Wednesday, December 15, 2010

Sweet Jimmy

9:30 PM EST Addendum:
I found this tonight. Its an update from King World News which cites an interview with the great John Williams of ShadowStats. Interesting stuff.
This is an interesting short read, too. DO NOT believe the nonsense that economic growth is causing the 10-year note and long-bond selloffs. This notion is only advanced by fools and/or those with an agenda.
Lastly, please take 5 minutes to watch this interview of Yra Harris from early Tuesday. Yra is one of Santa's best friends and he is an intelligent, pragmatic investor/trader. Note what he says about PM prices but also note what he says at the very end about future Fed intervention on the long end of the curve. Very important information from a very experienced man.

I heard some rumblings this afternoon that some of the gold selloff today was due to an overseas interview with Jim Rogers. I thought I'd check it out. Here's a link:

I guess its not important that Sweet Jimmy still sees at least a 40% potential move in the price of gold. Can you name me another asset about which you'd feel comfortable making that prediction? No...I guess what's important is that Jimmy isn't buying more right here. What BS spin this is! I wonder what his cost basis is? Does he see other commodities as having higher upside? How about the grains? Does he still love them? Apparently, all that matters is the headline. Please don't ever allow yourself to be manipulated by this kind of media spin nonsense.

On a lighter note, watch these two boobs:;_ylt=AkSmcjtbbyGrVOZjZz9NZDKtcq9_;_ylu=X3oDMTFndDA3aTc1BHBvcwMxBHNlYwNjb250ZXh0dWFsLXRlY2h0aWNrZXIEc2xrA2FzYmVhcnNyZXRyZQ--

Sheesh, talk about trying to cover all angles! These guys clearly don't know if they're coming or going.
I give you these links as examples of the nonsense that passes for "financial news" today. Don't be distracted. Don't allow yourself to take your eye off the ball. Today was very disappointing in gold and silver but days like these happen. Keep the faith.


  1. hahhahhh. . . I do like it when the Turd points & mocks!

    as for today, meh, another buying opportunity, 'tis the season - if you must shoppe, well, on you go!

  2. Bonds the name,Government Bonds,or just plain print the money buy the bonds.This is where the true action is playing out and it is not looking good for the EE,great for G & S which is why the trivial force downs by JPM are getting more desperate.All that interests the EE is the Garden looking good,you don,t taste the goods and your not allowed to pick the flowers or step on the grass,as long as it looks good everythings fine.Forget essential maintenance or sorting out structual problems or even popping a few Turds on its the looks that count.Looks like a very bad year for moles,greenfly,subsidence and even earthquakes next year,but looks a cracker for Goldfish and Silver trout as they disappear for bargain prices.Bit like fruit at the shop,modern varieties look good,but its the 5000 year old varieties that have all the flavour.Ah well with those green fingered celebrity Gardeners Bernank and Bythe permanently stuck in the office in crisis management the garden will go to pot anyway.

    Stay Happy,buy Silver take down a bank,its your patriotic duty.

  3. Turd...

    Thanks for your column.. it is enlightening and helpful..

    Sometimes people are led to say things on account of money changing hands... I know that you would have never dreamed this to be possible in these times..

  4. I'm sure there are many of you out there that are trying to bring friends and family up to isn't easy...this short video IMO is a shortcut to help those that simply do not get it....and it really is well done...let me know if anyone has a problem bringing it up...

  5. Turd - I suggest to be cautious until Wednesday next week. Latest thereafter possibly start of the next leg higher

  6. SLV option expiration on Friday. Lots of puts in the $26-$28 range. Given the $28 support level in the charts, it wouldn't surprise me to see the price pinned near $28 on Friday's close.

  7. Well this is a nice turn around back to $29. Someone is buyin em up.

  8. Harvey says this is very important, so I thought I'd provide the link here so that no-one misses it:

    I admit I can't fully comprehend the implications of this.

  9. Keep on keeping it real, Turd. As long as you stay in touch with your inner curmudgeon, everything's kosher. It's when you try going "respectable" (by calling yourself Monsieur LaMerde or some other such name) that I'll raise an eyebrow or two.

  10. Dave in Denver (

    "...Like most of us who understand the how/what/why of the precious metals market, Sprott as an institution - and the principals of the firm individually - have overweighted silver in their investment portfolio. I know both Eric Sprott and John Embry have 90% of their net worth in the precious metals sector because they have stated that on several occassions."

