Sunday, February 27, 2011

Watching Crude

Wow, what a crazy weekend! Thank you all for your active participation on the blog.

We opened higher on the Globex tonight and we've managed to stay there. I have an April gold last of $1413.40 and a last in March silver of $33.46. Very nice when you consider how much the PMs rallied on the Globex Friday afternoon. You can bet that Blythe would like to claw those gains back but, so far, she's either been unable or unwilling. I suspect its the latter because of what's going on in crude...its up over $1.50. Take a look at this 60-minute chart:
I would not be surprised to see WTI over $100 when I wake up tomorrow. This is significant because we know that instability and unrest in the Middle East have consistently translated into higher PM prices. I need it too, boy, because my accounts a mess and I need to clean it up. Hate to do that on a down day so I'm hoping for a nice, solid UP Monday and Happy Tuesday in which to get it done.

My inbox just exploded tis weekend but I think I was able to get back to most everyone. I don't have time tonight for a full "Turd's Mailbag" edition but I do have a couple of things to pass along...

First, reader Badu took the initiative to set up a chatroom for us until the new site is ready. Here are the instructions for how to access it:
"Thanks!
Ok it's set up, when you want to take control over it just go to www.tinychat.com/ and sign in with username "turdworld" and password "password123" and the link to the chat itself is www.tinychat.com/turdworld.



If you don't like the name I can change it!"

Next, Vineet from India sent this. Pretty interesting:




"hello Turd
This is your humble follower and regular reader from India. I want to share the following piece of news that I stumbled on Yahoo.
I went over the brief communique many times -- if we prune away the other details regarding tax collections etc, the core info reveals that :
1] Contrary to the expectations of most, it is not Mexico or China, but India that has taken the first step towards remonetisation of silver. I noted that these coins are not 'special edition' or 'collecters' items', but intended for general circulation.
2] I would hazard another guess that the Indian govt will bring out silver coins in other [maybe greater] denominations, to replace the paper money notes of INR 100, 500, 1000 etc
3] It seems that India has been aggresively stockpiling silver [ stockpiles had dwindled between 2002 and 2005] and now has the reserves to gradually introduce monetary metals as medium of exchange. This is probably the first step. In time, India may phase out a large part of paper money -- in approximately the same period as some other countries like China, Russia, Mexico also start re-monetising silver.
4] There was another news that Bank of India is now facilitating trade between China & India in Yuan instead of $. BOI is one of the largest public sector banks in India, and other banks will follow its example. Consider that India is now paying for Iranian crude oil in a combination of gold & INR. In 2006, India picked up half of the IMF gold sale [200 tons], the inference being that India was accumulating gold reserves before and has being doing so till date. My point is that the largest Asian economies [also the main growth engines] are gradually but surely detaching themselves from the US $ and towards re-introduction of monetary metals in their internal economies. These seem to be subtle indications that the gold standard is inevitable in the not-so-distant future."

A reader in Virginia passed along some correspondence that informed me that Jim Willie likes to read this blog. Yes, the real Jim Willie! I'm flabbergasted and truly honored!

Lastly, another reader sent me this regarding the situation in WI. Its my favorite, so far:
"I have to tell you: I read your blog daily for the measured commentary and often spot-on analysis regarding silver. As someone who's not a trader or market insider, your plain analysis is greatly appreciated. Occasionally though, when you veer into political discussions, your ignorance is cringe-inducing."
Which is why I so rarely go there....

OK, that's it for now. I'm headed upstairs to watch the Oscars with Mrs. Ferguson and the two little turds. Still can't believe that "Hot Tub Time Machine" wasn't nominated. TF


Midnight EST UPDATE:
I've received several requests that I pass along this information from Ted Butler. Duly noted.
We should all take time to participate in Ted's campaign. All the information you need is listed below. Thanks!


Speak Up and Be Heard
 On several occasions over the past couple of years, thousands of you have taken the time to write to The Commodity Futures Trading Commission (CFTC) concerning the issue of position limits in COMEX silver.  Now the CFTC has solicited your opinion again for what will be the last time.  The current open comment period, through March 28, is the culmination of all the public hearings and commentary over the past two years.  Your comments on silver position limits make a difference.  Private legal counsel and even sources within the Commission have assured me that there can be serious consequences for the CFTC should they ignore the will of the public, when that public opinion is reasonable.

The silver market has been manipulated by a concentrated short position.  You can’t have a manipulation without a concentrated position.  The only effective way to prevent concentration is by enacting legitimate speculative position limits.  The key is to set the speculative position limits at the right level; not too high, so that speculators control the market, not too low as to restrict trading liquidity.

The proposed position limit for silver comes out way too high, over 5,000 contracts.  It’s too high because it gives speculators too much dominance over real world producers and consumers.  5,000 contracts is the equivalent of 25 million ounces of silver.  There are only three mining companies in the world who produce more than 25 million ounces of silver a year.  In addition, there are only a handful of silver consumers in the world who consume more than 25 million ounces a year.  There are hundreds of important miners and consumers who produce or consume less than 25 million ounces of silver a year.  Therefore, it makes no sense to empower any speculator who comes along with the ability to hold, long or short, more than the amounts most of the important world producers and consumers make or use in a year.

The proper level for position limits in silver is about 1500 contracts or 7.5 million ounces.  That amount is still larger than what the vast majority of the world’s silver producers and consumers make or use in a year.  If you agree, please make your opinion known to the Commission.  It’s crucial that you do.

Here’s my letter.  Use any part of it or just the last sentence on a copy/paste basis if you wish.


