Turd on the Brink of Insanity

Gold was down about $12 and silver about $1.50 for the week covered by the latest COT.

In the COT, both gold and silver show a growing net position for the commercials.  To me this seems routine and not a big reason by itself to get excited about gold or silver moving up in the short term.  It's not bearish, but it's not immediately bullish either.

On the other hand, an increasing commercial net position accompanied by a falling OI is definitely a coiling spring.  But that is in the context of a longer time frame.  Could be sooner, could be later -- the COT by itself won't tell you which.  The spring could definitely coil more.

To me, the gold COT looks better short term than silver.  This is just based on the fact that commercial net position in gold has quickly bounced almost back to the high level it had around Jan 1st (~92%), whereas silver has not bounced back up so much (~63%).  (In other words, gold is much closer to being "fully coiled like Jan 1st" than silver.)

Disclaimer: I'm long physical, but I no longer by and hold paper gold or silver.  In other words, I trade paper every day, but I won't make any decisions based on my opinion in this post.

Guess I do know how to embed. : )  Anyhoo, the perfect song for insanity and trading, the  Awesome Dr John

Thx for the bacon video.  Enjoyed by one and all. 

Great idea silvermedusa 

A Stones vid at...

http://www.tfmetalsreport.com/comment/153709#comment-153709

GSA official to take the Fifth
http://www.politico.com/news/stories/0412/75121.html

How come TPTB or their minions, never go to prison when they take the fifth, or do they? I find it fascinating that the very same people that have contributed to shredding the constitution, fall back on it when convenient and necessary.

Why don't more people claim the Fifth?

OT. Why isn't Corzine in friggin jail? And Dimon as bunk mates?

Thank you for your input

looks pretty positive to me especially for silver.

Yes, but when it comes to ammo, I know which side I'd rather take my chances on....

Here you go, posted over in Pailin's Corner, figured you all may want to look at it also.

(Commercial long – Commercial short) / OI

Since 2010, using this equation this week would be 18^th best week to purchase silver out of 67.  Best week would have been 12/27/2011, worst week would have been 9/6/2011.  It’s not perfect, the second worst week would have been 3/1/2011, I’m guessing a massive short squeeze lead to that big run up in price the next two months.  2/28/2012 was sixth worst.  I haven’t really analyzed this as I just did it, but it looks like we are safe from some sort of massive waterfall, for the next month or two anyway.  Seems to me we’ve already bottomed, which I didn’t think before I did this.  I think a better way to do this is to compare current weeks number to the previous X weeks number, where X is number of weeks, and then mess around X to get index to predict price better, I’ll try and do that later.

Anyway, here are top 25 and bottom 25 you can have fun playing with over the weekend.  Sorry for making post so long, I can’t think of a better way.

BEST

Index                                    Date                      OI           C. Long C. Short

-0.133733974937054        12/27/2011         138611  53053    71590

-0.140849201012861        12/20/2011         139802  52154    71845

-0.143806100355258        01/03/2012         142713  52906    73429

-0.15562618246302          10/18/2011         160153  55226    80150

-0.158961876501697        10/04/2011         159403  55004    80343

-0.16675842443569          01/10/2012         139861  50633    73956

-0.173441424982873        10/11/2011         157644  52864    80206

-0.173448601381229        01/17/2012         140889  51436    75873

-0.180739455337558        11/01/2011         163661  53824    83404

-0.180930475311939        10/25/2011         164776  53568    83381

-0.189082783570973        11/22/2011         140970  49692    76347

-0.189736523445655        11/08/2011         167643  55913    87721

-0.190533512003452        12/13/2011         132087  45534    70701

-0.192842980370155        09/27/2011         156853  52423    82671

-0.195248340858814        11/29/2011         131996  48325    74097

-0.198360596497145        11/15/2011         166036  53681    86616

-0.19880402926578          01/24/2012         143649  48785    77343

-0.198848127881313        04/10/2012         153142  55495    85947

-0.213855187733988        12/06/2011         128746  45070    72603

-0.218244105595486        05/17/2011         193531  51398    93635

-0.218881526523234        06/07/2011         186987  52553    93481

-0.220755035475668        06/14/2011         183647  53953    94494

-0.221667026515736        05/24/2011         194526  48988    92108

-0.223001868382811        01/31/2012         144510  48169    80395

-0.223723470134549        06/28/2011         159867  47651    83417

WORST

Index                                    Date                      OI           C. Long C. Short

