Monday, December 6, 2010

The Squeezing Vise

Silver closed today on the Death Star at a new post-1980 high. After hours on the Globex, it continued to trade higher, at one point reaching a remarkable $30.36/ounce on the March11 contract.

Clearly, there's a lot going on in the world that is combining to send all dollar-denominated assets straight up in price. As well documented here, most are moving in tandem, at a similar % growth rate. There are exceptions, however, and notable exceptions become that way for a reason. For example, lets look at Turd's current favorite grain, wheat. As noted earlier today, since 11/17, wheat is now up about 22.8%!
Why is wheat up double the percentage of corn, soybeans, gold and crude oil? There must be some fundamental reason behind it. There is! There is significant concern for crop failure in Australia and, I think more significantly, the U.S. winter wheat belt is in the midst of a nasty, winter drought. Taken together, these events are creating the very real condition of a future supply squeeze and wheat is rocking!!

OK, now read this:
and this:
and get your daily Harvey:

As of today, the March11 silver contract has now moved up 21.2% in just 13 trading days! Sound familiar? Do the three articles above give you the impression that silver is in a supply squeeze, too, just like wheat?
Now, look at this chart again:
This is not a normal chart. In slightly over three months, silver has appreciated nearly 70%. Let me state that again to let it sink in...In slightly over three months, silver has appreciated nearly 70%!!! There's a lot of noise out there from QE2 to Harvey's daily updates to the "buy a coin and break JPM" campaign to the cute little (and 100% accurate) video from last Friday but none of that adds up to a 70% move in 90 days. Take a step back and drink it all in, however, and you begin to realize that there is something very serious going on here. Very serious and very real.

This week promises to be crazy. Be prepared for some wild price swings as squeezing vise gets tighter and tighter on the Evil Empire. Can't wait for tomorrow. Turd out.

Wow, we are rollin again today! As I type, gold 1429.60 with an overnight high of 1432.50. Silver is 30.66 with a high of 30.75. The grains finished up higher and they will re-open higher in Chicago at 10:30 EST. Crude is kickin arse. It is over the critical $90 level and stands at 90.56. The S&P is indicated 12 points higher and we have $8B in POMO hitting the PDs in about two hours. How's that for a long list of good news?!?
I'm going to be watching crude to see if it can hold those gains and stay/close above $90. The longer it stays up and continues to rally today, the greater the strength will be in the PM pits.
Going back to 2002, Santa has had his next intermediate price target in gold at 1444. Don't ask me how he does it. The guy is clairvoyant. At any rate, his targets are usually pretty accurate so lets all watch to see what happens as gold approaches that area. More later.

I'm not overly concerned about the metals trading off their highs as they appear, like yesterday, to be following crude, which is now $89.64 and more than a dollar off its highs. All that POMO will put a floor under things today anyway.
Besides, the last ting we want is silver going up $1.50 every day as that will set off alarm bells everywhere and force the EE into draconian actions. Nice, orderly 30-50 cent up days are just fine with me.
Gold should see a lot of support between 1410-15. Silver will be well-bid between 29.50 and 30.


  1. I started buying a bit here and there around $10.00 per ounce. I'm a small player just a vetran on the dole but if I can buy $100.00 per month why can't others?
    I got my food, water and ammo at the same time. I did on less than $18,000 per year, no food stamps, no energy assitance. Yes I do feel I am owed all the money I paid into SS, I feel I am owed getting a bit busted up in the Army. I sure don't make big money. But how I feel is irrelevant if I get squeezed. That's why I buy silver and preach it to all I meet.

  2. A 70% move in 90 days is just not sustainable. I expect Blythe to have some fun juicing the short side, however, that can be from any price point on up to $35. Holding physical keeps one out of the craziness sure to come in the futures market. Large profits also allows you to handle the swings. It's the late comers to the party that will get their nerves tested and will feed large swings both ways.

    Good luck to all!

  3. "The New U. S. Mint America the Beautiful
    Silver Bullion 5 Oz Silver Coin Will Not Be Released, According To The Mint, Due To Concerns Over Price Gouging."

    The wheels are coming off.

  4. A bill has been sent to Obama to enable Sec of Trea. to ration the gold/silver production @ US mint. Evil empire is everywhere to curb the demand of gold an silver.

  5. @i1 -- there is an even scarier page on Tulving:

    ALL units available for sale seem to be sold out...

  6. the same token, APMEX seems to be sold out of all silver bars except a few 100 oz. You can still buy Eagles and bags of pre-'64 coins - but everything else is either 0 or promised for late Dec/early Jan.

  7. Some charts to peruse (no warranty expressed or implied, but found this to be an interesting illustration so thought I'd share - at least Bill Downey acknowledges that TA does not apply here).

  8. Turd, Bill Downey's charts in the 2nd link provided by CD seem to suggest a Sell. What are your own thoughts on this? 3rd time lucky?

  9. yeah, thats what we need, a chart to show the fundamentals of our econoNOT. A chart showing the crass manipulation of stocks, the dollar and the public. I think a picture of bernanke on a dartboard will do as well.
    Thank you Turd Fergusen for the window on our collective didsater that you provide.
    Merehuman, see you at ZH

  10. CD: Sold out can mean many things, delay in supply being just one. If I were a bullion shop right now and I could see futures going up I may just sit on my inventory until next delivery day when price is likely to be kinder. Remember everyone is in this to make money.

    Personally I trade for a living, and I recently took profits. For me I expect a strong EE attack pre December/Jan delivery and I intend to take advantage.