Dear Chairman Gensler and fellow Commissioners:

I urge you to approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers.   I would ask you, however, to readjust the proposed formula in silver.  The current formula would result in a position limit of over 5,000 contracts for any single speculator, on an all-months-combined basis.  5,000 contracts is the equivalent of 25 million ounces of silver.  This is too high of a threshold in light of the realities of the world silver market.

There are only three mining companies in the world who produce more than 25 million ounces of silver per year and only a similar number of industrial consumers using more than that amount.  Any speculator holding an amount of silver derivatives greater than what 99% of the world’s silver producers and consumers make or use in a year would have inordinate pricing power.  The purpose of speculative position limits is to prevent such a circumstance.

Please institute a 1500 contract (7.5 million ounce) position limit for silver.

Respectfully submitted,

Ted Butler


The instructions for submitting a comment can be found here http://comments.cftc.gov/PublicComments/CommentForm.aspx?id=965  All that is required is your first and last name and email address (repeated) and to use the validation code before submitting your comment. Your email address will not be published, but you will receive a confirmation that your comment was recorded. If you have difficulty entering your comment electronically, you can mail it in, but I just did it and I’m not a computer maven.

Please remember that your comments and name will be published for the record. Accordingly, please be professional and limit your comments to position limits, the issue at hand. Also, please comment only once, but be sure to comment. It is important that the Commission knows your opinion on this matter. You can view the public comments on position limits here http://comments.cftc.gov/PublicComments/CommentList.aspx?id=965

130 comments:

  1. Great vid today Turd. When you're truly world famous, will you still remember us ? Heavy silver, but only physical. Also invest in lead, brass, food and water. In no particular order.

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  2. Hey! I thought Hot Tub Time Machine was pretty funny. ;)

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  3. Turd your video was fantastic... Your personality fits perfectly with what you are doing. I think that you are moving in the right direction and have the correct mindset with respect to the power of your community. You are the revolutionary model for others to follow. I can't wait to watch others follow your path... it is inevitable with the amount of success you are about to have :)
    -

    Back to crude... There is no way it doesn't pop soon. It is clearly under price suppression, but I don't see how it stays this low longer than this week or next... but then again I could be way wrong...

    Gold and Silver look ready to blow to me... If you look at the daily silver chart, it has been so bullish that it hurts to look at! This should transfer over well to the junior miners (hopefully), and I am waiting for the days when investor demand overrides the hedge funds for miners... It has to be coming soon.. probably when the physical shortage is recognized by the silver market is when it really start taking off.

    Additional thoughts about mining equities here:
    The Case for Mining Equities

    Come for my bullish views, stay for the revolution!
    -
    I look forward to tomorrow, I will be here on the comment section lurking all day. Thank god its Monday (You know life is good when you can say that).
    -
    Scott J

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  4. The fix is in! The oscars brought to us by the jp morgue!

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  5. Congratulations, Turd, on having Jim Willie be a follower of your blog. I've been reading his stuff for years when it appears on gold-eagle.com. If the US govt. had been listening to him all along (and doing something about it), our country would be in a lot better shape. His site, of course, is The Golden Jackass. Looks like with your name, you're following in treasured footsteps.

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  6. Turd,
    thanks again for your observations a few weeks ago on oil and sugar, as the two commodities that hadn't yet moved. I bought crude oil futures shortly thereafter, but not sugar. Has been volatile, but so far profitable.

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  7. The protests have now moved to Saudi Arabia in what they're calling the day of rage , other groups are joining in.The Royals are very nervous, offering money and jobs, almost like the COMEX.

    All it takes is for one fruitloop to cut a pipeline and prices could out of hand pretty freaking fast.

    I think that the dollar is tied to oil , if so it would raise the dollar strength and maybe weaken gold and silver,I dont know, just throwing it out there.

    Turd, dont tell me your watching the awards, lie to me, please. tell me you have a boxing match or have to train of fix the pipes .just Say it isnt so. :)

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  8. @Fred: the FRN (Federal Reserve Note - what you call a dollar) is not tied to crude oil. Crude oil is sold internationally for FRN's but the value of the FRN is not based on the price of crude. Crude cost is raised because of a perceived possible future delivery issue. If Saudi goes into a "protestation" then rebellion, the MAIN OPEC supplier for the US will be officially defunct. IF that does happen, the price of crude will rise very rapidly. We will see 7.00 FRN/gallon price for gasoline, 6.50 FRN/gal diesel prices. No pipelines need to be cut, the only thing that needs to happen is the traders on the floor need to think that due to the unrest, crude will not get delivered on time, or in adequate quantity.

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  9. For next year's Oscars, Turd should do a remake of 'The Wizard of OZ' with it's original intention as a silver documentary, and a modern cast. 'And the Oscar for Best Supporting Actress goest to Blythe Masters, for her rivetting portrayal as 'The Witch!'"

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  10. Thanks,I was under the impression oil was traded in dollars,No? or not the same thing?

    I figured one lone numb skull could definitely compound the situation, not really cause it.

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  11. http://www.youtube.com/watch?v=CMNry4PE93Y

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  12. Oil is traded in dollars, for now anyway until the FRN is no longer a reserve currency.

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  13. Re: Vineet's comments:
    "4] There was another news that Bank of India is now facilitating trade between China & India in Yuan instead of $."
    --------------------------------
    Note that Russia and China also recently agreed to trade between one another using their currencies, rather than the US$.

    It looks like, slowly but surely the US$ is being pushed to the sidelines in international trade.

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  14. My college professors said, before exams: "Where is the knowledge in all this information?", and, "Where is the wisdom in all this knowledge?", to which you deserve an 'A' for helping us see thru the fog of disinformation and confusion, to the enfolding realities, hiding in plain sight.