-0.333655792091254        09/06/2011         168497  42873    99093

-0.331167325456614        03/01/2011         185441  40702    102114

-0.324297996696455        08/30/2011         165277  43697    97296

-0.322882518363953        03/08/2011         188821  41376    102343

-0.321275976206181        09/13/2011         168279  44747    98811

-0.313173842147533        02/28/2012         164356  48250    99722

-0.30843096223658          03/22/2011         196407  43963    104541

-0.306891972052053        03/15/2011         190497  42955    101417

-0.302944267065433        03/29/2011         197944  45743    105709

-0.302938361033828        08/02/2011         178637  42382    96498

-0.302168857671681        08/23/2011         189639  48907    106210

-0.295169564778123        07/26/2011         178162  41998    94586

-0.291719678946597        04/05/2011         211429  48696    110374

-0.291018235631086        09/20/2011         167584  45471    94241

-0.288785423582588        02/22/2011         213276  45559    107150

-0.288537821066688        02/15/2011         203696  45474    104248

-0.283330353417963        01/04/2011         184569  38468    90762

-0.283256756987               08/16/2011         176077  47338    97213

-0.282877077147814        02/08/2011         189623  42078    95718

-0.27578249693924          02/21/2012         156007  46307    89331

-0.274967765702708        07/12/2011         162870  42210    86994

-0.274554859970744        07/19/2011         178427  44250    93238

-0.273330134685904        02/01/2011         175074  41957    89810

-0.273293170008416        02/14/2012         149722  46325    87243

-0.271831604909118        03/06/2012         152451  49226    90667

Here's my guess..

If the margins for silver were lowered and the margins stay the same in gold, we could be looking at some money being taken out of the gold market to be moved over to the silver market. Silver to rise and gold to fall on Monday.  Both to rise on Tuesday and Wednesday morning, then options expiry come in to play, Wednesday afternoon and Thursday metals drop.

How much? Look at your bollinger bands.

Update by Brother JohnF

Use the 3 9v batteries and some of your silver stack to make colloidal silver. Kills all pathogens, bacterial, viral or fungal. Colloidal silver can fetch $40 a bottle, you can make gallons for pennies. That $18 may be an investment.

The signs of chaos we see in the market ( replacing rational trading decision by irrational , overreacting to minor "imagined" signals and plots etc. by all players ) means that the PM market is looking for direction where opposite rational directions ( up/down) are starting to bear equal weight. So the net rational decision direction is actually 0, or no direction, and that state is extremely volatile and not sustainable.

Such chaos usually precedes a breakthrough in one or another direction (up /down) , so that is not far away.

Now we here seem still to believe that the underlaying rational move will be up. However, the strength of conviction is fading on average, exhausted by previous crashes, long term sidelines trading and current chaos where no direction seems to be clear anymore.

Now comes the interesting part:

1) If the market is going to find its rational direction and it will be UP, expect a move from chaos to BOTTOM before the UP trend takes off. There are psychological reasons behind it on both sides of the trading - UP side loses followers, DOWN side thinks the direction has been found-like these longer term TA lines that start to point down.

2) After that final bottom when seemingly the rational direction DOWN has been established, the UP will replace it, and this time more and more convincingly.

3) That is just the usual way crisis and chaos plays out into definite action- first there comes that feeling that everything You do is wrong, money time wasted, morale down, and than suddenly out of this mess ,given the right bottom price is reached plus the obviously true fundamental rational reasons for UP turn starts to show through the chaos , and UP trend takes over.

This also happens in major organizational or in fact any change project that is undertaken in organizations or even individual lives- there is always chaos and doubt-drop in confidence-  before the final outbreak- in one or another direction.

4)I think the outbreak will be in UP direction, and current chaos , irrationality tells that the moment is coming closer- we are entering the final stages before PM market next breakthrough UP (prior to this, there should be a final DIP).

5)If our basic rational reasons for PM value in paper going UP are right, the key to success is simple persistence, which borders with belief in some cases, intuitive knowledge.

SO, these maddening irrational day trades are in fact a clear signal things will not last this way for long. Which should make us happy, should it not?

(I am talking here a bit more about silver shorter term than gold as GSR continues its way up-as long as it does , silver will enter the final dip first-uncoupling).

http://www.tfmetalsreport.com/comment/152657#comment-152657

You may remember me mentioning UCG Syndiesel as a viable alternative when discussing peak energy/diesel usage before.  So long as you can find stranded coal seams - (they are EVERYWHERE and particularly in China and Mongolia fwiw), you can pop a UGC-CTL plant on top and run around 20,000 barrels per day from each facility at around $30 a barrel.  There is no reason not to build several such plants in each geographic location to produce both syndiesel and as feedstock for small powerstations to feed the grid.

Expect the company that are doing this to announce a Joint Venture with the Chinese on Monday's open....propitious timing indeed.    This announcement is a biggie as it will change the markets perception of the tech much the same way Kinder Morgan and Denbury surprised the industry by proving the model of EOR years ago.  The big difference is that UCG-CTL is infinitely scaleable - and even can provide the needed C02 for further EOR!

This is a link to comment on the EOR/UCG nexus outside of Linc Energy promo materials!

http://www.uwyo.edu/eori/_files/co2conference11/bruce%20hill%20-%20catf%...

Your calculations about Diesel are very interesting and no doubt based on good data but humans generally have a way of finding a solution when pushed against a wall (where we are as you point out) and UGC-generated syndiesel is that answer as it also is very broadly distributed (ie the stranded coal) meaning that countries won't be so reliant on imports but rather will have domestic supply.