    I'll buy what Eric Sprott buys. He's a legend. 90%? I'm underweight PMs.

  11. You guys are over-analyzing everything. JPMorgan this, bonds that, this guy says this, my London sources say that. The only person you need to pay attention to, who consistently gets it right is this guy, Franklin Sanders:
    Everything else is just chatter.

  12. Turd, is where is the link to the Yra Harris interview?

  13. Well, this is certainly worth reading:

  14. dd: CNBS is apparently having some web "issues" tonight. Once you click the link, if the video doesn't instantly start, keep hitting refresh until it does.

  15. Turd, thanks for running such a great blog. I followed you over on ZH and then came here a few weeks ago. Check for site 3-4 times a day, from Morning till night.

    You have another Aussie follower.

    I have a thought. JPM moving in to Copper ETF's in a big way will likely stimulate increased production. With Silver a low cost by product of Copper extraction, that would have a negative impact on ag.

    That's a double plus for JPM trying to extricate itself from silver right? It would also add some legitimacy to holding a large silver short I would imagine.

  16. Tulving is buying "mixed lots" of .999 silver.

    "Misc .999 Silver 500 Ounces Combined Weight Or More (Must Be .999 Silver) Can Be Any Combination Of The Items We Buy That You See Listed
    Or Any Combination Of Odd Weight .999 Silver (Ex: 2oz, 5oz, 50oz, Bars Or Rounds). Buying at spot -.30.

    If Tulving is having a supply problem, things are getting tight. I've not seen him do this before. Has anyone else? Other supply issues out there from sources you buy from? I know Apmex is tight as well.

  17. Chris: Thanks for joining the fun!
    You pose an interesting question. The effects you're looking for, however, would seem to be too long-term to rescue Blythe & Jamie if things really get out of hand.

  18. "I admit I can't fully comprehend the implications of this."

    I would imagine that if this is correct, then what we think of SLV and all of the assertions of 'paper gold' are also applied to central banks. The gold is there to facilitate trade trust between trade partners. Without any trust at all I can imagine a military resolution.

    I saw a recent comment (possibly on FOFOA) that Germany's gold all held outside it's borders, a lot of it is in the US. Since that gold underpins the Euro concept a discovery that the gold doesn't exist would be like pulling the pin on a grenade in the EU.

  19. To Turd / anyone,

    I find the whole Comex mechanic very confusing, and here is the first question of many.

    Say silver is $25, and a bear shorts it at $23, while a long bets it will rise to $27, and the price then rises to $29. Has the bull inadvertently become now a short, or does he remain a bull by dint of being a buyer, regardless the price?


  20. Oh great and wise Turd!

    Your humble supplicant asks this one question of you!

    I am currently trapped in a 401 retirement plan that doesn't offer much by way of protection from the coming monetary collapse.

    The plan does allow me to borrow a substantial amount from it at about 7.5% interest. Given the current rising trend in silver prices am I completely out of my mind in thinking that I should borrow the money (from myself effectively), buy silver and make the payments by selling off silver at the later higher price?

    Given the current rate of increase in PMs I should be able to pay off the loan in increasing less valueable FRNs and keep the difference between the cost of interest and the increased value of the silver.

    Is this nutty? It seems too good to be true!

  21. Byzantium, by the content of your question it seems that you may never have participated in a market, but perhaps it's just the wording you've used.

    If silver is at $25 you cannot "short it at $23". You can only buy it at the current offer price or sell it at the current bid price, which will be just above or below $25, respectively. So, a bear will be selling at just below $25 and hoping the market price drops to $23, at which price he will cover his short by buying. He will make about $2. If a bull buys at just above $25 and it goes to $27 he can sell and make about $2.

    If the price rises to $29, then the short seller is making a loss of $4. He is feeling much less bearish, possibly very nervous, annoyed and more (but such feeling are ameliorated if he is TBTF). At $29 the bull is sitting on a gain of $4 and feeling like a genius and is getting worried that the Flying Monkey Brigade will swoop in and take his profits.

  22. (Australians everywhere!!)

    At the end of the ANOTHER thread:

    He mentions the same thing. Gold at the BIS is mostly paper. You can see the parallels in ag today. Sell 20 people the same item and hope you never get called for delivery.

    So, paper gold is another ponzi scheme. I guess we shoudl be thankful to buy gold\silver at this current discount!

