On The Lookout
I have a little time this fine Saturday morning so I thought I would share some observations with you.
First of all, we have to talk about the open interest changes on Thursday. You remember Thursday, don't you? The day of the big beatdown? As an aside, how many times has this now happened in 2012 alone? Anytime The Bernank steps in front of a mic, the metals get crushed. What was last week...about the 7th time this has happened this year alone? At any rate, from the Comex close of Wednesday to the Comex close of Thursday, gold was down $50.30 and silver was down $1.55. As Ruprecht would say: "That's a lot". Let's keep in mind a couple of things here:
- Price declines when there are more sellers than buyers.
- There are two kinds of selling pressure. Long liquidation and naked short selling.
- When longs liquidate, they are closing an open position. This causes total open interest to decline.
- When naked shorts are added, this is opening a new position. This causes total open interest to rise.
- If you are to believe The Cartel Apologists and Disinformation Agents, then The Bullion Banks are simply benevolent market makers who add liquidity to the metals markets by taking the other side of these trades. They are the willing providers of paper metal when buyers initiate new longs AND they are the buyers on the other side of new, spec naked shorts.
- (This is, of course, true and the CoT and Bank Participation Reports bear this out. The problem with The Apologists is that they stop right there and fail to consider/comprehend that The Bullion Banking Cartel may have more nefarious aims as they serve their Fed/ECB/BoE/BoJ/SNB masters.)
- Since late February, The Cartels have been rapidly reducing their net short exposure in both gold and silver. For gold, The Cartel net short position has fallen from a ratio of 2.69:1 to a current (a/o last Tuesday) ratio of 2.08:1. That's a drop of 36%. In silver, the reduction is even more dramatic. On 2/24/12, The Cartel net short ratio was 2.32:1. As of last Tuesday, it now stands at 1.36:1. That's a drop of 73%.
So now, with these points in mind, let's assess the open interest changes from Thursday. For gold, while price was falling over $50, the total open interest change from Wednesday to Thursday was just 34 contracts. From this, what can we surmise? Clearly there were equal parts long liquidation and new shorting on Thursday. All of that selling pressure drove price down $50. The overall Cartel position was likely flat and the entire shift was within the "Large Spec" category where spec longs were dumped and spec shorts were added.
The $1.55 decline silver, on the other hand, was an entirely different event. While silver was falling, the total open interest grew by over 6,000 contracts and, at 127983, it stands at the highest level for all of 2012 and it's a level we haven't seen since last May! More on the implications of this in a minute but, first, what does this OI rise indicate?
Again, as pointed out above, a rising OI coupled with a falling price is an indicator of naked short selling. Having price fall 5% and OI rise 5% shows that the entire event was caused by new spec short selling, not long liquidation. How can I assume that it is the specs that are adding shorts and NOT The Silver Cartel? Re-read point #7 above. If this is the case, then Thursday put a significant dent in the remaining Cartel net short position.
As of last Tuesday, The Silver Cartel net short position was 16,954 contracts. They were short 64,401 and long 47,447. The difference is 16,954. (As an aside, per the latest Bank Participation Report, JPM was short 17,000 all by themselves. This means the rest of The Silver Cartel is already net flat.) So...IF Thursday's selloff was almost entirely caused by naked short selling and IF that short selling was coming almost entirely from the specs...the current net short position of The Silver Cartel may be as low as 11,000 contracts. Additionally, the balance MAY be JPM net short 16,000 and everyone else net long 5,000. Think about the implications of that for a moment.
Regardless, today the net short ratio of The Evil Empire in silver is at an historically low level. I have maintained for over a year now that the run-up in April of 2011 and the ensuing beatdown in the 14 months since has been a coordinated effort by The Silver Cartel to extricate themselves from their tenuous and extreme net short position. In late March of 2011, they were net short 55,000 contracts. Today, they are net short as few as 11,000 contracts. That's an 80% reduction and they are almost there, almost flat. The question of the day, and the ultimate subject of this post, becomes: WHAT HAPPENS NEXT?
- Can silver reverse and rally while JPM battles the rest of The Cartel?
- Must silver decline further in order for The Cartel to move to net flat?
- Can silver decline further in the face of tight supply and strong physical demand?
I wish I had the answers but, obviously, I don't. I'm left to speculate and guess just like you are. One thing I do know, however, is this: Silver will reverse and it will then head much, much higher. For traders, the timing of this reversal is extremely important. For stackers, not so much. Any further dips in price should be greeted with joy as the opportunity to buy silver at these fiat price levels will not last much longer.
