Wednesday, January 26, 2011

An Eventful Wednesday

Well, well, well. What a day we had.

Let's start tonight by summarizing what needs to happen next. I truly believe we have found our hoped-for bottoms at 1321 and 26.54. We have risen nicely from those lows. The HUI has rebounded sharply and the FED confirmed today what we all know, namely that QE will last until The Second Coming. Next up, we need some follow-through. First, let's look at the most troublesome of the charts, copper:
Note the pattern of lower highs and lower lows, though the new low yesterday was only fractional. Now that we've regained 428, it is vital to the nascent PM recovery to have copper retake 438, as well. The FOMC minutes should give us enough fundamental strength to make that happen but no one is allowed to launch balloons and shoot off fireworks over the end of the PM correction until it does.

Now let's look at silver. It looks a lot like copper but its next objective is a lot closer:
Any sustained move through $28 should seal the deal but it won't be as easy as you might think. Don't get discouraged if we have to bang away at that level for a bit before we get through. Lots of fresh paper shorts waiting there in a last ditch effort to contain this bounceback. Again, The Ben Bernank gave us plenty of fresh fortitude this afternoon and I believe $28 will fall before the end of the week. Gold looks much the same but its bar is even lower. Do you recall the hope that $1345 would hold. Well, now 1345 is resistance that needs to be cleared. I have a last in silver of $27.62 and gold of $1343. I can't wait to see what the overnight action holds for our two friends.

Here's an updated dollar picture, this time in a 1-hour format. This dog is clinging to the 78 level by the skin of its teeth. Absent some manufactured "news" overnight, the pressure will soon become too great for it to hold on. I expect 77.50 before I awaken in the morning. From there, it'll be 77 before any substantial amount of buying surfaces again.

A couple more things...
One of our friendly readers, who shall remain anonymous, sent me a link to this nugget. Apparently its a powerpoint presentation that the Sprott folks are using to market their funds. Nothing earth-shattering, it isn't marked "broker/dealer use only" and its in Goggle Docs format so I figured, what the heck, it looks like public information so I'm going to post it for you to look over. Here you go...
Nuts. I can't seem to get this into a format that will work. I'll keep trying...

Also, I got this idea from Harvey. Its a very interesting discussion from Jesse Whatshisname. I link it because it covers the main "conspiracy theory" everyone's been mentioning but Jesse also seems to see the situation as I do...namely that JPM is a proxy of The Fed and has put themselves in a rather untenable position. Here's the link:

OK, that's it for now. Can't wait for tomorrow. TF

ps Today was the biggest day yet at TFMetals with 25,447 total pageviews. My "gold to 1600" post from last week has now been pulled up over 9,000 times alone! I'm am amazed every day by the incredible success of this blog and I want to thank you all again for participating in what has apparently become one of the foremost PM discussions on the internet. It would be nothing without your efforts and terrific input so please accept my gratitude. God bless us everyone.


  1. Turd, I've been putting together some interesting numbers regarding retail silver sales. Based on the information I've found, retail sales of silver has dramatically increased since the already big retail spike in November (no surprise there), but what I've found is that retail silver sales have continued to accelerate in January of this year so far. It looks like people are BTFD... It a major retail silver dealer would be willing to anonymously provide rough numbers on number of unique customers and ounces sold, we could verify this with a lot more data points.

    I am not basing any of my data on the US Mint #s. Unfortunately I don't have enough good data points to really make a proper graph that would hold up in a court, but I can say that silver sales are certainly rapidly escalating this January far faster than they were in November.

  2. Turd: It wouldn't have happened if it wasn't for the quality and authenticity of what you do. Don't go away, no matter what.

  3. I couldn't get the Sprott link to work. I'm using Firefox on a Mac. Is it me or the link?

  4. Can you load the Google doc and repost it somewhere? Having a little trouble getting access to it...

  5. Turd,
    keep up the great work!

    Here is a link to Jesse's original piece, from his own blog. It seems a little different from the version you linked to:

    His next target for silver is $37.50.

