Wednesday, January 26, 2011

Austerity, Schmausterity

Lots of BS and SPIN this morning about President O'Bottom's speech last night. We're being led to believe that the most liberal and progressive president since Wilson has suddenly become Margaret frickin Thatcher. What nonsense. For some no BS analysis, watch this interview of David Walker. I've met this man before so please trust me when I say this: He is an honest, non-partisan number-cruncher and a standup guy. He was the Comptroller of The Currency (there's a oxymoron for ya) for several Republocrat presidents. He knows his shit. Listen to him cut through the BS:

Besides, as we all learned a few days ago, cutting spending at this point will only work to eliminate any fractional "growth" the economy is producing.
And growth is the key. All of The Ben Bernank's bets hinge upon the resumption of economic growth because without it, tax revenue only continues to plummet, which prompts the need for greater and greater spending, which means we are farther and farther away from the point of no return, which means that spending must increase again...
And, hot off the presses is this, also from ZH:

At the end of the day, why would any rational, well-informed person sell their precious metals? Additionally, when selling your PMs, you are converting them back to fiat...the same fiat that is losing value day after day. Do not let your heart be troubled. We are correct.

I have just two charts for you this morning. First, a 30-minute Feb gold. Its a 30-minute chart only because that gave me the time frame I'm looking for, in this instance. Note that 1328 is your level to watch today:
 I have a last as I type of $1328.20 so, there you go.

The dollar still looks like roadkill. It may reverse course and surprise us all...that's certainly happened countless times before...but it needs to bottom fast and reverse course through 78.20 and 78.50 or else its headed to 77 in short order.
For laughs, I just watched this again. It's still relevant:

More later as we wait and hope that yesterday's lows hold. TF

OK, so here we go. Exactly as forecast, predicted and otherwise hoped for, our double-bottom attempt has come. Though I am very confident in my numbers, I'm still as nervous as a whore in church.
Copper is hanging in there and as long as it can maintain its footing above 423 or so, it will provide support for the PMs. Crude, too, is slightly positive and the grains are kicking ass so everything looks good that our double-bottom will form here.
In an ideal world, here's what I'm hoping for today:
We bang around at and/or slightly above yesterday's lows of 1322 and 26.54. So far, today's lows are 1324 and 26.65. This is close enough but don't be surprised if we take another shot down to get even closer. As the metals rebound later today, we begin to see steps 7, 8, and 9 play out as I described yesterday. Copied below for your convenience:

"Why those levels and why a double bottom? The process goes like this, in 10 easy steps:

1) Price drops to easily recognizable support point. In this case, 1320 and 26.50.
2) Price stops there as speculators have put buy orders there to test the water and shorts have put cover orders there, too, as many use these projected support points as good places to take profits on shorts. See today's trades at roughly 8:00 am EST on both charts.
3) This rally from the projected support levels gives the bulls (us) some hope. It also strikes a little concern into the hearts of those who are still short.
4) That first rally fades as everyone in the market waits to see what happens next.
5) Market drifts back down to near support points. Thanks, Blythe.
6) Support holds and double bottom is confirmed.
7) New buying comes in as greed replaces fear in hearts of longs.
8) Even more buying emerges as fear replaces greed in the hearts of shorts.
9) Market moves out of downtrend and begins to take on look of uptrend. In this case, a move near   $1350 in gold and $28 in silver. (Don't laugh, we were just there yesterday morning.)
10) Consolidation above the double bottom low takes place and market is now poised to resume UPtrend."

For now, sit tight and let things play out on this very important morning. TF


  1. I have more faith in the PTB than you be more devious than even you believe to sell us down the I am holding a WAD of fiat to smoke their axxes if they do push this to the rumored blue light special......still holding a big core here......but if these bastids give us a big buy in aisle 5 ......I'm ready.....whoops just popped 1327 on gold.....lets watch these scumbags go......keep up the work Turd

  2. Very tepid volume this morning. SLW being accumlated aggresively at the moment. Could portend a pop higher in Silver later today.