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  15. Thanks to tf for this helpful blogspot, but I for one am lookin forward to the new site, as every time I view this blog, windows internet explorer tells me it's 'not responding' and it's getting to be a pain. Nothing like Blythe is going to experience in the next few months, but...

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  16. @Fred: not the same thing. crude is purchased with FRN's currently. OPEC could just as easily say they will accept only Yuan for oil. The devaluation of the FRN causes the Arabs in OPEC to sit back and possibly reconsider what currency they will accept in exchange for the oil, however this unrest precludes an OPEC meeting. Just because OPEC wants FRNs for oil does not increase or retain any value of the FRN in the international marketplace. They could change next week, next month, even next year, to accepting only Yuan or straight gold, if they wish, in exchange for their oil. Currently, the FRN is the medium of exchange. If that changes oil may as well be $500.00 a gallon. International exchange rates are atrocious.

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  17. I meant $500.00 a barrel...lol sorry

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  18. I cant find the other link yet, but it stated they were offering money and jobs to calm the people .

    Saudi Protests Threaten Oil Prices

    http://www.forexcrunch.com/saudi-protests-threaten-oil-prices/

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  19. So you see, other countries that buy from OPEC need to exchange their currency for FRNs to buy oil from OPEC. Right now we are on the winning side of that equation. Newer regimes in the OPEC countries may decide that the want gold, silver, yuan, Krugerrands, whatever else instead of FRN's for oil.

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  20. http://aljazeera.com/news/articles/34/Saudi-king-orders-more-permanent-jobs.html

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  21. I came across this article by Robert Blumen and I thought this portion of it very enlightening. I hope it is not to obvious to most, since I am new here.

    "But there is a more profound and less easily quantifiable argument for holding gold. Earlier I mentioned the finite limits in the domain of applicability of value investing. Value investing is an example of what the economist Ludwig von Mises called economic calculation. What Mises meant by this was the allocation of scarce capital goods toward the greatest expected profits using estimates of future market prices. Because economic calculation relies on prices, and prices are expressed in terms of money, calculation depends on a reasonably stable monetary system. As the monetary system is becoming increasingly chaotic, economic calculation is disrupted and investment decisions more and more irrational. We are sliding out of the zone where the inputs of value investing -- prices -- have any meaning.

    During a monetary breakdown, variations in the supply and demand for money itself drive prices more than the supply and demand for goods.

    Value investors like Grantham only want to buy something when they have a quantitative estimate of its intrinsic value. While this rule works well enough during periods of stability, it provides no guidance for rational action when the monetary system is no longer able to provide reliable money prices. Value investors have successfully invested in countries experiencing a monetary breakdown by using an external stable currency to calculate prices. The present crisis, which is global, threatens to disrupt all of the external stable currencies, making them less useful for this purpose.

    As a shadow money, gold is a hedge against times when value investing becomes difficult or impossible because money has become too unstable. During those times, gold is a way of preserving purchasing power until the some stability returns. The disruption of the price system and resulting misallocation of capital will undoubtedly create many opportunities for value investors, once the monetary crisis is over and the monetary system is stabilized. Having an asset that can then be converted into stable money (which may be gold itself) will give value investors the ability to take advantage of these opportunities when they emerge."

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  22. Yesterday golf sponsored by JP Morgue Nascar by HSBC. WTF!

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  23. Wow, it looks like the person responsible for propping up the dollar was late for work tonight.

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  24. @falcon15

    Dollar settlement for crude will not be removed so easily.

    There have been attempts to settle in euros, gold and possibly other currencies too before.

    Strangely, all attempts fail; I wonder why.

    Dollar settlement for crude is what makes the dollar the reserve currency, not the other way around.

    Dollar settlement is FAR more important that most realize.

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  25. Sorry, that was hockey not Nascar.

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  26. Hi guys, anybody have any tips on hown to play this oil price surge. I was thinking some offshore rigs like VTG or even some wacky VTG, since you know, nothing has really changed in Egipt.

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  27. @Rick - they are working to keep us entertained !

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  28. @mrgneiss - that was awesome, I spit some soda out my nose !

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  29. Bubbles,
    If you are looking for stocks, whatever you do you need to avoid USO.

    http://www.businessweek.com/magazine/content/10_31/b4189050970461.htm

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  30. @jet

    From the previous post.

    You paint an ideal solution, do you believe the rest of the world will sit idly by while the US reneges on her obligations?

    A dissolution of the Fed and dropping FRNs implies a default.

    The only way the US gets away with this is her military power.

    Do not underestimate the Chinese.

    Also without a sea change in the congress and senate, it is hard to see how currently entrenched interests do not subvert any attempts of what you suggest.

    While I admire the ambition behind what you propose, do you see the potential for such change based on the current state of the congress and senate?

    I do not want to move to far from gold and silver here, discussion on politics invariably degenerates.

    I return to the original point many posts ago, a COMEX failure would precipitate a more violent dislocation than necessary and thus may be in our best interests to see a relatively more gradual revaluation of PMs relative to fiat.

    Gradual progress tends to result in less lives lost, witness Libya, Egypt, Bahrain where change was forced upon them.

    Forcing a change in the US will involve China, and unfortunately history has shown time and time again that in such situations there will be bloodshed, either directly or through proxies like the Libyas and Egypts.

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  31. Art...entertained and distracted.

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  32. @ Bubbles

    http://tfmetalsreport.blogspot.com/2011/02/heading-into-close.html

    There's some oil sands discussions in the comments might worth looking at.

