No Time For Victory Laps

Yes, it feels good to finally get the short squeeze I've been calling for. No, it's not time for dancing in the streets. At least, not yet.

It's been a frightfully long day and it's going to be a long evening, as well, so I have to keep this somewhat brief. Yes, today, we finally had our short squeeze. Note that, once again, the move was "contained" at the 2% level. No matter. It's just good to be off the floor. The hints for today were actually placed yesterday. If you've been following my almost-daily analysis of the open interest, you'll recall that this recent, 3-week down move has been primarily driven by new spec shorts being added to the market on nearly every down move in both gold and silver. Yesterday, we had a near washout in terms of price as both metals bottomed near (hoped for) long-term support of 1525ish and 26.50ish. The "tell" for today may have been in the OI numbers from yesterday as, instead of a continuance of the trend of new shorting (adding OI) driving down price, we saw OI decline yesterday. What does this mean? It means that yesterday was a washout. It was a day when some wary gold and silver longs finally waved the white flag and simply gave up. Capitulation. Not a massive, blood-in-the-streets, obvious capitulation but a capitulation, nonetheless.

When we get today's numbers tomorrow, let's look for a flat to down OI change. Yes, a few new longs were probably added today but they were likely more than countered by the closing out of short positions (the squeeze). I'll continue to monitor the total OI very closely for clues in the days ahead.

On that subject, we'll get another very interesting CoT on Friday, too. For the reporting week of 5-9/5-15, gold price fell about $48 while total OI rose by about 4300 contracts. For silver, price fell by $1.38 and total OI rose by about 650. Again, I am quite certain that the new shorts that were driving down price and raising OI were algo spec and managed money chasing downward momentum. Why? Because The Cartels are losing so much metal at these prices it would be utterly foolish for them to help drive prices even lower by adding shorts. Nope, these new shorts were almost all spec and this is why you are seeing them squeezed. Remember what we discussed earlier this week and last week...The Cartel needs to manipulate price higher in order to lighten demand for physical (they hope) and, as the "long" on the other side of all the new spec shorts, they can profit by squeezing them, as well. (http://www.tfmetalsreport.com/blog/3780/looking-squeeze )

So, the big question is: WHAT HAPPENS NEXT?

First, let's look at some history. Recall that prices made similar and almost identical  bottoms in late December of last year. What did the charts look like then? Here's a 1/3/12 gold and a 1/5/12 silver. Look closely and take a mental picture of the trading pattern off of the lows made about a week earlier. Let's hope we see similar action in the days ahead.

You might go back and review this post from 1/3/12, too:

http://www.tfmetalsreport.com/blog/3218/how-bout-some-charts

And here are your current charts. First an hourly, a daily and a weekly gold.

And here are hourly, daily and weekly silver charts.

Lastly, there's something that I need to reiterate. Unless you are of the belief that this is it, the final and complete deflationary collapse of global liquidation and panic (which I'm not), there is absolutely no way that gold and silver are going to trade much lower than where they bottomed yesterday. The demands through London for physical supply are too great and the bullion banks are being looted for metal at these prices. As an example, just yesterday I know of a massive order of an equivalence of 2,000 Comex contracts being filled for physical silver when price tripped below $27. This type of physical demand is sucking the life blood from the current LBMA/Comex system. As price rallies back, demand may not abate but that is the chance that the banks are going to have to take. For now, they simply cannot allow paper price to continue lower. As such, today was the first day of the rebound.

Members of this site are very wise and learned but I can assure you that no one here has the contacts and information that I have when I make these assertions. And let me assure you of this: Silver, in particular, is going higher. Much higher. There are things going on behind the scenes that are not readily apparent to the average investor. Besides the ongoing backwardation (http://www.zerohedge.com/news/guest-post-backwardation-gold-and-silver ) and tight supplies, do not forget the ongoing CFTC investigation and potential for positions limits, the class-action lawsuits and the new, physical exchange set to open next month in China. I will continue to use any and all weakness to add to my physical stack. Will you?

