Off To The Races

As the great Trevor Denman would say: "And away they go"! (fast forward to 2:05)

My intention this morning was to discuss this:

MODERATOR

We seem to be very near a capitulation of the spec longs where those who are going to sell will have sold.
At the same time, The Cartel is rapidly covering short positions.
I'm getting increasingly bullish.
Let's see what tomorrow brings.

And now look what tomorrow has brought! Free money!!! Bailouts of everyone and everything!

http://www.zerohedge.com/news/foreign-currency-liquidity-swaps-aka-global-bail-out-plan-b-faqs

Rather than focus on the inevitability of the failure to print our way back to prosperity, let's go ahead and dissect the latest CoT report, as there are several interesting trends within it.

First up, the perspective of someone who actually knows what the heck he's talking about. I'm going to have a slightly different take on the numbers but you need to be aware that my interpretation is not necessarily the correct interpretation.

http://www.traderdannorcini.blogspot.com/2011/11/commitment-of-traders-reports-confirms.html

I haven't spoken with Dan about this but I think I know where he's coming from. Margin rates are high and traders, both spec and commercial, are being driven from the pits and, without their interest in participating, it will be difficult for the metals to rally.

I have a somewhat different point of view. What I see in this week's CoT are markets that are very close to a bottom. Why do I say that?

1) Spec longs in both gold and silver were bailing out at a very quick pace. This is bullish for two reasons:

  a) It's a contrarian indicator, first and foremost. If specs are a sort of "dumb money", do the opposite.

  b) Spec money will, eventually, flow back in. You want to be ahead of it.

2) Commercial longs are also selling but commercial shorts are covering.

  a) More long liquidation leads to a point where everyone who is going to sell will have sold.

  b) If The Cartel is the "smart money", follow them, They are covering shorts which means they are buying.

Let's look at the specific numbers. In gold, specs longs fell by over 11,000 contracts while, at the same time, spec shorts covered 13,000 contracts and The Cartel covered another 12,000. Longs selling and shorts covering...that's exactly what we're looking for when we go looking for signs of a bottom.

In silver, the picture is much the same. Spec longs fell by almost 10%, over 2200 contracts. All the while, The EE covered a huge 3,270 of their shorts. Again, specs bail while the banks cover. This is a bullish set-up.

And the trend has continued this week as we've approached December contract expiration. As of Monday, the total OI in gold had receded to just 426,000 contracts and silver fell to 99,000. It would seem that many traders liquidated their December contracts but chose NOT to roll into Feb12 or March12. That pent up demand is clearly the main driver of the huge move you are seeing back into the metals today.

And this is ultimately why these CoT numbers are so bullish. Similar to late September, almost all of the spec money had exited the PM pits as of yesterday. Today you are seeing the initial impact of that money rushing back in. Are the bottoms in? Probably. Especially with the kick-starting of the printing presses today. Let's see where this all takes us. There will likely be a pullback later this week as the reality and gravity of the situation takes hold. Could that be the dip to buy? Maybe. Let's wait and see. I'll keep you posted.

paper_11-30amgold.jpgpaper_11-30amsilv.jpg

In other news, the Middle East continues on the path to war. Here's just some of the latest:

http://www.zerohedge.com/news/uk-iran-situation-escalates
http://edition.cnn.com/2011/11/30/world/meast/syria-unrest/

http://www.reuters.com/article/2011/11/30/us-pakistan-nato-idUSTRE7AT0JZ20111130

Also, I last night I found this interesting piece from the always-entertaining Mark Steyn. Worth a read:

http://www.ocregister.com/opinion/debt-328730-government-spending.html

Lastly, just a reminder. Today is the final day of the great, once-in-a-lifetime, genuine, real deal, autographed, big yellow hat sale. I'll be deleting the "sticky" thread at midnight EST so anyone wanting their own piece of precious metal antiquity had better act fast...or wait until the next "hat contest".

Have a great day!  TF

126 Comments

bellyacre's picture

first

first

RedRover's picture

Well alright!

Well alright!

boil_in_the_bag_rice's picture

Great work Turd. Highlight of

Great work Turd. Highlight of the day! Thanks for all you do.

ewc58's picture

Boiing!

Oh yeah baby, hit me with your Rhythm Stick, hit me, hit me, hit me!

GoldMania3000's picture

An Inisde Job

Based on your assessment TURD, if the cartel/ee where covering their shorts and where buyers, they must have known something was up. the word was passed along...they knew....it seems way to obvious.  Follow the criminals...they always know where to find the money

Silver_investor's picture

Fed announcement this morning

Earth dwellers, the world's problems have been solved.