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  33. Turd,

    Nice video. My wife said that you don't look anything like what she imagined. I really wanted to see the hat. =(

    Was just hanging in the chat room with folks. I can't wait for the forums. Hard to get thoughts across with 20+ people all typing at the same time.

    Anyhow, add this to your drink repertoires:

    FUBM

    1 1/2 Oz Goldschl├Ąger
    6-8 Oz Hot Chocolate

    Enjoy!

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  34. @Qussl3: It is actually THAT easy. It is a single step, that OPEC can take. Never doubt the power of oil. Attempts prior to now were done when the American economy was extremely more stable, strong, and we had very little overall national debt. That has changed as has the tenor of the rest of the world. China is going to drop us for all trades (outside of crude) in the next 6-8 months. They hold 40% of our paper. Once China drops us, our FRN devalues so quickly every other country will drop us. OPEC will be #2 in line. Live in your hopeful fantasy. I work in the petrochem industry. If we are not careful when we negotiate contracts with mid-east countries, we would be paid in EUR, not FRNs. FRN settlement for crude can change with a single vote by OPEC, with a majority leaning away from the FRN. Enough anti-west persons get on the OPEC council...it is a foregone conclusion.

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  35. Qussl3...we pay everybody but the fed. That will leave us in pretty good shape. The Morgue doesn't have an army although it might be anti-semitic.

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  36. News from China.

    While sifting through my metals account in Shanghai I have now discovered that the Chinese have added a new metal in addition to silver and gold, now I can buy grams of platinum. It is about 385(like 50 dollars) yuan per gram from the ICBC(industrial and commercial bank of China)

    I don't know much about platinum. Is it wise to invest in platinum? or just keep putting all my money in silver??

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  37. Thank you TurdleGG. Thecolorredsky, great link.

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  38. Bubbles,
    For an oil play, look at oil services OIH ETF.
    Pros and cons on this anyone? BTFD.

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  39. There will be an end to Oil purchases being settled in FRNs and, most likely, sooner than any of us would expect it to happen. Leave your normal bias at the door and realize everything eventually changes course. I don't relish the dawn of that day, but it is a foregone conclusion with the substantial printing of money by the Federal Reserve. We were a blessed nation to be the world's reserve currency on some levels, but IMHO the US will lose this status as soon as next year or as far out as 2015. I don't see the world waiting much longer than this timeframe. Crude will move to at least $150 before summer, but most likely sooner based upon the continuing unrest in OPEC nations. It's going to take some very nimble actions by all of us to stay out of the muck and stay ahead of the wreaking ball. Be prepared for anything!

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  40. My silver dealer has been trying to get me to invest in gold jewelry. He buys it from the public and will resell it for the value of the gold. If a piece has a good diamond or other stone, its a freebie.
    Has anyone had experience in jewelry and stones?

    Oh, and my wife loves to wear the silver bracelets and rings that I have bought her. We have fun shopping at antique malls for such things.

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  41. @Falcon15

    Since you work petrochem you are aware of vast amounts of US military hardware in the region ready to intervene for "security" purposes no?

    Moving to a euro or yuan settled oil is as good as asking for a revolution, courtesy of the CIA.

    Sure producers can drop the dollar, but will it be without consequences?

    China's first step isnt direct confrontation, its settlement with Russia outside the dollar. The ME probably not so soon.

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  42. @Randy Flagg

    Platinum can be a good investment as part of a diversified pm portfolio, but it really depends what your goals are and what kind of returns you are looking to achieve. What are your goals with your pm investments? I personally think silver will continue to be the biggest pm performer in the coming months....followed by gold. I'm sure others will provide their thoughts as well.

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  43. @mhavoc

    I think my motives are to buy and hold silver for a couple of years then sell it and go directly into real estate(not for investment but just to buy a house we want to live in) and also to pay for a good education for my daughter. A good education is expensive in China. Thats about it for now.

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  44. Jerome

    I'd inquire about the buyback prices of said jewelry, and get an idea of the buy-sell spread involved as compared to coins. Then decide.

    However, the practical utility of such an item cannot be denied, and must be factored into the equation.

    "Happy Wife=Happy Life"

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  45. @Randy Flagg

    My thoughts would be to say your course with silver and, maybe some gold. Platinum doesn't have a traditional monetary role and it used in industrial applications. Platinum's role could change and it could be monetized. Based upon your goals of a couple of years, sounds like the traditional pms would be best. As always, do your own due diligence and take everything with a grain of salt. :0}

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  46. @Qussl3: Oh, yeah, just like we did in Kuwait and Iraq, and we all know how well that has worked out for us. China's stated GOAL has been the destruction of the United States, and direct confrontation would be unnecessary. Devaluing the US fiat currency would cripple us. They know it, we know it.

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  47. @Rick

    And what shall you pay them with?

    External creditors would want to see value of their holdings maintained, 11T is approx 11B bbls of crude or the equivalent of a BMW for every man, woman and child.

    Americans will not want to pay America's debts, the real value, even in today's devalued dollars is just astronomical.

    Already America has enjoyed a discount on what she owes the Japanese, who have been holding huge reserves far longer than the Chinese, 10 years ago a dollar bought much more in real value.

    For all the calls for "sound" money, Americans cannot afford to pay the rest of the world in it, and if it wasnt for the carrier groups, military bases and nukes, they would have collected by now.

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  48. @Randy - Platinum may get killed in the next oil driven recession. Platinum's main use is in catalytic converters in cars. If oil goes to $140+, a recession will follow within months, with a recession auto purchases will decline, and with it the need for platinum. Platinum also has a precious / investment side to it, but it is a tiny fraction of why it is demanded.

