Sunday pre-game, 4/28/2013

 Hello friends-

I apologize for being out of commission lately. Frankly, I haven't had much to say since pointing out the obvious on Friday, April 12, that hugely important support had been broken and all bets were off.  I've found all the subsequent talk about the "8 standard deviation event" (or whatever) that followed mildly ridiculous. I'm not sure how one gets those numbers, but had the ensuing crash been spread out over a few days, far from being a one in a trillion event, it would've been positively expected.

I mean, going back to the Screwtape silver symposium way back in February of last year, on the topic "When to buy silver?", our very own JdA warned that the day would come when

"you can say hello to $22 silver before you can mutter "I think I'd better log into my trading account". That's when you should buy." 

Granted, she's hated silver ever since I brewed her some homemade "Silvershlager" and turned her blue, but I don't think she was predicting an 8 std deviation event.

[As an aside, looking back, I see that my contribution to the symposium was an exhortation to buy silver. And, in fact, those who took my advice would've made a 10% profit over the following 2 weeks. I also distinctly recall telling my readers to sell at precisely that point, but only in my subscription letter.]

Anyway, speaking of "standard deviations," back on Dec 31, I half-seriously expressed my 2013 prediction for silver in those terms. I felt at that time that a yearly close at the conservative blue trend line would've constituted a 3 standard deviation event. 

Sure enough, we're at that blue line now (see chart below), and I still don't think we'll close 2014 below it. So, as far as I'm concerned, yes, perhaps come 2014 a three standard deviation event may be said to have occurred (~1 in a 100), but not 1 in a billion or trillion or whatever number many analysts have been popping off.

Catching up on SLV and GLD (and other observations)

I was hijacked by my day job for about two months! During that time however I managed to keep track of most of the conversations going on. If only I could have bought shares in 'opinions about what gold is doing', for this is surely reaching into bubble territory. I don't want to add to that, rather just bring a few brief updates from the bar lists study corner - these are the low hanging fruit while I get myself reorientated.

Remember the Hunt Bros? Bull trap ahead. Maybe. Kind of.

A follow on post from below.

Some of the elder curmudgeons may remember the Hunt Bros silver run was also based on depleting inventories as part of the big story encouraging people to jump in and buy everything in sight.
However, the depleting inventories story was sleight of hand back then. The bankers used the Hunt Bros as patsies and fed the story until they were ready to pull the rug.  It was a movement of inventory from one place to another that created the "shortage". The Hunt bros and the public bought more as it confirmed their theory and then lo and behold the bankers changed the rules mid game and the price collapsed. Martin Armstrong mentioned all this in one of his essays.

Remember all those ships full of oil parked creating an oil spike? Same idea. Just google... lot's of links

Sprott used it recently to great effect so much so that his "fully backed" silver ETF was 20% above market value. If you think about that statement then what it means is his silver fund was not fully backed by Silver unless you were willing to pay 20% more for your bullion than it was worth.
Is someone paying ZH?
His three month delays in receiving his Silver fed the story of Silver shortages which Warren duly exposed as probable hyperbole

With the ETF's etc. co-mingling bars in a single vault they can disappear from view (inventory list) for periods of time without physically moving and without an available public daily inventory listing it allows the banks to position themselves for a run in front of news like this. However, if you track the bars (see Warren's detailed analysis ) then you notice previous "outflows" seem to come home. If anything GLD has more gold than they tell us. So what I am saying is this is possibly a bull trap. It doesn't matter in the short term if it is but just be aware they just might be parked somewhere waiting for the price to go up just like those oil tankers. Except in this case by "parked" they are just not listed in inventory and haven't moved a millimeter. Caution.

