Terrible Tuesdays

Tuesday, May 29, 2012 at 5:01 pm

In a stunning development, gold and silver sold off today...just like last Tuesday, and the Tuesday before that, and the Tuesday before that, and the Tuesday before that. In all, that's five consecutive Tuesdays where price has fallen. Hmmmm. Why would that be?

Of course, regular readers and longtime Turdites know why. Tuesday is the day of the Commitment of Traders survey and, as we all know, great care must be taken to "paint" the CoT.

In the past, when The Cartel were active sellers, we referred to these days as "Happy Tuesday". After selling short all week, The Cartel would buy on Tuesday to "cover their tracks" ahead of the CoT survey. This resulted in UP days. Now, however, things have reversed. As I've mentioned here repeatedly, The Cartel is now actively covering shorts (buying) all week. Therefore, the attempt to "cover tracks" for the CoT survey now involves selling, not buying, and now Tuesdays are not so happy.

Regardless, in the grand scheme, this really doesn't mean much. In the end, both Cartels are still at work transferring risk from themselves to the specs (mgd money, hedge funds, etc). The Cartels are not quite net long but their net short positions have been dramatically curtailed. Expect this to continue (if they know what's good for them). In his latest newsletter, Uncle Ted estimated that JPM's net short position in silver is now down to near 10,000 contracts. This is a 75% drop from its peak. Many expect JPM to simply add shorts back on when price reverses. This time, I don't think they will. I've done a lot of homework and talked to a lot of people and this is what I believe. We'll just have to wait and see what happens.

In the short term, today's beatdown was insignificant. Gold shed almost $20 in the final 20 minutes of trading, losing $9 right before the bell. Ho-hum. We've seen it all before. Silver, of course, sold off in sympathy. Whatever. Let's see what happens tomorrow.

Here are some interesting items that I picked up along the way today. First up, some good news for the "Re-Elect The Great Leader" campaign. Remember, anyone that falls off of employment "insurance" is no longer even counted by the BLS. That person just disappears and is no longer part of the workforce. Therefore, less people "collecting unemployment" means that the unemployment rate will go down! Hooray! All our problems are solved! Vote to re-elect The Dear Leader! ( http://finance.yahoo.com/news/u-winds-down-longer-benefits-152809517.html)

But don't look now, the MENA is about to get more unsettled, if this Debka article is to be believed. Russia backing away from Syria would likely allow overt support of the "rebels" to begin. Remember, Syria is pals with Iran, Hezbollah and the like and any moves against them will inflame the entire region. Uh-oh. ( http://www.debka.com/article/22038/Russian-arms-ship-turned-away-from-Syria-President-Putin’s-first-misstep-)

And then you must read this. Not one of our usual sources but maybe it should be. Making gold a "Tier 1 Asset" would be a very good idea and a really big deal. Please read ( http://www.sharpspixley.com/comment/ross-norman-the-next-big-thing-in-gold-possible-purchase-of-1700-tonnes-gold/122544)

OK, that's all for now. Let's see if gold can hold and gain overnight and establish a third, consecutive higher low within the range. More on Wednesday. TF

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Comments

Let's do some math:

Submitted by Mickey on May 29, 2012 - 11:03pm.

The current cot shows 435,000 gold contracts open and thats 43 mill ounces--and the CME has 11 mil oz gold. If gold pops suddenly-lets say because global QE -the total shorts in gold have to find a way to deliver or buy back 33 mil oz of gold or default (33 mil oz of gold at 2000 is 65 Billion?)

Silver same story--last cot shows 575 mil ounces and 40 mil oz available for delivery--means 535 mil oz required if QE is announced and Silver goes nuts to upside.

Silver at 50 means 27 billion more needed--and of course if this happens even more qe or tarp or whatever you want to call it will be required to cover this 90 billion or so on the default-

which is why CME was named too big too fail last week. But how big is London?

And what happens to the price of PM if this happens? I have to think it goes higher than 2000 and 50.

then you have the other trillion trillion of derivatives.

Wow--no time for napping. We are about to see history made--why else would the Treasury name cme as tbtf?

gold pooping again overnight

Submitted by bam on May 29, 2012 - 11:09pm.

Wonder if we'll make a 4th attempt at the lows this week.

Happy Tuesdays to Terrible Tuesdays

Submitted by OrangeAlert on May 29, 2012 - 11:16pm.