  23. This comment has been removed by the author.

  24. GG, firstly, thanks for the response.

    Essentially, and I am sure I am not alone, I struggle to interpret and understand for example, Harvey Organ's blog. If the PM bulls want to reach out to a bigger audience, then there is need for some kind of 'idiots guide' for non traders like me, to understand the comex game.

    What actually determines the minute by minute comex price? Is it based on actual price handshakes between buyers and sellers, or based on current offer prices, or is it the moving midpoint between the highest unrealised offers and unrealised bids?

    If a bear, aka a 'short,' operates as you say, by selling physical silver, how do they turn this into a paper game, and prevent so called 'bulls' from simply cleaning them out of their metal?

    Also, what is the definition of 'open interest,' which can rise or fall from day to day; is it the totality of unmatched offers and bids, or something else?

    Finally, I have the impression that all bulls / buyers are losers, if their bids are greater than the comex price on expiry day, that they are somehow left with 'worthless options.' Why should this be so, if they can still acquire the metal at the price that they were earlier happy with, and are still entitled to delivery?

    I am clearly displaying my ignorance, but this is relevant if I am asking the kind of questions that would help other readers.
    If anybody knows a useful link, then that would be good.


  25. considered widening the main wrapper TF? so we get more page and less books?

    Drop me a line to and I'll give instructions on the 'how to' its quite simple

  26. FWIW I am well aware John Williams is highly respected by among others Richard Russell and Jim Sinclair and of course our own Turd but Mr. Williams has repeatedly pushed backed his hyperinflation event prediction. Just saying

    @Byzantium Good questions. I wish I had a silver dime for every time Mr. Organ has said his latest missive is "IMPORTANT!"

  27. Byzantium
    I would suggest going to the website. There's an Education section there. That should give you lots of material. After that you will need to decide how much more knowledge you need - it would take you months of part-time study to know the basics well. Do you want to go to that much trouble? The answer depends on how important it really is for you. I have always found that it's best to ask questions of experts (like Turd) only after you've learnt all you can through your own efforts. If the issues are truly important to you, you will learn most of it yourself and rely on experts to teach you the fine distinctions.

  28. to GG,

    there's the rub. I do not want to trade on the Comex. I just want to be able for example, to understand harvey's blog.

    The rest of what I say is not to you in particular GG, it is just an open comment.

    I believe that to jump from where I am, and where I, and those like me, need to be, could be settled by a 10 minute read, if written well.

    It is not a question of intellect or 'study.' The Comex has its idiosyncracies and rules, and the explaination is seemingly not easy to find. I bet even that many people who think they understand Comex process, in fact do not.

    The gold/silver bug community is good at lamenting and cussing the 99% who do not participate, but fall short in reaching out to those who are interested to learn. If there is no need to be inclusive of the newbies, then fine, but I do not believe that there is no need.

    I am maxed out on PM investments, but how can I explain to friends / colleagues how the market is rigged, when I do not understand the Comex?

  29. Just to add, there are thousands of articles and millions of words written by critics of the Comex cartel every year, but nobody seems to have taken the plunge to write the Comex 101, to induct those fresh to the topic.

    If it exists, it is very low profile.

  30. @ Byzantium
    Spend much time on ZH? trav777, if not one of the most diplomatic commenters is unarguably one of the most informative and here's his recent comment about the COMEX.

    by trav7777
    on Thu, 12/16/2010 - 01:12

    and let's review what happened w/ the Hunts. They were PREVENTED from standing for delivery.

    JPM's counterparties will be PREVENTED from taking delivery from JPM. NYMEX will force cash settlement, as that is the PRIMARY role of a futures market.

    You think silver is bad? Look into the oil futures market. There is WAY more paper oil than real oil. You could buy 10kbpd like a snap in futures, but good luck getting that amount of *real* supply, which would require dealing with refiners, producers, and nation states.

    WTF do all of you think the freakin "China inks oil deal with xyz" news blurbs are about? Why doesn't China just go buy the freakin barrels off of COMEX? Answer: because that doesn't work. If you want any significant amount of real commodity, you have to actually go ink deals with producers of it. Futures markets are and always have been CASH settlement mechanisms.

  31. Heh, Trav is an engineer - "diplomacy" ain't in the spec. sheet.

  32. Thanks Paul.

    Yep, that was already my understanding. The Comex sets the notional commodity price, but the physical purchases are typically done elsewhere, with regard to that price.