Couple of noteworthy articles

 OK, I'll admit I'm guilty of stirring up things just to make KD jump up and down but in the end I try to provide a balanced view. ZeroHedge has jumped the shark. Tyler knows damn well eligible inventory doesn't mean the Gold was sold.  Silver didn't work but this time it's different appears to be the developing narrative...... 
 .... from ZeroHedge which I am sure will having a Million souls screaming "Gold Bitchez" 

We are confident that in the aftermath of our article from last night "Just What Is Going On With The Gold In JPMorgan's Vault?" in which we showed the absolute devastation of "eligible" (aka commercial) gold warehoused in JPM's vault just over the Manhattan bedrock at 1 Chase Manhattan Place (and also in the entire Comex vault network in the past month), we were not the only ones checking every five minutes for the Comex gold depository update for April 25. Moments ago we finally got it, and it's a doozy. Because in just the past 24 hours, from April 24 to April 25, according to the Comex, JPM's eligible gold plunged from 402.4K ounces to just 141.6K ounces, a drop of 65% in 24 hours,and  the lowest amount of eligible gold held at the vault on record, since its reopening in October 2010!

This one from Matt Taibbi from Rolling Stone is an interesting read.


Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.
You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

Read more: http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-

.

Pour some Xylose on me

Interesting developments on the renewable energy front.

From Slashdot: (They have all the relevant links)
"The combination of recent super capacitor battery discoveries previously covered by Slashdot combined with Percival Zhang's cheap Hydrogen production method, I predict will render the gasoline engine obsolete within 10 years. Percival Zhang not only shows a cheap way of producing Hydrogen from biomass, but also demonstrates that using carbohydrates to store the Hydrogen until the car releases the Hydrogen safely and efficiently. "Hydrogen gas – a small, energetic molecule that reacts with many materials – is difficult to store and to transport. His solution is to produce reactive carbohydrates – that is, carbon-hydrogen-oxygen molecules – at a biorefinery using local biomass resources. That product, a carbohydrate, would be the hydrogen carrier. No complex infrastructure required. You could buy it from a grocery store or dry goods outlet." His discoveries conform with the Department of Energy 2017 Ultimate Solutions Criteria of 300-500 miles on a single tank. Percival Zhang has made a huge contribution to the production of hydrogen from biomass. The name Percival comes from the old French. Invented by a medieval poet in the 12th century for one of King Arthur’s nights whose virtue was so great that he alone could retrieve the elusive Holy Grail."

This One's For Duggo...

By popular acclaim I return with the doughty October 2012 4hr spot gold chart analysis, the chart that caught the attention of the editors of this august blog, the chart that propelled me into the limelight as the chronicler of the remarkable trading strategies of S Roche, the chart that has served S Roche so very well... until it didn't. 

Can you spot the moment? 

UPDATE: April 18 Chart Added...keeping the dream alive!

Bombings and Bombers

I hadn't quite expected my first post at Screwtape Files to be on such a depressing, chilling, nauseating subject. But the news hitting the wires regarding twin bombings at a marathon finish line in Boston, US, is hardly something I can ignore.

GM asked me to start contributing to the blog, as a kind of foreign policy commentator, raconteur and polemicist. For what it's worth, I am a real diplomat, have worked and travelled in over fifty countries, some nice, some not, and have had rather privileged access to the great and not-so-good of high and low society. I may or may not be a real Grey Mouse Lemur.

But now is not the time for such levity. I of all people should know that. I was cooking up an article on North Korea, but felt swayed by the images and sounds of pain and chaos being brought about in an unlikely location and at an improbable event. Twenty-second clips, when replayed over and over, become like constant montages of the awful moment. A ground-hog day in microcosm is generated. One notices a new face of panic here, a new barricade being torn down there, but the script is unchanging and one's senses dull lightly as the same brief event, with immediate consequences far beyond the merit of a twenty-second occurrence, takes hold. The clip never finishes with runners smilingly, tiredly finishing the race.

I have had the misfortune to be broadly present at four actual bombings and one failed one, and the fortune to have not been injured at any of them. Each are different, but with common threads of incomprehensible action and reaction.