Does anybody have an idea of when the Happy Tuesday's stopped and when the Terrible Tuesday's started? Turd said it's been terrible for the past 5 weeks. It seems like that would signify something. There had to be a mid point where they decided to switch. What was that point and why?

If you feel your resolve weakening . .

Submitted by Fred Hayek on May 29, 2012 - 11:18pm.

If you start to wonder if you've done the right thing, if you start to wonder if you've made a wise choice to protect yourself and those you love with precious metals, remember what's below:

The official U.S. gov't debt of $16 trillion is money that will never be even officially paid back without massively inflating the dollar to do so.
That $16 Trillion total doesn't include some $5 Trillion that Fannie Mae and Freddie Mac are on the hook for and which also cannot be paid unless it is with ersatz inflated currency.
The current value of unfunded mandatory payments for Medicare was $23 Trillion at the start of this year.
The current value of unfunded mandatory payments for Medicaid was $35 Trillion at the start of this year.
The current value of unfunded mandatory payments for Social Security was $8 Trillion at the start of this year. Does anyone think there's even the slightest chance that Medicare, Medicaid and SS can possibly make good on their promises without truly epic money printing, or that the U.S. gov't will try to fix things solely through benefit cuts?
The 50 states cumulatively have a bit over $3 Trillion in debt. Half the 50 states are in terrible situations with regard to their debt. A third are already way past the point of no return in regard to their pension systems. How will this be fixed? Will it be done only through forcing these gov't union employees to face reality . . or will there be a little of that and a lot of the federal gov't printing money and shoveling it to the states?

The math of these situations is INESCAPABLE. There is no way out from them except default or money printing. The latter will be chosen and it will make the worthlessness of the dollar increasingly clear. The promised money cannot be paid. Cannot. We already know that and yet the de facto official policy of the U.S. and the states is to keep adding to the already unbearable burdens and hope that something comes along to rescue things. Deux ex machina makes for generally poor theater and films. It's even worse as attempted fiscal policy.

Hat Tips for Anonymous Users Temporarily Shut Off

Submitted by Moderator Jane on May 29, 2012 - 11:19pm.

MODERATOR

FYI - Viewing and giving hat tips has been temporarily shut off for anonymous users while we investigate some potential website shenanigans. If you want to leave a hat tip, you need to login to do so. Thank you!

Nice dose of reality

Submitted by Cipher on May 29, 2012 - 11:22pm.

Nice post Freddy H! Keeping it real brother.

Cipher

Just to add grist to the

Submitted by Fired on May 29, 2012 - 11:37pm.

Just to add grist to the mill...

Swiss short bonds have now gone negative (-0.62% interest, that's right you pay monthly to hold them) just like the Schatze did last week. Can't wait to see a negative rate on the long bond! It makes (much) more sense to hold gold, at least you don't have to pay for the privilege.

@fred hayek

Submitted by Mickey on May 29, 2012 - 11:42pm.

you could add in the entire stock market which is selling at a PE ratio of around 13 when growth at best is under 2%.

All this thanks to monetary policy and rather low interest rates forcing investors to take risk (will they did have a choice to buy PM but have not) and money printed and dropped into the stock market.

Or you could include the fixed income market which keys off treasuries and we know is in a bubble.

Or if Obamacare is not struck down one way or another 17 trillion of unfunded liability.

What many of us see here is a need to stay in PM because we will wake up one morning to an implosion. in the global economy and PMs have gone parabolic and while it is not too late to get in it will certainly be a lot more expensive.

It seems very strange that

Submitted by tmosley on May 30, 2012 - 12:04am.

It seems very strange that you could leave hat tips without being logged in.

A gold negative story...

Submitted by bam on May 30, 2012 - 12:12am.

...that is actually meaningful. Just what we need. Apologies if already posted.

http://gata.org/node/11419

Which means that China's government wants a hand in gold price rigging too.

* * *

China's ICBC Has Big Dreams for Bullion Business

By Fayen Wong
Reuters
Monday, May 28, 2012

http://af.reuters.com/article/metalsNews/idAFL4E8GS2OW20120528

SHANGHAI -- Industrial and Commercial Bank of China Ltd is seeking membership of overseas exchanges and aims to become a major global bullion market maker, a senior executive said on Monday.