    I think you'll like his "Precious Metal Competitiveness Training" videos from today.

  6. See the last of Jesse's videos. The cow = Blythe? :)

  7. Al Mighty Jim Willie in his latest public posting had sth to say about why Chinese BOS have been missing in action in January. That might explain this sudden void in the buying side of gold and silver recently.

    Quote: "The Chinese are well along a full court press to secure Gold bullion and dominate in the next phase of the global chess game that will span the next decade or more. With the expansion in the European Dollar Swap Window by the Chinese, the Euro currency has risen impressively. No benefit to Gold has been realized despite the USDollar slide in the last month. One must suspect the Chinese are busy as yellow jacket bees dumping USTreasury Bonds. But also, the Chinese might have suspended some of their Gold & Silver purchases. They might have actually drained for a time the COMEX gold inventory, and await its replenishment. Enter the BIS after midnight from the loading dock. Beijing leaders might be anticipating a high volume Gold bullion purchase flow from the back door in Europe. Refer to EuroBonds bought at discount using the Dollar Swap Window, converted eventually to Gold. My guess is the harlot Intl Monetary Fund will facilitate the Gold conversion, from the EU member nation central banks associated with PIGS nations. If inadequate supply of Gold is a problem with PIGS nations, perhaps some gold swap contracts can be enabled with the help of the Bank For Intl Settlements in Switzerland. But those swaps would seal the PIGS nation fates, since they would hand over industrial, commercial, and other collateral, assuring banker elite ownership of whatever keys to the kingdom are left. Therefore, Gold is vulnerable to hits during the time China takes its foot off the accelerator pedal. China has found a way to purchase high volumes of Gold bullion at a discount. The discount is essentially the EuroBond sovereign debt discount under distress, which might be in the 10% to 20% range. So the PIGS debt will be rescued for a while, but with forfeit of their central bank gold, or borrowed gold."

    Like what we have suspected, China does not trade in the same manner us small investors do. We can go seriously in and yearn for huge rise to come while China cannot with their massive 2T capitals. So Chinese BOS just dabbles at it: make a move and then wait with lots patience. We will have to adjust our strategies the same way.

  8. Turd,
    he is talking about you:

    "In addition, any economist will tell you that when the free market fails a black market emerges. The blogs are the black market of information."
    David B. Collum, Cornell University

  9. I knew I wasn't the only subscriber to the McClellan Market Report, but apparently so is Richard Russell. Here is a link to a short snipit of his on 321gold (or you can link thru Jesse's Cafe Americain)

    I've been a subscriber for a number of years and their recent timing accuracy is even better than it was before. Not to say they're infallible though.

    I'm saying this because I'm not convinced we've seen the bottom (and their Feb 8 call is still two weeks away). My reasons are:

    1. I think TPTB want to get the stock market into rally mode while gold is still depressed "down $100" as you are constantly reminded. This way people will sell gold to get funds to buy stocks. So gold still has another dip coming.

    2. Most of the two dozen mining stocks I watch on a 15-min chart are hitting resistance at the 233 bar exponential moving avg, with short-term stochastics overbought and long-term ones oversold. In other words, expect the short-term ones to come down and join the long-term ones so they can all go up together.

    3. It just doesn't feel like a final bottom to me yet.

    I'm not saying don't buy. I've nibbled on the way down myself. I just think there is one more spasm coming. If I'm wrong then I'll be making the big commitment at the prices I was nibbling at before.

  10. Thanks for all that you do on this blog, although "Turd" is far too undignified a moniker for someone with your acumen. Perhaps "the argentine oracle" would be better? Anyway, you've convinced me and mine that the physical is the only long there is, and may you and yours be prosperous and safe in the long days ahead.

  11. Don: Thanks for posting that info but I think that point #1 is silly.

    Shawn: Thank you for the kind words.