    See pie chart & description here:
    http://www.unctad.org/infocomm/anglais/platinum/uses.htm

    At the bottom of the next recession buy platinum, palladium, oil, rhodium, uranium and potash :)

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  49. @qussl3: there have already been a bunch of revolutions. The whole middle east is on fire. I don't think that the CIA started them - they were likely totally surprised when things started going down. People are unhappy in Saudi Arabia as well ... will be interesting to see what happens. The question is, what currency will those people be accepting for oil AFTER the revolution? They probably won't be viewing the U.S. as a savior.

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  50. @falcon15

    Crude is still settled in dollars no?

    In both cases more foreign oil is under American purview, how is this not "good".

    Sure American lives have been lost, but so have Kuwaitis and Iraqis and many others.

    Devaluing US dollars is worst for the Chinese in the near term than it is for America.

    There is far more fat the US can "burn" during inflation than the Chinese can afford, not to mention the years of stored labor and environmental degradation those pesky devaluing FRNs represent.

    The US CANNOT pay its debts at its current value in real goods, devaluation is far worse on the rest of the world than it is for the US.

    Imagine a return to gold settlement of international trade, it would take a matter of months to drain the US of all the gold she has even at current depressed prices.

    America needs to be able to extract wealth from the rest of the world through seigniorage, a strengthening dollar does not fit into that picture.

    Dollar hegemony is maintained via dollar settlement of crude - THE feedstock of the modern economy, enforced thru military power.

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  51. @snick

    I think it pretty safe to presume that the ME will never be viewing the US as a savior.

    But its pretty certain that the US will never leave the area willingly or allow unsympathetic leaders to step into power.

    Just look at Egypt, do a quick google search of Omar Suleiman, there is no question where his allegiances lie.

    It will be the same in the rest of the ME nations.

    For example, the US is reserving the right to military intervention in Libya, on what grounds?

    If the ME could choose they'd want gold, wouldnt you?

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  52. An update for Randy in Shanghai...
    From a California Jedi.

    How much is your gasoline there?

    Diesel is now topping $4.15
    Regular at $3.799
    Supreme at $3.999


    My guess is that California may see $5.00 gas for Memorial Day.

    The Republicans have control in the petrochemical industry. They are purposely killing the California economy for (1) profit and (2) political gain.

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  53. @Quessl3 -
    My impression is that the UN Security Council resolution is the international legal action needed to position the UN to permit military intervention in Libya in order to halt any atrocities and provide humanitarian relief.

    The "relief" will be provided by USMC and NATO.

    My view is that the trigger will be a halt on the Libyan oil supply AND USDX<76.

    Gold 1600 by when?
    The Ides of March is getting scarier this year than prior...

    Anyone familiar with the "Day the Dollar Died" series on johngaltfla.com?

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  54. @silversurfer/mhavoc

    your idea are noted.

    I can't get my hands on rhodium or palladium, or oil, its not available in China. China is a very restricted market to foreigners. But I heard that rhodium 2 years ago went from 300 dollars to 10'000 dollars an ounce. Is this true?

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  55. @jedi

    I really don't know because I don't drive here. I use the metro. Driving in Shanghai is like a death wish.

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  56. @silversurfer

    I think the Chinese are planning to use platinum as a monetary reserve, that's why i have access to it in a bank. What would that do to platinum if that was on the Chinese mind?

    I'm very very sure that millions of Chinese will be planning to invest in platinum when they find out about it. It's an alternative to buying a house.

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  57. @StrongSideJedi

    With China and Russia almost certainly snapping up whatever cheap gold they can find its hard not to see gold anywhere but higher with the added backdrop of added unrest in the ME.

    IMHO the only thing that can stop PMs' rise and even the just temporarily is another credit crunch, especially one in China where all the growth in demand that is so important to pricing is coming from.

    Alot of bad juju nowadays, I just hope everything doesnt blow up.

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  58. @strong side jedi,

    I agree, They going to make a move against Qaddafi . I believe it has more to do with the strength of the Euro than helping people, (sad to say)


    a breakdown of how much oil various countries import from Libya (in barrels per day) and the percentage of a country's total crude imports supplied by Libya



    Italy: 376,000 (22 percent)

    -France: 205,000 (16 percent)

    China: 150,000 (3 percent)

    -Germany: 144,000 (8 percent)

    -Spain: 136,000 (12 percent)

    -United Kingdom: 95,000 (9 percent)

    -Greece: 63,000 (15 percent)

    -United States: 51,000 (0.5 percent)

    -Austria: 31,000 (21 percent)

    -Netherlands: 31,000 (2 percent)

    -Portugal: 27,000 (11 percent)

    http://www.thestate.com/2011/02/22/1707581/europe-gets-most-of-libyas-oil.html

    As of right now , they are not getting any oil from Libya, If they dont take action , they are going to be selling their kids for gas. right now Europe pays 6-9 dollars per gallon.

    Italy lost 22% Spain lost 12% France lost 16% Greece lost 15% If prices begin to rise They might start seeing people outside thier state buildings soon too.

    Id say there is a 95% chance your going to see some kind of NATO military action take place .

    Id say they have little choice, They cant let one guy push the Euro off the cliff. Something has to be done. And for the sake of the people too.

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  59. Gold and Silver on a nice upleg....

    @Strannick, heres your wizard of OZ Silver film -

    http://www.youtube.com/watch?v=7qIhDdST27g

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  60. @fred

    i don't think the dollar is tied to oil. the dollar will probably continue down and oil will go up.

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  61. Silver story from India is very interesting.

