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April 16, 2012

There are days when I sit back in wonderment at the position in which "Jimmy Stewart" finds himself. To go from regular dope to regular-dope-with-amazing-contacts is sometimes difficult to deal with in that it's so surreal. Anyway, there's just a lot of interesting stuff going on in the world, 99% of which is never discussed in the media, financial or otherwise.

So, I try to make sense of it all and then pass it along to you. The hard part is deciphering what is worthwhile and what is not. And I'm not just talking about the PM-positive, "pumper" information out there. I get a lot of anti-PM, you're-all-batshit-crazy stuff, too, which, frankly, sometimes has merit. As an example, I give you this:

Over the past year or so, I've gotten to know Jim Willie a little bit. I've never actually met him and we probably wouldn't even recognize each other if we passed on the street. That fact, however, doesn't mean that I can't make a conclusion regarding his validity as a PM opinion maker and editorialist. Therefore, though he's got few ideas that I don't necessarily agree with, I think he's one of the good guys who is doing his level best to inform and warn as many folks as possible about what lies ahead.

In his update of 4/12/12, Jim included some rather juicy information regarding the link between current paper price swings and behind-the-scenes physical delivery. Now, you can write this off as the lunatic ramblings of a madman if you'd like (someone in the previous thread called him "the National Enquirer of newsletters"), but I personally think that this information is valid. Jim has an extensive list of contacts within the global financial system and, from time to time, these folks pass this type of quality information to him. Should you choose to dismiss it and slander him instead, ask yourself first "what kind of contacts do I have?". If you, as a detractor, have no contacts within the international gold trader community, maybe you should be willing to openly consider that the information Jim provides is accurate, knowledgeable and helpful, not simply tabloid-level heresay.

Here are the first, two paragraphs of the piece, followed by a link to the rest:

"What an incredibly complex confusing and treacherous month. It can be safely said that 80% of the activity is almost totally kept from the public. The financial system is breaking in an accelerated fashion. Compare to some grisly horror movie where a man is strapped in a chair. The more he moves, the tighter the bindings pull on his gasping throat and pressed nether stones. The most significant two factors at work are the Iran sanctions and their powerful backfire, and the futile efforts in Europe to stem the banking center collapse. The anti-USDollar federation that spans widely across the globe is gathering strong momentum. Financial aggression is being met by financial alternative development. As Greece moved off the daily news fabrication factory, the reality of a collapse in Spain and Italy has moved to the front center of observations. Meanwhile, the American nitwits continue to argue over Quantitative Easing when it never stopped, and in fact, went global under their noses. The US news machine, dominated by the syndicate, churns out absurdities after more nonsensical bites on an economic recovery. The subprime loan machinery has ramped up. The retail factor does not tell of strength, but of weakness. Spending on consumption does not indicate strength, but a path to ruin still not well recognized. The gap between reality and reports is diverging.

Back at the gold desk, another cartel member kill is in progress. A string of UBS-type gold arena deaths is the biggest untold story of the new decade. The UBS rogue trader story was a total fabrication, written and staged to conceal the removal of all UBS gold from their reserves inventory. They are a dead gold player. The gold community, even LeMetropole Cafe and GATA, appears to be missing the coalition kills taken place in sequence with each paper gold ambush. If the cartel wishes to drive down the paper gold price, then they must deal with the consequences of having one more cartel member bank offered on the physical altar in a death sacrifice. They are vulnerable from sovereign bond positions and weak currency positions. In the margin call vise, they must forfeit their gold, but in a long slow process as truly enormous physical gold orders are being filled over a pyramid of prices lower than the cartel bank wishes. Details are scanty, but the trail can be followed to some extent by false stories to cover the damaging tracks. The press did a wretched job in checking the facts on the UBS rogue story. The loss was over $6 billion. The trades were all approved at VP level. The trap was laid and UBS entered with both feet, the consequence for which was being expelled from the gold arena, probably forever, in a total loss of its gold bullion. No wonder the press did not report the actual story. It would have been a monster bull story for gold. If Barclays or Royal Bank of Scotland or Bank of America were having their golden blood removed on a table, with straps in place for directors of their gold desks, and hot pokers applied by coalition forces to extract their gold, the outcome dictated by incredibly insolvency and margin call vulnerability, the effect on the gold market would be magnificent. Such events are in progress in my opinion, based on some juicy information feeds. Rather than divulge the entire details of the cartel kill, the coalition prefers to move to the next victim in the Wall Street & London cesspool of finance."