  12. I know Rui and others have referenced Jim Willie's latest, but it really is a must-read:

    Here's one highlight: -
    Something unique and unusual has happened in the last three weeks. The Euro currency has risen noticeably from 129 to 137, but the Gold price has fallen from $1385 to $1335 per ounce. For almost a full decade, the correlation between the US$ DX index and the Gold price has been in the minus 70% neighborhood. What has happened in the last month has been a gigantic outlier. It is not just significant with umpteen standard deviations above the norm. It is in the wrong direction. My best guess is that the Chinese have temporarily halted their usage of the COMEX avenue for gold acquisition. They have permitted the corrupted COMEX to push down the gold price, using its fraudulent paper mechanisms. They have given free rein for the Wall Street maestros to lower the gold price for any IMF deal to secure European gold bullion in exchange for EuroBonds. Most gold & silver contracts are settled in cash anyway these days, since the COMEX does not have much precious metal in its possession. Imagine the day coming before too many months when gold & silver can be traded in contracts at the COMEX with no gold or silver metal exchanging hands. That day is coming, along with ruin of the GLD and SLV defaults, ruin, deep discounts in share price versus the metal price, and investor lawsuits. As for the Gold & Silver price, they will rise when the Chinese decide to resume buying. Right now, their attention is diverted to EU gold bought at deep discount, and in volume. As usual, they are thinking at least 20 years ahead. The Gold & Silver price will rise soon enough for the patient minded. The physical market wrests control always, as the mid-term forces take over.

  13. Some very nice UPticks at 1348 and 27.78.
    Looks at this, too:

  14. Episode 3: Gwen wants to quit the CFTC

    Exasperated by her job at the CFTC, after only a few days, Gwen tells her boss she is quitting. Gwen is taken aback by her boss's reaction. Who is he? What does the CFTC really do? To find out, Gwen must undergo a secret initiation into the dark world of Finance, at midnight.

  15. Personally I reckon BOS is more than just Chinese. There are plenty of other players (eg other Asian states, Russia, Middle East) that want silver too.

    Also, speaking for myself here, I don't see a problem having a mix of paper silver and the real stuff. If COMEX defaults (an event that is predicted as often as the next coming of Christ), then one is settled in cash, presumably at a very high price? This seems OK to me, or am I missing something? I am not in the hyperinflation brigade (domicile is Australia), so am accumulating silver strictly for profits and preservation of purchasing power.

  16. In case anyone has not seen it yet, the World Gold Council Q4 2010 report gets a mention on ZH:
    Full report:

  17. Sumo,

    Seriously, keep it cleaned up a bit. You're going NASCAR on us and that's not the norm around here. If you're looking for shock and awe or some Jerry Springer feel to your messages then you've missed the bus. Most likely people aren't going to base their investments based on cartoons like yours that talk about women swallowing. Grow up and clean it up and I might have some respect on your message.

    Sorry to be a fun hater, but the line been set down...

  18. We need an audit of course but...

    I love Jim Willie...always read him...but when he starts saying Fort Knox is empty of Gold (without proof) and calling anyone brain-dead who doesn't agree with that; then I have a problem.

    People have to remember that Jim Willie is there to sell his subscription service first, and if the vault doors open revealing 8,000 tonnes of Gold, then he should apologize.

  19. @ Patrick -- I am pretty sure the Gwen series is intended as entertainment, rather than investment advice... Spoilsport. The reference you found so offensive was, I think, talking about Ms. Burnett of CNBC.

  20. Hey! I like Erin Burnett. Nobody messes with my Erin.

  21. Patrick: re NASCAR: whoops, having been on ZH for a while now, I forgot to throttle back and shift down a few gears.

  22. Gold and Silver markets now seem quiet...too quiet.

  23. This just popped up:

  24. This seems interesting:

  25. Turd,
    In my opinion Rob Kirby nailed it! Read his most recent article on, "Why Gold and Silver have declined". It makes a lot more sense than any lack of buying from China or an asundry of other reason. Re-weighting/re-balancing of index funds, as managed by the EE.
    A very important read!