New battery tech may change your mind about Electric Vehicles

I'm not a fan of electric vehicles, solar power or most green initiatives

mainly because they are usually mismanaged white elephants costing taxpayers money. I have no problem with Federal funding of R&D to develop big ideas but dislike the implementation of the immature tech that relies on subsidies because it is not cost efficient. 

I would love a Tesla because they are fast but the thought of having two or three of them just to get around for the week makes no sense to me. It's a toy, a hobby, it's a look at me I liked my Swiss bank account so much I bought my own Swiss bank.

Dump the batteries out of the thing and put a V8 that only runs on racing fuel in there and call it a day. What is required is a minimum of 2-300 miles per charge.

The US Dept of energy has a couple of targets when it comes to Electric vehicles. The first is 100 miles and be able to recharge the batteries a lot. So called "deep cycle" batteries.

The main focus on battery tech these days is capacity and it usually focuses on the Anode in the battery. Case in point the Israelis squeezed 1000 miles out of one battery.

http://us.shalomlife.com/business/19094/israels-phinergy-develops-ev-battery-that-runs-for-1000-miles/

Pretty cool except their aluminum-air battery may have an energy density of 8 kWh/kg but you can't charge the damn thing. Silicon is also looking good but the problem is it expands so no good for phones etc.

XG Sciences has developed a Graphene capacity of 1500 mAh/g with low irreversible capacity loss and stable cycling performance in life tests. This is a probably a game changer. Time to take another look at those boring listings on the stock market related to batteries

Read more

Bill Downey "How the Gold market was crashed"

UPDATED 18th April 2013: IMPORTANT The key element in the reported story about 'the platform shutting down' has not since been substantiated. The Fundamental View blog did a followup on this story, and is recommended reading. Moral of the story: 'one specific trader's internet woes does not reflect the industry at large and needs to be tested and validated just like any other piece of information, regardless of the emotive surroundings at the time'.

http://thefundamentalview.blogspot.com.au/2013/04/shedding-light-on-how-gold-market-was.html

But please also view our own comments section here which explains our rationale behind publishing this material (and also keeping the post published). We like to consider all viewpoints and raise discussion.

----------------------------------------------------- original text:

This is a follow up post from "How to crash a market" which raised more than a few eyebrows.
Put on your smoking jacket. Pour yourself a scotch. Put your feet up on a cowering servant or submissive and read on.
L.C.

How the Gold Market was Crashed By Bill Downey

There’s been a recent huge draw down of physical gold at the New York COMEX and at the JP Morgan Chase depository. Look at the physical market draw down on the charts below. It has taken a drastic plunge.

HOUSTON -- we have a problem.

Physical inventory draw down at JPM

Friday Metals Wrap, 4/12/13

Hoo boy.

Closed my recent long positions kicking and screaming.  I actually committed a trader's sin by lowering my predetermined sell point after things took a bad turn in early April.  NB: the trading gods always punish those who break principle!

I'm still surprised and mildly incredulous -- given the macro-environment, I didn't think gold would break clear out of its 12+ year exponential trend.  But for those who have been following this market, the $1480 weekly close is a big deal, whatever the cause. Move your goal posts further from here and you might as well go ahead and buy your tombstone early with "gambler's ruin" carved into it. It pays to remember: the market will still be there tomorrow. Actually ... I can't say that with confidence.

But assuming it will - gold will soon probably close a week testing the ~$1430 level on the weekly three line break chart (red horizontal line)

The end of April will give us a big clue as to how bad things look for the rest of the year. A strong close to the month could mean that this was just a (heavy-handed) wash-out, or, as Paul Craig Roberts has been saying, a thug move by the Fed to protect the dollar. I'm by no means ruling that out. I'm swayed neither by those who always cry manipulation, nor by those who never concede the possibility. Both are flip sides of the same coin, insofar as they let their psychological needs (albeit different psychological needs) control their faculty of judgement. It's simply not easy (or pleasant) to suspend judgement and update one's provisional conclusions as new evidence demands. It's also not easy to widen what one considers "evidence" -- as must be done in our current situation, given the enormous asymmetry of power between the diddlyshit class and the coterie of men with undeniably sociopathic tendencies who can, to a first approximation, do as they please, given their unchecked ability to hide behind a byzantine system of derivatives, procedural law, and propaganda.

