Monday, January 17, 2011

Back To Work

OK. it's 7:00 pm EST on Monday. Time to get your gameface back on. First, a couple of things:

The metals are trading flat as we get started. Gold is 1360 and silver is 28.32. Watch Dr C, however. I've got a last of 439. A move down through 434 could be very bad for the short-term price of the PMs so watch that level very closely.

Next, as mentioned earlier, there will be a lot of talk about US/Chicom relations this week. Most of it will be noise and unimportant. However, you will find some interesting nuggets. I found such a nugget here:
About two years ago, when I first started mentioning to friends that the days of the US$ as global reserve currency were numbered and that it would, eventually, be replaced by an SDR or some such vehicle, everyone thought I was crazy. Preposterous was the usual response. When I mentioned that the renminbi would "un-peg" from the $ and become, perhaps not the global currency but a global currency, I was looked upon as some sort of lunatic. it is two years later and this idea is becoming "mainstream". (By the way, when did Bernie leave Bloomberg for CNBS?) Anyway, I also used to think, as in the video, that the days of this change were 20-30 years away. I don't anymore. You and I both know that this is coming sooner rather than later. Now I'd say within the next 3-5 years.
I point his out because when I first started talking about gold and silver I was looked at as a loon then, too. A "gold bug", whatever that means. We "bugs" are still looked upon as bubble-chasing fools but we know we're not. Soon our ideas on the PMs will be mainstream, too, and you can bet your ass that gold won't still be stuck in its current range by the time that happens. Keep buying and taking delivery!

Next, read this great article Jeff Nielson just posted today. More great stuff from a very smart guy:

Lastly, read this. Harvey often cites this guy, Heller, and I read his stuff, too. An informed opinion.

Keep your fingers crossed that copper and crude hang in there overnight. I'll check back later if I have something significant to add. TF


  1. I wonder if they were just getting all this fro Turd

  2. Please fill in a blank: does Santa = Jim Sinclair?

  3. Here, Liz. This will help:

  4. Silver is beginning to slip.
    I'm sticking with what cartoon "Blythe" said Friday: a move down below 28 sometime before the Comex open tomorrow but then a rebound during the pit session.

  5. When the USD is no longer the reserve currency will the asian countries & other big players in the world have any respect for the U.S. financial markets such as the Crimex? I can't see how the Fed will be able to manipulate anything at that point. So, why do we care what the price of PM's are tomorrow, 6 months from now, or 2 years from now when the prognosis for the USD is terminal at this point? Price discovery will be behaving appropriately when the USD is history.

  6. The metals are trading flat to the point of rigor mortis.....almost like the traders are waiting for something to happen, or fearful of the repercusions if they push the price up or down....the mental image I get is the traders on the ground glancing up nervously at a troop of Blythe's flying monkeys sitting on the battlements, just waiting for the command to attack.....

    OK, I have an overactive imagination, but it still seems a little weird to have no action at all just because the Yanks weren't playing today.

  7. "When the USD is no longer the reserve currency will the asian countries & other big players in the world have any respect for the U.S. financial markets such as the Crimex?"

    Who says they have any respect for the US financial markets now?

  8. I know this is geeky and OT ... but it does use silver and palladium ...


  9. Turd keep up the good work here. I ran across this article from the LA Times talking about the Chicoms have to let there currency appreciate. Goes long with the theme and basic economic principals that a very small group of people understand or admit that the USD is about toast and how this affects PM's.,0,6489232.story

    Atleast one mainstream media outlet is reporting something accurate to the sheeple. But it is LA, nobody will pay attention until it truly affects them.

    Northern Border

  10. Turd,
    Keep up the great work.
    I have a question for you. What do you think happens to the spot market for the PMs (in various currencies) if there are defaults on Comex?

  11. dryam: Nice work. Very well stated.

