Bizarre Silver Open Interest (chart update)

I wasn't planning on making a new post this afternoon and time is short but I feel that we must discuss the completely bizarre and somewhat unprecedented open interest numbers in silver.

Yesterday, at about this time, I gave you this:

"Lastly, just a word about the latest OI numbers which were again rather eye-opening. As you surely recall, gold was down almost $14 yesterday. It appears to be a mass long-liquidation. HAHAHAHAHA! Suckers! The OI in the Feb12 fell by 18,000 contracts but only 9,000 rolled into April. The rest of them simply capitulated. Dweebs. They shoulda been reading more Turd! Clearly today's rally is primarily due to those same "traders" rushing right back in. I expect a pretty healthy bounce in OI when the numbers are reported tomorrow. Probably something like 7000 new contracts.
In silver, the OI situation remains stable and this is a very good thing. Yesterday, price fell by 30 cents but OI only declined by 5 contracts. A battle is being waged between resolute longs and the EE, which, as The Wicked Witch told you yesterday, is intent upon only allowing silver to move up slowly. Well, their plan sure failed today. Let's look for another, healthy 2000-3000 OI bump when today's numbers are released tomorrow."

Well, the gold picture is almost exactly as I'd projected. The same old longs who got flushed out on Tuesday came rushing right back in yesterday as the total gold OI rose by about 7,600 contracts, from 427,408 to 434,997. Though this was predictable, total OI is still about 3,000 contracts below where it was a week ago when gold was $40 cheaper. This shows us that, though new longs are entering and exiting the gold pit on a daily basis, much of this last week's rally has been on the back of short-covering, by both The Cartel and the spec shorts.

Silver, on the other hand, is totally f'd up. I don't even know where to begin! As you'll recall, I had thought that the big rally last Friday would be proven to be primarily EE short-covering. Instead, the OI numbers showed an increase of over 2,300 contracts. Short-covering was prevalent on Monday as silver rose 60 cents but OI fell by 1,400 contracts. Tuesday, as you know, was a push as OI and price were basically unchanged. Yesterday, as we all saw, silver exploded along with gold after the FOMC minutes were released. With a Comex session gain of $1.15, I thought we'd see another 2000+ gain in OI. Instead, we saw a 500 contract decrease! Since there was almost certainly some new buyers hitting the pit, how many shorts did the EE cover yesterday? 2000? 3000? Who knows?!? What is for certain are a couple of things:

  • Over the past week alone, silver has rallied almost $3 while total open interest has fallen by 300 contracts.
  • Shorts are scared right now (physical supply squeeze?) and rapidly moving to cover positions.
  • Margins are so disproportionately high that new money is barely flowing into the pit. No doubt that the MFingGlobal disaster has scared off quite a few specs, too.
  • This lack of liquidity will lead to increased volatility. Yes, most of the volatility will be to the UPside due to the aforementioned physical supply squeeze and other bullish factors but we must all be prepared for some pretty violent takedowns, as well.

Below are some closing charts for today. Not much new to report from this morning. The metals have been pressured on the Globex due to a little pop in the POSX. Not really a big deal as they are due for some profit-taking anyway. (If you bought on the FUBM yesterday morning pre-FOMC, you probably gave it through the day today to see how much farther things would go. When you saw The Pig begin to perk up, you rang the cash register and sold this afternoon. Don't worry. Those folks will be back.)

The main action now is tomorrow. Gold must close above $1705 and silver must close above $33. Failure to do so would likely postpone a further rally for a few days. Watch prices very closely overnight and keep your fingers crossed. Be on the lookout, too, for headlines that might breathe some life into The Pig. After a 3% drop this week, you can expect TPTB to try to prop it up at some point.

paper_1-26pmpig_0.jpg

paper_1-26pmgoldh.jpgpaper_1-26pmgoldd.jpg

paper_1-26pmgoldw.jpg

paper_1-26pmsilvh.jpgpaper_1-26pmsilvd.jpg

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More tomorrow.   TF

10:20 am EST UPDATE:

A very interesting battle is setting up today. There seems to be an effort afoot to keep gold under 1730 and silver under 33.80 but more likely 34. Which side will win? The smart money would have to be on The Cartel and the EE but we'll see. In the end, the primary battle for today is not in beating those levels. We mainly just need to hang on to the gains of this week and not give them back. IF we can, the weekly charts will begin to look quite favorable. An improving technical picture will inspire some fresh WOPR and hedgie cash to flow into the pits next week. Given the utter lack of volume and participants in silver, new money can have a rather dramatic effect, as we saw last Friday.