As I type this, the Dow Jones Index is up almost 400 points. What utter nonsense. While I'm glad that PMs are rising, this action by central banks around the world could hasten the arrival of hyperinflation. 

juanmehris's picture

wow - about the time the sax

wow - about the time the sax player starts playing two at once it got a bit surreal.

GoldMania3000's picture

ok TURD

Where do we go from here...you gave us earlier this year the Turds famous call. Can we get another one of those calls.....aummmmmmmm TURD:)

GoldMania3000's picture

ok TURD

Where do we go from here...you gave us earlier this year the Turds famous call. Can we get another one of those calls.....aummmmmmmm TURD:)

Turd Ferguson's picture

I'm working on it.

MODERATOR

I'm working on it.

Response to: ok TURD
ReachWest's picture

Firefighters and MOPE

Thanks Turd.

Just watching CNBC (Why do I do that?) and listening to an interview with Goldman's Jim O'Neill - according to him, things are looking quite good in the USA. WTF?!

I know it's all MOPE and spin, but it's amazing to see the firefighters (AKA The FED .. arsonists?) call in more trucks and at the same time turn to the local news camera and say, "The fire is just about out". Argh.

ewc58's picture

No words needed...

But you all know I can't shut up... just sayin', this one is as hilarious as it is dead-on.  I'll bet by now this fine Public Serpent is wishing he could get royalties for his image, the dude's around like dog doo lately...

GoldMania3000's picture

HMMM

The greed will now come back....it's so true..buy when they are fearful...now let's hope we get to sell some of the paper crap to the greedy folks and buy the silver/yellow hard stuff...this is what im talking about

Irene's picture

@ewc

I don't think any of us want you too shut up.  That pix is priceless. 

stoneeh's picture

So, 2000 contracts standing

So, 2000 contracts standing at first day notice. You gotta be laughing your ass off at Harvey Organ, each time a contract expires it seems like the end of the world for him, and every time nothing happens. 90% or more of the 2000 contracts will be settled in cash too, or some other form of paper.

Anyway, everything else looks exceedingly bullish.. just curious how the position limits will play into all of this.

Excalibur's picture

Trevor

ecw, U2 like Ian Dury? 

LaMachinna's picture

Hoping noone

was seriously gouged today sad  Hope noone burned by Casino Royale.....

Fred Hayek's picture

Thank you, EWC. That image is brilliant.

I've already passed it along to a dozen other folks.  Genius.

Oh, and can anyone tell me.  Does the Fed's carpet bombing of the world with dollars this morning come before COMEX buyers have made their definitive commitments to take delivery of gold or silver in December?  It'd be great if they got enough buyers to crash the frigging thing as a result of this stupid move.

pforth's picture

Glad to see this but...

Silver (up 3%) is still underperforming the ES (up 3.4%).  I'm enjoying the move, but we won't really be able to tell that the people who are controlling the silver price have lost control until it moves upwards independent of the DOW.  Remember, they don't necessarily have to make silver seem like a bad investment... it just has to be less good than stocks.

solidpractice's picture

As they say in Gotham...

Hard Rain's picture

QE 3 Baby....

....on a global scale.

Rain

themarkmonster's picture

Ian Dury was a genius

Ian Dury was a genius

Orange's picture

Barnhardt

She's not on facebook. Smart lady.

http://barnhardt.biz/

FriedEggs's picture

5ive K

Hey Turd - Thanks and...

.

Congrats on 5000 Users to the TFMR site - well done.

.

Fried(e)

¤'s picture

Thanks TF

Thanks for your latest effort and the update.

I'm pretty happy about the whole thing for reasons I posted at the Speak. It's a good feeling to see this happening but not so much for the reasons why.

I don't see this as being anything long term at all. I knew China would have to go along with the monetary easing just like everyone else is doing.  You could see it coming a mile away from everything that's been written or spoken  out there about that possibility.

Shill's picture

Things that make you go Hmm?

Things that make you go Hmm?

JackPutter's picture

Found this Vid on CNBS

Cartoonist turned to video for media, and the cures for the crisis;

cpnscarlet's picture

@Shill - OK, I'll bite.

@Shill - OK, I'll bite. What's the significance (is it something to do with pachyderms)?

cpnscarlet's picture

Morning thoughts...

Nice PM moves, but war drums still loud. Been having this run through my mind as we move toward Christmas -

Ned Braden's picture

Fed Cancels POMO??

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