The world's biggest bank by market value, ICBC is the top player by volume on China's gold and futures exchanges, but its participation in foreign markets is limited to over-the-counter trading, which reached a total $90 billion last year.

Emboldened by Beijing's ambitions to have a bigger say in global commodity prices, ICBC now has an eye on bourses such as COMEX and on joining the 11 market makers of the London Bullion Market Association (LBMA).

These quote continuous two-way bid and offer prices for gold, silver, platinum, and palladium throughout the London day, providing a liquid market in which to trade.

"We hope to play a bigger role in the global precious metals market and become a major market maker, like Barclays," Shen Shisheng, ICBC vice-general manager of financial markets, told Reuters on the sidelines of a conference in Shanghai.

Barclays Capital is among the gold fixing members on the LBMA.

JPM being helped covering silver short?

Submitted by TomMack on May 30, 2012 - 12:32am.

maybe jp morg is covering their silver short as the price is knocked down. i believe that the COT report seems to indicate they are less short (been buying). so maybe some other entity is knocking down the silver on JPM's behalf?

FB 28.84 for a new low. Ag

Submitted by Hammer on May 30, 2012 - 12:35am.

FB 28.84 for a new low. Ag 27.66 as of typing............Horrible for regular investors led into this slaughter by their companies/brokers who thrive on transaction volume commission.

(No subject)

Submitted by Hammer on May 30, 2012 - 12:41am.

Bit more from the NY Times article about JPM I posted above.

The February conference was held, ironically, in JPMorgan’s offices on Madison Avenue. Workers at the bank milled about as Mr. Weinstein and others offered investment tips.

Dressed in a sharp blue suit, Mr. Weinstein stepped up to the microphone and opened with a joke that only a financial wonk would appreciate. He showed a slide comparing the cost of credit default swaps on various government debt to the percentage of young men in those countries who live with their parents. The slide titled “Mamma Mia!” suggested that, by that measure, Greece, Portugal and Italy were in trouble.

But what really got people’s attention was his second-to-last slide. It was his pick for the “best” investment idea of the moment. Mr. Weinstein recommended buying the Investment Grade Series 9 10-year Index CDS — the same index that Mr. Iksil was shorting.

The crowd, 300 or so investment professionals, began buzzing.

“Once he came out in that meeting and was so specific, others jumped in,” one hedge fund manager said.

But the London Whale was so big that, for months, the hedge funds betting against him simply got steamrolled. One of Mr. Weinstein’s funds at Saba was down 20 percent heading into May.

Then the tables began to turn, as news reports about Mr. Iksil, fed by the hedge funds, began to surface on both sides of the Atlantic. Suddenly, everyone was checking out the obscure index that Mr. Weinstein and others had seized upon.

By May, when fears over Europe’s debt crisis again came to the fore, the trade reversed. The London Whale was losing. And Mr. Weinstein began to make back all of his losses — and then some — in a matter of weeks.

Decisions, decisions, decisions....

Submitted by El Gordo on May 30, 2012 - 12:48am.

I've got a hundred bucks to blow, so what should I do? 3 shares of FB, or 3 ASE's. Decisions, decisions, decision....

You're NOT Going to Believe This!

Submitted by Marc Grail on May 30, 2012 - 1:02am.

El Gordo

Submitted by SaratogaPrepper on May 30, 2012 - 1:06am.

I'd wait a day or two, you most likely be able to buy 4 shares of FB.

Consolidation in banking & politics

Submitted by JY896 on May 30, 2012 - 1:29am.

Hammer wrote:

Does this make the two parties concerned now officially Rockerchilds or Rothsfellers or some such thing now ?

http://www.nytimes.com/reuters/2012/05/29/business/29reuters-rothschild-...

I knew I had seen something similar/related recently. I only wish I understood more about what this portends (if anything) -- other than the sinking suspicion that nooses are tightening -- around the wrong set of necks...

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9189053/...

On a related note: I thought publications like Foreign Policy magazine were invested in maintaining the facade of republocrat 2-party system... Interesing article: Barack O'Romney

Meta-analysis of the same from Salon (via Mike Krieger) is here.

__________________

Turdland Jobs Forum

Hold the front page!

Submitted by Bugzy on May 30, 2012 - 1:48am.

Gold Rally in progress.

Yeeehawwww and whooopy and go -go gold go.

Ok it was only $2 but in these slender times one needs to celebrate any sort of upward move - I am hoping to generate some enthusiasm in order to give this fantastic and unprecedented rally some serious legs...........