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  62. @rui
    I am puzzled by this story from Vineet. I am not able to get to root of this story. May be Vineet can give some link.

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  63. @Turdle GG

    Thanks so much for the link on USO. I didn't want to purchase it without understanding it, but thankfully you have sent that link.

    If I wanted to diversify my portfolio with oil what's the best option outside of oil companies? Seems commodity ETF's in contango are junk.

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  64. Correction to one of Vineet's points

    . The Indian Central bank had purchased IMF gold some time in 2009 @ $1048 and not 2006 as mentioned.

    . Regarding the 'Bank of India' accepting trade in yuan I have contacted my local branch of the above bank and should be able to provide a clearer picture soon

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  65. @G

    The way you monetize a metal is by starting put it in circulation so that it spreads enough to be considered legitimate. You can either initially set its price higher than its commodity price or do a periodical revaluation upward to eventually discover the right kinda of equilibrium.

    Giving that silver is so suppressed, industrialized and under-hoarded, I expect it to be a longer process than re-monetizing gold. I don't know how much about 150Rs Indian currency. I just hope it's high enough.

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  66. Earl the Pearl
    I'm not an oil expert, I just know that USO is a bad choice.
    I think you'll find lots of opinions here from people better informed than me.

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  67. what do you expect for todays judgement day?

    takedown or new highs?

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  68. @snick, Qussl3
    http://www.engdahl.oilgeopolitics.net/print/Creative%20Destruction%20Washington%20Style.pdf
    http://www.voltairenet.org/IMG/pdf/A_strategy_for_Israel_in_the_Nineteen_Eighties.pdf
    http://tarpley.net/2011/02/18/mubarak-toppled-by-cia-because-he-opposed-us-plans-for-war-with-iran/

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  69. @Rui
    Current USD/INR rate is $1=45.26 INR
    INR/Rs 150 = $3.31.

    Lastly in 1835 Silver standard introduced in (British) India, with one
    rupee coin of 0.34 t.oz/10.6 grams.

    I do not know what is planned now. I think Vineet should throw some links to this news.

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  70. @Piter
    Looks like it is takedown in asian market. I am still holding on to some contracts

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  71. I've just done a very rough back of envelope (literally!) calculation of the next 'leg up'. If we assume we are now forming a 'bullish flag' from the $34.30 top, the run-up or 'flag-pole' from the recent low of $26.40 (Turd's Bottom) gives a range (or 'flag-pole height') of $7.90. If we add this to the recent $34.30 top, we get a target of $42.20. So, if we are currently forming a bullish flag here (big, big 'IF', of course), then we can assume we will run up the next 'flag-pole' to $40.00 at least in the next 4 - 6 weeks.

    Remember though, this was brought to you on the back of an envelope, sitting on the table next to me as I type! Therefore, as with anything to do with trading and TA, it is not set in stone. It is the fundumentals which are key to the POS and subject to the machinations and vicissitudes (trying saying that after 4 pints of beer) of 'The Opposition'. TA merely gives us a tool with which to interpret price movements 'over time'.

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  72. "day of rage" I kinda like that saying lol

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  73. @falcon15

    I think one of the crucial things to remember about pricing oil in FRNs is the boost it gives to the USD.

    Current consumption is around 85,000,000 barrels a day; if we subtract US consumption, that leaves foriegn countries having to purchase 65 million barrels a day's worth of USD at $100 a barrel - ie, $6.5 billion dollars worth of FRNs are purchased A DAY to pay for oil.... which adds up to around 2.3 TRILLION dollars a year that would not be purchased if oil wasn't priced in FRNs.

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  74. You can read Ron Paul's excellent analysis of the petrodollar component of dollar diplomacy here:

    http://www.lewrockwell.com/paul/paul303.html

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  75. This comment has been removed by the author.

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  76. Dollar slowly losing air.

    The India thing, I am sure, was worked out with the central banks and USA in reparation from cds/cdo stuff(You can tell because Russia, China, India and Japan were the ones rumored to have the closed-door session with our congress in 2006 ) while Iran and Iraq were not part of the clique and MUST stay in dollars for oil trade or be punished.

    I think this play will continue for several more acts before the final act. 2012-2016 should
    be a new dawning for the world. Until then, can I have fries with that?

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  77. This comment has been removed by the author.

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  78. averagejoe - careful.

    PSLV is the fund run by Eric Sprott, generally regarded as one of the 'Good Guys' and I have never heard anyone suggest there is anything fishy about it.

    SLV on the other hand, is JP Morgan's almost certainly fraudulent means of diverting cash into their pockets that would otherwise flow into real Silver and drive the price higher.

    People should understand the difference.

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  79. That video concerns SLV, not PSLV

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  80. @averagejoe,

    huge mistake - SLV is a fraud, not PSLV.

    I sugggest you delete your post and resubmit a correct one since PSLV is absolutely clean as it is managed by Sprott.

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  81. Geez sorry guys last post by me. I need to learn more before I say anything.
    Sorry again but I do feel better its not PSLV

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  82. No need to worry averagejoe if it was just a mistake. As Quintus said, Eric Sprott is respected in the silver scene, so that's why you had reactions so fast

    Just enjoy Turd's blog & keep on posting.

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  83. averagejoe,
    Keep posting! ..That..along with reading all you can here is how you learn. I have only been in the metals world for less than 6 months. I have so much yet to learn but I am graciosly allowed to post here and even though I've said some bone-headed stuff.. they let me stay!

    All of us who care and believe in this cause and in preparing have something we can add to the conversation I believe.

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  84. Would somebody be kind enough to repost the info on the video that addresses SLV. Thanks!

