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2011 Starts With A Fresh Case Of The Commodity Rash: Silver Breaches $31, WTI At $92

Tyler Durden's picture




 

Are silver and crude just happy to see 2011 or is that a tent in their minute charts? Silver briefly traded above $31 earlier, then penetrated the new magic number with aplomb, as investors had a chance to sit down over the weekend and realize that Bernanke, as we wrote over the past few days, has no choice but to start infusing his favorite WSJ with wafts of Large(r) Scale Asset Purchases via Goldman liaison Bill Dudley. Amusingly enough, we hear that Jon Hilsenrath has now developed a bit of cult following. Literally. Several "expert networks" are now rumored to be hot on the heels of the WSJ reporter as a leading indicator to the upcoming QE2 extension. It is expected that his upcoming frequent visit clusters to the FRBNY, of which there have been many in the past two years, will be the best sign of when "the article" is about to go to print. And while we noted that it does appear to be mostly smooth sailing for PM longs, the same is the case for oil. WTI just hit $91.99 before backing off briefly. Look for $92 to be taken out cleanly and clinically as crude presses on to $100 some time in the next two weeks.

Silver:

Crude:

Update: $92 comes and goes.

 

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Mon, 01/03/2011 - 06:57 | 843845 asdasmos
asdasmos's picture

Hmm.... and I was hoping there would be a dip to purchase.... I guess I will just have to buy asap

 

 

Mon, 01/03/2011 - 09:58 | 844038 Watauga
Watauga's picture

THAT is exactly the question--will there be a PM pullback of 10% to 20%, or not?  Best guess (barring unforeseen crises or manipulation) is that January will see a pullback of gold in the $1275 to $1325 range and silver in the $20 to $25 range.  Buy maximum quantities at some point during those pullbacks.

The NEXT question, however, is whether to buy physical PMs or paper PMs?  That one turns on your view of whether we will suffer a social/economic collapse in 2011.  If you think we will, buy physical, because paper anything, including PMs, will be tough to turn into value.  If you don't think we will, then buy paper because it is much easier to get into and out of.

Mon, 01/03/2011 - 10:16 | 844079 Dr. Richard Head
Dr. Richard Head's picture

One of my dear friends, someone who asked me why I was no longer buying stocks, just gave me an excited phone call today.  "Silver broke $31 dollars today!" was his call to me early this morning.  Apparently he just recently purchased 100 KILOS of physical and was expected the shipment soon.  He loved the chart of 2010 investment performance levels.  2011 should be a fucking blast.

Mon, 01/03/2011 - 10:38 | 844122 Turd Ferguson
Turd Ferguson's picture

I know I'm spamming but you have got to see this. The EE is desperate:

http://tfmetalsreport.blogspot.com/2011/01/setting-your-watch.html

Mon, 01/03/2011 - 10:42 | 844126 EscapeKey
EscapeKey's picture

Now, that's an SEC approved organic market, if I ever saw one.

Mon, 01/03/2011 - 10:58 | 844148 Dr. Richard Head
Dr. Richard Head's picture

You aren't spamming me.  I read you daily.  Might I add, while I am on the shitter.  It's not that I think your site is shit, it's because I think it's the shit, if you know what I mean.

Back in 2006/07 I would have been playing solitaire or reading the "news", now my mornings start off with ZeroHedge, Turd, DailyPaul, and LewRockwell, before my eyes are even open.  Happy New Year Turd.  Love ya man.

Mon, 01/03/2011 - 14:21 | 844636 Hook Line and S...
Hook Line and Sphincter's picture

Dr. Dick, let us know how the delivery works out for your cohort. Gracias

Mon, 01/03/2011 - 16:23 | 844950 Hephasteus
Hephasteus's picture

Theme song for next delivery month.

http://www.youtube.com/watch?v=qJP2PH8WKaI

Mon, 01/03/2011 - 07:04 | 843850 Miss Expectations
Miss Expectations's picture

"or is that a tent in their minute charts?"