However, I recognize that even stackers watch the day-to-day price changes with great interest. With that in mind, take a good, long look at these charts of silver:
Look, I can assure you that silver is in very tight supply and it is increasingly difficult for Buyers of Size to get timely, price-efficient delivery. This condition of the physical market will make it very difficult for silver to break down through $26. Difficult, yes, but not impossible. On a very short-term basis, it's certainly possible for silver to be run through $26. There has to be a considerable amount of buy-stops under that level. "Harvesting" them alone could drop price below $25 and, after that, selling momentum could take price all the way to $22. Heck, maybe even $20.
I tell you this not because I expect this to happen. I tell you this so that you are mentally prepared. IF this happens, it will mark the end of silver manipulation, as we've known it. A brief drop into the lower 20s would allow The Cartel to finally move to a net flat or even net long position. From there, silver will rapidly recover and soar to new, all-time highs. Of this, I am 100% certain. Therefore, IF silver suddenly falls another 20%, do not freak out and panic sell your metal. This would be the biggest financial mistake you'll ever make.
Again, silver could and SHOULD hold the $26 floor simply because of the tight, physical marketplace. IF it doesn't, though, be prepared for the opportunity of a lifetime to buy silver at what will be an historic bottom. Price will not stay down for long, though, so you must be prepared to move quickly. Besides The Silver Cartel moving net neutral/long, there are several fundamental changes coming over the horizon for silver. Be strong and do not waver.
In this context, we should discuss gold, too. Any set of conditions that would allow for a raid in silver would likely cause a raid in gold, as well. Do the charts bear this out? Maybe. Take a look. Like $26 silver, you can rightly assume that there is an abundance of stops below $1525 gold. This has to have The Gold Cartel salivating. Can they pull it off in the face of extraordinarily strong, global demand for physical gold? Yes, they can but again, though, they won't be able to keep it down there long.
At it's last peak in August of 2011, note that gold broke out of it's primary channel and moved about $250 higher. Having broken down now and residing outside the channel, the risk remains that gold could fall $250 below the channel. This would take it to roughly $1400. Looking at the weekly chart, this would be a logical spot for support to appear, too. Again, I AM NOT SAYING that gold is going to fall to $1425. I am saying that it's a possibility and, if it does, this type of move would present to you an extraordinary and historic opportunity to BUY not sell. Just be mentally prepared, that's all.
Regardless of all this, it's going to be a great week around here. The new "podcast" site is finally set to open on Monday. Besides daily audio commentary from yours truly, the site will also include:
- Member interaction with PM "gurus" (webinars, conference calls and chats)
- In-depth interviews of industry leaders
- Non-moderated (except in extreme circumstances), "blogspot-style" daily thread comments
And remember, the ultimate purpose of this new, "sister" site is to allow TFMR to stay completely as-is and grow at the same time. No fees. Never so many ads that you can't tell the content from the advertisements. A community where we all freely share and prepare.
I hope you have a great weekend. It's going to be a fun summer regardless of what the next few weeks may hold.
TF
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Comments
Bron
I might be able to help with this, am in the loop, what sort of size can you fill immediately for delivery?
Can you really fill an order for 5m oz, with likelihood of same again quickly? when talking about size, this is the ballpark TF is talking about I think.
Thanks
@Tabberto....agreed,
and when you are Siemens,Apple,GE,Toshiba etc and silver is a primary component,even a few days of delay does not fit well in the process. These large manufacturers must know what is happening, if not they will fail, I do not buy the argument that demand will wane, $27.00 or $500.00 they need it..
Bank update.
Still issues here, branches are open for the first time ever on a Sunday. The news has now caught up with it but they are just reporting the problems as ongoing.
My internet banking is back up this morning but there is 53 euros missing from my account. No transactions to explain it and I haven't spent it nor do I have any direct debits for this amount. I can see my statement but cannot make transfers. My wife still has no access to her account online. She is in Poland.
We were very lucky, I usually don't keep too much cash around the house and a few weeks ago I changed what we did have into swiss francs. I then bought a gold sovereign set using my current account balance. This left me with minimum money in my account. I went to the credit union and took out a thousand euros to put into my account to cover bills. I had yet to pay it in when this happened. We were VERY lucky to have this to hand.
My wife and I are both with Ulsterbank, the real problems started the day before she was flying to Poland with the kids. If we hadn't had that cash in the house she would have been unable to travel to Dublin, would have missed her flight and the costs to us would have been much worse.
We could have changed other currencies we hold, we could have sold silver or gold. But crucially, not before her early morning flight. The flights were nearly 1000euro and non-refundable.
Someone mentioned earlier that we should use credit unions. We do, we have 2 credit union accounts that we keep savings in, we empty our current accounts to these unions as soon as there is a build up, however, what most people don't realise is that credit unions bank with the same banks that we do. Customer funds are held in normal high street banks. Also, credit unions here don't have cards, it is all OTC transactions. I like that but it leaves you at the mercy of opening hours. (Still better than the banks)
As it stands my wife has no access to over 1500 euros in her account as she is abroad. (luckily we keep money in Poland) I have limited access to money in my account but am loath to go to the branch as I don't want to make ANY transactions while this is ongoing. That way it is easier to keep track of what is missing.