At any rate, a $1430 (or below) monthly close on this chart would mark a very bearish three line break.

In fact, a silver monthly close below $27.50 on the monthly chart would also mark an important reversal, and as of now with silver under $26, that looks a lot more probable than not. So, a very bad day for metals bulls.

And note: zero support on the weekly three-line break silver chart whatsoever. This could get ugly.

During my March metals preview,  I explained that I wouldn't be confident that gold has entered its next major up-leg until the weekly GDXJ:DOW ratio had a three-line break reversal (please see here for my rationale). Well, the huge red bar this week means that the DOW pretty much has to have a big sell off, with gold moving inversely, if we're to see a three-line break anytime soon. And that seems intuitively true, too; gold has been going nowhere since equities began their recent blast-off in November.

Does it make "sense" that stocks are responding to trillions of paper money being created every month (and no-selling the FOMC jawboning) but gold and silver are not? Not to me. But this is where we are.

How to crash a market

Bill Downey (goldtrends.net) is a no-nonsense guy, and if my periodic reading of his daily email for futures traders advice is representative, he's been on the right side of practically all of gold's big moves up and down for the past few years. Anyway, I was surprised to read this from him today. I'm not qualified to comment on whether this specific accusation is true or not, but lately it seems many un-usual suspects have become perplexed at the counterintuitive trading of the gold market. 

HOW TO CRASH A MARKET

Gold
Yesterday we reported the critical inventory level at the COMEX and JPM VAULTS. First the FEDs leaked out the FOMC minutes early and compounded the sell off by announcing that CYPRUS would sell 400 million dollars worth of Gold. Cyprus banking sources said no such talk took place.

SO WHAT TO DO NEXT? T

here is only one way out of this. MAKE THE MARKET COLLAPSE and trip up all the stops at 1525. Then ---as the market collapses, STOP THE PHYSICAL MARKET FROM the ability to buy. And how can that happen? Read on for today’s lesson in market manipulation.

Physical inventory drawdown at JPM
Physical Drawdown at COMEX

The selling began last night from 1564. By time we got to COMEX the price was down to 1542. And then the attack began. Wave after wave of selling until it got to 1525.  Then they break down the price and the stops start getting tripped up and the selling accelerates.

THEN – ALL OF A SUDDEN the LONDON PHYSICAL PLATFORM THAT BUYS AND SELLS PHYSICAL GOLD GETS LOCKED UP. THE SYSTEM FREEZES.

What does that mean?

No one can get to the PHYSICAL MARKET TO BUY at these low prices but at the same time, they CAN’T SELL or protect their position.
Meanwhile the futures market continues to drop.

So what happens? The physical market holders begin to panic. How can they protect themselves as they can’t sell either?
There is only one solution, especially during a panic.

THE PHYSICAL market has no choice but to enter in FUTURES AND SELL in order to hedge their physical positions.

From there the MARKET GOES into a free fall as the physical market CAN’T BUY AT THESE LOW PRICES; they can only sell FUTURES TO HEDGE THEIR long physical holdings. Now it gets worse as underfunded players are getting wiped out and now they have to liquidate. The market goes into a total collapse as all the stops below 1525 get tripped up and all the stops at 1499 also as the market tanks to 1490.

I hope you got the picture on how the control boyz forced a major sell off. They LOCKED the physical market platform and they have total plausible deniability. HOW?

THE COMPUTER BROKE DOWN ---it couldn’t handle the traffic and it shut down.

VOILA. The perfect excuse and the perfect scenario.

THE PHYSICAL MARKETS CAN’T BUY -------
Let me repeat that. THE PHYSICAL MARKETS CAN’T. They can only sell futures to hedge their positions.