On the count of 3

PUSH!!!!!!!!

Edit: news just in: Make that $3 rise - I repeat $3 rise. Standby for more updates.

Edit #2: After a short breather to acclimatize to these new giddy altitudes, gold continues to push higher despite fierce opposition from the very naked short people. This could be the mother of all rallies. Please keep your hands inside the vehicle at all times....

drug containing Gold 10x more effective in treating parasite

Submitted by ashtoncole on May 30, 2012 - 1:52am.

Gold's new medicinal power :) http://healthcare.utah.edu/publicaffairs/news/current/052112Barrios.htmldk

"In a Stunning Development"

Submitted by eyeswideopen on May 30, 2012 - 1:55am.

That there is funny TF.

Wonder which MSM "personality" will be the first to utter that phrase, and what the story will be behind it.

No telling what folks over at The Speak may conjure up after tilting a few. We could all use a little more humor.

If anybody missed this, I pulled it from Jesse's yesterday. Good read along with a few solid book recommendations.

http://www.capitalismwithoutfailure.com/2012/05/barry-ritholtz-on-what-l...

@ashton

Submitted by Bugzy on May 30, 2012 - 1:57am.

Link no worky

sorry link UofU link was updated.

Submitted by ashtoncole on May 30, 2012 - 1:59am.

http://healthcare.utah.edu/publicaffairs/news/current/05-21-2012-Barrios...

Tripple bottom (Reversal) -reading more on TA

Submitted by ivars on May 30, 2012 - 2:05am.

repost..

Why can this be not applicable to silver (forming triple bottom on weekly chart) ? Because of manipulation? But that is already within the pattern and previous bottoms, clear downtrend before the bottoms. It has all the signs explained in the link by Murphy for beginners, even lowering volume on average from first bottom to third, so ?

Seems a very distinct possibility if the general exponential trend is not broken, which can be achieved only by sovereigns reducing their debt via really fast REAL growth. Sounds real someone will achieve such growth and use it to pay of debts in 2012 or 2013? Kind of not.

Well its not the only pattern that can form around 3 bottoms, but if we believe in fundamentals, I think bullish is what it is.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:triple_bottom_revers

Quote (partial from www.Stockcharts.com) The Triple Bottom Reversal is a bullish reversal pattern typically found on bar charts, line charts and candlestick charts. There are three equal lows followed by a break above resistance.

Prior Trend: With any reversal pattern, there should be an existing trend to reverse. In the case of the Triple Bottom Reversal, a clear downtrend should precede the formation. check!
Three Lows: All three lows should be reasonable equal, well spaced and mark significant turning points. The lows do not have to be exactly equal, but should be reasonably equivalent. check!
Volume: As the Triple Bottom Reversal develops, overall volume levels usually decline. Volume sometimes increases near the lows. After the third low, an expansion of volume on the advance and at the resistance breakout greatly reinforces the soundness of the pattern. check!
Resistance Break: As with many other reversal patterns, the Triple Bottom Reversal is not complete until a resistance breakout. The highest point of the formation, which would be the highest of the intermittent highs, marks resistance. that is what we waiting for!
Resistance Turns Support: Broken resistance becomes potential support, and there is sometimes a test of this newfound support level with the first correction. I hope so!
Price Target: The distance from the resistance breakout to lows can be measured and added to the resistance break for a price target. The longer the pattern develops, the more significant is the ultimate breakout. Triple Bottom Reversals that are 6 or more months in duration represent major bottoms and a price target is less likely to be effective. Does not matter!Price will stay on exponential trend until it goes into one off intermediary bubbles, like before, then gets back.

Yesterday GSR went up, still bellow maximum in this bottom

Submitted by ivars on May 30, 2012 - 2:11am.

Despite daily loss in silver, it means that protracted bottom since May 16th continues to hold above. The ratio below maximum is still bullish for silver, as is the small trend appearing , which have now lasted for 14 days.

Mario Monti speaks

Submitted by silverstool on May 30, 2012 - 2:13am.

The irony of it!

"It's particularly sad when a world which should be an expression of the highest values - sport, youth, competition, fairness - turns out to be a mass of foul play, falsehood and demagoguery,"

Ex-Goldman Sachs international advisor and incumbent Italian PM commenting on latest Italian match fixing scandal.