Have a great overnight and I'll be back with you again tomorrow.  TF

328 Comments

The Springbok's picture

first

bingo!!

waxybilldupp's picture

Uno!

Sweet

Nevermind!  Besides, I just did it to annoy the nose pickers who get annoyed by posters posting the first post.

Second edit:  Actually, those posters would be the posters posting the first "first" post.  Every so often, the first poster has something to say and is not just posting "first" to celebrate the pure joy of being first to post a post on the newest thread.  The annoyed posters would be the "holier-than-thou" posters who can't seem to find a reason to smile and applaud the first "first" posters and judge first posters as being unworthy of being allowed to raise their hands to the sky and say, "Huzzaaa!, Look at me! What a great day this is!"

Clear?

wax off

MichealPH's picture

great work

Thanks TF for this update. Please keep up the great work.

Sorry but the people who rush to comment first are fuckin stupid. 

Mudsharkbytes's picture

Third for the third time

in three days.

Dr Jerome's picture

Keep stacking

I stopped by my local LCS and picked up a few oz of AG yesterday. Made me feel good!

ReachWest's picture

Cautiously Optimistic from Here

It does sound encouraging, but I remain cautiously optimistic. After reading Turd's latest post, I think my Contest guess numbers may be a bit too low!! We'll see.

¤'s picture

Just stack...

...and don't look back yes

35780.jpg

Thanks for the update TF. 

Those grandfathered position limits being changed would be a big game changer along with all those other things you mentioned. 

R man J's picture

Congrats to thos who stacked yesterday

I had a vision of a $100 gunny-sack of Walking Liberty Halves on sale at Gainsville for $2005.00 as it hit $26.97...but I would have had to use credit. Still I was gunna...but no!  After reading Louise Yamada's possible $20 call I will wait until the big event...

That's what I get for using up all dry powder...learning a lot though. Enough to know I'll sell everything else before the stack is touched.

The Death Ceiling's picture

Great Site

I've just discovered a great site for judging the mood of the MSM from a global perspective, you can select newspaper front pages from around the world, very interesting.

http://www.newseum.org/todaysfrontpages/flash/

Must admit it is nice to have a decent up day, but we're just one day closer to such tragedy.

kingboo's picture

Top 10.........again

poet and didnt know it

iceman321_2k2's picture

Just in case...

you missed it...

What are Hedge Funds Doing With Gold?

http://wallstcheatsheet.com/stocks/what-are-hedge-funds-doing-with-gold.html/

More than two years ago, George Soros, one of the most famous hedge fund mangers, warned at the World Economic Forum that gold was in a bubble. He claimed, “When interest rates are low we have conditions for asset bubbles to develop and they are developing at the moment. The ultimate asset bubble is gold.” Apparently, Soros had a change of heart. His management firm nearly quadrupled its exposure to the SPDR Gold Trust from 85,450 shares in the fourth-quarter to 319,550 shares in the first-quarter. Soros Fund Management also opened a new position through call options in Newmont Mining, one of the world’s largest gold producers.

Earlier this month, Greenlight Capital’s David Einhorn wrote a piece criticizing the Federal Reserve’s monetary policy and related it to force-feeding someone too many jelly donuts in hopes of a sugar rush. With the Fed maintaining record low interest rates, Einhorn explains, “As a result, I will keep a substantial long exposure to gold, which serves as a jelly donut antidote for my portfolio. While I’d love for our leaders to adopt sensible policies that would reduce the tail risks so that I could sell our gold, one nice thing about gold is that it doesn’t even have quarterly conference calls.” While Einhorn likely keeps his substantial long exposure in the form of physical gold bullion and off the records of the 13-F filings, he does have positions in some miners. He kept his position in the Market Vectors Gold Miners ETF unchanged at 7.2 million shares in the first-quarter, but reduced his exposure to the Market Vectors Jr. Gold Miners ETF and Barrick Gold to 1.2 million shares and 1 million shares, respectively.

Dr G's picture

One up day doesn't make a new

One up day doesn't make a new trend. This evening and into tomorrow are very important days for both metals. These moves must not only be sustained but increased. Asia is important this evening.