    But the Comex is setting the price and so the process thereby still matters.

    Putting aside the fact that the Comex through the small print, can force cash settlement, that is not how the Comex would PURPORT to work. I understood Trav's view before he made it, because we all agree that the Comex is not far from broken. But still nobody has described the way that the broken thing purports to work, and was SUPPOSED to work.

    Given that little physical is changing hands there, is the activity essentially betting on future price, or the buying and selling of title to the 'fictitious stock,' bought and sold back and forth?

    Is the typical purchase transaction, just an option?


  33. The "Criminal Evil Empire" strikes again at 8:00 EST

  34. Turd, what do think about OpEx this week? Does the EE care about max. pain for SLV and GLD options?

  35. @Byzantium

    COMEX is commodity futures, and options on futures, exchange. A future is a contract that entitles the holder to either buy or sell something in the future at a price agreed to today. That something could be 1000bl of oil, 10000dthm of NG, 100oz of gold, whatever. For every long futures contract, someone else holds the short.

    Lets just talk about futures to keep it simple:
    COMEX does not set the price per se; the participants in the exchange do. Every time a transaction occurs (a buyer agrees with a seller) the buyer gets a "+1" next to his name, and the seller gets a "-1" next to his name, both at the same price ($25). This transaction sets current price at that moment in time. There are some special mechanics about the "daily closing price" but you can ignore those for now. As the price moves, if the original buyer sells his contract, he gets a "-1" next to his name at the current price (say, $27). He now has zero obligations (he bought and sold one), but he made two dollars (+1*-25) + (-1*27).

    Open interest is the total number of futures contracts that are not closed or delivered on a particular day. In other words, this is total position of only participants who are net buyers, still outstanding.

    Trav is pretty spot on. Most futures are settled in cash. This isn't a bad thing necessarily. Lets say you use natural gas in your factory, located in pennsylvania. You have to buy from your local utility, at their rate, which isnt a fixed rate. You want certainty about the future. As a result, you can buy a futures contract for Henry Hub gas (louisiana) today, and settle it in cash at expiration, since natural gas 1500 miles away doesn't help you. However, financially, the effect is almost the same as if you took a fixed agreement from your utility. If the price goes up between the time you fixed, and settlement, your make money. This income is offset by the increase in price from your utility.

    Im puzzled by the silver futures situation, to be honest, since it lies somewhere between an investment and a consumable. Remember that most futures are settled in cash (sold, or bought back), by the participants themselves before expiration, so claiming that however many million oz of silver WILL BE DELIVERED at expiration by looking at open interest is unrealistic.

    I recommend investopedia for primers on things like this.

  36. Thank you Theos.

    With this in mind, I will see if my understanding of Harvey's blog is improved.

    Turd, can Theos' comment be used as the basis, by some mechanism, as a 101 guide, that can be linked somehow to your blog, and be expanded upon as and when time permits, and as and when pertinent reader's questions arise that inspire additional explanation?

    (now would be a good time to start work on it, anything but having to watch those plunging graphs above).

    Thanks all.

  37. However, it is a vehicle for delivery if one chooses.
    Try forgetting about a long OJ contract sometime and see what happens.

  38. Absolutely. And that's why we have this issue. The SI shorts assume that the contracts will be settled for cash (which can be printed to infinity)... But longs are starting to say the longs say nuh uh...

    Most of the other commodities are so cumbersome to take delivery of that most just take the cash against their "existing ink agreements". I get the impression that SI is becoming "different"... Is there a place where we can see the cash vs physical delivery statistics?

    BTW Turd, great blog. As a young investor it's tough to find good information and honest commentary. I've been teaching myself these markets; it's astounding how most of us are getting fleeced, and how completely oblivious I was. Hell, 8 months ago I didn't know a future from a T note. Now I see that my parents, my friends, and myself are all "long the USA", unhedged. Considering we're at the mercy of the lunatic money junkies (banks), or the lunatic power junkies (central planners), I cant believe how exposed most of us are. I've been starting a portfolio of "things I need" (energy, food, etc), and your blog has given me the encouragement to add PMs to that list. Even if you're wrong and the USA remains the land of sunshine, lollipops and iPads, we'll all have jobs, food, and shelter. But no, my friends think I'm a tin-foil hatter.

    Anyways keep it up.