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  85. kitty kitty, blythe where are you?

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  86. SLV video from max keiser web site

    http://www.youtube.com/watch?v=_-dBQd16cvg&feature=player_embedded

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  87. If Sprott's PSLV has 20,000,000 Oz and the shares are 15/USD since it doesn't follow the spot price does that mean that all the silver is owned by share holders. For instance 1/2 of the spot price = Half of 20,000,000. Newbie question

    ReplyDelete
  88. Someone was looking for a play in oil outside of oil companies. Oil Service would be an option. Best known ETF in the space is OIH.

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  89. @Tim-
    USDX - yikes!
    That downdraft might be related to the relatively poor consumer data that Betty Liu just read on Bloomberg.
    She started to give her opinions, then thought better of it and basically said "we'll have others on later to discuss..."
    LOL...Bloomberg now talking about the oscars.

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  90. hey guys, first time poster, long time stalker. I really like the community that is developing here, there is a wealth of information and I hope to learn as much as possible as well as add my 2 cents in now and then.

    I have a question concerning SLV, I'm seeing that alot of people on here think its a fraud, does that mean i should stay away from buying SLV options? If so, are there any other silver options worth playing? Thanks for the input and thanks to TF for putting this thing together.

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  91. Tankers is another way to play oil. VLCCF is one that I know of, with an 8% yield to boot. There are others too, but I'm just not that familiar.

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  92. Jim,

    I liked what you said about the "petrodollars" to Falcon15. Most people don't realize how important that is to the US. It's FREE monetization of our debt. US dollars are literally flowing out of the ground diluting our debt. It would be the end of this country if dollars stopped being used exclusively for oil.

    Our military ensures nobody "strays"... It is fair after all...we do take on the cost of maintaining the stability of the world. Somebody has to do it. An "independent" world "every man for themselves" isn't a very nice place to live. Look at the places we don't care about...Africa...look how they live when not under the "umbrella" of US protection.

    Actually, I'm hoping it doesn't all end...I like my cushy life. I really hope they pull another rabbit out of their hat and kick the can about 50 years down the road.

    Energy is the key...cheap oil allowed us to grow exponentially...something else needs to be found so we can grow exponentially and cheaply again. Energy drives everything. Oil is a special case...it's energy AND a base stock for just about everything we need.

    Thanks for reminding others just how important keeping the dollar as the reserve currency really is! The first group to seriously consider going against the dollar as reserve will be met with terrible terrible anger and retribution. It won't happen and it will probably cause WWIII...in the middle east. We've known it...our government isn't that stupid...Iraq and Afghanistan were engineered to get us a good foothold there.

    The spice must flow!

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  93. Dollar has been drifting down all day (I'm in Central European Time) ... don't know what to make of it, as Gaddafi is still loose, etc. Looks like "flight to safety" doesn't mean the dollar anymore. And it looks like I was completely wrong yesterday when I speculated that the Euro might fall due to the results of the Irish election ... glad I'm not a currency speculator.

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  94. @ elanda811,
    I have been trying to scalp fiat profits on SLV and then convert a hefty portion of profits to physical (steady profit is the challenge). If SLV is going to collapse in price, I am trusting that we have a bit of warning as we see a spread between the cost of physical and paper so I can exit.

    One problem with SLV options is that the price of futures moves all night. SLV price in the morning can gap either way. I don't like to stay in overnight unless I am very confident that the trend will continue the next day.

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  95. @ Jim, loved the Dune reference. Where's Muad Dib when we need him? Is Turd our Kwisatz Haderach in sunglasses and a baseball cap? Let the Sleeper Awaken!

    All, here's a new expose on SLV's prospectus. Ben Davies and Catherine Austin Fitts both previously analyzed it exhaustively in '10 and their report-outs are cause for grave concern for anyone who can read.

    This one is a YT vid and provides some good insights:

    http://www.youtube.com/user/TheWeeklyTelegram#p/a/u/0/_-dBQd16cvg

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  96. @Joe, US policy is anything but stability-producing. The debt crisis is partly a result of over-reaching to enrich the MIC elitists and banksters involved. I agree that kicking the can down the road is a positive in that it enables us more time to prepare for the inevitable global financial/political/spiritual reset.

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  97. @Joe, not to mention US Fed policy which is causing food inflation and instability world-wide

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  98. Sorry All, didn't realize I linked to the same vid averagejoe already posted. I have The Weekly Telegram YT page bookmarked but see Max Keiser linked to it as well.

    As I say, it's been done more comprehensively by 2 very heavy hitters, but any newcomer wanting to get a look under the hood of SLV will benefit from the vid too.

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  99. @joe

    Although I believe the petrodollar is vital to short-term US prosperity, it comes at a terrible cost to the rest of the world, and to the long term survival of the US itself.

    Most of the muslim backlash against the West (and the US in particular) is because of our support of autocratic tyranies that are essentially satraps for the US government. The resultant terrorism and the US governments' reaction to it is slowly bleeding the US dry, as more and more resources are being diverted to the MIC.

    It's tempting to compare the quality of life in the Middle East with Africa, and come to the conclusion that the former is prosperous because of Pax Americus; but the Middle East has been richer and more productive than Africa for far longer than US regional hegemony has been in place, so I don't think the conclusion holds water.

    And all this comes at enormous moral cost; empires, like all govenment, impose their rule by violence, which corrupts the imposers as surely as it enriches them.

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  100. So what is the group prediction for today? Haven't heard much speculation on OI lately and the deadline is today at 1:30- where do you think the price is going on this important day?

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  101. I don't have much patience for people who say let's just have Armageddon right now already and get it over with. Seldom see any of those on this blog thankfully, but they are out there on the net.

