Wednesday, January 5, 2011

Sentient Sentiment

What an interesting day this has been...actually what an interesting week. We ended last week (and last year) on a terrific high, a full superfecta, but as we know by now, when all systems are go for launch, the Evil Empire sees no other choice but to attack. I wrote about this phenomenon a month ago:

   "Everything, and I mean everything, looks great for the PMs as we head into this week. From the charts to the fundos to the chatter, it appears to be "all systems go" for liftoff. Therefore, you should be nervous. It is in times like these when the EE often counter attacks. Just look back four weeks ago for your latest example. The Fed announced QE2 on 11/3 and, by 11/9, the dollar was diving and the PMs were soaring with no conceivable end in sight. Well, we all remember what happened next. Out of the blue, we get margin requirement increases and a sharp correction in price. Silver shed $4.30 in a week and gold lost $95! None of the fundos changed, however, and we've since recovered. If you don't think that the EE has more tricks up their collective sleeves, you're living in FantasyLand."

So, here we sit. Gold pulled back nearly $60 in about 36 hours and silver plummeted nearly 10%! Yikes! Precious metal watching/trading certainly isn't for the faint of heart. I'm reminded as I type of this post from back in November, written at the bottom of a similar correction. At times like these, I find it reassuring to review notes from past challenges:

As you are well aware, we finally found some support today near the critical 1365 and 28.50 areas. Recall these charts I posted about 10 days ago. I expected a breakout this week but Blythe had other plans and she has considerably deeper pockets. However, note that no real damage has been done these last two days. We are still well within the "consolidation area" and it looks like the next UP leg is still imminent. Here's the weekly gold I posted:
And here's the weekly silver:
Reviewing this silver chart, you could just as easily make the case that the "consolidations" are 4 or 5 weeks in duration, not 3, so let's see what the next 5-7 days hold.

I'm very much looking forward to reading Harvey tonight as his wrap-up of yesterday's action should make for interesting reading. He usually posts around 8:30 EST so I'll try to check in again later this evening. TF

Harvey posted some very, very interesting open interest numbers from yesterday. Both gold and silver OI rose significantly during the decline which indicates two things:
1) The EE supplied a huge amount of new, bs paper metal
2) Non-spooked buyers btfd. HAHAHA, Blythe! More and more folks are onto your little game. The end is near!
Also, Eric King interviewed the great John Embry today. The full interview will be posted on Eric's site soon and it will be a must read. Be sure to check his site tomorrow for the link. In the meantime, here's a link to the summary/excerpt:$2,000,_Silver_Above_$50_in_2011.html
Lastly, read this from Gonzalo Lira. The idea, for a while today, was that the improving economy lessened the need for QE, which rallied the $. What abject nonsense! Gonzalo nails it:


  1. Victory lap for Turd. Thanks again. Good times!

  2. Both Eric King and John Embry @ KWN were pretty excited by this buying opportunity. Go check it out.

  3. Bought another 50 ounces of physical silver at my local coin shop today, and also pickes up some SLW. Thanks for the discount and FUBM. I hope the price hangs out here through the weekend - planning to add hundreds more ounces over the next few days if it does.

  4. Silvers up 30 cents in the last 30 min... must mean blythe is taking the night off

  5. just read this by rumblefish over at teh 'hedge:

    "received an email from apmex that the mint is limiting allocations 2011 silver eagles to distributors."

    no doubt others here who buy from Apmex will confirm.

    hang tough Mr. F - and don't wear yourself out with the new business!

  6. The GDMF EE managed to screw up the timing of Santa 1650$ and London sourse 150 $ higher in 5 weeks and catch many of us by suprise as the BoS also suprised many of us by their apparent inactivity.
    Better be constantly scanning the horizon atop the watchtower.

  7. Bullionvault silver bid (physical in vault) is $30.23. Futures price is $29.43, which is make-believe.

  8. Could you post Harveys site? I just started following your blog!


  9. This is what apmex emailed me earlier today:

    Have you secured your order of 2011 Silver American Eagles yet? Now is the time to act. We have received news that the U.S. Mint is limiting the allocation of 2011 Silver American Eagles to distributors. We will accommodate as many of our customers as possible, but it will be “first come, first served” for this beginning allocation.

    We have been taking orders for the 2011 Silver American Eagles and will continue to do so as long as supplies last. If you would like to make this popular investment-grade silver coin part of your 2011 precious metal holdings, then don't miss this 0pportunity to place your order today!


  11. So, I've BTFD a bit more. Feels good to know the state of the market. I'm also stocking up on new weapons to protect my shinies... a new 12 gauge, a new semi, and enough ammunition to last at least the first few months of the zombie apocalypse... After that I'll be bashing those zombies over their heads with 100oz bars!

  12. Guys,

    I dont know why everyone is freaking out about the price adjustment we have seen in the past 2 days. Turd is 100% correct. The fundamentals have not changed. Exact same reason I started mass accumulations of physical in the last 3 years because I finally understood its all back to the basics and the fundamentals.

    A little irony that I would like to share with everyone today about a text message to a great friend of mine who just does not get it when it comes to PM's and basic economic principels. "

    He stated how is is loving the stock market ride's and was laughing at me for the recent downturn in PM's....My response back: "Just the Sheeple being led to the slaughterhouse....Dont say I didnt warn you."

    Bottom line, the basics have not changed one bit. BTFD, buckle your seat belt, and enjoy the ride.

  13. Turd (or anyone else)

    Could you explain how Blythe's paper shorts drive the PM market down? Shorts are utltimately buys (even if naked), so I've always been confused when people say that shorting makes prices drop. Thx!

  14. They don't buy all the shorts back...there's a huge short position that remains open.

    From Harvey -
    The modus operandi of the crooked bankers is simple. They withhold all bids to buy as they tell would be purchasers to hold off as they will get their metal cheaper. Then they bombard with over 100,000 contracts that are totally un-backed and they trip some of the longs who have stop losses below the spot price. This trips other stop losses as the price goes lower until it reaches its nadir and the bankers slowly try to cover all their shorts. This is collusion, as all the bankers are told in advance when the raid is to be expected. Then they supply paper with no backing to gold or silver whatsoever. And our regulators just stand there and do absolutely nothing with this blatant manipulation.

  15. Time to buy more Silver Physical!

  16. I just hope these "non-spooked buyers" are taking physical delivery, because it's not going to have much effect if they don't, correct?

  17. Look for big green on short covering signaling "A" wave down completion. "C" will be your gift.

  18. Let´s buy Guys... it will never be cheaper again !