Given Turd's list of contacts and what they are saying, I suppose the question of the day is how much disconnect do we currently have between the spot price and the physical market, and then how much more disconnect can we get before the band breaks?

Eric King has contacts as well, and I've learned not to trust their short-term thoughts at all. I'm not trying to stir the pot, just trying to convey my thoughts. I appreciate the time Turd takes to write these posts. I know they aren't easy, but it certainly is easy for me (or anybody else) to piss all over it whenever we please. I'm trying to remember that.

And for the record, I bought Maples today at 29.95 total out the door. Stack it up.

Sharkysmachine's picture

Longtime Lurker..

...But it's time to join the party! Great site Mr. T... Thanks for all your hard work.....

tpbeta's picture

Ooooh

Turd has a boy crush on Andrew Maguire.

Anyways he's kinda right. $26 was a very good place to buy I hope.

Jakob's picture

Exactly, but...

The fact that silver and gold had a major divergence from stocks at large​ today is psychologically extremely significant. Having been sold so hard for 2 weeks, an asset being bought when everything else, including the $, is not...that's a pretty cool time to get your first 'up' day in a while. That said...always keep some powder dry.

And more than anything, know that it isn't JP Morgan or Goldman Sachs who is in charge of everything.

SaratogaPrepper's picture

Moose & Cougars

Picked up a few Moose & Cougars today with last weeks Overtime. Worked all night like I thought I would, so next week it'll be some of that yellow shiny. We don't have the contacts...We got Turd!

LaMachinna's picture

IS7...

Can LaMachinna have that pretty shiny one in middle??  cool

tread_w_care's picture

Turd did you post two Gold weekly charts by accident?

Looks like it to my eyes . . . you have me paying close enough attention now that I noticed.

No worries, would like to see it but there is of course, no rush :).

Appears the "all time low" for GDXJ might have been a decent entry point too, no?  :)

balz's picture

FIRST

I wish some people would grow up and stop wasting our time with stupid "First" or "Second" comments.

I don't care if you are the first one or the 100th.

I care if what you write is meaningful.

And wasting my time saying "First" is a NOT meaningful.

Nuff said.

kingboo's picture

Didn't someone say watch for the 10yr if it breaks 1.80?

20120517_eod5_0.pngsomeone straighten me out here...

madcow's picture

give me powder

someone give me powder so i can make some physical purchases since i happen to buy right before this latest dip.

also you can thank me for the latest dip. grumblegrumblegrumblegrumblegrumblegrumblegrumblegrumblegrumblegrumblegrumblegrumble crying

Turd Ferguson's picture

Thanks!

MODERATOR

Fixed.

TomMack's picture

top 100 again 1 day in a row

stacked a pinch on monday  lost it in a canoe accident  looks like i may have to go diving for it but it is still under water 19.97 for $1.00 face   tonight they are at 19.89.... lets not get too worked up at these levels there is plenty of fight left.  maybe IF we see a little divergence in some momentum indicators (RSI) the next few days and then load up? 

Istack's picture

Thanks

Thanks for the reassuring information.  It has been unsettling for awhile.  I don't have very much extra powder left over (got most of my stack at $30) but I went and bought 8 more ASE yesterday.  It is good for the heart when you buy something that has true value.  I'm gonna continue to fight fear with truth and try to have some conviction about it and invest my hard earned dollars accordingly.

GoldMania3000's picture

Doug Casey on Manipulation

I think i've have lost much respect for doug casey.  Does he not get that there are paper markets. He basically is saying fuck you to erick sprott, jim sinclair.  Can you provide us a reason why gold is not manipulated?

Precious Metals Market Manipulation?

For many years now, a meme has been floating around that the prices of gold and silver are being manipulated, which is to say suppressed, by various powers of darkness. This is not an unreasonable assertion. After all, the last thing the monetary powers-that-be want is to see is the price of gold skyrocketing. That would serve as an alarm bell, possibly panicking people all over the world, telling them to get out of the dollar. It's assumed, by those who believe in the theory, that the US Treasury is behind the suppression scheme, in complicity with a half-dozen or so large bullion banks that regularly trade in the metals.