    I also support Can Kicking insofar as it gives us more time to prepare for the inevitable.

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  102. Andrew,

    Nah...it's for "our" stability...the "Wests" stability. Europe, US, Canada, Austraila...you know, "those" kinds of places.

    Fuck everyone else...use, abuse, and take their shit. Oh, and leave them holding the bag too. Like China. We get their shit, they get our debts. What CAN they do about it? Sure, they have a billion people, a big army...but they're peasants. Most Chinese still live like the pictures we saw as kids...farming a rice paddy with an ox and a house full of chickens and ducks. It's a really big "Mexico"...not a threat.

    It's wrong...but it keeps me comfortable and I'm not very willing to give that up.

    But now we're getting political...

    Have a prosperous day!

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  103. Pining

    I'm feeling pretty bullish. No idea for a given day, but I say higher for the week. Thinking about what to buy this morning.

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  104. Eric,
    I think that that is because most of us here actually realize the pain that ensues once the can stops being kicked. We are in a major need of a reset to our political and financial systems in the USA. But.. it will be a painful reset and nothing any of us want our families to go through. I agree with you. Time..we need more time to prepare. I pray that we will be able to avoid the hard stuff.. .but I don't see how ..eventually.

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  105. Jim,

    Unfortunately, Muslims...their ideology...can't be trusted with something as important as oil. Their governments WILL be friendly to us or they WILL be eliminated. Do you think "we" will let them get between us and our vitally important oil? No way Jose!

    The spice WILL flow...no matter the human cost.

    I've been to the ME...Saudi...LAZY people, they "own" but import others to do the actual work. It's what happens when your country is awash in "free" money. Like our "poor"...hardly poor by anyones standard. Homes, cars, cell phones, plenty of food...really...what does "poor" mean in the west?

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  106. The Obama administration now supports the overthrow of K'Daffy. Although late to do so, reluctantly cut Mubarak loose. If revolution fever grows in Saudi, we (the USA) will have a real big problem. Official US policy backs the current Saudi regime, yet Obama seems to favor revolution. What to do?

    I'm not making a political statement, just an observation. At any rate, imho, WW III has already begun and oil, gold and silver will go higher.

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  107. Here's a little reading material. When they start talking "wave patterns" my eyes tend to go blurry, but I'm always willing to read something that agrees with me that gold and silver are going UP!

    http://etfdailynews.com/blog/2011/02/27/gold-silver-on-the-verge-of-the-biggest-surge-in-its-bull-market-gld-gdx-gdxj-sgol-iau-slv-agq/

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  108. The East is not stupid and this is why we will eventually return to some form of PM derived settlement currency - ie not debt but money.

    The salient question is whether the pesky issue of geographical distribution of said PMs will foment war, for it is far easier to take than to produce.

    Witness the MIC.

    We will end up playing the same game just with different pieces even after a reset, with alot of violence in between.

    That is why no reset is likely the best of a multitude of shitty options, though a reset is absolutely inevitable.

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  109. One thing we should all keep in mind about the FRN's status as a reserve currency: IMF SLR's are getting a huge push from most European countries to replace the FRN with a "global" currency. The SLR would be tied to no currency, yet it represents a "new" reserve.

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  110. GPL. Do I sell into this strength, or do I hold for longer term? I'm not much of a stock trader (yet). Ugh, conflicted...

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  111. Miners behaving nicely this a.m. :]

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  112. Eric- I hope you are right! It just seems odd that after all the commentary on this blog for the past 2 months, everyone has gone quiet on D-day. I know you were never into the WB thing, but the Comex OI story by itself is still potentially huge. It seems to me that we almost HAVE to see very big movements today and tomorrow, just based on market psychology- $33.50 is a no-mans land between the "big crunch" price and the "everything is fine" price. But we'll see.

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  113. Your Monday am update is ready for you.

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  114. @Joe - This is not a racist site so keep your comments to yourself.

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  115. Ginger, Golden Predator is roaring this morning, up 13% on top of Friday's gains. Yeeha!

    CZ up 5+% not too shabby :-)

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  116. @Falcon15

    Do you mean SDRs?

    Have not heard of SLRs.

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  117. Eric, questions popping up for WRN this morning about Carmacks. Glad I didn't buy it last week.

    What do you think you'll buy? Justin's GPL is en fuego this morning as well.

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  118. I'm a physical holder only, but took the time awhile back to look at the SLV prospectus.
    Hard for me to believe that much of the phrasing in the FIRST portion of it did not concern more people. My understanding is quite limited though.

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  119. Sorry if the question is redundant but how soon before we have system's implosion in SLV and what sign should one be looking for? I have been trying to get a friend out of this for sometime now but she enjoys its 'liquidity' as a trading vehicle.

    T-minus what???

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  120. @joe

    I understand your reservations about the apparent (modern) Saudi attitude to work; but as the average citizen of the West is also getting a 'free ride' from the petrodollar, we see a similar decline in the work ethic amongst our own citizens.

    As for Muslims not being trustworthy enough to control their oil - it's THEIR oil, remember. They're the ones who live in the oil producing countries; and if they get fed up with their lot, they will rebel against their US-maintained rulers in sufficient numbers that we won't be able to do a thing about it... unless we're willing to commit genocide and then colonise their countries.

    Even with the current levels of Islamophobia in the West, I can't see that happening any time soon (thank God).

    My point, morality aside, is: we rely on the petrodollar for our prosperity; this is corrupting us; and we can't guarantee we'll be in this privileged position forever, though I agree our elites will fight tooth and claw to maintain it.

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