As you know, another guy with whom I'm now able to communicate directly is Uncle Ted. The statement below isn't anything earth-shattering but I've been meaning to re-print it. It's taken from his mid-week update last week and it simply speaks volumes about where we are currently in the silver charade.

"I realize that we are currently in a period of doldrums in the price and this has blunted investment demand, the silver price driver with the most kick. Prices are down sharply from the peaks of a year ago and there is a self-fulfilling nature in all investment assets where lower prices discourage new investment. More than ever, the short-term control of High Frequency Trading (HFT) is exerting greater daily pressure to the price as real volume dwindles. I’ve noticed a clear pattern where most days we start out under price pressure. This makes it easier to for the COMEX commercials to contain the price. No one can guarantee that the COMEX commercials can’t rig another sharp sell-off. It’s enough to sap the resolve of even the most ardent bull.


But I would remind you that these conditions have been a regular feature of the silver market over the past ten year (excepting the presence of HFT). While we have climbed sharply over the past ten years, that extraordinary price rise witnessed its share of sharp takedowns and prolonged periods of price stagnation. For example, the price high at $8 in 2004 wasn’t exceeded for almost two years, as was the price high of $15 in 2006 which wasn’t exceeded for almost as long. It took more than two years for silver to exceed the price highs of March 2008 of $21 (when JPMorgan took over Bear Stearns). Yet anyone who bought at the former highs and held on was rewarded, as will those who bought at last year’s highs. (Going back even further, the decade or more that silver traded between $4 and $5 was the biggest price doldrums of all; along with being a great time to accumulate). My point is that during the last three silver price doldrums, the gloom and negative talk was almost thick enough to cut with a knife, almost the same as now. Yet history shows us that the very best time to buy was during past price doldrums as was it also the very worst time to sell."


I reached out to our pal "Winston" over the weekend to get some thoughts from him, too. He sent me a lengthy email which I will try to summarize. He is quite confident that there are some very large, sovereign buyers underpinning the physical market in London. (Note that this jibes with Jim Willie's assertations.) These buyers halted the paper selling on a couple of occasions last week and they continued to do so all the way into this morning. Did anyone notice that gold rallied at 3:00 am EDT today instead of selling off? This was due to the same sovereigns buying into, and post, the AM London fix. Winston expects this to continue to provide a floor for paper price. The key level to watch going forward is 1680-1685 as, apparently, there are all kinds of buy-stops at that level. Any move through there will trigger a quick rally toward 1700+. Above 1700 and the WOPRs will flip to "BUY" again and we'll head back off to another test of the critical 1800 level.

Interestingly, Winston's analysis fits in quite well with my charts, too. (Makes me feel a little less dopey.) As you can see on the charts below, gold is still struggling to make a permanent turning point. It's close, however. There should continue to be strong paper price support between 1630-40 and this makes another attempt at 1680 a simple eventuality. Once 1680 is finally bested, 1705 should be the final hurdle before another run at 1800.



Silver, as you might imagine, has a similar picture. In the short term, it is still penned in a range between $31 and $33. However, very strong buying support continues to emerge between $31.00 and $31.25. The longer this support holds, the lower the trendlines "hurdles" get for the next rally. For now, all we can do is wait for a breakout through $33 before we can get really excited. Also, pay very close attention to the weekly chart below. We are nearing a resolution to the current pattern but it may still be 6-8 weeks away. Please try to remain patient. The next move in silver is going to catch a lot of people by surprise but not us.

(Click on charts to enlarge)



Ok, I'm going to stop at this point because I've been in my office for about three hours now. I need a break and you need a new thread. More later today. TF