Just saw on sky news, a reporter is live outside a natwest branch in Leeds, England. A young couple just tried to get access to account in branch but were told the system was down. This does not fit with the company releases that say the systems are up and running. They are claiming that balances are not up to date because they are processing the backlog.
The young couple were trying to change their address. What does that have to do with a backlog of transactions?
Something is not right.
Number 47, have you read this from the Slog?
RBS/ULSTER ‘GLITCH’: Has IT at last done something useful?
I wonder if I am the only person in Britain this morning who finds the NatWest/Ulster Bank computer ‘glitch’ incredibly convenient for some – albeit not the customers?
This just happens to be one of the world’s rockiest banking groups (most of whose astronomical toxic obligations are being hidden from view in one of the nastiest cover-ups in history) and the ‘glitch’ just happens to involve the inner core of the toxicity, Ulster Bank.
There are other considerations to think about too. One former insider tells me that the previous Head of Retail, Brian Hartzer (who resigned last November but only left nine days ago) had made something of a nuisance of himself as an internal whistle-blower about RBS’s myriad Antics Road Shows. Equally interesting is that 50% of Hartzer’s job was looking after….Ulster Bank.
Full piece
http://hat4uk.wordpress.com/2012/06/24/rbsulster-glitch-has-it-at-last-done-something-useful-3/
@Number 47....
...Thank you for the up-dates. "big darkness soon come" Raul Duke..
thanks excalibur
Did you read the comments? At least 2 stackers there and a whole load of mistrust. Nobody believes this is what they say it is. Everyone is waking up to the real risks in our economies.
Some more recent forum posts.
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Those last 4 are quite worrying, seems that anyone who has managed to take money out have had it debited from their accounts. Ulsterbank say they don't have access to accounts in branch and are working from carbon paper yet transactions are showing immediately. Yet wages from last week are not showing up, something is very wrong here. No money coming in but quite able to keep track of money going out. There are a lot of people worried this is customers being used to cover a shortfall. It sure looks suspicious.
47
This is all quite the coincidence.......
But...there is no such thing as a coincidence.
Hang in there, we're thinking of you.
Watch Out for the Hurricane
Hurricane Shelia Jackson Lee Debby is headed our way (Texas Gulf Coast). According to press reports, we'll most definitely all be killed if we don't keep listening. Hope is washed up some of my stack that got lost in the bay.
el gordo
Thanks for one of the funniest things I've read in a while.
@N 47
Events are almost coming daily now that reaffirm our decision to protect ourselves with PMs and other preps. I wonder what proportion there are of stackers in the general population...? When will there by a major bank run that cannot be contained?...? Cash in the attic will be taking on a literal meaning (for those lucky enough not to know, Cash in the Attic is a TV show). Cash is an essential component to a survival stack.
Two Italian friends that live near me in Cumbria have just returned from Italy and report the draconian measures that are limiting cash withdrawals and transfers. On the bright side they have returned with wonderful prosiciutto.
and I'll be round there to watch the football later.
Katy-help w/ math
$4.00 is the starting point. For that to increase to 100% it would be $8.00, 200% up from $4.00 would be $12.00, etc. Always remember to disregard the original price when computing % increase. So your example of $4.00 to $13.35 would be: 13.35-4=9.35 divided by 4=233.75%.
p.s. I'm not a math whiz, just somewhat randomly clever. I didn't even know there was no "divide" symbol on my keyboard until I tried typing that equation.
p.p.s. Enjoy reading your posts. I'm a country boy too, and probably about your age.
Nothing to see here.
As you can see, even the more “solvent” countries like Germany and France are sporting Debt to GDP ratios of 75% and 84% respectively.
These numbers, while bad, don’t account for unfunded liabilities. And Europe is nothing if not steeped in unfunded liabilities.
Let’s consider Germany. According to Axel Weber, the head of Germany’s Central Bank, Germany is in fact sitting on aREAL Debt to GDP ratio of over 200%. This is Germany… with unfunded liabilities equal to over TWO times its current GDP.
To put the insanity of this into perspective, Weber’s claim is akin to Ben Bernanke going on national TV and saying that the US actually owes more than $30 trillion and that the debt ceiling is in fact a joke.
What’s truly frightening about this is that Weber is most likely being conservative here. Jagadeesh Gokhale of the Cato Institute published a paper for EuroStat in 2009 claiming Germany’s unfunded liabilities are in fact closer to 418%.
