Saturday, May 28, 2011

Good Morning

Just a quick note to start your weekend.

When you have 10 minutes or so, please utilize the time to read this guest post from ZeroHedge.

We talk often here about the "end of the Great Keynesian Experiment" and its implications. The missive discusses how and why the "end" will come about. If I, The Turd, had the time, the mental tools and the talent to write something such as this, I would have done it. As it is, this Mr. Long has done it for me.

I'll check in later today with some weekly chart updates that all look very positive.
Have a great Saturday. TF


  1. KWN Weekly Metals Wrap is up. Bullish for gold, bullish recognizing volatility for silver.

    TF I read the article at ZH last night. A really good explanation of the bigger pictures and overlapping influences. Backs up what Santa has been saying for a long time of course but it's good for us mere mortals to deepen our understanding.

  2. Morning, Turdites. I love my silver, but I'm going out looking at land today. Peace.

  3. Carl

    Nice fish! Is that a walleye? If it is, that's a whopper!

  4. Thanks for the link turd! It was a great article. Good luck with the yogurt stores! Thanks for your help!

  5. Here's another good one by Jim Willie:

  6. It's the end of cheap energy causing the "great deflation"...the end of growth. I truly believe it.

    I think "peak CHEAP oil" has come and gone. And with it, the "unlimited growth" that fueled the "great expansion" up until now.

    We need another cheap energy technology to keep the growth going. Fusion? Something with salt water maybe? It HAS to be cheap and plentiful. How soon will we get it? That's the question.

    I don't think natural gas will cut it. It will keep us out of the dark ages, but it won't be able to save the emerging economies...including China.

    It's why China been buying up resources and going where the resources are. They know the jig is up. So do we. That's why I'm certain a big (WW III?) ME war for oil is imminent. To survive, the "west" needs oil. And I think we just may be getting to the point where we're willing to take it.

    All this stuff going on, a Muslim elected president, Congressional hearings about Islam, Osama killed, the rioting and new governments, Iraq, Afghanistan, Pakistan, 9-11, war on terror, homeland security, they're all precursors to war. We've been setting our pieces. We MUST act before we go broke. And I think we will. I can't see TPTB giving it all up. War is coming, cheap plentiful oil is coming (after we win and cut out the middlemen...the Arabs), and with it...growth.

    China can either be for or against us. If they choose against...they can kiss there trillions in bonds goodbye. China isn't strong or big enough to go it alone...and Europe is with us. I think they'll be smart and join us in taking the oil fields of the ME. It's a deal they can't refuse the other path is lose - lose for them. They lose the war...surely they will, against the EU and the US? No REAL navy, no "global reach", they will lose a war with the west. And then, they'll be cut up like Germany and the Ottoman Empire was.

    Interesting times ahead...the question soon do things begin and what will be the trigger?

  7. Its all about CONfidence......

  8. p.s.

    If nukes start could be Mad Max time... That's the unknown. Will a country like China lets lose the nukes in a "if I can't win, nobody does" MAD scenario.

    I still think we make a moke for the ME oil...we need it SO badly and like American workers...the Arabs have priced themselves out of the market. World growth DOES stop with $100 oil. It continues with $50 oil. Until it runs out...

  9. Perhaps some here, speaking of the fight club otherwise known as Zero Hedge, might also be interested in a recent article by a fellow calling himself "cognitive dissonance". Here's the link:

    What it reminded me of was a personal observation, recently arrived at, that failure is a good thing. Yes, failure is good since it helps a man in understanding his own limits. Only by knowing his limits can a man overcome them, and in turn, grow (of course, this only works if a man is smart enough to take a lesson from his failure. Otherwise, he is just going to keep getting hoofed in the balls).

  10. This guy has made some outstanding calls using time cycles and symmetrical patterns. He went short Silver on Friday, says it has topped and a sudden drop for Silver is coming under $30 by June 6. A week ago he did call a sudden drop for S&P Monday, and forecast a Silver top at this current level also.