The assertion is bolstered by the fact that governments in general, and the US in particular, are always intervening in all kinds of markets. They try to control the price of wheat and corn with various USDA programs. They manifestly manipulate the price of credit (interest rates), now keeping it as low as possible to stave off financial collapse. And they may well be active, through the so-called Plunge Protection Team, in propping up the stock market. They were largely responsible for the boom in property, through numerous programs and parastatals like Fannie Mae and Freddie Mac. Why, therefore, shouldn't they also be involved in the monetary metals? Central banks regularly intervene in (i.e., manipulate) each others' currencies. So it's not unreasonable to imagine they'd try to manipulate gold as well.

In fact, the US and other governments did try to suppress the gold price from 1961 to 1968 through what was known as the London Gold Pool. The US alone persisted in trying to do so until Nixon devalued the dollar and closed the gold window in 1971.

But if it was ever doable, that was the time. Although nobody knows exactly how much gold there is above ground, a reasonable guess might be six billion ounces. There was a possibility of controlling the price, in the days of the London Gold Pool, when there were only three billion ounces in existence and when all the gold in the world was worth only $105 billion ($35 x 3 billion = $105 billion).

Today, however, the value of the world's gold is around $10 trillion ($1,650 x 6 billion = $10 trillion), nearly 100 times as much. And governments own about a billion ounces, only 16% of it, whereas the last time they tried to control the price they owned about 1.1 billion ounces, which was about 35% of the world supply. And the governments, their central banks and almost all large commercial banks are bankrupt; they have vastly less financial power than they did in the days of the London Gold Pool. Why would they try to do something that's so obviously a losing game?

I'm not at all disinclined to believe tales of manipulation of markets by the state; I expect it, and as a speculator I relish it. But I like to see evidence for everything. And extraordinary claims demand extraordinary evidence. I've read the stuff these guys have written for years and have seen nothing but strident assertions and accusations. I'm completely willing to believe central bankers are capable of any kind of nefarious foolishness, but I'd like to see proof. I'm constantly reading assertions of how "the boys" come along at "precisely" 1p.m. or 2 p.m. or perhaps "precisely" 11:37 a.m. or 12:16 p.m. and, on a purely not-for-profit basis, decide to "smack down" the market for gold or silver or both. Meanwhile the market has been hitting new highs for a dozen years.

As you might imagine, I know most of the believers in the precious metals manipulation theories personally and am only a phone call or email away from those I don't know. And I'm curious. So I ask questions of these folks, who are generally intelligent, well informed and sophisticated. But I don't get answers that I find make sense. There have been readily identifiable reasons for other government manipulations in the past. It's obvious why a government wants low interest rates. It's obvious why they want high real estate and stock markets. But why – in today's world – would they really want to spend billions keeping gold (or especially silver) down? You'd think they might have tried to control the price of uranium when it ran to $140 a few years ago. Or perhaps the price of sugar when it ran to 28 cents last year; everybody uses sugar.

Despite the fact that gold can act as an alarm bell, few Americans – or anyone, for that matter – among the hoi polloi care or even know the stuff exists except as an academic matter. Suppressing the gold price is not only vastly harder but much less important than it was during the last market.

Here are some questions I'd like answered:

Q: Why do these banks (JPMorgan, etc.) even give a damn, in the first place, what the price of the metals might be?

The only reason that makes any sense is that they are acting as proxies for the US Treasury; the Treasury doesn't go into the markets itself. But does it direct a commercial bank to act for it to buy or sell gold? It might. But there's zero proof of any sort it's doing that.

These banks have no dog in the fight; they couldn't care less what the metals prices are and have no reason to try manipulating the market.

Q: Why has there been zero word from their traders about how stupid their bosses are for fighting a gigantic 10-year bull market? These guys all know each other, and they gossip with the same delight as teenage girls.