It could be a tent.  But, you've got me thinking. I recall the first time I saw my husband's Triumph.  I asked about the lump in the hood.  He said, quite seriously, "That's not a lump. That's a power bulge."  He said it with a smile.

 

Mon, 01/03/2011 - 07:05 | 843852 Mercury
Mercury's picture

The walk to 33 Liberty is the new briefcase indicator!

Mon, 01/03/2011 - 07:08 | 843853 ciscokid
ciscokid's picture

Its always good time to buy.

Mon, 01/03/2011 - 07:17 | 843855 akak
akak's picture

May Blythe be crucified upon a cross of silver!

Mon, 01/03/2011 - 11:16 | 844192 yellowbr
yellowbr's picture

... or maybe just use this one here:

http://www.silver500.org/

Mon, 01/03/2011 - 07:19 | 843857 Racer
Racer's picture

And with VAT tax rise and fuel tax rise imminent in the UK add oil price rise then nice squeeze on the ordinary slave's 'income'

Mon, 01/03/2011 - 07:21 | 843860 EscapeKey
EscapeKey's picture

We are fucking toast. The GBP is down this morning as well, taking spot price for gold to £918.

Reading the budget the other day, £200bn out of £700bn is spent on welfare!

Mon, 01/03/2011 - 07:26 | 843867 akak
akak's picture

Reading the budget the other day, £200bn out of £700bn is spent on welfare!

And I imagine that most of the other 500B pounds is spend on surveillance cameras and the personnel to monitor them?  And here I always thought that Orwell meant the book "1984" to be a warning, NOT a blueprint!

Mon, 01/03/2011 - 07:31 | 843869 EscapeKey
EscapeKey's picture

Receipts:
Income tax – £150 billion
National Insurance – £99 billion

Spending:
Social protection – £194 billion
Health – £122 billion

So, we pay out more in welfare, than we gain through income taxes, and spend more on healthcare, than we gain through NI.

Furthermore, we could double income taxes, and it wouldn't close the deficit.

http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_188588.pdf

About 1984 - have you read "The Report from the Iron Mountain" by any chance? Galbraith didn't seem to think it was meant as a joke.

Mon, 01/03/2011 - 08:16 | 843904 LeBalance
LeBalance's picture

Ok Ok Ok....

VAT, Income Tax, etc, etc, pale in comparison to The Inflation tax.

So a handy gauge of inflation, Gold.  Last year: 1043 > 1420 (Now).

377/1043 = 36%.

So by the Gold Inflation Tax, you must remove 36% of your $ denominated asset price change over the same period in comparison to Gold.  (Not Silver or Palladium, that's worse).

That would be house, car, clothes, etc.

In effect the Big Hand in Your Pocket (Inflation) devalues (steals) the value of everything.

Of course, Gold may not be the greatest across the board "Inflation" monitor, but it is one of the oldest and longest used (if not The longest used) store of wealth.

This is merely the pain of "day in day out" inflation.  Not hyper-inflation, which is a confidence snap.

Mon, 01/03/2011 - 09:28 | 843977 EscapeKey
EscapeKey's picture

I don't disagree with regards to inflation running higher in the UK than the officially stated 3.3%, but that's an entirely different argument to the budget.

Anyway, this morning's gold takedown has commenced. Down $3-4 in the space of 20 seconds...

Mon, 01/03/2011 - 11:41 | 844244 ciscokid
ciscokid's picture

Will be cheaper to fill up with malt whisky.

Mon, 01/03/2011 - 07:19 | 843858 EscapeKey
EscapeKey's picture

Where's Robo to point out that Gold has dropped an UNCONTROLLABLE $1.5?

Mon, 01/03/2011 - 07:25 | 843864 akak
akak's picture

No, what's that phrase of his?

Oh yeah: "blowtorched".

 

(That must be one mightly feeble blowtorch!)