  11. AGQ question for any options traders around here:

    I've traded heavily in SLV options for awhile but picked up a bunch of AGQ calls about a week ago. Not looking for comments on how ridiculously leveraged a play this is - that's the whole point... and everyone has their lotto plays. :)

    So the question - i never exercise my options - I always sell. I'm purely a derivatives trader. With something like SLV, it's liquid enough that there's no concern. With AGQ, unless for EACH and every call contract at, say, strike 200 I have $20k sitting ready to settle I'm forced to sell the options rather than exercise them. But if the market is so illiquid, do I leave money on the table by doing so?

    This question has two sides:
    1) Does the person in my position leave money on the table by selling a contract for less than it's worth due to an illiquid market and insufficient capital to exercise it for the underlying asset?
    2) If this is so, is there profit to be made (with sufficient capital backing) to take advantage of an illiquid market and buy these contracts that smaller specs don't have the capital to settle for less than their exercise value?

    I'm assuming #2 is already happening, making #1 not an issue (i.e. even in an illiquid market options bids converge to exercise value into the expiration), but I wanted to bounce the question of any agq options traders out there who have experience with this scenario.

    Thanks, and happy long weekend, all!

  12. Turd - Please respond!

    Do you still stand by this?

    5) Having accomplished all of this by the end of June, the metals will enter their typical summer doldrums. Silver will have painted a double top on our "white out" chart. Gold will have a near perfect double top on its actual chart. The PMs will selloff through July and into August, just like they did in July and August of 2010 and then January and into February of this year. Gold will likely retrace all the way to $1450 or so. Silver will trade back down to this 33-35 area.

    From here:

    I ask because I want to try and flip PSLV for increased shares. Thanks for all of your dedication.

  13. @Eric #1 yes it was a walleye. 30.5 inches and 12 lbs. More luck than anything. It was a whopper. CPR'ed ( catch photo released). The small ones are the best eating anyway.

  14. @Vince

    At the risk of sounding chiding (which is not my intent at all, I promise,) I always assume that TF stands by everythng he has written until he has had an insight that would call for what he wrote to be changed. So while I'm not TF answering your question, why would you need to know if he still stands by it if he IS still standing by it?

    Also, Turd (only in unfortunate events) offers direct investment advice since he is here to help us learn and not to do our homework for us.

    I understand your need to know and I don't falt you for it at all but you must realize that TF has not said anything about the plan changing and if truth be told, TF doesn't KNOW, I don't KNOW, atlee doesn't KNOW, Palin doesnt KNOW, you don't KNOW - it only comes down to likely risk/rewards based on the systems we use.


    Huxley Ann

  15. Here's how to cross a border with more than $10,000. Legally.

  16. Carl

    I thought so. Did an awful lot of walleye fishing in my younger days. My biggest went 8 pounds, 27.5". Yes, for me the best eaters run maybe 15-18". Yum!! No other fish can compare.

  17. @TJ

    Thanks for the charts. I sure hope your guy is right because I would make lots and lots of money if he is and loose lots and lots if he isn't next week.

    Let us pray.



  18. @pekar

    God Bless You, Mr. Man.

    Our problem was, though, we had 90% silver face coins - two $2000.00 bags full. How on earth could we put that in a card? HOWEVER, that card I've bookmarked and am keeping for when I win the Mexican Lottery and fly to Gainsville to pick up my 631 Centenarios. Getting them into Mexico is easy with just a couple in my pocket daily it's about a year.

    And the lottery is a pretty good one: 1 chance of willing out of 59,000.

    Best and Thanx


  19. Something's not right.

    Friday's trading was based on the following paradigm:

    Lousy economic stats means lousy economy means lower interest rates (and maybe even QE3?)

    Therefore, the USD falls, and stocks and commodities (such as oil) rise.

    So if I get this right, stocks went up based on the idea that we have a weak economy and higher input costs. Brilliant.