The key levels to watch are on the charts below. It would be fantastic if gold could close above 1720 but 1705 will do. A silver close near or above 34 would be extraordinarily great but, really, anything over 33 will be fine. We just don't want to lose too much momentum as we head into next week.

paper_1-27amgold.jpgpaper_1-27amsilv.jpg

Have a great day and keep your fingers crossed. TF

273 Comments

Dr Jerome's picture

I've never been first before!

And I read Turd's whole article before posting.

Keep stacking!

FleetFeet's picture

Old story . . .

Question:  Were economies throughout history, including America’s 200+ years, repeatedly similar to our years?  In 1819 - 1820, American writer Washington Irving [Rip Van Winkle; The Legend of Sleepy Hollow] published a collection of stories that included a tale of a traveler who left England, bound for the West Indies.

The traveler’s sailing ship was part of a convoy, and they had a favorable breeze for a rapid day of sailing, and then a beautiful sky at sunset when the wind died down and the sea lay calm.  The traveler remarked to the captain that all augured well for a prosperous voyage, but the veteran ship’s master said the peaceful calm was a “weather-breeder.” 

And indeed, that night, a terrible storm battered and scattered the convoy, leaving some ships demasted, and others firing signals of distress. . . .

The final paragraph of the story is: 

“When a man of business, therefore, hears on every side rumors of fortunes suddenly acquired; when he finds banks liberal, and brokers busy; when he sees adventurers flush of paper capital, and full of scheme and enterprise; when he perceives a greater disposition to buy than to sell; when trade overflows its accustomed channels and deluges the country; when he hears of new regions of commercial adventure, of distant marts and distant mines, swallowing merchandise and disgorging gold; when he finds joint stock companies of all kinds forming, railroads, canals, and locomotive engines, springing up on every side; when idlers suddenly become men of business, and dash into the game of commerce as they would into the hazards of the faro [card] table; when he beholds the streets glittering with new equipages, palaces conjured up by the magic of speculation, tradesmen flushed with sudden success, and vying with each other in ostentatious expense; in a word, when he hears the whole community joining in the theme of ‘unexampled prosperity,’ let him look upon the whole as a ‘weather-breeder,’ and prepare for the impending storm.”

                       [quoted recently in the magazine, The Sun] 

Kuchek's picture

I've never been first before!

And I read Turd's whole article before posting.

I rarely post. I just like to read what all you wizards dish out. Thanks Turd! Love the site.

Animal Sacrifice's picture

Forth

Shnozberries's picture

Silver, Soooo...

BTFDs?

Dyna mo hum's picture

Baltic dry freight chart

I looked at the bdfi chart and it is telling. Europe is on the precipice indeed. http://www.bloomberg.com/quote/BDIY:IND/chart

Tabberto's picture

Thanks Turd

You are a Dude.  Silver is ticking...

swampgas's picture

Higher Lows on Silver

Silver's looking pretty good. It's been making higher lows on the 15 minute chart since early this morning. The following address will bring up the 5 minute chart. Just click on the '15' above the chart.

http://www.forexpros.com/commodities/silver-streaming-chart

I also like the little "i" heads-up messages that appear several times a day when something affects the prices of the PMs.

CaptainOverkill's picture

Somewhat OT question

I watched Turd's recent Wicked Witch video, and realized I did not know who Ruprecht was. Is he a real person or just someone invented by the makers of the video to have the conversation with Blythe?

agrock's picture

Inquiring also

Yes - who is Reprecht? and who does he represent? besides a servant of blythe.

¤'s picture

In case no one knew....

...did I mention I'm bullish?  Thanks for the update TF.

Gold and silver seem to be really disconnected at this point. I've noticed they are reacting differently for the most part lately but didn't realize why.  I'm weak in the O/I interpretation and need the explanations on it.

I wonder if Sprott ever rubs his two hands together with a diabolically, happy laugh when these moves in silver happen? Like a mad/happy genius. I say that with admiration.