    GG: imho...the simple supply/demand curve from Econ 101 will prevail. By definition, a Comex default occurs when supply runs out. Less supply (in this case, dramatically less) with constant demand means HIGHER price. Less supply with increased demand means MUCH HIGHER price. In any event, a Comex default means significantly higher spot prices. Significantly higher.

  12. Its midnight EST and its time to go night-night.
    Copper has rebounded to 442 and the dollar is sliding. Reason to be optimistic while I sleep. (Is that possible?)
    Can't wait to open the ole Macbook at 7:45 and see where things are...

  13. Hi Turd, first post here but long term CD-ROM on your blog since day 1.

    I beg to differ for the point on CNY as a global reserve currency. It might achieve that sometime in the future but not under the current regime.

    If we accused of US of outrageous money printing, I would say China has been doing that on a greater scale and for much longer (QE in China is a de factor not a temp measure). Check their M2 growth rate, check their property market, check the casinos in Macau, check what their sons of leaders doing in the financial world, you will know what I am saying. I live in HK and spends quite some time in China and I have first hand experiences to let you know the level of corruption there is unimaginable compared to what you can possibly see in US. After all, you still have a semi-functioning legal system. Listen to Huge Hendry of Electica, he's right about China. There's no China miracle but a big money printing scam.

    I have huge difficulty in understanding the hope people place on China as the savior to this US$ crime.

  14. To add one more point, if at one day, CNY really depegs itself from US$, people might be surprised to learn that what they will see is a stronger US$ and the devaluation of CNY! (Not to say that in gold/real terms, US$ will really appreciate).

    Connected/smart monies in China know where to go if that chance opens up... it's OUT.

  15. I have a question for y'all.

    As paper and physical markets decouple (and the COMEX soft-defaults by settling in fiat), supply of physical on the COMEX dries up.

    As supply dries up, the physical market is forced to move to OTC and other unreported mechanisms. If this happens, how will we learn the trading price of physical silver?

  16. This is slightly OT, but there is a new (to me) proliferation of pyramid-scheme websites (among the blog's Google 'sponsors') designed to fleece small-time/amateur investors. The 'we buy gold at 30%-50% under spot' shops are one thing, but this is somewhat infuriating:

  17. bryan-x,
    that's sort of related to the question I was asking Turd. I trade PMs in the spot market (XAG/USD , XAU/JPY, etc). They are the spot prices , which are tied to futures prices. Buyers of actual physical metal pay some premium over spot prices , depending on factors such as coin /bar size, scarcity, etc. So what happens if the futures markets blow up? That does not, i think,necessarily mean that spot prices and therefore physical prices will rise. Asset classes don't need associated futures markets in order to function properly.

  18. @ GG: I do the same and I have the same question. A related question is, whether there is an instrument that is actually tied to physical price.

    Anyhow, looks like today we got a nice upside surprise. Didn't yet check Copper and Oil, but what I can tell from USDX is that they are faaaaaar away from their last line of defense :)

    Hey, ole Turd, does this bounce at 28 (2nd this year!?) qualify as rock solid double bottom? :)

    Thanks btw, keep it going! You got some 100+ comments in your last post which means that there actually IS a number of people following you!!!!

  19. Bosco: That is simply terrific info. Please continue to provide your perspective. Your "boots on the ground" in HK can really help us all to learn.

    Daniel: Maybe. Maybe. I don't think we're out of the woods just yet. Let's see what Blythe has in store for us this morning, beginning in about 30 minutes.

  20. USDX hammered so far today.

    China said they need more of their Reserves in EUR and JPY and they bought EUR overnight.

    GBP rose after high inflation raised the prospect of a rate rise.

  21. Edgar Allen Poe wrote the goldbug story, I guess the bankers found it irresistible. Or he was a tool. Who knows.

    Physical supplies are tight. I smell a bottom.

  22. The USDx has crossed into the 78s. We just made a lower low @ 78.83. A Low below 78.81 shows that we could be heading to 78.15.

    I think it's time to long....
    Scott J

  23. any sustained move below 78 and the dollar could be in big trouble.