Where Were You On Super Bowl Weekend?

I was in Vegas with my friend, Sweetness. He and I gambled too much. Drank too much gin and played a little golf.

Where were you? Did you watch the game? Perhaps you had a party? Maybe you're not an american football fan so you spent the weekend relaxing and catching up. Either way, like me, you had no way of knowing what was going on behind the scenes.

My next question is: Where was Ben Bernanke? Where was Tim Geithner? Where were the rest of the Fed governors and the heads of the TBTF banks? We may never know, though history one day may record their actions for posterity.

Why do I ask and why was February 4, 2011 so important? In hindsight, it is clear that 2/4/11 was the day that the Fed's hand was forced. A critical moment in time had come. The ruinous implications of the Fed's quantitative easing policy had been made clear. That weekend, both the dollar index and the long bond were moving toward critical, long-term support. Both could not be saved and a decision had to be made.

Sometime over Super Bowl weekend it was decided. Your monetary "officials" chose to preserve their own power at your expense. Why do I say this? Three months on, it's clear that the decision was made to support the long bond at all costs, to the detriment of the dollar. The global reserve currency was sacrificed on the altar of low interest rates and the maintenance of the Fed/TBTF/Govt ponzi. Because of this decision millions, even billions, of people will suffer. The inflation that is coming will spark food shortages and protest. This unrest may/will lead to war. All of this so that the Fed can maintain their power, the TBTF and primary dealer banks can remain afloat and the bankrupt U.S. government can continue printing and spending money, thereby allowing elected officials to escape the scrutiny that would come from actually leading. Neither history nor The Almighty will judge their selfish and cruel actions well.

Here are the charts that prove this out, beginning with the dollar or, as we call it here, the POSX.

As you can see, post 2/4 the dollar actually rallied for a week. It has since declined by almost 8%.

The critical chart on 2/4 was the U.S. Long Bond. The "long bond" is a futures contract on the 30-year U.S. treasury bond. This contract has been in an uptrend for nearly 29 years, from a bottom in 1982. The trendline lays somewhere around 114 to 115, depending upon how accurately you draw it. This was an important topic back in February. For example, here's a thread from 2/9/11:
http://tfmetalsreport.blogspot.com/2011/02/santas-pillars.html
With the decision made to let the dollar die in order to preserve The Ponzi, the long bond suddenly reversed and has since traded much higher.

Let's judge the practical, short-term impact of this decision by looking at our three favorite dollar-destruction hedges. First, here's crude:

Oh, that's right. The politicians want you to believe that its the oil companies and the evil, scawy specuwators that are driving oil higher. Anything to deflect the blame from themselves.

Now look at gold:

If you haven't yet protected yourself and purchased "wealth insurance" by buying gold, its OK. There's still time. But, if your normalcy bias and blind faith in the status quo keep you from buying some in the future in the face of all the evidence that the dollar is dying, you are the proverbial fool who deserves to be separated from his money.

Lastly, take a look at silver. As we know, silver is also being propelled by some, shall we say "enhanced", fundamentals. Regardless, this performance is stunning and reflects a grass roots, everyday-citizen demand for protection against fiat destruction. My advice is to get some, and take delivery, while you still can.

Finally, the intention here is not to say that the demise of the dollar is imminent. The death of the dollar is similar to that of a terminally-ill, cancer patient. There will be good days. There will be moments of hope. The dollar will bounce, probably from the area around 72. The long bond will peak and consolidate in the area around 124. The PMs will correct again soon giving you another buying opportunity. In the end, however, the fate of the dollar was sealed over the weekend of Super Bowl 45. The Packers won but we all lost. For the Steelers, there's always next year. For us, nothing but an uncertain and perilous future.

Just When You Think You've Seen It All

You get days like today...

Never mind that I told you this morning that silver would be capped all day.
Never mind that I warned you last night that The Wicked Witch would be stalking the pit like a mythical beast.
Never mind that I told you yesterday that gold was going to be leading silver for a while.
Today was truly breathtaking it it's peculiarity.

I've been around a long time and maybe my memory is starting to fail. (Wouldn't surprise me. It's always been said that alcohol abuse damages brain cells.) I cannot recall ever seeing such a disconnect between silver and gold on a day session. Ever. Oh, sure, maybe silver might be up or down 3% while gold only moves 1% but at least they'd be moving in tandem. To have the two totally and completely trade independent of each other is absolutely extraordinary. Here are your two charts to consider. They are both 5-minute pictures of today's action.

So, what does this mean? Is it just an aberration? A coincidence? No freaking way, my friends. Everything...and I mean everything...is being done to temporarily restrain silver. The Cartel is effectively expending their entire "conventional" arsenal in their attempt to survive May settlement in silver and live to play another day. Think about it, this week we've seen:

1) Two CME margin increases in 48 hours.
2) Every available Disinformation Agent has been put forth to convince the sheep that silver has topped.
3) Sell side analysts stubbornly refusing to raise or even maintain year end price estimates. Remember, year end estimates are critical to the calculation of miner share price forecasts.
4) Today's historic price divergence.
5) And now, on the Globex, on a Friday no less, The EE is putting the hammer down in an attempt to gin up ever more top-calling over the weekend. Since closing on the Comex at about 48.60, silver is now down 80 cents, the majority of which has come in three minutes.

Anyway, the good news is that The Cartel has been successful. Weak-handed longs have been frightened. They've run from silver and charged into gold, instead. This is great news! I'm long a bunch of June 1550 gold calls so I made a lot of money today. Thanks, Blythe!! Its also great news because we needed The Comex to survive May. The fundos haven't changed. In fact, they've only gotten worse. Remember the Scotia story? June will be another crazy, wild month in the silver pit and we will have a remarkable opportunity to make a boatload of money. In the words of The Wicked Witch herself, "shit, Ruprecht, IF Turd Ferguson is correct, we'll make enough money to fucking BUY Venezuela"!

And, regarding this "topcalling nonsense". Since when has any market topped while everyone was telling you to sell. I'll tell you when...NEVER! Markets "top" when the last buyer has bought...when there is no fear and no perception of risk. Is that today's silver market? Hardly! The fact that so many douchebags are trying to convince you to sell your silver is simply a sign that silver will trade even higher. "Climbing the wall of worry", as they say.

So, relax and be happy. Go into the weekend KNOWING that you are WINNING. Gold is at $1562/ounce, for the love of pete!  Rejoice!  TF out

ps Before today, I hadn't urged anyone to make a trade at any time. Against my better judgement, I did just that earlier. For any short-term angst I have caused you, I sincerely apologize. I won't do it again. I make general observations here for you to interpret and evaluate. It is not, nor will it ever be, my place to give you specific advice or trade ideas.

