Wrapping An Extraordinary Week

And why do I get the feeling that next week is going to be even more wild??

Before we get started, I thought I'd give away one more hat. I'm sure you've noticed by now that, once again, the financial world seems to be staring into the abyss. Of course, though, with all of da diffewent and scawey tings dat CNBS could tawk about, they instead are all-Facebook, all-the-time. So here's the new contest: On what day will the closing Comex price of an ounce of silver exceed the NASD closing price of Facebook? Please use this thread to log your guesses and I'll close it to new entries on Monday morning. (and can someone please log all of the guesses onto a spreadsheet? please??)

Great follow-through in the metals today. As you know, I was expecting this rally but I was also expecting a brief pullback and double-bottom. We didn't get that and that's a very good sign. Additionally, I was expecting a somewhat flat OI change for yesterday and boy-oh-boy was I wrong there. In the near $40 rally yesterday, total OI expanded by 17,000. WOW!

So, what's the deal? Well, there was certainly the short-covering that we talked about. However, there was obviously a HUGE surge in new longs, too. It's almost as if a spec short not only covered that contract, he/she/it then turned around and went long. This is GREAT NEWS. But 17,000 cannot be written off solely to this idea. Clearly, brand new longs came into the picture and who are they? In my opinion, most likely The Cartel. Adding longs to start the short squeeze but likely adding even more later in the day. As usual, we won't really even be able to make an educated guess until next Friday's CoT but this sure seems plausible right now.

On the other hand, silver OI from yesterday was exactly as predicted. While price was jumping 83c, total OI rose by just 100 contracts. Here's your pure short squeeze. Longs add new, shorts cover old, net effect is no change.

Again, though, the fact that we continued to add to the gains today, moving through expected resistance at 1580 and $28 is very encouraging. We eventually ran out of gas near more serious resistance of 1600 and 29. That's OK. It's perfectly normal for a few folks to ring the register after such a strong move, particularly ahead of a weekend. Let's wait and see what happens Monday. To that end, here are your charts. Note the steady climb higher on both of the hourly charts. Also note the next levels of resistance. In gold, once 1600 gives way, the serious battle will be near the intersection of horizontal resistance around 1625 and the 2008 trendline in the same area. Expect quite a fight. In silver, though 29 may offer resistance again early next week, I think the main battle will be between 29.50 and 30.

It's now 3:35 EDT on Friday and the CoT was just released. As expected, it's fantastically bullish once again. For the week 5/9-5/15, the Gold Cartel reduced their net short position by 12,538 contracts. This gives them a net short ratio of just 1.81:1. That's as low as I've ever seen it. On the flip side, the easily-manipulated large specs reduced their net long situation by 9,161 and the small specs reduced by 3,377. The lambs were led to slaughter. This report undoubtedly marks the bottom in paper price.

The silver CoT saw similar action. The Forces of Darkness reduced their net short position by nearly 2,000 contracts and their net short ratio now stands at 1.35:1, which is almost exactly how low it was at the price bottom of late December. Like gold, both large and small specs were selling longs and adding shorts. Though, I had hoped for a bigger drop in the EE net short ratio, given the tiny change in total OI for the reporting week, the 2,000 contract drop is pretty good news and confirms that, like gold, the silver price likely saw its lows this week.

OK, here's some reading material for your weekend. First, Eric Sprott was on KWN today. You should, of course, give this your consideration. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/18_Eric_Sprott_-_Governments_Frightened_of_Panic_Liquidation_Event.html

And then there's this. Turdite "tabberto" turned me on to this author, Detlev Schlichter. His book and this column discuss what we shall loosely call "the gold standard". I plan to be discussing several "gold standard" ideas in the coming weeks, so this seemed like a logical homework assignment for you. http://papermoneycollapse.com/2012/05/by-abandoning-the-gold-standard-we-embraced-monetary-central-planning-chaos/

We're also going to be spending time discussing backwardation as this has become a near-constant condition on the metals markets, particularly silver in the spot vs futures area. I found this study from 1999 linked on Harvey's site a few nights ago. If you've got the time and the mental energy, give it a look. http://www.fame.org/PDF/Howe_War_Against_Gold.pdf. Of course, the seminal piece on backwardation can be found here: http://fofoa.blogspot.com/2010/07/red-alert-gold-backwardation.html

That's all for now. I hope everyone has a safe and relaxing weekend.

TF

374 Comments

recaptureamerica's picture

Crossover

May 24 2012

thisismynewname's picture

CrissCross Apple Sauce

October 12, 2012

Planters's picture

5/31 ....... FB Goes down and

5/31 ....... FB Goes down and so does the everything else 'cept the diggity solids

Vernon Wormer's picture

Ferd

I'd pay to see that!

June 18

Chris P. Bacon's picture

re: Schlicter Article

Thanks for that Turd! What a wonderfully coherent and 'plain English' explanation of how we got here vis a vis the Politcal/Financial Complex.

This is going to a friend who has asked me for explanations of many points covered in the article, but which I can tell I have not been able to answer to his complete understanding. This article would be a great 'pass-along' to anyone you know who needs help with their financial education.

The link to the Paul v. Paul debate is just a bonus.

Cheers!

Thorn

Spencer's picture

June 6th.   6 , 6 ,

June 6th.  

6 , 6 , (6+6=)12

Numerology bitches!

¤'s picture

Hot Metal

Deeper's picture

Another Hat Contest

April 19th, 2013

$48-$50.