    Clearly I run the risk of 'missing out' but this is what I do to make a living.

    If your sitting on physical at home then you have little to worry about as all were talking about here is +/-5-10% swings in price, going into next year I don't see a single dynamic thats driving commodities changing so the mid term is very bullish for real things.


    Rick Ackerman suggests that the BoS is one or more sovereign funds, who are unruffled by any Comex margin hikes.


    Jim Rickards mentions a recent case where an owner of about $40M physical gold, held in a Swiss bank, wanted to withdraw it. The bank stalled for 30 days. Only after the owner's threats of adverse publicity via Reuters etc and legal action did the bank make good.

  13. @sumo

    Check this story from GATA on how Scottia Bank refused to supply silver to an owner. Note SB is one of the silver short @ CRIMEX.

  14. Rui, I can't remember where I saw it, it may have been on FOFOA (, but I remember reading about Asian customers finding that the PMs in their *allocated* accounts in London had been illegally leased out, so they started angrily withdrawing the physical back to Asia (Hong Kong?), out of LBMA warehouses. I wish I could track down the reference and give you hard fact. It looks like there has been an illegal racket going on, in allocated accounts, globally. There's never just one cockroach, is there.

  15. Sumo,

    that was Jim Willie. He described that on his Golden Jackass website, and also in his interview by Max Keiser on Youtube. Great interview!

  16. Jeez, $30.68? Talk about the Lone Ranger ... hi ho Silver, away!

  17. Blythe needs those Chinese rate hikes stat, lol.

    Margin increases cant be far away now, parabolic moves are no fun for JPM.

  18. Can someone explain the cause and effect of Chinese rate hikes causing a pullback in PMs?? SO a six year old can understand -- like me? Many thanks...

  19. Cris: To me, its an algo selling thing.
    1) higher chinese rates
    2) lower demand for commodities
    3) algos think the PMs are a commodity
    4) down go all commodities, including PMs

    Any human who sells on this type of "news" is a fool who deserves to be separated from his $.

  20. @Cris

    Here's my layman grasp of the matter, the more informed pls feel free to correct and shoot me down :)

    Frankly, in a normal world Chinese hikes shouldnt dent PMs.

    Bit there are now 2 transmission mechanisms that could affect PMs.

    One, in our wacky risk on/risk off bipolar market,

    rate hikes = risk off = USD up = PMs down

    Two, considering that China is THE major growth driver, hikes there have the potential to shoot commodities down.

    Some commods down = algo selling in other commods = since PMs are kinda like commods PMs down

    At least that's what it used to be like, but the tenor of this move as the Turd has described is very different and is driven by a fundamental lack of supply.

    Thus in the event of any pullbacks now the BOS are likely to step in, so PM prices may only be dented temporarily.

    Personally, in the event of rate hikes or margin increases I'll probably be buying, in small bites with semi loose stops :).

  21. Cris, wot Turd said. And:

    Keep in mind that Silver is used in solder and in electronic components (e.g. the terminations in surface-mount devices (SMDs). This is because Europe outlawed Lead under its RoHS (reduction of hazardous substances) program, and the world is following the EU in this.

    The silver is needed for technical reasons (to stop tin whiskering, which leads to catastrophic short-circuits - Lead used to prevent this but can't be used anymore).

    So every electronics-based product now has silver in it. Imagine the world-wide demand for electronics. Now add the demand for Silver in jewelry as gold gets too expensive. Now add global investment demand for silver coins and bullion bars.

  22. Btw, I just absolutely love the dialogue on this thread. The exchange of information and links is exactly what I had hoped would happen when we started this thing four weeks ago.
    Great, great stuff. Please keep it up.

  23. On a somewhat related note:

    Fed forced to 'quarantine' one billion $100 bills after printing error makes them worthless

    You can't make this sh*t up. 1B in $100 bills with Timmah's signature misprinted.

    "The new high-tech bills were initially scheduled for release in February of 2011. They were due to be the first in circulation that bore the signature of President Obama's treasury secretary, Timothy Geithner. [...]
    After printing, officials discovered that some of the new bills have a vertical crease that, when the sides of the bill are pulled, unfolds and reveals a blank space on the face of the bill. [...] The sheer numbers are staggering. Authorities estimated that sorting through the enormous pile of bills by hand could take 20 to 30 years. Instead they are developing a mechanised way of sorting the usable notes from the flawed ones - a process that they hope will only take a year. There was no estimate on how much the sorting process will cost."

  24. Fwiw, I have been buying gold and silver from Bullion Direct for about 3 years now. I purchased some gold and 100 oz silver about 3 weeks ago. Received gold last week but silver has not been released and shipped yet. At what point is there risk in buying pm's because dealers can not get the supply to ship? It has never taken this long for me to get my shipment.

  25. I love it too. In the immortal words of an ex-trader on iraq rumours..."do you mind? I'm trying to trade off this!"

    I'm totally small-time and getting into silver, and I'm surprised how addictive it is. Physical only; it's like a rewarding hobby.

    I'm in this for the long-haul and I'm loving the discourse, but moreover I'm loving the solidarity.


  26. The 20 EMA just touched the 200 on Gold and Crude futures.. maybe that just triggered all the algos to sell?

  27. Hmmm.

    Euro bank run maybe?

  28. Wow, vicious attack by the EE, took almost a buck off Silver! Rebounding nicely now though..

  29. Watch out for those Monkey bites!

    Keep your colloidal silver cream handy for preventing infections!