It's hard to keep a long-term illegal collusion a secret. Two parties might possibly be able to keep a secret. But six or eight commercial banks acting in broad daylight? It's said that three individuals can keep a secret, but only if two of them are dead. But for a half-dozen trading operations to do so? Wall Street is the world's greatest rumor mill. But there's never been a rumor (outside of those created in conspiracy circles, who offer no sources) that the bullion banks are acting, in concert or individually, as agents of Timmy Geithner.

Q: If, as alleged, these banks have been short gold from the bottom of the gold bear market at $255 in 2001 and the silver bear market at $4.25, also in 2001, how can they possibly absorb tens or hundreds of billions of losses? Did they expect to take the metals to a fraction of their 1971 lows?

Trading desks make mistakes. But they don't stay short in one of history's great bull markets – it's not the way traders earn bonuses. How stupid are the supposed "not for profit" sellers of gold supposed to be?

Q: Exactly where and how do they supposedly get the capital to cover these losses? Haven't they ever heard the old saw, "He who sells what isn't his'n must give it back or go to prison"? No bank can tie up billions in capital fighting the market for a decade.

Q: Exactly who originated this idea of trying to suppress prices using the futures markets?

Here a well-known writer on this subject suggested the following to me, via an email, when I asked: "The big commercials, starting some 25 years ago, discovered they could dominate the market and force technical traders in and out of the market when they wished at great profits to the commercials. But they miscalculated and stayed in too long, and now they are trapped."

I don't buy that explanation for several reasons. Of course the big guys, like commercials, are always bullying small speculators. The small guys use technical trading systems, which make it easy to figure out where they're buying and selling. Small traders are always minutes behind the market. And small traders usually use way too much margin, so they're prone to being squeezed and panicked. This has always been true, not just for the last 25 years. It's part of why small traders are notorious for losing. The commercials are typically on the other side of the trade.

But one thing is for certain: nobody (certainly not commercials) allows himself to get in so deep he's trapped for 12 years in one of history's greatest bull markets.

Q: Why fight the market, and get trapped, in just gold and silver? Why aren't they trying to suppress copper, platinum and palladium as well? For that matter, every commodity?

I don't credit the people who run central banks or national treasuries with a great deal of financial acumen; they're basically just political hacks, flunkies that went to "good" schools, dress well and like feeling important in a safe niche in the bureaucracy. But they don't want to lose their jobs by being that wrong for that long.

Q: Why would the US Treasury (if it's behind a gold suppression scheme) make things easier for the Chinese, the Russians, the Indians and numerous other developing countries by suppressing the gold price? They simply take advantage of the lower price to buy more.

The arguments for suppression of gold make very little sense when you examine them. The arguments for silver make absolutely no sense at all; it's a tiny market that nobody cares about except for silver fanatics, who treat it like a religious icon. That said, I'm at least as bullish on silver as gold – but a discussion of that will have to wait.

If anyone could answer these questions, I'd appreciate it. I advise readers to buy gold – even at current levels – but I'd like to see them do it for the right reasons. And it seems to me the arguments about gold manipulation are more redolent of religious belief than economic reasoning.

¤'s picture

1/10 oz. rounds

No biggie, but grabbed 50 of these moments ago.

So far in the past 2 weeks I've bought at $30, 29, 27 yesterday and now 28.

Looks like $28.50 as a median.

Walking Liberties, Franklin's, 1/2 oz. rounds and these little merc's will soon be in the fold  cool

60933_Slab.jpg

GoldMania3000's picture

casey again

and he even has the CTFC commissioner saying there is manipulation, i think there's something wrong with doug caseys head and he should stay in argentina.  talk about a corrupted governement

GoldMania3000's picture

REbutt casey

Turd do you care to take a stab at a rebuttle to mr casey.  i would love to send it to him

Fred Hayek's picture

The new physical exchange is set to open next month, Turd?

Great news.  

I don't think I'd heard that schedule before.  I hope everything comes off smoothly.  Best of luck to Andrew, Ned and whoever else is working on it!

Torpedo Fish's picture

new Page

So if the NEW PAGE opens on June 28th, that probably means they should start buying physical silver like crazy now. 

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