Fifth Friday

That the goons at the CME have now raised margins on silver twice in 48 hours should tell you just about all you need to know. They are clearly losing. That the silver market has suffered no lasting impact tells you that we are clearly winning.

Onto the charts. Take a look at this hourly gold. I still believe that gold is about to jump higher again, probably UP toward 1550.

Now look at these two charts. First, here's a 2-hour silver:

And now here's a 3-hour crude:

Isn't it interesting how they are almost identical? Why they are identical has to do with trading patterns and human psychology. That's a topic for another day. For today, just know that they both look like they are ready to spring higher. They both parabolically jumped through a number. In silver it was 47. In crude it was 111. Both were quickly pummeled back as fraidy-cat momentum chasers quickly exited. Both double-bottomed and consolidated below the previous breakout. Then, both shot back higher and through what had begun to look like "resistance". Now silver is well clear of 47 and crude is well clear of 111 and are basing above those levels. To me, this is extremely bullish. Of course, there is always the potential for unforeseen circumstances to develop that could push both lower and bring out all the double-top-calling douchebags. It could happen. However, I think there is a much higher likelihood that both are about to catapult higher. You can be assured that there is a plethora of buy stops above 114 in crude and above 50 in silver. Moves through there could bring a rather sharp acceleration to the UPside and we'll likely push 52 in silver and 118 in crude.

This breakout doesn't necessarily have to happen today. In fact, its more likely on Monday as silver will have to deal with active EE price suppression through the entire Comex pit session today. Fridays on the afterhours Globex have been consistently good for about two months now so I'm more interested in how the day ends than in how it begins.

Silver will probably be stuck in this range between 48 and 49 all day. Recent trend would suggest, however, that buying on the Globex this afternoon could drag it toward 49.50 by 5:00 EDT. IF that's the case, overnight Sunday into Monday could be very exciting again this week.

I'm getting a little ahead of myself, however. Let's see how the morning plays out. Keep an eye on the POSX for clues. It picked up a stink bid right at 73 on the June and has since rallied about 20 cents. IF it rolls back over...well, you get the picture.

More later. TF

A Losing Game

I must admit to being amazed. The utter desperation of The Cartel is palpable. They may still win this battle but it is increasingly clear that their empire is crumbling. They are losing and will lose.

The size of the raids to protect and defend 49.50 are enormous.
The backwardation to 2012 and beyond is growing.
Option premiums for July are extraordinarily high.
Bullion banks are quickly acting to protect themselves by reclassifying bullion so that it can't be used in the delivery process.

All of the signs of a coming signal failure are there. The market participants know what's at stake and are desperately trying to avoid it. However, their own actions betray them as it is quickly becoming "every thief for himself" and, as the saying goes, there is no honor amongst thieves.

All that said, I still don't expect this overnight or even next week. It might happen. I'm just saying that I don't expect it to happen, at least not yet. If I had to give you a timeline, it would look something like this: (Again, I'm attempting to predict the future here. Please don't do not expect me to be 100% accurate with everything I state below.)

1) First notice day for May silver is tomorrow. Expect intermittent raids through the evening, overnight and tomorrow as The Cartel tries to shrink the May OI as much as possible.
2) The POSX continues to decline next week. It will get desperately close to critical support between 70.81 and 72.17 on the cash number.
3) Though volatile, gold and silver rally through next Thursday. Gold breaks through 1550 and even approaches 1560. By Monday, with some Cartel pressure removed, silver finally begins a successful assault on 50 and reaches toward 52 by Thursday.
4) Just as all looks lost for the dollar and the PMs look ready to roll, the BLSBS report comes out next Friday with a better-than-expected (versus reduced expectations) number. Dollar shorts scramble to cover. The POSX gets a desperately needed bounce away from 72. Over the next 10 trading days, it even makes a run back toward 74.
5) In the face of a rising POSX, the metals trade in a downward consolidation from 5/7-5/21. Gold trades back down toward 1535. Silver reaches a selling climax all the way back down toward 47 or even 46.

IF all of this plays out even remotely close to what I've described, I believe we will be set up for the opportunity of a lifetime. From 5/24 until the end of June, silver will streak higher, peaking somewhere between 65 and 70. Gold will rocket higher, too, achieving my stated goal of $1600 before 6/10 and rolling on toward Santa's oft-stated goal of $1650 before the end of the month.

The key is to not get carried away and act in haste. Let the events of the next three weeks play out before you act. Be patient. Wait for your opportunity to strike. You will be rewarded.

Here are your charts for the day. First, here's a 5-minute gold. Very important to note the resilience and strength of the buying every time The Cartel beat it back. Very, very impressive. 1550 here we come. Maybe as soon as Monday.

Take a look at silver. On this hourly chart, you can clearly see the desperate and foolish attempts of The Cartel to keep it below 49.50.

And now, the pathetic POSX in three pictures. Recall that The Fed must choose between the long bond and the dollar. They can't prop up both. In light of yesterday's events, it is clear now that they have chosen the long bond. Though bounces will invariably come (next Friday?), the fate of the greenback has been sealed.

It's 4:20 EDT. Gold, the strong leader of the next 6 days, has effectively shrugged off today's raid and rests just $2.50 off of today's highs at $1536.30. Silver, the object of Cartel scorn, is still $1.17 off of it's highs at $48.39. For silver, the overnight and tomorrow will be wild with volatility. Trade if you must but beware. The Wicked Witch stalks the night like some sort of chain-smoking chupacabra. You have been warned.

TF out.

ps
The blog is now running every day between 90,000 and 100,000 pageviews. With that, the volume of emails I now receive is literally overwhelming. I try to read every one but it is no longer possible to respond to them all. Please do not be offended if I don't get back to you. Thanks for understanding.

A Change of Leadership

Do you recall the time recently when copper led the metals? Then, for a while, gold was linked to the price of crude? As I've often stated, silver has led gold since August but that is changing, at least for a few days.

This is not meant to inspire questions like "how much gold should I own and how much silver?". I'm just saying that gold may drive silver for the next week or so instead of the other way around.

I'm glad that silver has charged back and now sits just north of $49. I'm very glad that it isn't $51 and making new highs like gold is. After all the talk about parabolas and blowoffs, I want to see silver crawl higher from here, not explode higher. The crawling indicates a general reluctance to get back in. It shows doubt in the fundamentals and belief in the topcallers. This is good! This shows us that silver still has a long way to run! It's when there are no dips, when there is no reluctance and when there is no perceived risk that markets put in tops. This is clearly not the case at this time.

Now, take a look at these gold charts. Note that it didn't drop nearly as much as silver did and had since rebounded to new highs. This is orderly and continues the pattern we identified last week

and clarified yesterday.