  3. That would work, Rick. Let's hope for a close back up where we closed on Monday, near 27.30. In gold, 1342 or 43 would be very productive.

    Copper is moving up smartly so that will help us.

  4. More on copper, if we can get that thing back above 425, and stay there for a while, the PMs will definitely benefit.

  5. ANV moving very hard up.....but NO volume....sneaky baastids

  6. It's here people:

    MUST SEE!!!

  7. Turd,

    I wrote a reply to your commodities question over at ZH. It was late last night & im not sure if my thoughts were clear. Just wanted to see where I might be wrong. I'm not a financial guy and im just trying to figure all of this out.

  8. O's rhetoric may be liberal/progressive, but his policies are pure neocon. Bought and paid for.

  9. What is this World Economic Forum in Davos I keep hearing about? I've been meaning to research it but I'm up to my eyeballs in other stuff.

    Anyone who thinks that we're out of the woods regarding the economic crises and currency crises isn't paying attention. The changes to the Fed's accounting rules virtually guarantee more bad asset purchases and more QE. If the Fed really believed things were going to get better, they would proudly display their horrid balance sheet to the world and proclaim themselves gods when it gushes green in the midst of the prophesied recovery.

  10. On the price of silver... Turd, I would like to see another push down to your support level followed by a rebound, and maybe another successful test of that level this week in order to have more confidence.

  11. They do that Davos thing every year. All the top movers and shakers in global finance go there to plot their evil deeds. CNBS usually has someone camped out in the snow. Must be like Christmas time for Swiss hookers.

    If you didn't see the Marc Faber interview video posted on ZH last night, check it out. I believe he was speaking for all of us regarding Davos.

    Also, Jim Rickards talked about last weekend. His comments about Davos start about 8 minutes in.

  12. Here's the webpage for the World Economic Forum. Makes it look pretty harmless. But that's the insidious part of it!

  13. flaunt: Here it comes. Gold is 1325.
    Keep your fingers crossed and hold your breath. This is playing out exactly as I'd hoped and forecast but I'm still very nervous.

  14. IF we can keep the copper above 423, the double bottom should definitely hold.

  15. Hey, I just got an idea. Once we recognize decoupling of paper and metal, go short GLD. I suspect this is what GS and JPM would do and they just love to short their clients :)

  16. Wow Turd. Gold is down a bit MORE than silver right now. If that's not strange...

    Thanks Eric. For some reason I've been hearing more about it this year. I did listen to that Faber interview. I'm still a little perplexed about his "treasuries for 10 days" comment. What happens in 10 days? Maybe nothing, just seemed like an odd time frame for him to mention.

  17. Does it really matter that much following the dollar? Especially when you have got a circle jerk of international bankers pulling the puppet strings, and countries trying to boost exports. This inflation thing is a worldwide event, instead of a "great depression", it will go down as "the great inflation".


  19. The Junior Mining stocks are rallying well this morning. Seems the public sold off hard in recent days in panic puking out selling and the smart money is buying today positioning themselves for what is ahead.

  20. Yes, Matt, and they often lead the metal by about 48 hours.
    Crude popped up about 0.50 so that is helping gain traction above 1325.

  21. Turd, we may have a bit more to go here. Maybe not, we'll know more tomorrow and Friday. The whole month has been orchestrated with an eye toward key dates for the EE. I've yammered for 10 days that with options expiry, the SOTU, and the FMOC this week that the EE would likely press the attack thru today at least.

    No one hates being stolen from more than I, but I've got to take the long view here. So what if the 2x bottom doesn't hold in the 1320's and gold goes all the way to 1260? And silver to 26? In terms of my expectations and investment horizon, these bargain prices will just represent a Bigger F'n Dip to Buy.

    It was helpful great to read the great John Embry's latest piece and to be reminded how fiat's hole only gets deeper:

    Embry maintains that we are slogging through the toughest part of the year for Metals & Miners right now. I do think the psychological damage after this 3 week pummeling is far worse than the technical tho- - Harvey Organ's post from last night made the point of how little damage the EE has seen from what is now a $100+ outbreak of BM toxicity.