Imagine being Eric Sprott and having that much phyz! cool

Lumpy's picture

Click

Over the last 2 or 3 years the POSX has been in the low 70's click up over 80.  Maybe they hit the clicker a little too hard and THEY want to pull it back a bit.   They need inflation and a high POSX doesn't help that cause.

Gold within spitting distance of $2000....Click bring it right down to $1500's.   They really don't need the Gold at $2000 headline.

Silver withing spitting distance of $50...Click....right down to the mid 20's.  Don't need an all-time high in another competing currency do we.

Dow getting close to falling off  the edge Tah Dah.   Double Click.....amazing rebounds based on BS news....and god knows what the FED is doing.

If Silver is allowed to run it's only to scalp us for huge profits later.

If the dollar looks weak it's because they need it to look weak.  Usually to help the Dow.  I may be taking a very simple view here, but If you look at the entire picture "knowing" that 100% of it is controlled completely by the EE it does make sense.

The 2008 collapse was the back-drop needed to give the FED all the brand new tools to help get the can down the road for who knows how much longer.  So it's not a stretch to feel like they were totally in control when it looked like they weren't.

Rigged to rob us blind.  Rigged to keep up the illusion of a strong/less weak financial system.

That's my probably wrong view of it......but it makes sense to me.

Dave T's picture

Ruprecht

My guess is that Ruprecht is from Dirty Rotten Scoundrels.

http://www.youtube.com/watch?feature=player_detailpage&v=nqMc9B7uDV8

¤'s picture

Kuchek

Nice try! wink

Post more often and you'll be first one of these days. Hope to see you on board more often.

Dr Jerome......Congrats! Good feeling isn't it? I bet you smiled.

Silly maybe, but it's tradition and I'd like to see more people posting more often trying to do so and join the group on here. 

So if you're out there and reading this and don't post often or have thought about it....just do it.yes

HeNateMe's picture

I Don't Post Much

Probably because I am jealous of the group acumen on this website.  

I am just a lowly mid-30's coming of middle age baby boomers' son.  I am neither Generation X or Y.  I am of the lost generation.  I have money and I have debt.  I have hopes, I have regret.  But I am a huge physical silver advocate.

Speaking of, my folks have been meeting with some bullshit financial advisor who told them not to bother with silver.  Only 5% in gold, he said.  I told them to tell him to f**k off and that he knows nothing nor cares to know anything about the silver story.  

However, this event did give me hope - hope that the mainstream isn't even close to silver.  We are still 100 yards from the threshold.  Anyone who talks about mania, euphoria, bubble, etc. is full of shit.

HeNateMe

ClinkinKY's picture

Screwed

¤'s picture

henateme

You sure sound like a Turdite to me and I've seen your avatar enough to know your one of us.

The more you post the more you'll relax about having something to offer. I'm willing to bet you have a unique perspective on something or maybe just a boatload of goodwill or humor to mingle in here.

Contribute when you can or feel like it. We could always use a new slant on things and some humor/goodwill at the same time. 

Turdle GG's picture

Time for a margin CUT?

Maybe the crooks need to invite a bit more speculative interest by cutting silver margins?

¤'s picture

Anymore of you out there?

C'mon now, I know some of you are just hanging back and don't want to dazzle us with your brilliance. I'm willing to take be dazzled or just to say "hello" at welcome you to the community.

Think about it and just do it and post or register at least. C'mon....just do it!

Turdle GG's picture

Big week and Chinese have been on holiday

What are they going to do next week when they come back from CNY holidays?  A bit of panic buying perhaps?  

Perhaps Eric King might get some of his much loved "disorderly to the upside" action?

¤'s picture

Turdle

Long time no see. Nice to see you on the Main.

I like what your saying about the margin cuts. Makes sense. We can only hope and wait until some money comes flooding in. From the sounds of it, Jim Sinclair and Sprott and others are on a crusade of sorts to get the information out to the big money people.

At some point, this becomes very breathtaking to witness to the upside. 

HeNateMe's picture

@DPH

Yup, I am a loyal Turdite and have been lurking and posting since last March.  Love this place.  My #1 website.  I think I refresh it about 20 - 30 times a day. 

Hopefully I can bring something to the table.  Honestly, I am more passionate about silver than I am about anything else, except the wife and kid...except the wife and kid (wait, she doesn't read Turd).

I do like to throw in the sarcastic humor every now and then.  Feel like that is my specialty.  