And here's an updated 30-minute chart from this morning:

I have a last in the June gold of 1535 so let's see if a new UPleg develops shortly that will take it toward 1550.

Here's a 30-minute silver chart. Note a couple of things:

As I type, silver is already above $49 and looking to threaten the overnight highs of Sunday. I would expect some selling as it closes in on that area but we'll see. There are millions and millions of dollars of fresh shorts that got piled on back on Monday below 48.40. Those folks are just now beginning to feel some real pain. Silver will either stall for a few days in this area and give the shorts some relief or it will rapidly accelerate higher toward $52 as the panicky shorts begin to cover. This will be great fun to watch.

The POSX is so awful and horrible that I don't want to take time to discuss it now. I'll make that the focus of the next update. Again, for now, watch gold. IF it can explode UP through 1540 and make a move on 1550, silver will charge back toward 49.75 things will get very interesting very fast.

Have a fun day! TF

Hours of Easy Listening

No, I'm not talking about my box set of the classic releases from The Captain & Tennille.

Instead, I'm talking about the interview I had with the good folks at The Webbot Forum last Friday. If you're sitting around tonight with nothing better to do, you may enjoy it. The interview has been edited into 15 minute segments. Here are all the links:

http://www.youtube.com/watch?v=AIDdQ_d1i_c
http://www.youtube.com/watch?v=plKhxq9XaCg
http://www.youtube.com/watch?v=MoYOo1c3XuU
http://www.youtube.com/watch?v=q1Q49BxVGAg
http://www.youtube.com/watch?v=eA3ChBQanzM
http://www.youtube.com/watch?v=cXxJN_Zrah8
http://www.youtube.com/watch?v=kKq-vNqY2-o
http://www.youtube.com/watch?v=fk6M0YJY2Ik

Oh, and because I know you're now humming "Muskrat Love", here's a link to it, too:
http://www.youtube.com/watch?v=xBYV_7a0FQs

The dollar continues to sink tonight and is currently on it lows. Crude, gold and silver continue to rally. Tomorrow will be very, very interesting. TF out.

Very Impressive Predictions

And the winner of today's contest is....

Well, its a tie. Two entries were for exactly $1575. The actual final number was 1575.07. Looks like I'm sending out two hats this time! One goes to "Doug" and the other goes to "kiwiquest". I'm also going to send one to "H" who selflessly took the time to create the spreadsheet of all the guesses.
https://spreadsheets.google.com/spreadsheet/ccc?authkey=CIXNnagM&key=tTNoJynVXR7B0K8W6L2SFGg&authkey=CIXNnagM#gid=0
Would all three of you please email me at tfmetalsreport@gmail.com with your mailing address? Thanks!

Just a quick followup to today's action. First of all some clarification...
The "self-glorification" some saw in the last post was not intentional and I hope you didn't take it that way. Managing and growing this blog is interesting and quite challenging. When I make posts like the last one, they are simply a reminder to all readers that this blog has been extraordinarily accurate in predicting price action in the PMs. And it's FREE! It's free and it will remain free because I feel it is our duty to help as many as possible prepare for what is, most assuredly, coming. Your duty is to spread the word. Things go viral because of the exponential effect of the internet. I remind you of the accuracy here not to give myself "atta-boys", I do it to prompt you to tell others to visit here.

Now, look at these two great charts. First, silver. The action on Monday was real so I can't take the whiteout to it. However, if you ignore it, the chart looks pretty impressive. Given today's events, I can't imagine that silver won't head UP from here and test the highs of Sunday night near $50. After a pause there, I would still expect a move through $50, perhaps as high as $52 next week before the next pullback.

The gold chart is particularly fun. You know how I like patterns. Take a look at the one I found on the four-hour chart!

How about that?!?!
Gold moves UP $75 and finally takes out resistance around 1440.
Gold then retreats $25.
Gold moves UP $75 and takes out resistance at $1500.
Gold then retreats $25.
No reason not to think that gold isn't currently in the middle of the next $75 UP move which would take it to about $1560. From there, a pullback in the May 12-20 timeframe I keep mentioning and then a blastoff to my predicted high of $1600 before 6/10/11.
Works for me!!

OK, that's it for now. Again, congratulations to our winners and thanks to all who played. Rest well. Be happy. Smile often. Get ready for tomorrow. TF out.


8:10 pm EDT UPDATE:
Lots of great stuff on ZH tonight but you absolutely, positively must read this:
http://www.zerohedge.com/article/how-comex-lost-20-its-registered-silver-one-week-or-where-theres-smoke-run-theres-probably-r#comment-1214205
I was interviewed last Friday evening by the WebBotForum. I told them at the time that this "Scotia Announcement" might be something that we look back upon in a few months as the turning point...sort of like how one angry, self-immolating peasant in Tunisia can set in place a chain of events that is leading to massive change in the entire MENA region. In all seriousness, this may be nothing. Just more windmills at which The Turd can tilt. However, it might also be the event that finally causes the collapse of the entire Comex/Cartel/TBTF complex. Time will tell.

Your Fearless Leader

No, not The Bernank. The Turd!

Let's go back over the last four weeks chronologically.

1) In early April, the Turd gives you $45 as a price target by May silver option expiry.
http://tfmetalsreport.blogspot.com/2011/04/others-to-watch.html
http://tfmetalsreport.blogspot.com/2011/04/greed-vs-fear.html

2) Then, last week, I began to warn you to be careful and to watch for the brief, sharp correction that was coming.
http://tfmetalsreport.blogspot.com/2011/04/something-to-consider.html
http://tfmetalsreport.blogspot.com/2011/04/easter-sunday-evening.html
http://tfmetalsreport.blogspot.com/2011/04/be-cautious.html
The Wicked Witch even chimed in and tried to warn you.
http://www.youtube.com/watch?v=WhcFI-vzNXk

3) Then, yesterday, when almost everyone in the media was trying to convince you to sell, The Turd stood alone and tried to reassure you.
http://tfmetalsreport.blogspot.com/2011/04/not-for-faint-hearted.html
http://tfmetalsreport.blogspot.com/2011/04/fastest-10-ever.html
http://tfmetalsreport.blogspot.com/2011/04/tricky-tuesday.html

So now here we are. Back to 1527 and 47.60. Feels good, doesn't it?
If you read all the posts above, then you know by now that we should expect this rally to carry us through next week. Silver will test, and likely best, $50. It may even see $52. Gold, now that it is through 1520, will accelerate toward $1550.
Beginning the week of the 9th, pattern suggests that we should see about a two-week downward consolidation. After that is completed, the table will be set for the wonderful and record-setting opportunity that will be presented to us in June.

For now, here are your charts. Both look great. More later, after the contest concludes at 5:15. TF

p.s.

I appreciate and value all of the donations that I am receiving but I have something for you to consider. I hoping to put together a "Turdathon". I have a favorite charity that I'd like to support and I think it would be terrific if all turdites would donate a small amount of their recent profits. Maybe I can even line up a sponsor who would be willing to issue a corporate match. I'll keep you posted.

Contest Closed

It certainly looks like it will take a guess of 1555+ to win. We'll see.

More after The Bernank is finished mumbling.

The Things The Ben Will Say

Here is all you really need to know regarding the unprecedented Fed "openness" that will be on display this afternoon:

As you know, The Fed is trying to walk a tightrope. The overwhelming deficit and debt of the U.S. government is requiring fresh funding to the tune of about $1.5T/year. There are no buyers. Left with no other option, the Fed "digitizes" money to fund the daily operations of the government. Without this intervention, rates would skyrocket. In a natural market, rates would rise until they reached a point where investors felt compensated for the principal and inflation risk they are assuming. What would that rate be? It's impossible to say for sure but it certainly isn't 3.5%. If the natural buyer/seller equilibrium of 7% or 10% was allowed to be achieved, three very bad things would happen:
1) U.S. economic activity would essentially stop.
2) This would collapse tax revenue, further exacerbating the debt/deficit issue.
3) The "interest component" of the national debt would more than double in a short period of time, again further exacerbating the deb/deficit issue.

Left with no alternative, quantitative easing continues. The problem is, as you well know, that QE is killing the dollar and causing meteoric rises is almost all things dollar-denominated. This only further serves to build in even more inflation risk into any bond investment. This forces the Fed to print even more money as even more potential buyers shun U.S. treasuries. Its a very unpleasant cycle and one that will end badly.

For now (and the reason for the press conference), the problem is the rapidly falling dollar. Go back up and look at the charts. You can clearly see that, for the time being, The Bernank has more wiggle room in the Long Bond than he does in the POSX. Critical support for the Long Bond is down around 114. Critical support for the POSX is around 72. So, expect Ben to be just "hawkish" enough that the POSX rallies and the bond sells off. He'll try to be "not too hot and not too cold". It might even work...for a day or two. Then sanity will prevail and market participants will get back to the fundamental picture described above. QE is not ending. It can't. The dollar will reverse and, in a week or so, it will likely be right back to where it is this morning, if not lower.

What does this all mean for the metals today?
As I've stated ad nauseam, pattern suggests that the metals will trade higher from here into the end of next week. However, as I've also stated ad nauseam, TA can only take you so far in markets that are so blatantly and openly manipulated. Simply stated, no amount of chart reading can allow someone to predict exactly what the lying shill Bernank will say today. For the next 24 hours or so, we're all flying blind.

To that end, it dawned on me that this would be another great day for a contest!! From now until 1:00 EDT, this thread can be used to place your guesses so that may win you your own, autographed yellow hat. For today's contest, you must pick the combined price of gold and silver as of 5:15 EDT, when the Globex closes for the day. For example, if you think that gold will be $1506.80 and silver will be 45.45, then your guess is 1552.25.

From ZH, here's your schedule of events.

Below is an expected timeline of events, reproduced from Monday’s US Daily:

12:30pm – FOMC statement released.The Fed’s website gives the time as “around 12:30pm”, which will come as no surprise to Fed watchers used to twiddling their thumbs for several minutes after the scheduled release time. (Just to keep market participants on their toes, the statement does occasionally come out a minute or two before the scheduled time.)
 
2:15pm – Press conference begins. We expect Fed Chairman Bernanke to make an introductory statement which will feature the FOMC’s projections for growth, unemployment and inflation (but probably not the detailed distribution of these forecasts nor discussion of the staff’s forecasts). An article published today on the Wall Street Journal website (“Federal Reserve Irons Out Details of Post-Meeting Press Conference”, by Jon Hilsenrath) implied that any introduction is likely to be very short. According to the article, additional published information on the FOMC forecasts, along the lines of Table 1 in the Fed minutes from the January 25-26 meeting, will be made available on the Fed website at this time. Assuming this is correct, it would imply that detailed information on the distribution of forecasts, and on the staff’s economic forecasts, would not be revealed until the publication of the minutes (though of course these subjects could surface during the question and answer session).

ca. 2:25pm – Question and answer session begins.This is a live session with journalists, who are likely to be well prepared with probing questions. The questions have not been submitted to the Fed in advance.

Sometime around 3pm or slightly after – Press conference ends.The typical length of an ECB press conference in recent years has been about 45 minutes, perhaps a little longer recently. The aforementioned WSJ article suggested a similar length for the Fed’s first conference.

Have a fun day. If anyone out there can help out The Turd by making another spreadsheet with all the guesses, it would be greatly appreciated.  TF

Tricky Tuesday

First of all, two headlines from ZH that I think are fantastic. First, where have you heard this before?

"Pimco's Observations As The US "Reaches The Keynesian Endpoint" 

Next, you gotta love this, don't ya? A couple of downticks and every available topcaller and disinformation agent rolls out trying to scare you into selling your precious metals. I hope, by now, you've learned to ignore them.

Simon Black Answers The Question Du Jour: "Should I Sell My Silver?"

Besides, back on Monday morning, I even warned you that they would be lurking:

"It will take a lot of courage to step up and hit the bid there as every douchebag topcaller in the world will already be proclaiming that the "silver bubble has popped".



OK, onto the business at hand. As I'm sure you're aware by now, the Fed is rolling out the ultimate hack, The Bernank, to try to talk up the dollar tomorrow in his first ever press conference. You can bet your sweet batooty he'll have some success. The chart is primed and ready for a bounce. I'll even give a 99.9% guarantee that a "Calvin" is right over the horizon. Look at this chart. A perfect, scraping bottom at precisely 73.94.

Now look at the daily chart. You can see that, as the POSX fell from 81 to 74, every couple of weeks the Fed rolled out hacks to generate a quick bounce. None of the bounces have held and nothing that The Bernank will say tomorrow will have any lasting effect, either. The POSX will bounce up toward 74.80 to 75 but that will be it and it will, most assuredly, roll back over by Friday or early next week.

So, how will this dollar bounce affect the metals. It is all coming together perfectly for my little plan.
Beginning late last week, I was warning you that days 4 to 2 before first notice day have consistently seen a selloff in silver as The Cartel tries to "nudge and cajole" current month contract holders to sell and roll. What a surprise! It happened again! The POSX rally that is coming will help both metals finish off this short corrective phase will beautiful, little bottoms. In silver, the dollar rally should force silver to put in a double bottom near 44.50.

In gold, The Bernank will succeed in talking it back under $1500 but when it stops and reverses at 1495, he will have unwittingly painted a reverse H&S on the hourly chart. See for yourself:

So, what happens next? Again, if you've been reading and paying attention...and I pray that you have...you know that this "correction" will have ended by Thursday at the latest and the metals will commence a rally that will last until about Friday of next week. Silver will trade back up near $50 or so and gold will move back toward $1520.

After that it will be a true gut-check time for you. Again, recent pattern can tell us what to expect. In the 5/9 - 5/20 timeframe, the metals will roll over again. They will move back down to about where they are today, 1495 and 45. Everyone and I mean everyone will be screaming at you that the metals have double-topped and that the long rally is over, at least for the summer. I can assure you that it won't be...yet. IF I'm right and the next three weeks play out almost exactly as I've just described for you....well, let's save that for another day. Suffice it to say, we will be ready to capitalize.

Have a great day. Don't get all freaked out when the POSX rallies and the metals sell off tonight or tomorrow. Remember, everything is going as planned.   TF

ps I forgot to include this picture of "MonkeySmoke", our contest winner from last week. Here he is, in all his glory:

The Fastest 10% Ever

How's that for craziness? That was an almost 12% drop in silver in less than 24 hours!!

Just a quick note as I will be driving home from Mr. Hyde's this morning. Notice a couple of things:

1) Gold hung in there very well and is back above $1500. Considerably less volatile. If you want to be in the metals but can't stand days like yesterday, gold is a lot easier to stomach.

2) The POSX still looks awful.

3) The "press conference" of The Ben Bernank tomorrow will likely, at some point today, give the POSX a bid and cause the PMs to roll over and move back down toward last nights lows. I doubt they'll make it but they'll surely see some weakness.

What I'd really like to see in silver now would be a dip back down to the lows of yesterday morning. It would be on a very short-term chart but you could then make the case of a head-and-shoulder bottom to this very short correction. With that in mind and considering the pattern that led us to expect the correction in the first place, I'll be looking to buy this morning IF silver can get pushed back down toward 45.50.

More later. Keep the faith and have fun!! TF


1:00 EDT UPDATE:
Turd is back at his post. I'll have a new thread in about 90 minutes. In the interim, notice:
1) Gold is clearly pegged to 1500 for expiry and silver is pegged to 45. A sign of manipulation.
2) The PMs are being driven lower in the face of a falling/flat POSX. A sign of maipulation.
3) I gave you a May expiry/notice target of $45 about four weeks ago. The Wicked Witch gave you $48 Saturday. I then gave you the high probability of a sharp, brief pullback in the days 4 to 2 before first notice day.

My question is: Why all the angst? Why the willingness to believe all the topcallers who haven't been right for years but they're paraded out every time the metals have two, consecutive downticks?
Pattern tells us that, beginning tomorrow or Thursday, the metals will rally into late next week. More in a few. Please be patient.

Not For The Faint Hearted

Holy Cow. This is some wild stuff, isn't it? Unfortunately, this was some pretty good advice:

"So, stay nimble. This might be an event better watched from the sidelines for the next few days as its certainly going to be wild."
This, too:
"Keep an eye on things tonight and get ready for a very volatile week. Watching the PMs over the next few days will not be for the faint of heart." 

I've mentioned $45 to $45.50 as a buy zone but silver sure blew right through there. Luckily, I've been hanging out with Mr. Hyde all night so I didn't have any orders in at $45. Frankly, I didn't think it would get there until tomorrow so I didn't bother to place any this evening. Lucky me! At this point, it looks like $44.25 might be a bottom but, if we get through there, $43.50 will be the next, logical area in which we might be able to buy the dip. For perspective, $43.50 is where silver was last Tuesday, so it's not like it's the end of the world.

I'm getting ready to turn in but first I'm going to lob in some orders for the July $50 silver calls and see if I can catch the falling knife overnight. Again, please keep perspective. Though we are about a dollar lower than I expected, both Cartoon Blythe and I tried to warn you that the first part of this week could be ugly. Hang in there. The pattern remains. Silver will reverse and trade higher toward the end of this week and into early May. Keep the faith. Be happy. Rest well. TF

Be Cautious

I am, once again, flat in silver. I bought 2 May 47s this morning at 35 and sold them an hour later at 70. I still have my June 1550s in gold but I'm about to sell them, too, if we get to 1515.

You have to admit that this is playing out almost exactly as planned. We've plummeted once. I'm sure that move was enough to shake out a lot quite a few of the fresh silver longs. I highly doubt that that is it. There will be another down leg. Options expire tomorrow and you've got this weird Fed news conference scheduled for Wednesday. That's more than enough ammo for The Cartel to give the silver tree a really good shake.

Nothing has changed, however. I will be looking to buy July silver calls at $45.50 and, as The Witch said over the weekend, we may even see $45. I'll be buying there, too.

Here are four charts with some guidance. I'll be out of pocket for most of the afternoon so, from here, you're on your own. I'll try to check in later, probably not until at least 6:00 pm EDT. TF

5:45 pm EDT UPDATE:

As predicted this morning, the goons at the CME raised margins again this afternoon. No shit. Really? No! 

"If I had to guess, the dip will come on the back of a margin increase from the goons at the CME. It won't/can't be a puny little increase, either, as the market will simply shrug it off if it is. No, it will likely be more substantial this time. In fact, you've already got Disinformation Agents like this shill practically begging for one:
http://www.businessinsider.com/rein-in-rampant-speculation-or-face-the-black-silver-swan-2011-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheMoneyGame+%28The+Money+Game%29
All in the name of the greater good. "Please, CME. Save us from an overall market collapse by reining in silver."

Once again, The Cartel clearly gave notice to their buddies and silver sold off well before the announcement. Getting this behind, however, us is good news!! No need to worry about another margin increase anytime soon. 

Now, in a sell the rumor but buy the news type of event, the selling may diminish and silver may head straight back to $50. It also might not. I still think that the highest likelihood probability is for silver to head down again tonight and tomorrow and retest the lows of this morning, near 45.50. It may even make it all the way down to $45. Again, IF that happens, I will be an aggressive buyer of July calls as I expect a move toward $50 or even $52 by late next week.

That's it for now. I hope that I was able to help you navigate this extremely crazy day. Be sure to check back in tomorrow. TF out!

Here We Go

Keep an eye on things tonight and get ready for a very volatile week. Watching the PMs over the next few days will not be for the faint of heart.  TF


Wow, I've written some stuff over the past few months that has worked out pretty well. I'd say this close from last night's note ranks right up there.


After spiking almost to $50 overnight, silver has been clawed back to a low of $47.80 this morning. We've seen this countless times before since August. It just seems more dramatic because the price is now so high.
It looks like this:

Silver rallies off of a three-day or regular weekend (think back to President's Day as an example) and then plummets as soon as the prop desk monkeys hit their desks at 7:30 EDT. Like clockwork.
In fact, evidence of the coordinated attack is clear when you see that gold and silver were first hit at the exact same freaking moment, 7:35 EDT:

OK, so here's what you need to watch. Silver is going much higher but maybe not today. Again, pattern suggests that in the 2-4 day time period before first notice day, silver sells off as The Cartel attempts to "convince" weaker-handed longs to roll out of the current month. No reason not to think this won't happen again. In fact, as I type, I have no position in silver calls or futures. I'm waiting for this dip.


If I had to guess, the dip will come on the back of a margin increase from the goons at the CME. It won't/can't be a puny little increase, either, as the market will simply shrug it off if it is. No, it will likely be more substantial this time. In fact, you've already got Disinformation Agents like this shill practically begging for one:
http://www.businessinsider.com/rein-in-rampant-speculation-or-face-the-black-silver-swan-2011-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheMoneyGame+%28The+Money+Game%29
All in the name of the greater good. "Please, CME. Save us from an overall market collapse by reining in silver."


So, stay nimble. There are a lot of fresh, new longs in the silver market. They are not grizzled veterans like you and I. IF The EE/CME can get the ball started downward, the weak hands will panic and silver will drop very quickly. I will be waiting for them and I will gladly buy their silver from them at the levels below:

I would first expect support at the point of the gap UP on last nights open, around 46.60. I would give my right arm for a chance to buy some silver at 45.50. (Do you recall that The Wicked Witch gave you that level back on Saturday? http://www.youtube.com/watch?v=WhcFI-vzNXk) It will take a lot of courage to step up and hit the bid there as every douchebag topcaller in the world will already be proclaiming that the "silver bubble has popped".
Regardless, IF I can get a dip to buy, silver should then rally back to and maybe even through $50 by later next week.


So, stay nimble. This might be an event better watched from the sidelines for the next few days as its certainly going to be wild. Much more later. TF

Easter Sunday Evening

Hello, all. The Turd and all of the Fergusons hope that you've had a safe and fun holiday weekend.

The PMs opened higher at 6:00 EDT and are still rolling. I have a last of $47.77 in May silver and gold is $1513. Crude is up. The grains are up. Its all kickin ass.

If you haven't already, you should probably take a minute to read this:
http://www.zerohedge.com/article/china-proposes-cut-two-thirds-its-3-trillion-usd-holdings
Trust me, there not rolling out of dollars into Venezuelan bolivars. A lot of this money is going into PMs.

Much of the hubbub tonight seems to be over the rising May open interest numbers. Here, see for yourself:
http://www.cmegroup.com/trading/metals/precious/silver_quotes_settlements_futures.html
Now, before you get all carried away, you'd better do some historical research.
49,418 with five days to go is a lot. Its even more impressive when compared to the 46,839 OI basis Wednesday night. However, for perspective, with five days to go before first notice day in February, the OI for the March contract was even higher at 50,888. This is not to say that, in the end, we won't have a higher number of "standing" contracts come Friday...but...don't let your emotions get the better of you simply because the number increased back on Thursday.

As you know, I discern and follow pattern. The pattern from last November (first notice for the Dec10) and February (first notice for the Mar11) is for a brief but sharp selloff in days 4 to 2 before first notice day. This raid is orchestrated to "convince and nudge" as many front-month contract holders to roll as possible. I fully expect the same pattern this week. As The Wicked Witch told you yesterday, after a rally to $48+, expect a quick drop back toward 46 or 45. From there, pattern tells us that silver will rally through the first week of the delivery month as hope remains that the Comex will be unable to fulfill the settlement of the delivery contracts. A similar rally from late this upcoming week until Friday, the 6th of May, will take us from the area around $46 up to $50 or even $52. Its all right here, if you haven't already watched it:
http://www.youtube.com/watch?v=WhcFI-vzNXk

Lastly, I want to remind all readers, old and new, to read the disclaimer at the bottom of this page. Judging from the amount of emails I've received lately, many of you need a refresher. If you are taking investment advice from a guy named "Turd" and managing your investments based upon the musings of a cartoon character, you seriously need to re-evaluate your decision-making process. I am here to provide my guidance based upon my experience but it is up to you to decide what to do with it. The Turd should only be a small piece of the puzzle, if at all.

Keep an eye on things tonight and get ready for a very volatile week. Watching the PMs over the next few days will not be for the faint of heart.  TF

For Your Viewing Pleasure

The Wicked Witch and her trusty sidekick, Ruprecht, have made another feature film. Please pay close attention to their plan and the price targets they mention.

http://www.youtube.com/watch?v=WhcFI-vzNXk

I'll have more late tomorrow evening, once we see how things are going on the Globex.
Happy Easter!! TF

Our Only Hope: You

So I'm flipping through the channels late Wednesday night and I stop on O'Reilly visiting with Lou Dobbs. I notice that they're talking about oil prices so I figured I'd give it a listen.

As the interview dragged on, I was amazed at their points of view.

O'Reilly: Its all the evil speculators, oil companies and OPEC who are at fault. They are driving up the price of oil for their own benefit and screwing the consumer.

Dobbs: It's all Obama's fault. He should be putting the screws to OPEC to force them to pump more oil and bring the price down.

That these guys are apparently so clueless bugged me all day yesterday. In fact, I even discussed this on the phone with Mr. Hyde. How could these guys not get it? Anyone with a brain knows that crude is going up because of concerns of unrest in the Middle East and, more importantly, the rapidly declining dollar. But here are O'Reilly and Dobbs taking 5 minutes in front of O'Reilly's massive audience to construct bogey men for everyone to blame. WHY? Seriously, this really bugged me.

I got my answer yesterday when I saw this:

• ( RTR ) 04/21 02:30PM OBAMA SAYS HAS ASKED ATTORNEY GENERAL TO CREATE TEAM TO "ROOT OUT" FRAUD, MANIPULATION IN OIL MARKETS THAT COULD HIT GAS PRICES
• ( RTR ) 04/21 02:31PM OBAMA, IN PREPARED REMARKS, SAYS TEAM'S FOCUS WILL INCLUDE OIL MARKET TRADERS AND SPECULATORS
• ( RTR ) 04/21 02:31PM OBAMA SAYS WILL MAKE SURE THAT NO ONE IN OIL MARKET IS TAKING ADVANTAGE OF THE AMERICAN PEOPLE FOR THEIR OWN SHORT-TERM GAIN

And it all began to fall into place. The O'Bottom regime knew that the President was going to be discussing this nonsense yesterday. So, they put out a call to their new buddy, O'Reilly. Remember, O'Reilly owes them a few favors after they granted him the exclusive interview back on Super Bowl Sunday, O'Reilly obliges by gladly staging this interview to give the President some political cover. Adding Dobbs to the segment to criticize Obama gives O'Reilly cover, too. Pretty handy, huh?

Do you now see how you are manipulated? The Fed/TBTF/Govt/Media Complex is desperately clinging to power. Again, anyone with a brain knows that oil is rising because its denominated in dollars. It's the reason corn is rising. It's the reason gold is rising. It's the reason the stock market is rising. The world is awash in dollars, willfully printed by the Federal Reserve, to fund the U.S. government ponzi scheme. If you want to control inflation and bring the cost of crude oil down, you stop printing money and make the U.S. government function on revenues alone.

But that's not going to happen, now is it? Nope. No way. So long as the politicians and their willing accomplices in the media can construct straw men upon whom you can vent your anger, change will never come. Your politicians will distract your neighbors from focusing on the real problem (the politicians) by encouraging them to chase dead ends and ghosts, instead.

Our only hope is each other. We must educate and help each other and then we must help as many of our friends, family, neighbors and coworkers as we can. It is up to us to do it ourselves. I'm willing to risk everything trying to help. Are you? Do you know what you believe? What is it that you know to be true? Are you willing to stand in front of others and proclaim this truth, knowing that you will be criticized, ridiculed and marginalized by those who choose to let normalcy bias rule them? We must try. If not for ourselves, for posterity.

Thomas Jefferson wrote of this 235 years ago. It is clearly still valid today. I leave you today with his words to ponder:

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

And The Winner Is.....

I just got off the phone with Lind-Waldock. They have confirmed for me that the official Comex closing price for today in the May11 silver contract is $46.06.

This means that the winner of the autographed, Big Yellow Hat is...........

MONKEY SMOKE


Mr. Smoke had a guess of 46.08 so he barely beat out R Man J at 46.00. The official spreadsheet can be viewed here:
https://spreadsheets.google.com/ccc?key=0AkbhQfELraBedHlpSVlMam9oa1k1cUowQXZGT3d6dUE&hl=en&authkey=CMLxpdcH#gid=1

Mr. Smoke (may I call you Monkey?), please email me at tfmetalsreport@gmail.com with the address to which I can send your prize.

This was great fun. I'm very pleased that so many participated and that I rescued my minimal reputation by only missing by $0.25. Have a great rest of the day. This being the final trading day of the week, it should surprise no one that silver is trading higher on the Globex. This has been the case for about 6 or 7 weeks now. Maybe we can see $46.50 and onto new highs before they shut things down later this afternoon. I'll have a full weekly summary either later this evening or tomorrow. TF out.

All About The Buck

There are a number of interesting things going on. Chief among them, if you haven't read this yet, you need to take some time and consider the possible implications:
http://www.zerohedge.com/article/45-scotia-mocattas-registered-silver-transferred-eligible-status
And then there's this. Here's the link to ZH where you can read the full FT story with registration:
http://www.zerohedge.com/article/silver-surges-over-4625oz-rumours-short-squeeze-and-cornering-market-gain-credence
Hmmm......sounds a lot like or Buyer(s) of Size, doesn't it???

Anyway, as a precaution, I am now long 1 July $50 silver call which cost me a cool $7500. However, the recent spike, the upcoming option expiration and this latest news all but guarantees a steep but brief selloff is just over the horizon. I'd put the chances at 90%. On the 10% chance there is no pullback....which is why I bought the call...silver is going to accelerate UPward rather quickly here. This will be a very interesting day.

Two main thing I want to discuss in this note. First and foremost, the POSX. It's sure living up to its name, isn't it? WOW! Look at this six-hour chart:

Also keep in mind the longer term perspective:

This is an absolute disaster. In their attempts to shore up the bond market with limitless printing of money, the Fed has succeeded in killing the dollar. Trader Dan wrote a terrific piece on this yesterday:
http://traderdannorcini.blogspot.com/2011/04/us-bond-market-has-become-most.html

As the POSX approaches 72, the almost has to be a Calvin coming. The dollar will rally and bonds will sell off but then what? The dollar will roll back over and down it will go.

Lastly, I've been getting a lot of inquiries about the horrific underperformance of some/most of the mining shares. Keep in mind, there are three main issues affecting share performance currently:

1) ETFs. ETNs and closed-end funds siphon investment dollars that would traditionally have been flowing into the miners.

2) The "ratio trade" employed by hedge funds whereby they sell the shares of the hedged miners and use the proceeds to purchase paper metal contracts on the Comex. Eloquently described here by Trader Dan:
http://traderdannorcini.blogspot.com/2011/02/hui-gold-ratio-gld-and-ratio-spread.html

3) Equity analyst limitations. This is important. Eric Sprott touches upon this is his latest (which is copied below) but let me expand upon this. At a sell-side firm (retail, private client or investment management firm), analysts all have individual areas of expertise. In making their forecasts for equities that they cover, they get feedback from other analysts that specialize in other areas. For example, the analyst that covers a  multi-national company like GE may know everything about that company's growth prospects but his opinion will be enhanced or tempered by the opinion of his company's "global economist". Global macroeconomic forecasting is not the expertise of the GE analyst so he will defer to the global economist when implementing growth forecasts into his earnings projections.
The same thing happens with mining stock analysts. The analyst may love SLW and all that they do. But if his firm has a "commodity specialist" who forecasts year-end commodity prices and this fool has a 2011 price target for silver of $30, then the analyst has to use the $30 price as his number for projecting earnings per share numbers. So silver can go to $45 and you and I know that SLW will make a boatload of extra money this year but until the "firm" changes its price targets, the EPS forecasts will stay the same and money will not flow into the stock. Does that make sense? I have a feeling that this concept is much more easily explained verbally than in text. Anyway, I hope that helps.

And here is the latest Sprott letter, in its entirety. Really, really great stuff. I love how he inadvertently blasts all the trolls as folks who don't understand the fundamentals.