    I'm just chillin' and letting it unfold. Don't try to catch a falling knife, we just need to be patient for screaming bargains to fall right into our laps. So wait until you see the whites of her (Reptilian) eyes boys (and girls), and then let the beeeaaatch have it with all ya got!

    We're gonna win. Believe it.

  22. @flaunt

    Gold delivery FEB silver MAR.

    When physical delivery looms, paper prices converge with "street" price.

    At least thats how i like to look at it.


  23. Have you guys ever wondered about whether the EE mines the web for blogs like this to check investor sentiment? They could get a gauge about what the "suckers" are doing/thinking and then base their actions on that. I'm not talking about a chimp sitting at a computer and casually checking blogs. I'm talking about web crawlers literally mining data from the web and categorizing it in a database for analysis suggesting when it's a good time to pounce on the retail crowd. I ask because that's certainly what I would do if I were in their position.

  24. Cant shake the feeling that China has a New Year surprise for us this Fri.

  25. Do we have the makings of an FUBM on the chart?
    It would be our first in quite a while...

  26. I just went back an re-listened to Jim RIckards interview from last Saturday at Really really good stuff. He reminds us that in 6 of the last 10 years, gold hit it's low by February, and in 9 out of 10 years it hit it's low by May.

    KWN has become my regular saturday morning ritual. The Weekly Metals Wrap is always awesome, and then there are usually 2 or 3 other interviews that range from good to great.

  27. Eric, same here. There are times where I've stayed up extremely late in order to hear the interviews out of KWN before Saturday "morning."

    We're heading into lunch so you can't really pay too much attn to the price action. Hopefully silver will test again after lunch and hold.

    The chances of a close over 27 don't seem great to me considering the futures options settlement coming up.

  28. Eric, you're so right about KWN. I do same on Saturday mornings. The Weekly Metals Wrap is can't miss listening.

    May I also suggest Chris Waltzek's fine program on New each Saturday too (late on Friday nights usually). So yeah, along with Eric King's interviews, there goes Saturday mornings. But it's time well spent for Turdlings.

    Here's a good interview with Embry on from last week. Check out the pdf I linked to in an earlier post too:


  29. @Turd - thanks for the info on jr miners leading silver


  30. Flaunt, they are all over the internet in terms of linguistics and trends. The EE has people and resources that make Clif High's Predictive Linguistics setup look like a home chemistry kit. Hopefully they don't have his expertise in analyzing the data they capture, although sussing investor sentiment is probably fairly easy compared to the stuf Clif is looking for at

  31. Thanks to Earl the Pearl for his help yesterday.

    The way I see it, Blythe is constricted in her range of options because if she overplays her hand and shorts silver to some ridiculous level (say to $15 in 3 days), it triggers such intensive buying amongst the strong hands that the silver runs out and the COMEX busts immediately, while at the same time completely discrediting the CFTC, creating more such strong positions as more learn that it's time to get out of Dodge.

    So the best strategy for her is to maintain the price between certain supports and resistances points to keep the bulls out of the market, not wanting to buy just yet, and fend off the entrance of more bulls and creating more bears. To do this, you would need to tank gold for a bit to scare off the weak positions so that they could provide the ammo for a super-slow-motion decline to beat the strong bulls through attrition.

    How do the bulls fight this strategy? What are the indicators that this strategy will fail? The only thing I can think of is that there is still more buying interest sitting on the sidelines who are unwilling to wait too long regardless of what the market is doing. I am such an individual. I am strong on silver to the point where I don't really care about short-term losses. I buy whenever I can spare the cash.

    If there are enough such buyers, and they take delivery (and these strong bulls understand full well that they must do so) the silver will just flow out until the COMEX becomes totally disconnected from real physical prices. (A lot of people are so clueless that they will continue to pay attention to their ETFs when actual physical is on EBAY for triple the price.)