    Ummmm, I have seen this kind of illogical paradigm many times before, and trust me, it won't last long.

    I have no idea which way it will break (stocks fall at same time USD falls? Seems most likely to me) but it won't last.

    Now the trick will be to figure out when the market will start trading half way rationally again. Tuesday? July? Never?

  20. @tj his prediction of silver bottoming out to $5 seems so bogus that I can't put much stock in anything else he says.

  21. Out for the day, but wanted to share this quote I stumbled upon last night:

    For more than a century, ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that is the charge, I stand guilty, and I am proud of it.

    Page 405 of Rockefeller's autobiography, "Memoirs", ISBN-13: 978-0812969733.


    What brought it to my attention was a 3hour documentary by Michael Tsarion talking about how we must return to self-hood, and the complexities of the human consciousness related to the physical world we experience. Very interesting comments about how DNA emits photons, and with the 2012 Mayan Calendar.. it it is nothing but a time when our DNA absorbs the light photons in a certain way, leading to the "age of revealing" tied into our subconsciousness.... or something like that. If you have 3 hours and want to really stretch the mind, I enjoyed this work:

    (19 parts, 10 minutes each).

    Have a good one to all,


  22. For those who don't want to take a day off Monday, the Toronto exchange will be open.

    You can play the following 2x ETFs:

    HBU gold bull
    HBD gold bear
    HZU silver bull
    HZD silver bear
    HGU gold miner bull
    HOU oil bull
    HOD oil bear
    HNU nat gas bull
    HKU copper bull
    HDU US dollar bull (vs CAD)
    HDD US dollar bear (vs CAD)

    There are lots more of course, and some of these have very little volume, but the oil, gold and silver ones are ok.

  23. Huxley, I'm short Silver too :)

    Carl, Let's see next week. That low number is LT.

  24. Those who continue to devest out of PMs with a belief in "summer doldrums" will permanently lose their position, in summer of 2011? maybe the summer of 2012? It works until it doesn't.

    Trends by their very nature always change as people anticipate the pattern repeating and front load their investment strategy further.

    Michael Pento of EuroPacific said on KWN 5/25 that his company is selling half of their PM position and will get back in when the price is lower. Good lock with that. This week's other KWN contributors have a vastly different take.

    Summer doldrums is a PM theory that will soon be disdained as a dangerously stupid assumption.

  25. This comment has been removed by the author.

  26. @TJ am I missing something with that blog. The last entry is dated may 25th SMS the post on silver may 24.

    Granted he called a rise to "around" 38 for the 27, but I didn't see the forecast of a drop to 36.50 on the 26th.

    I know no one can be accurate all the time but I look at the accuracy of previous postings, frequency of posts and vibe of a post and it's comments before I consider taking it's contents into account.

    I'm sure this guy knows more than me but I'm not convinced.

  27. @TJ OK,I looked at the blog again and stand a little corrected.

    The chart I thought was silver was SLV. and he posted comments up to yesterday.

    I do think there'll be a drop next week but I'm not convinced it will be that hard that fast.

  28. He works with cycles and symmetry, a very different way of looking at things. He seems to just show posts for the big moves every so often when the cycles line up.

    All I can say is he has been on fire in May. Called S&P top May 3 and bottom May 23 - a month ago. That's impressive considering the pinball machine we've been in recently.

    Last week he was saying in advance what would happen every day and throughout the day on S&P, and it happens just like he said. Of course every trader goes hot and cold.

  29. Hope y'all silver shorts get slaughtered next week. Just sayin'. =)

  30. I found this article quite interesting as a good upsum of the deflationist case, from the 'super-Keynsian' Richard Koo.

    As a close reader of Koo I'd sum him up like this:

    1) Inflation and high commodity prices are not at the moment caused by money-printing. They're caused by speculators playing on the expectations of inflation because of money printing. Don't believe a word of it myself but that's what he argues.