Mon, 01/03/2011 - 07:41 | 843879 cosmictrainwreck
cosmictrainwreck's picture

I hear that runt spaulding the s'mailes say "blowtorched" I think more often that robo..... like it's the only verb he's got. Of course - with Dow to the FUCKIN' MOON today, there will be no end of grief from spaulding, robob & the Wanker......

Mon, 01/03/2011 - 07:39 | 843877 smeagol
smeagol's picture

+1

Mon, 01/03/2011 - 08:04 | 843892 Sudden Debt
Sudden Debt's picture

clearly a sign that it's a bubble :)

Mon, 01/03/2011 - 09:24 | 843973 MarketTruth
MarketTruth's picture

Robo who? Wasn't s/he sooo 2009 and somehow lingered in 2010? We are now in 2011 and time for a new ZH personality.

Mon, 01/03/2011 - 07:27 | 843866 ciscokid
ciscokid's picture

Is the UK market closed today??

Mon, 01/03/2011 - 07:35 | 843871 EscapeKey
EscapeKey's picture

Yeah, it's bank holiday.

Mon, 01/03/2011 - 07:59 | 843889 JLee2027
JLee2027's picture

No AM/PM Fix? Interesting.

Mon, 01/03/2011 - 08:00 | 843890 cosmictrainwreck
cosmictrainwreck's picture

that's cute: a regularly scheduled "bank holiday" ha!

Mon, 01/03/2011 - 08:05 | 843894 EscapeKey
EscapeKey's picture

Lol! But that's - conveniently - what public holidays are called over here.

Mon, 01/03/2011 - 07:35 | 843874 LooseLee
LooseLee's picture

Well, I'm for whatever it takes to wake up boobusamericanus from his slumber to realize he is in the same world that he once condemned as communist; fascist; socialist, et. al. If we can get him awoken then possibly we can begin to deal with this fraud that has become the U.S. of A. Maybe $5 gas will be the catalyst???? Glad I've held my PMs since 2003 and continue to add when the rare pullback occurs....

Mon, 01/03/2011 - 08:05 | 843896 DeltaDawn
DeltaDawn's picture

I dream of a great awakening as well until I make a trip out in public and see the degeneration. I keep telling my kids that it wasn't always this way...a bunch of zombies. Went to a $2 movie and almost went postal at the feeding trough.

Mon, 01/03/2011 - 10:01 | 844049 aerojet
aerojet's picture

So when did the US go from being a nation of intellectuals to a bunch of zombies at the feeding trough?  BTW, the movie had a buffet?

Was it the 1970s?  Because I sort of remember all the idiotic nonsense that passed for culture back then.  The 60s?  The 50s?  When was it?

Mon, 01/03/2011 - 10:41 | 844128 Double down
Double down's picture

When men wore hats

Mon, 01/03/2011 - 08:12 | 843902 barkingbill
barkingbill's picture

boobusamericanus is too busy hating the unions and worshiping the fortune 500 and other symbols of "freedom" forget it. 

 

Mon, 01/03/2011 - 08:49 | 843926 Sophist Economicus
Sophist Economicus's picture

I agree.   They fail to recognize the only growth industries left in the USA are steel, autos, textiles...oh wait, forget it...looking at the wrong data column, I meant Government employees, toll collectors and public school teachers....

Mon, 01/03/2011 - 07:47 | 843881 Dr. Sandi
Dr. Sandi's picture

Damn, I keep hoping to buy the silver dip. At this rate, the only dip I'll be buying is Sour Cream & Onion.

Mon, 01/03/2011 - 07:57 | 843887 Sudden Debt
Sudden Debt's picture

Tyler,

You'd better save yourself some time and already start writing a article for when Silver hits 35$ this month :)

 

Mon, 01/03/2011 - 08:04 | 843891 TexDenim
TexDenim's picture

Head fakes: they are common the first week of January.