    So eventually, if this is the case, Blythe will have no choice but to go for broke hoping to bring the bears out in force, but since the physical market is already disconnected from the paper market, this might just accelerate the process. Catch 22.

    Or am I grossly misunderstanding something?

  32. @brad pitts better looking brother

    Unfortunately I dont really understand the metaphor.

    Neither American nor old enough to understand the boomer cultural touchstones.

    The EE are winning the propaganda war now, but at what cost?

    A phyrric victory at best.

  33. I mean, obviously, "tank silver for a bit".

    And there is the added issue. Is JP Morgan even *capable* of tanking silver by 50% in a week if it thought it were in its interest to do so? Are they that omnipotent over this market. If they are, the only possibility is to create a situation where they are screwed no matter what they do.

  34. Miners continue to show evidence that we are in a bottoming process .....ANV SLW all green and strong volume.....NOT a confirmed bottom but its still bears watching.....Hope you are right Turd.

  35. Looking really good into the close.
    You can bet I'll be printing that big FUBM in silver and posting it in a few minutes!

  36. Consider the source but, since I posted something along these lines earlier, here you go:

  37. The comments here are unbelievable, UNBELIEVABLEY great. Actual thoughts relayed after research and links to show. I'm so impressed and glad to have found this place. Lets keep the clowns out. Glad you referenced SGS's bear part 1 again. I have about 100 of the 200k views. Xtranormal is one of the best things to come out of the web. Do they have stock?? hehe

  38. Thanks, jaws. I love it, too. Its really great fun.

  39. Hey kliguy38

    My Jr portfolio showed the characteristics of a capitulatory sell-off yesterday. Largest 1 day percentage loss of the entire correction, by multiples. Currently rebounding in every issue.



  40. @turd -- fantastic call. Just really fantastic.

  41. if this really will be bottom and gold will be 1600 in june we should really send some buckles to Turd

  42. I'm new here by just a few days and am extremely impressed. I've been looking for a place like this for a long long time. I tried getting on Golden Eagle forum only to be booted off for views such as Turd's. This blog is awesome. I have finally found a home. Master Turd you are incredible you can catch a falling knife. I know you are not perfect and do make mistakes but your analysis is the best I have ever seen for the short term. I am looking forward to what there will be to learn here and an exchange of ideas with an incredibly intelligent bunch of people. Thank you ever so much.

  43. Look at the spike down in the dollar on the Fed announcement. Ouch!

    More QE and low rates to come! Hi-Ho Silver!

  44. Fed minutes may have helped:

    "Economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions." Nobody voted against continuing the insanity.

    QE to infinity.

  45. C'mon, let's test support a couple more times and build a base...

  46. biosci: Thanks!
    loller: Mayber I'll be able to buy a new hat.
    bob5: Thanks for joining us. You're welcome here anytime.

  47. FUBM from the Fed itself...poetic justice..low is!!

  48. Hi Turd,

    Longtime lurker, first time poster :). I am glad I followed you here from ZH. I got on this PM train back in 2008 and in for long term. Your simplistic approach based on fundos is fantastic.

    I have went back and read most of your blogs all the way and stumbled upon your small list of PM stocks. Is it a good time to load up for mid-term on EXK and TRE?

    Thank you

  49. Turd, right now I'm hearing that great cartoon sound of a coiled spring letting go... Man wouldn't I love it if it's all up from here.

    Awesome TA and instincts on display here today. In near-realtime.

    This is why I come here. Thanks Big Hat.

  50. does it look like the low for the week just passed? I see silver has jumped over .50 now recently today. Just wondering if I missed out a little bit on B'ingTFD.

  51. Don't worry, I bought the dip in the wrong direction....loaded up on ZSL looking for a little more bottom in the bottom.....ouch.

  52. Great site, Turd. Keep up the good work. I have put a link to your site on my blog. P.S. Here is a cartoon I made for y'alls entertainment. Fun stuff.

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