    2) The real inflation comes later in the cycle. At which point, hold onto your hats. Which is pure Turd-think.

    Anyway I think he's a pretty good look inside the head of Bernanke. So well worth a look. Apart from anything else, Koo thinks QE3 is a dead cert.

  31. @TJ like I said, I'm sure the guy knows more than me!

    Looked back at some older posts, seems he's only been mentioning silver recently. Called a rally at mid may (but then most people did) but his charts were going up to 45 within days. Where was that?!

    Not saying he's wrong, we'll find out next week.

  32. The fact that everyone is so bearish on silver makes me feel good about being bullish. Gold is definitely going to 1575. Last peak it was silver leading gold. Gold dragging along silver now.

  33. See what happens NCOT. Early on he thought the Silver bounce was larger then realized the cycle was smaller and a larger negative Silver cycle still in place would overpower and drive it down harder.

    Like I said it's a very different approach. He also called an April oil top in March within a few $. Seems to just trade wherever his cycles show action. Should be interesting.

  34. TJ -

    I just read a lot of his recent calls. Not too difficult to see a downtrend cycle in the S&P. He did get a few immediate silver calls, but was way off predicting $28 this week when we're at $38.

    He also is calling a long term $5 price target but gave no details saying something like "more on that later." So he's saying the bull market is over because silver was $5 in 2003 just before the uptrend began. This man is either a prophet form another time and space or he's looking at copper or something! lol...

  35. Just a couple of personal observations from Fridays trading. Silver refused to uptick with gold through out most of Fridays trading session and at times ran in the opposite direct. Meaning while gold was moving up in price, silver was moving down. Gold rallied on very light volumes and the fact that silver traded in moderate to high volumes but in a very controlled range raises some red flags. Also the raids we've been accustomed to seeing from the EE were virtually non existent.
    Just thinking out loud, because of the light volumes in gold I'm a tad concerned about the short term and anxious to see what the EE has in store for gold for early this coming week.

  36. Hux: Thank you for answering Vince for me. Well stated.
    If/when I ever change my long-term forecasts, it will be made quite clear to everyone.

  37. @NCOT

    Sorry I missed your post last night.
    My belief is that very very few traders
    win at spread betting.
    My fave vehicle is LSIL. This can be adrenaline
    enough. I started buying silver before I'd
    heard of KWN etc etc on my own research at
    around $15 earlyish last year. Couldnt understand
    wtf it wouldnt follow its chart or fundamentals.
    Learnt much since then. However, if I'd bought
    LSIL at $15 then kept til $45 when I DID get out,
    that would have been an easy peasy 6 bagger, and
    I could have taken up golf, or done something fun. Instaed of that, I traded and traded LSIL,
    to try to improve my skills, and reduce my risk.
    All in all, did not much better than a double,
    albeit with minimal risk.
    Harfwits world has a core, a mantel, and a crust,
    and with a wedding coming up, you need to get
    things right as much as we all do. Because we
    are all fundamentally long silver for the next decade, there is no sense in anyone taking heavy bets and getting knocked out of the game. I
    have fizz and juniors in my core. I have LSIL
    and LBUL in the mantel. I am thinking very hard
    about a spread betting crust, primarily as short term short position protection of the mantel and core. This depends on whether we can collectively improve our waterfall anticipation
    or not. Am thinking of moving some LSIL (AGQ in US) into the core (which doesnt get touched). There are some very gifted traders on this site. I know I'm not one of them. That doesnt mean
    I cant get good overall results. Am pondering at the moment. Will talk again after some more thinking. Please take some time to study a
    little mining geology if you can. Thats where I think the big action will be before year's end. Good luck m8y.

  38. Here's a question for everyone...

    Does anyone look at the Indian MCX markets on a saturday or the middle east on a Sunday to try and guage what the open will bring? I recall a few poster on her from India.

    Just wondering if it makes a difference or helps? Can't make much sense ofnthe MCX India site and their historical prices don't seem to work.