¤'s picture

Superunknown

We live in interesting times, no?

Enjoy the ride and each day of it 

California Lawyer's picture

@S Roche

Just now checking in from a long day. I will take a read, then weigh in. Stay tuned.

TomMack's picture

silver vs facebook

sooner than you think   5/24/12    $34.75.

i just cannot believe what people waste their worthless paper on a 'retail ipo!!!'  the bankers are so benevolent.  they just want to make up for an infinity of screwing people i guess.  all the 'value' will be pulled from the retail investor.  Bankers are doing a reverse ipo.   instead of the usual ipo where they steal fiat from the company and keep it for themselves, friends and family.   they take the all the fiat from the retail investor selling a company that is valued at over 100 times earnings....

STACK STACK STACK  they will crack then crumble     it is starting to add up

Buckets o Plenty's picture

August 17, 2012

Because my birthday falls on a Saturday

GrampAg's picture

Sale?

I'm interested...what are you looking for in FRNs?

GrampAg

Steinbacken's picture

June 7th

June 7th, the day that will live in infamy; the day I win a hat!

Chi-Town Deadhead's picture

monday july 30

Monday July 30th

JY896's picture

Deleting your account in honor of the IPO

If you ever had one, and have not yet done so. THIS is my FB, I am on the verge of deleting my account there after having removed all visible personal details and locked down access last year. I figure today is as good a day as I'll get...

Speaking of which:

"Once you confirm you want to deactivate your account, be sure to read the fine print! It clearly outlines that account deactivation is not the same as deleting your account / profile. By deactivating your Facebook account, you’re merely disabling your ID however all your data remains on Facebook servers." article here

Direct FB link to delete account here. But before anyone gallivants off to delete (and it's questionable, of course, whether it's actually deleted, or if it now lives ONLY on the servers in Utah and not on the FB side...) -- you might as well get the same benefit of all your friends' contact details exported (since it's not practical to call the .gov every time you decide you want to get/stay in touch with some of those FB friends after all). While FB does not itself offer a method, there are a few workarounds.

As for the date; I'm gonna have to go with Eric O's suggestion of the day that will live in infamy as TFMR's go-live date: 6/14

rtabit's picture

NEVER

FB opens over 60 Monday morning, skys the limit for FB, who knows how high it will go.  I win, hat please.  And until this absurd fantasy you have that SI will cross over FB, I get to say, I TOLD YOU SO.

Irksome's picture

date...

5/29/2012.  I am pretty pessimistic about the market in general, and FB in particular, while finally feeling bullish on silver again.

rtabit's picture

CNBS

What is CNBS?

Stratajema's picture

Miner Production Costs

If you are invested in the miners, here is a nice article about production costs per ounce.  Might see some small miners showing losses for Q2 due to the price drop.

http://blog.hindecapital.com/?p=357

Excalibur's picture

Anyone remember Ireland? Referendum 31st May

Ireland has been almost forgotten, as they have been bending over and supplying the grease themselves. A few gallant people like economist David McWilliams are tying to educate the people. His series of videos are brilliant. Should be in every school. This is number 4, focusing on the current German/Greek dilemma and how the Irish could play their hand.

Philharmonicus_Maximus's picture

FB < Ag

Make mine Wednesday, July 10th @ 10am ($35)

rtabit's picture

Hey Turd

How come you use just futures for your stats, is there a reason?  I've been using futures and options for my stuff, I have no reason.  Anyway if you use futures and options the silver ratio is 1.29, which is lowest since 1998.

maravich44's picture

@rtabit What is?...

,,CNBS=CNBC in Turd World..

Stratajema's picture

Perth Mint Blog

I noticed that the Perth's blog has improved recently with several new contributors.  Here is a nice article with graph about those choosing allocated versus unallocated for the $3.5 billion of PM stored at the Perth Mint.

http://www.perthmintbullion.com/us/Blog/Blog/11-05-11/Perth_Mint_Depository_Fear_Index.aspx

I was hugely surprised to see that only 15% of the metals are held in allocated accounts.  I was expecting it to be above 50%.  FYI, an unallocated accounts means (among other things) that one does not hold title to the metals and would be an unsecured creditor in a bankruptcy proceeding of the Perth Mint.  A regional government guarantee is in place that is suppose to offset that risk. 

Did you know that even though Australia is a major producer of gold (from its own mines), it still needed to import gold last year to meet production demand at its two mints?

saulysw's picture

My guess (not sure if it's already taken)

Next Monday, May 28th at 11am, give or take a few minutes.

JohnnyR's picture

@Excalibur - Punk Economics

Thanks for the video link Excalibur, really interesting / informative videos.

From lesson 2 ...

"You know there's something odd going on, when the Pope is a German and the head of the central bank is an Italian".

Well worth watching.

J.

Senseosensei's picture

FaceCookBook

will meet gravity the 5th of July at 10 in the morning.

Fade2Black's picture

August 12  2012

August 12  2012

pbfurn's picture

FB/Ag Junction

July 26, 2012

I feel bad that everybody else is just wasting their time guessing.  I have never been wrong in one of my predictions at this website.

It is possible that my never previously attempting a prediction has positively impacted my unblemished record.  I am not certain about that; I am, however, considering the possibility.  I will get back to you concerning this matter.

In the interim, hold your breath and remember that I have never mislead you in the past.  I am certain you find that most reassuring as you should.

You are, as always, most welcome for my sagacious analysis, altruistic benevolence and bs.

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