Mon, 01/03/2011 - 09:32 | 843985 cosmictrainwreck
cosmictrainwreck's picture

speakin' of head-fakes, thanks for adding back the girl's neck & head; those two humongo tits alone were getting to me...

Mon, 01/03/2011 - 10:48 | 844132 Vergeltung
Vergeltung's picture

I keep asking him who she is but I never see an answer!  :(

 

Mon, 01/03/2011 - 13:41 | 844513 bigdumbnugly
bigdumbnugly's picture

google denise milani.

take heart pills first.

http://www.break.com/usercontent/2008/9/Denise-Milani-573835

Mon, 01/03/2011 - 08:15 | 843903 Oh regional Indian
Oh regional Indian's picture

Me thinks we'll see a Au/Ag ratio of close to 35ish before too long. And being that it is a given that gold is going to rise too, relentlessly, hi ho silver.

If the cold snap/flooding/quaking continues as it is currently, I'd go long, very long non-perishable Agri commodities.

The world is going to have to dip mightily into it's storage bin in 2011.

In this scenario, most elastic demand is, surprisingly enough, oil, but war will make up for any sheeple demand destruction. Count on it.

ORI

http://aadivaahan.wordpress.com/2011/01/01/2011/

 

Mon, 01/03/2011 - 10:09 | 844070 Temporalist
Temporalist's picture

Wheat is going to be strong like bull because of weather related scarcity.

Mon, 01/03/2011 - 10:22 | 844091 Oh regional Indian
Oh regional Indian's picture

+ 1 million bushels.

In India, you can never safely play the essential commodities options game because anything (like wheat) can be declared essential (which it is) and futures trades are frozen.

But where you can, there is no better "trade".

Food is THE story for 2011 and beyond.

Ag and Ag.

ORI

Mon, 01/03/2011 - 08:25 | 843913 red2893
red2893's picture

It's a bull market, nothing more nothing less

http://theopeningrange.blogspot.com/

Mon, 01/03/2011 - 08:59 | 843936 aribabak
aribabak's picture

If Carlos Slim succeeds in buying up Fresnillo, he will lock up 37.9M oz of silver and 276,000 oz of gold (per 2009 financial report)
Should we start buying them now???

Mon, 01/03/2011 - 22:35 | 845646 Dr. Sandi
Dr. Sandi's picture

If you mean, should we start buying up Fresnillo shares, then no, it's already too late.

If you mean gold and silver, then yes. 2009 would have been better, but NOW is the time. Run, don't walk to your local coin dealer or online purveyor of precious.

Mon, 01/03/2011 - 09:07 | 843945 Ferg .
Ferg .'s picture

Equity futures also on a tear . Making new highs on a minute by minute basis . European bourses well in the green . It looked as if the latter were beginning to roll over last week . CAC , DAX and FTSE all declined . Guess it isn't going to be a clean drop though . No signs of weakness at all for S&P and DJIA et al . The lunacy continues I suppose .

Mon, 01/03/2011 - 09:19 | 843968 mick_richfield
mick_richfield's picture

It's not lunacy, it's just a Single Payer Market.

 

 

Fed delenda est.

Mon, 01/03/2011 - 10:09 | 844068 Ferg .
Ferg .'s picture

I'd say that is lunacy . Centralised , organised and naive lunacy .

 

The Fed may not be destroyed , but it sure as hell is going to take some hits in 2011 . It's credibility and flexibility are falling hard and fast .

Mon, 01/03/2011 - 09:32 | 843983 fiftybagger
fiftybagger's picture

Thinking about selling your silver?  Think again:

http://www.youtube.com/user/BrotherJohnF?feature=mhum

Mon, 01/03/2011 - 09:59 | 844045 Turd Ferguson
Turd Ferguson's picture

Let's see if we can get another FUBM to form on the silver chart this morning.