  26. Here's one more for you insomniacs. A slightly different perspective.

  27. Short candles on the $USD.

    And notice that platinum and palladium haven't breached any significant moving averages.

    Article on metals traders on Wall Street. Even mentions Blythe.

  28. Tim,
    Yes that Kirby article totally rings true with me. I remember on oil's run up to 147 in 2007-2008 they kept doing the same thing. Reweighting and rebalancing the commodity indexes to suit their own purposes, and frontrunning the trades to boot. Oil & products kept on regrouping and blowing through it anyway right up until the whole system cracked. I've seen this movie before.

  29. Japanese debt downgraded.

    Looks like they are pulling out all the stops to keep the USD up.

    Funny business from Asia this weekend looks more and more likely.

    A big equities dip now would be a perfect set up for PMs.

  30. Wouldn't that initially cause some to liquidate their PMs looking for cash? But I guess that exited equities would be looking to add some PMs, so you might get a yoyo.

  31. @SilverPaine

    An equities dip would probably result in risk off algos going off.

    Usually that entails USD n JPY strength, and for better or worse PMs are risk on assets in todays wonky world.

    So even if there was rotation into PMs from equities USD strength and risk off selling would at the least hold PMs down somewhat.

    But once an equities dip is out of the way, its almost all clear for PMs to rise as almost all negative factors would be cleared - well at least for a couple of months :)

  32. Euro is very strong against USD now, do those move inversely? If eur starts falling then maybe USD is going to rally some months as Faber thinks?

  33. Is it time to buy? It looks like it but it sure doesn't feel like it to me. My spider senses are tingling, I can't stop feeling that there will be one more BIG shakeout in the very near future. When the shakeout happens all current physical stock piles will be utilized. You won't be able to acquire any Ag anywhere.

    Is it time to buy? In the big picture who really cares if they save a couple fiats? Come summer time when someone wants your physical Ag for $45plus does it really matter if you purchased it for $26.50, $25.50 or $22.00? I suppose to some it does but in my opinion when the SHTF it's all about the physical in your possession. If today one has some extra fiat in their pocket then YES by all means go pick up some Ag & Au when you still can. Yesterday is gone, tomorrow is not here yet but TODAY is here right now. Make it count! Cheers

  34. Disappointing but NOT surprising action overnight.
    Don't be too frustrated by all the new shorts that have appeared, as expected, at 1345 and 28. They must be defeated AND they will. It will just take a while. Be patient and watch for more FUBM on the charts.

  35. If this breakdown in Egypt and others gets outta hand more people will be demanding physical only and abandon paper promises.

  36. There was a guy in the comments of Harvey's latest post claiming that there is a correlation between GLD and SLV outflows. And the last outflows of both were huge!

    I asked him but he didn't yet respond to where he got this from...

  37. Oops, not a correlation between GDL & SLV outflows, but between those outflows and EE raids!

  38. Lets look for 27.20-25 to hold as new support for silver. We'd have the makings of a reverse H&S if it did.
    More on this in an hour or so.

  39. Turd, can you post the link/chart showing the H&S you´re refering ? Thks.

  40. Carlos, I will soon but, for now, look at the silver chart above and mentally fill it in with the overnight action

  41. Did the Blythe went shopping with the girls or what? Curious about today's volume..

  42. Silver is looking great compared to gold right now.

  43. MArtijn, let them shopping...... They made lot of money these few weeks. Time to spend some and time tou get our $$$$ back till next downtrend.

  44. Tim that is a great catch. A must read for sure, if anyone missed it.

  45. Manipulation?

    The analysis proves that The London fixes are consistently lower than the actual price over a 10 year period. Its a 1 in 2.6 X 10 to the 32nd power chance that the market isn't rigged.

    Good Read: