up freeing all the bond money by default, which flows through to commodities, and instant inflation results.

    Again, very bullish for gold.

  40. This is why, yesterday, I sold all my SLV, whose custodian is JP Morgan, and swapped it all for PSLV, the physically based ETF run by Eric Sprott. You can click on my name here to read my blog about this. I was just getting sicker and sicker realizing that the big short, JPM, also controlled my investment vehicle, SLV. I choose to not have actual physical because most of my funds are in my retirement account and I'd rather not mess with bars or a theoretically allocated account somewhere. PSLV sells at a premium, but hey owning bars is a premium also.

  41. Well, nuts. That was disappointing.
    I was reluctant to post this note last evening because I don't like working with 3-minute charts. Its more of a guess than anything else.
    And whadayaknow? THe USDX reverses overnight and is now UP.
    The PMS are holding in rather admirably. The longer they can base around 1380-85 in gold and stay above 28 in silver, the better.
    For now, Agoldhamster is spot on. Still time to be defensive.
    Today is the last POMO day of the current schedule. About $9B so, hopefully, we will have an OK day.
    More later.

    btw, GREAT conversation here overnight. I love it! Please keep it up!

  42. My 2nd comment had disappeared! Here it is again:

    Hey Byzantium, thank you for your comments on that - I totally agree with you!

    I just fear the short-term of the burst when liquidity is rare. Because if that happens, a Blythe-induced price correction by 2$ may seem rather insignificant compared to then. And I am asking because I am not sure whether the support at 25$ could withstand such a panic sell-off.

  43. Sorry, trying to learn how to post a link properly. This is my spreadsheet on silver supply and demand from 2000 thru 2009: here

  44. great link sassballsgrandpa!

    I will compare it later to another great summary that seems to be broadly supportive, over at Jim Willie's place.

    It is a graph a little way down the article, from year 2000 to 2009. Essential data for any silver bug!

  45. Jobless claims 421k vs expected 425k

  46. ZH picking up the missing metal story:

  47. Sumo:

    Interesting post and read. As a guy with PMs in a self-directed IRA account, this will prompt a call to my custodian. I have been assured that I can "visit" my holdings in the Delaware vault anytime. Since it's the holidays, perhaps I'll go visit my silver and gold. : )

  48. Dan:

    How difficult is it to establish a self-directed bullion IRA?? Can one only do that when one is self-employed? Can you do that through an employer? Any links or references would be appreciated.

    Also, is this safer, as safe, or less safe than say PSLV as a vehicle for pre-tax retirement funds??

    Many thanks....

  49. Obi-Wan Chilton is in the house at

  50. Well, I just saw this on KWN, but seems to be saying what I was earlier mooting about the connection to bond yields.

    Furthermore, JPM are desperate, they are going to fail & very soon.$150_Higher_Within_5_Weeks.html

  51. Blythe Vader is near. I can feel a disturbance in the Force.

  52. Sounds like Gary Gensler, the Chairman, has kicked discussion of position limits down the road (AGAIN) until next week -- december 16th.

    Gave props to Chilton; still awaiting Chilton's opening statement.

  53. Byzantium:

    Note well that the source quoted by Eric King also called for $30 silver "within 18 trading days" in early November -- got that one right!

    Sounds like a reliable source.

    $150 bump in gold is prob at least $4 in silver, consider the narrowing gold/siilver ratio.

  54. Well looks like we are off to a nice start this morning, and resuming our uptrend. Puts are sold, and the calls are making money! Unfortunately with the USDX rising. Oh well.

  55. Chris:

    I use Sterling Trust, and I will readily admit that I'm a newbie. In my opinion, they have been very professional and I have had no complaints. It was quite easy to establish a self-directed IRA account and then roll my Traditional IRA from Ameritrade to Sterling Trust. I'm not sure you move retirement funds from a company-sponsored 401k, but perhaps.

    I chose to close out my positions before the rollover due to the lower Ameritrade commissions. Once, I had the $ in Sterling Trust SD-IRA they asked me which PM dealer I wished to use. I chose APMEX, with whom they were quite familiar. After getting Sterling and APMEX on the same page (easy), I called APMEX and told them I wished to purchase PM bullion for my SD-IRA. APMEX helped me select IRA-APPROVED bullion for my IRA. APMEX billed Sterling, and Sterling sent payment to APMEX out of my IRA.

    Sterling utilizes an approved vault/facility in Delaware to store their client's SD-IRA-owned PMs. I haven't yet "visited" my PMs, but I think I will.

    As to your last question on whether it's better or worse than PSLV, I can't say. I'm not an investment professional. I do own a very small Jan call option on SLV, but my personal belief (which has drastically changed over the past year) is "buy stuff that you can touch".

    I hope my novice-level explanation is helpful. Thanks for the question.

  56. This potentially really good news:

    A SANE politician with real oversight over the Fed!

  57. Dan:

    You are a gentleman and a scholar. Thanks.

  58. WOW!!!

    He just admitted, IN PUBLIC AND ON THE RECORD, that ONE TRADER has a concentration of 40% in the silver market.

    They are being SOOO cautious, and looks like the real discussion will be next week, but he mentioned at least twice "we have the force of law behind us". And that admission is HUGE!

  59. Hey guys remember that are another great source to get your PM's through. And it looks like they are cheaper than APMEX. So if APMEX is out of something be sure to look over there. Their bankwire prices are phenominal. And they received the 5 star rating from the National Inflation Association in all areas. I have personally done business with them and are highly recommended!

  60. Cris: Holy Cow! Just whom could that trader be???

  61. Silver Keiser bullion launched...

  62. Turd:

    Hate to keep harping on this position limit thing, but I think this issue is the whole kit and caboodle.

    They (CFTCF as a whole, not Bart) are stalling for time, but the writing is on the wall for meanigful position limits, and that is really the silver bullet for the manipulation. Along with the growing physical shortage, it is just a matter of time.

    From an options strategy point of view, I was hopeful "the explosion" would happen this month.

    Looks like it will be next month, maybe Feb. I loved the link posted from King World News about $150 jump in gold in the next five weeks.
    I am personally gonna load up on SLV options for Jan and Feb. We want to be positioned to maximamly profit from the explosion WHEN it comes.


    BTW in my personal view, with that simple statement, Bart Chilton REALLY came through. He deserves supportive emails.

  63. Yes, Bart is The Man. Needs a haircut, though. The mullet doesn't play too well on camera!

  64. Turd:

    I just fed you. In fact, I'd be interested in paying around $15 for a t-shirt that says. "I FED THE TURD"

  65. Dan: That's a great idea. I'll look into it!