Not much more to add right now except that I am going to begin Rickard's Currency Wars tonight.  Been dying to read it!

HeNateMe

¤'s picture

Look very closely......August 20, 1896

0820csm.jpg

pixel.gifSound Money, 20 August, 1896

We Want No Crown of Thorns, No Cross of Gold-- Like This.

small_potatoes's picture

@DrkPurpleHaze

hello... i've been hanging around for a long time, henateme summed it up pretty good for me as well. i'm from that in between generation as well, just watching those around me walk blindly over the cliff. try educating them and they just grin at you and shake their heads.

question's picture

@California LawyerI; Finally Figured Out the Perception Problem

"Anyhow, the doomsday scenario plays out slooooooooowly, very slowly, at the margin, creeping along barely perceptible."

Yes and yes again; it's been going on for a while now. I read "slowly boil the frog" but no one seems to realize that we are being slowly boiled NOW.

Also, population reduction due to poor eating/nutrition/lifestyles and a growing lack of affordable medical care.

A few generations and it will be an entirely different world.

That was a very well put together post that everyone should take to heart.

"There is no need to panic and prep like a mad man.  Gradually accumulating physical PM's little by little is just fine."

Calmly head to the exits with friends and family; learn to grow food, learn a tradable trade (bread making eh?), set  realistic priorities and make them happen and pass on what you know.

cpnscarlet's picture

Fascinating... with an error?

http://www.zerohedge.com/news/guest-post-gold-bonds-averting-financial-armageddon

This newly listed article at ZH is a great read and really spells out a return to monetary sanity as a gold-backed system is set up to solve gov't debt problems. However, like the author says, "it's not realistic" for many reasons. Of course asking for sanity from the federal gov't is about the most unrealistic thing currently.

But I take issue with one thing the author writes that is repeated many times. "Gold isn't going up, paper's going down." This is true to a large extent, but there are just as many PM pundits and analysts who would say that "gold is undervalued". I am in that camp. I simply believe that at this moment, the true value of gold (a nebulous concept to be sure), measured in USD, is lower than it should be. I have no hard numbers to throw in here, I am simply basing this on the last bull of the 1970s. At a given time, the Au/USD price was such that the dollars in circulation were not backed. At then end of the bull, the Au/USD actually exceeded the face value of $ in circulation. I'm sure many of you have seen the charts showing this, and right now, the $ in circulation are so "unbacked" as to be frightening. I also bring to the table the concept that Au/person on the planet has declined. If human economy needs (and I think it does) a standard for transactions, than there needs to be enough value in gold to circulate to cover all human activity (again, a somewhat nebulous concept).

Now put it all together and what have you got? IMHO gold is cheap right now and worth much more than the dollar price would have you think. FWIW.

silver foil hat's picture

I'm going to guess

the FFBSTA*  is going to happen in Arizona. Just a hunch...

*False Flag Bull Shit Terrorist Attack

Go Jan!

¤'s picture

henateme

I just started it yesterday...finally! 

I've had it since it came out and I've been backed up in reading material and the holidays etc. and haven't got to it until now. It's got my attention and looks like a easy and compelling read.

I like Rickards from what I've read and heard over the years. He's just saying what he thinks and doesn't seem to care if it ruffles any feathers, generally speaking. 

Puck T. Smith's picture

I don't post much

I don't have any expertise in PMs but my gut.  Sometimes it's way right, sometimes not so much.

The one thing I could really ramble on about is political philosophy, but that tends to get out of hand pretty quick.  In case anyone is interested, you could spend a little time here: http://pucksmith.blogspot.com/ here: http://voluntaryboundaries.blogsome.com/ or here: http://www.facebook.com/puck.smith

Otherwise, I just listen and throw in a comment when I feel competent to.

¤'s picture

small-potatoes

Hello there! I love when this happens and people come on and take a stab at it.

I don't think there is one specific thing that anyone can bring to the site that wouldn't be appreciated unless it's super negative. I sense none of that lately.

I'm glad you responded  and I encourage any of you who are reading this now or later to just register or post, even if it's just a shout out of "Hello!"   

Ok....is there anybody else out there who wants to say hello and break the ice? Any music vid you want to see?

C'mon....make me type and post back a "Welcome aboard!" to you or post a vid of some tune you haven't heard in a long time. 

Just do it! wink

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