    Just a thought....

  39. Personally, I think VictorTheCleaner's insight's into the silver market have made the most sense. Here is some of what he has to say.

    LBMA silver has been in backwardation all of this year since January 19, 2011, except for a six week period between about March 15 and April 30. There is enough silver in the market to engage in term structure arbitrage. The fact that silver is still in backwardation means that the LBMA members have started to price in counterparty risk in their silver swaps, i.e. the risk that the silver principal of the swap will not be returned.

    I interpret this to mean that some market participant is under pressure. They might not be outright short silver, but perhaps have too many outstanding silver loans compared to their physical reserve. I think the covering of this position (which may be a closing of outstanding loans rather than a pure short covering) started in September 2010, but they got under pressure only this January.

    It is a lot less serious than the regular squeezes in the market for gold swaps that we saw in 1997-2002 when various gold carry traders and perhaps a number of the bullion banks themselves blew up. If you compare the 1997-2002 GOFO chart with anything in GOFO or SIFO after 2007, you see that today things are way less dramatic. But, on the other hand, the central banks cannot help out with silver today as they did with gold in 1997-2002.

    When silver spiked up towards 50$ towards the end of April, I thought this was the end of the covering and the price would collapse (at least for a while) as soon as they had finished covering. Backwardation had disappeared around March 15. But now that the price of silver has come down to the steady upward trend line (around 30..35$), backwardation at the LBMA has reappeared. So I don't think they are finished covering and we may well see another sequel of the movie. The end of April spike towards 50$ may well have been a 'pump and dump' in order to get rid of all the retail day traders in the futures market who made it even more difficult for them to cover.

    He really breaks down silver backwardation at the LBMA here. Backwardation in the case of a monetary metal

    And he has a five or so other great articles at his blog.Victor the Cleaner's Blog

    And he had a great running conversation at the end of Costata's open forum part two over at FOFOA. Link

    See ya'll next week.

  40. @Turd Ferguson

    Thanks for all that you do.

    I read that ZH article and it reinforced my belief that the only thing that can get our stalled engine to work again, is inflation. As stated in the article, the third mandate of the fed is to raise asset prices. Soon, we'll all be buying up the cheap houses (from our stock market wealth), and borrowing from them again to go shopping. After all, the system has gotten bigger and TBTF is now absolute. So inflate we must. Its the oil in our economic engine.

    Happy weekend all,

  41. @Everyone,

    Cream Minerals has announced the adoption of a Shareholder Rights Plan. The way I read it, in the event some entity acquires 20% of the float, each share outstanding (mine included) gets the right to buy an additional share at 50% of the market price prevailing at that time.

    Seems like a good deal, no?

    Press Release

    Is this type of agreement common for Junior Explorers? . . .Comments?

  42. @RLP,

    Good work digging that stuff up! Thanks.

  43. @Phantom

    I tend to go with the pessimistic view that the only thing that will actual start our system "working" again is a massive crash and deflation, wages down by 50%, prices on goods down, most assets only worth pennies on the dollar, and local communities so desperate for job producing businessess that they will ignore or defy all the state or federal regulations that slow business down.... at that point we will start actually producing things, and rebuilding an internal economy that can compete with the rest of the world. And we will get there, sooner or later, a defacto feudal system or military protectorate is not going to worry about enforcing OSHA regs, they will want their people to be fed and clothed by their own efforts, since there will be no hand-out money available.

    IMHO, More inflation just papers over the problem and lets us delay the inevitable for a little longer.... which is OK in a way, I'd like more time to prepare.

  44. @kiwi#1

    The loss of the gold standard removes deflation as the end result, IMHO. The fed can print until everything around is dirt cheap. Then the greed will kick in, and we'll all be back at the realtor and at the malls to restart the virtuous cycle.


  45. He also called an April oil top in March within a few $. Seems to just trade cb436a wherever his cycles show action. Should be interesting especially if buying tonner online.