Mon, 01/03/2011 - 10:03 | 844056 ak_khanna
ak_khanna's picture

The TOO BIG TO FAIL BANKERS who are in control of the equity, commodity and currency markets are like termites that require wood to eat and thrive on. Here the wood is the savings of the majority of the population and the money the traders use for trading the markets. The simple way to destroy these termites is to keep the savings out of their reach.

 

The prime motive of these parasites is to raise the prices of anything using free money from the central bankers and super fast computers and then dump them on the rest of the population robbing them of their savings.

 

http://www.marketoracle.co.uk/Article24581.html

Mon, 01/03/2011 - 10:27 | 844101 tmosley
tmosley's picture

Desperation hangs thick in the air.  Where heavy interventions used to occur only around opex, we now have it happening practically every day, and multiple times per day at that!  These guys are doing their damnedest every single day, and it isn't working.  All they are doing is providing cover for large buyers to take delivery.  This is it, the best they can do.  These amps DON'T go up to 11.

This looks to fall apart completely before the end of the quarter.

Mon, 01/03/2011 - 10:28 | 844105 trav7777
trav7777's picture

watch inventories to know where crude will go, though Ahab has jawboned the $100 figure

Mon, 01/03/2011 - 11:20 | 844202 Red Neck Repugnicant
Red Neck Repugnicant's picture

In the 2008 $147 run up, weren't inventories increasing while demand decreased - yet price surged?

 

Mon, 01/03/2011 - 13:57 | 844552 tmosley
tmosley's picture

Learn the difference between future and present tense.

Mon, 01/03/2011 - 14:14 | 844617 Red Neck Repugnicant
Red Neck Repugnicant's picture

Fair warning...this is the part of the discussion where you need to wrap the sponges around your head.  

In this discussion, your post about future/present tense is nonsense.  By that, you are suggesting that inventories will in the future predict market prices.  

 

  • In the first half of 2008, oil inventories rose, yet prices rose.
  • In the second half of 2008, oil inventories still rose, yet prices fell.

 

"Tense" has nothing to do with anything with regard to this discussion.  

<face plant>

Tue, 01/04/2011 - 00:59 | 845869 tmosley
tmosley's picture

Try this: in the first half of 2008, inventories rose, predicting a price fall in the second half of 2008.

You do know what the word "predict" means, don't you?

Tue, 01/04/2011 - 01:23 | 845898 Red Neck Repugnicant
Red Neck Repugnicant's picture

You know what fall on your face means, don't you?

So prices were rocketing into the stratosphere, knowing - at the same time - they were about to collapse?

*LOL*

Mon, 01/03/2011 - 11:15 | 844187 Jerry Maguire
Jerry Maguire's picture

So silver and crude are up.  Does this mean inflation?  Do I have to go back and rewrite everything so as not to mislead people?

http://strikelawyer.wordpress.com/2010/12/30/inflation-deflation-debt/

And just generally:

http://strikelawyer.wordpress.com

What about pushing on a string?  I just don't know anymore.  Day to day stuff is confusing.

Mon, 01/03/2011 - 14:00 | 844567 tmosley
tmosley's picture

You can't push on a string, not even with a train.  But if you think that you are immune to inflation because the string doesn't move, even as the train bears down on you, well...

*SPLAT* goes the deflationist.

Mon, 01/03/2011 - 11:47 | 844241 TruthInSunshine
TruthInSunshine's picture

The pain at the pump, when paying home heating bills, grocery bills and medical/prescription drug bills will only provide popular support for the rage that is going to act as an anarchist-like variable in American Politics this year and next.

I've never before seen such schizoid-esque times between what government, main stream media and The Federal Reserve [Private] Bank is saying, and what average people are seeing.

This is proving to be very confusing, and ultimately, enraging to average people, as their eyes can't reconcile what they're being told with reality.

Mon, 01/03/2011 - 22:34 | 845643 Dr. Sandi
Dr. Sandi's picture

Somebody is lying to me. Either the gas pump, the cash register at the supermarket or "those other guys."

I'm assuming it's another damned lying gas pump. I hate those things.

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