Taking a Licking. Still Ticking.
Another series of ruthless attacks have left the precious metals battered and bruised but they are still standing and looking like they want to continue moving higher.
First of all, a quick update to our Open Interest situation. Do you recall the trading action of Friday? Gold was down about $17 and silver fell about 60 cents. In a "normal" market, you would expect the gold open interest to have been stable to slightly down. Why? Because a $17 down day would prompt some longs to sell and close positions but, at the same time, fresh shorts would likely initiate new positions. The two would almost cancel each other out. Late today, we found out that the total gold OI increased by almost 7000 contracts on Friday. I'll state that again so as to ensure you didn't miss it: Gold OI increased by almost 7000 contracts on Friday!
Friday was a ridiculous and clear attempt by The Cartel to contain price. You can see their work on this chart that I posted this morning:
The battle continued to wage today. After rising to $1666 at the Comex open this morning, gold was immediately attacked by the Jackals. It was pounded in the first few minutes of trading and then again, right at the close. Typical Cartel nonsense and bullshit price suppression.
I will be flabbergasted if we don't see another, significant jump in OI tomorrow (for today's trade). Lots of new shorts were thrown at gold in the first few minutes today. The OI action throughout the day was most likely neutral. Then, even more new shorts were thrown at gold right at the close. As of the close Friday, total OI was 425,244. I expect tomorrow's reading to be closer to 430,000. Since today was Tuesday, I'll be quite interested to see this week's CoT numbers, too.
As has been the case recently, the silver OI picture continues to look more like a "normal" market. While silver was shedding 60 cents on Friday, the OI declined as you'd expect, from 103,877 to 102,835. Today, the price of paper silver tracked pretty closely to paper gold as silver was also attacked at the open and the close of the Comex. As much as days like today hurt, the OI tells me that the EE is continuing to slowly exit the silver market. Patience in silver will be greatly rewarded in 2012.
Obviously, the Criminals have been intent on hammering and suppressing price but they're not making much headway. Additionally, lease rates continue to be stable so there does not appear to be an abundance of gold for The Cartel to supply.
In the end, if I am right and the bullion banks have an intermediate-term goal of reducing/eliminating their massive, short exposure to silver and gold, then all of these fresh shorts in gold are eventually going to have to be covered. Gold will rally through 1660 and then tackle 1680. Soon, we must prepare it for The Battle Royale of 1700 and the down-sloping trendline from the highs of early September.
With each passing day, confidence is growing that silver has broken the trendline from its highs in September. With that accomplished, it must then rally through $31 and $33 before it can attack its real nemesis, the trendline from the highs back in April. Getting through "Line #2" is extremely significant, though, so be happy and optimistic. As long as silver is above that line, the chances for another collapse in price are remote.
Lastly, four items for your consideration. First, another Eric King update from his "London Trader". For obvious reasons (namely inaccuracy), I don't put a lot of stock in LTs short-term price projections. However, since he/she mentions so many of the points that I've been making, I thought I should include it here:
Here's an update from Egon. Please take the time to read it.
This next item is certainly thought-provoking. As with all Glenn Beck stuff, please ignore the messenger if you must but try to listen to the message. Maybe this is nonsense but it seems worth consideration at the least:
And here's something that I posted in the comments of the earlier thread. Good stuff.
Look, the financial world is hanging by a thread. Downgrades and devaluations are rampant. Greece is said to be very near default. Gold is being actively suppressed for a number of reasons but this latest scheme has nearly run its course. Be patient and you will be rewarded with massive amounts of fiat that you can then exchange for even more physical metal (if you can actually get it ). Relax and have a great evening. TF