That completes our lesson for today on how to force a major selloff. You start the ball rolling to where all the stops are and then you bring it down to where all the stops are at the lows and then you SHUT OFF THE PHYSICAL SYSTEM and stop them from buying and at the same time you force them to sell the future’s on top of it.

Now What?
The banks and brokers will be open all weekend to issue all the MARGIN calls. If the money is not received by Sunday night the positions will have to be liquidated. Just when the market is at its lowest liquidity and the longs have had all weekend to think about it and the media has had time to tell everyone that the bull market is over. It should be interesting Sunday night.

Huge New  Investment Opportunity!

I would like to share a tremendous new investment opportunity I have fortuitously come upon.

It may be the biggest thing of the decade, if not the century!

I am still doing research on how to best play this discovery, and am now performing 'due diligence' on that I see as the best ways to take advantage of this.

If any loyal STFU followers want to have access to my on-going my research, they can send $1000 to slowlorislarry@fastmail.com.au via PayPal  (no PayPal account needed, only a valid credit card).  Note:  I am not a registered Financial Advisor, so this is NOT investment advice!).

That disclaimer notwithstanding, I do think that there are huge opportunities to profit from investment in military medal manufacuters in Pyongyang, and that you owe it to yourself, and to your family (and heirs), to be early to invest in this already booming niche market.

SLL

Sunday metals pre-game, 4/7/2013

Hello, friends --

Last week's action reminded me of late December 2011, when out of nowhere, following what should've been bullish news, the metals tanked. I called bullsh#t on that then, and I've done the same here, holding on to my position. Sometimes you gotta listen to the charts, but sometimes you just gotta protect your hand. Can gold really decisively break through it's 13 year (conservative) 99% trend channel after the Cyprus fiasco and the Bank of Japan's latest attempt at re-enacting Weimar?  

Go ahead, whoever the hell is pushing these markets around -- show me your cards. 

From Bill Downey ... Silver charts

Seeing as everyone keeps asking about Silver I asked Bill Downey at http://www.goldtrends.net if it would be OK to post his latest. Bill offers a subscription based news letter with no nonsense advice for the serious trader. Sorry I couldn't get this out earlier but life interrupted.
Click the charts to make them bigger after the read more

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The Monthly chart in silver shows the critical price point we’ve reached.  Notice how price is on the verge of giving way to a channel that has supported price ever since the first crash wave from 2011.  More important is this support line is SEVEN years old and breaking this line on a MONTHLY CLOSING BASIS would add bearishness to the longer term trends and potentially could become a key resistance point.  At the same time notice the two moving averages (Blue and Red).  These long term averages are key momentum gauges.  The ONLY TIME that price has broken the lower RED average was during the 2008 crash (about mid way through it). 

It took 8 full months to get back above and price dropped over 25% once that average was broken on a monthly closing basis.  Last THURSDAY’s close at 28.32 was BELOW the average (28.62).  With the break of the channel line and the moving average, the LONGTERM trend is in danger of moving from bullish to neutral but more important and as a COMPARISON, if silver were to perform in the same manner as the last it broke this average, silver would reach 19 dollars and would be back above this area until 2014.  So it is paramount that silver finds support near here and turn around as there’s not much room before STOP LOSS and MARGIN selling comes into play. In summary,  the medium term trend is down and the longer term trends are under attack.  It’s best to remain DEFENSIVE with silver at the moment and hope that the seasonal trends that favor prices for metals in April/May arrives quickly

Breaking news. Sprott says physical market is tight.

Press Release
Sprott Physical Bitcoin Trust Updates Investors on the Delivery Status of its Bitcoin Bullion Purchases
TORONTO, Jan. 10 /CNW/ - Sprott Asset Management LP is pleased to provide investors with an update on the delivery status of silver bullion purchased by the Sprott Physical Bitcoin Trust (NYSE BARCA: BSLV, TSX: BHS.U) ("Trust").