MARCH 2011
		Follow the Money By: Eric Sprott & Andrew Morris You know silver’s doing well when the commentators start giving it the ‘gold’ treatment. Silver’s recent rise has been so spectacular that it’s caught many investors off guard. It’s natural to be sceptical when you don’t know the fundamentals driving strong performance, and many pundits and commentators have been quick to downplay it as a result - much like they do towards gold when it enjoys a run. Silver is also an awkward metal for them to categorize. Is it a commodity, a monetary metal, or both? And which side is driving demand? If it’s industrial demand, that’s ok, because that’s bullish. But if it’s investment demand for silver as ‘money’, well then that’s sort of bearish, isn’t it? The fact remains that most commentators have failed to grasp the monetary shifts that silver is signaling today, and in doing so they’ve failed to appreciate just how high it could actually go. The financial media’s failure to grasp the benefits of precious metals ownership continues to perplex us, and it’s not just the commentators who are prone to perpetual disbelief. The sell side analysts are equally as irresolute. According to Bloomberg, the ‘expert’ consensus silver priceforecast for 2011 is $29.50, representing a 31% discount from the current spot price. This same group of analysts also predicts prices will decline another 25% in 2012 and a further 9% in 2013 to $20 an ounce. When you consider that the silver price has appreciated by over 21% annually over the past 10 years, these forecasts suggest a very dramatic change in the long-term trend. Will this reversal come true? Probably not. These were the same analysts who predicted that spot silver prices would average $18.65 this year - so they’ve missed the mark by over 100% thus far. We don’t mean to bash the silver analyst community, and there are several whom we highly respect, but it is important for silver investors to appreciate that these price forecasts are being plugged into financial models that dictate equity valuations. These models are used by traders, bankers, analysts, andportfolio managers to derive valuations for silver stocks and create asset allocations for portfolios. To anyone questioning current silver equity valuations, we would ask: what price assumptions are you using? Of course we as allocators of capital are thankful for this phenomenon, as it allows us to buy our favourite silver stocks on the cheap, knowing full well that the herd will be following behind in due course as those backward-looking forecasts get ratcheted higher. How can we be so confident that the price of silver will continue on its upward trajectory? Our thesis is premised on the most rudimentary of economic principles – supply and demand. One of the key indicators that we’ve been monitoring is the gold/silver ratio. Much has been written about the ratio of late, and we won’t go into great detail on the subject, other than to note that the last time money was synonymous with defined amounts of gold and silver, the ratio was set at 16-to-one. In fact, for most of the past millennium, one ounce of gold would have been convertible to somewhere between 10 and 16 ounces of silver - an amount roughly in line with the relative occurrence of each mineral within the earth’s crust.1 For the better part of the past century, due to the world’s abandonment of bimetallism and then the gold standard, the gold/silver ratio has fluctuated widely, twice reaching lows near the 15-to-one mark and a high of 100-to-one back in the early 1990’s. The most recent high reached in the latter part of 2009 was nearly 80-to-one. Since then the ratio has been tumbling to where it stands now at 35-to-one – which reflects the incredible outperformance of silver over that time period. In our opinion, this ratio will continue to move lower, driven by nothing more than basic supply/demand fundamentals. The US Mint, which is the world’s largest silver and gold coinmanufacturer, recently reported that it had sold 13 million ounces of silver coins and 370 thousand ounces of gold coins on a year-to-date basis.2 This means that the US Mint is now selling roughly equal amounts of silver and gold in dollars so far this year. Furthermore, bullion dealers like Sprott Money and GoldMoney have confirmed with us that they are now sellingmore silver than gold in dollar terms. For additional confirmation of this investment trend, just look at the flows for the two largest gold and silver ETFs. Investors have withdrawn approximately $3 billion from the GLD so far this year while the SLV has seen net inflows of $370 million over the same period. Dollar for dollar, investors are allocating as much if not more money to silver than to gold. And why shouldn’t they? Silver is much more of a "precious" metal than the current ratio of 35-to-one would suggest. To explain, we must first address mine supply. In 2010, the world mined approximately 736 million ounces of silver and 85 million ounces of gold.3The world also produced an additional 215 million ounces of silver and 53 million ounces of gold from recycled scrap.4 Adding both together brings us 951 million ounces of silver and 139 million ounces of gold supply, for a ratio of nine ounces of silver to one ounce of gold. Interestingly, this 9-to-one ratio is very similar to the ratio of available in-situ silver and gold reserves. The U.S. Geological Survey estimates that there are current in-situ reserves of approximately 16.4 billion ounces of silver versus 1.6 billion ounces for gold, or about a 10-to-one ratio.5 The case for silver is even more compelling when one considers the ramifications of its dual role as both an investment and industrial metal. Last year, non-investment demand for silver (which includes industrial, photographic, and silverware demand) totaled approximately 610 million ounces.6 This represents approximately 64% of primary supply, leaving approximately 341 million ounces to satisfy investment demand.7 On the gold side, industrial usage totaled 13 million ounces, or about 10% of primary supply, leaving approximately 125 million ounces left over for investment demand.8 So, after netting out the industrial usage the primary supply left over for investment demand is about 2.7 times that for gold. However, if we convert those ounces to dollars at current prices, we’re left with $15 billion worth of silver available for investment versus $186 billion worth of gold, or a one-to-13 ratio of silver to gold! This means that in terms of primary supply, silver only has 8% of the capacity for investment that gold does despite having equal if not more dollars flowing into it. Now, it’s true that another potential source of supply is the very silver that investors already own - and at the right silver price these inventories of silver and gold bullion may be sold into the market to supplement any supply shortfalls. As we’ve noted previously, however, due to decades of underinvestment, the amount of silver bullion inventories are actually extremely small, even compared to those of gold.9 Recent estimates suggest that reported silver bullion inventories stand at roughly 1.2 billion ounces versus 2.2 billion ounces of gold bullion, or roughly a 0.5-to-one ratio.10 To put that amount in perspective, consider that at present there is only $52 billion worth of silver bullion/coins and over $3.3 trillion worth of gold in inventory which could potentially be recirculated into the market. Converting this to a ratio, you get a one-to-63 ratio of silver to gold inventories. So how is silver still priced at 35-to-one?! All indications lead us to believe that there is now roughly an equal amount of investment flowing into silver and gold on a dollar-for-dollar basis. And although the price ratio of silver to gold has fallen substantially since the highs of 2009, our analysis strongly suggests that this ratio must move lower to restore a fundamental balance between supply and demand. Only time will tell how much lower it will go, but we would not be surprised to see it hit single digits before settling into a more sustainable equilibrium. What the so-called silver ‘experts’ neglect to account for in their models and projections is that the fiat money experiment has failed. And in this context, we believe the Market has assigned world reserve currency status to gold - not USD, not EUR, and not JPY. In our opinion, gold’s continued appreciation vis-à-vis every currency is assured because the great flight from fiat has only just begun. Like gold, silver also has a long monetary history, and as such, investors are now also buying silver as protection from the ravages of fiat currency debasement. Yet, when compared to gold, it is silver that offers the most attractive value proposition by virtue of the gross mispricing of its scarcity, which, we might add, has existed for many years. Thus, in our opinion, as this new bimetallic standard takes root, silver investors will continue to be justly rewarded with marked outperformance. We truly believe that this is the investment opportunity of a lifetime, and increasingly so, others are taking heed. What is clear to us is that with equal investment dollars now flowing into silver and gold, the current 35-to-one ratio is unsustainable and has only one direction to go: lower.

Have a great day. Stay nimble and be mindful that The Cartel would do just about anything right now to convince May contract holders to roll into July. TF