@ adrock
Awesome Post... Thanx
@ Excalibur
Two Italian friends that live near me in Cumbria have just returned from Italy and report the draconian measures that are limiting cash withdrawals and transfers.
Could you please tell me what your Italian friends told you about these draconian measures? My father (who is not Italian) has a bank account in Italy, and despite me urging him to get his money out when he was there last, a few months ago, he couldn't be bothered, as it's too much trouble going to the bank, and anyway, didn't somebody on TV say that everything will be all right, nothing to worry about?
He has a card for cash withdrawals, and I have almost persuaded him to start taking money out, so I wonder how much he'll be able to take out per day, and whether he'll be able to take it all out before it's too late... He has a few thousand euros, not sure how much exactly.
If you are holding onto
If you are holding onto metals as simply an insurance and not with a fixed expectation of profiting, then fine :). However as for all currency's going to zero, you may be waiting a long time for such a scenario to play out and that's fine as long as you recognise how much you could lose during that time.
@ Number 47
Thank you for posting updates on the banking situation. I am very glad you were fortunate to have that cash at home just when your wife needed it.
I think this banking screw up is probably harder for people in Ireland than here in Britain. First of all, there are far fewer banks in Ireland, so larger proportion of the population is affected by this. Secondly, Irish government taxes plastic cards, so having multiple cards is possibly not as widespread as in Britain. I know some well off Irish people who don't have any credit cards, and maybe only one debit card. If that card isn't working, that's it.
Holy Shit...
...With the little 'computer glitch' going on in the UK in mind, I am currently watching a sheeple guidance show with my wife on cbs Sunday morning about how digital money is so convenient and simple and actually better and not as dirty...blah blah blah...we need a few glitches over here to wake folks up a bit more...jiminy cricket! Don't watch the show unless you want to get a lot pissed.
Katie we stopped farming
Katie we stopped farming alfalfa last year due to the drought. We raised square bales that weighed approximately 70 pounds at that time our best cuttings would get six dollars a bale but most of our bales were sold from the $5-$6 range. Now we just irrigate pasture for the cattle because we did not have near enough water to raise hay. Once again limiting factors for livestock water and feed. I'm sorry you have to cull your herd I know they become like family. In my part of the world these economic times have hit hard the drought and poor economy has led to many folks having to sell their cattle for lack of grass. I feel for them because they've worked hard to establish a herd that is genetically right. God says that he rains on the just and the unjust and I figure he'll decide which one we are pretty soon. Take care and God bless.
Tabberto, Exactly how do you
Tabberto,
Exactly how do you proposed to deliver seven sea containers of silver "immediately"? :) I would also note that one would not want to buy that sort of quantity immediately either as you wont get a good price.
As I said in my response, we haven't been shipping in from London recently so I don't know the state of that market, but SLV has allocated those sort of quantities in the past so I would be surprised if we can't source it from London and our other contacts if required. It would be ex-London of course.
Dental Hygeniest
@Lady Gaugau
I would suggest that her son is exaggerating a bit on where he has seen the gold in the Federal Reserve building NY...the building only has 5 floors underground as bedrock is only 50 feet below sea level...
Built from 1919 through 1924, this massive building occupies an entire city block, reaching fourteen stories tall with five additional floors underground. The stone exterior is reminiscent of an early Italian Renaissance palace with the horizontal and vertical joints of the stones deeply grooved or rusticated. The building was purposely designed to resemble a Florentine palazzo so as to inspire trust and confidence
http://en.wikipedia.org/wiki/33_Liberty_Street
14 stories underground would need a hole at least 140' deep plus footings...according to my rough calculations...pretty tough doing that in 1919 in an area of one city block...
NatWest opens 1,200 branches on Sunday
NatWest opens 1,200 branches on Sunday for first time to clear huge backlog
NatWest is to open 1,200 branches across the country today for the first time ever as the bank clears a massive backlog of payments caused by a computer glitch.
Stephen Hester, chief executive of NatWest owner RBS, yesterday issued a public apology for the technical hitch and conceded the bank had let down its customers.
Branches will open their doors today between 9am and noon, amid continued anger following days of disruption.
The chaos, caused by a problem with computer software, left many of its clients unable to pay bills or access their money.
Mr Hester attempted to reassure customers following mounting fears that thousands of people could be hit with penalty charges if their regular payments - including mortgages - were affected.
''I am very sorry for the difficulties people are experiencing,'' he said.
''Our customers rely on us day in and day out to get things right, and on this occasion we have let them down. This should not have happened.
''Right now my top priority, and the priority of the entire RBS Group, is to fix these problems and put things right for our customers.
''This is taking time, but I want to reassure people that we are working around the clock to resolve these problems as quickly as we are able.''
NatWest has more than 7.5 million personal banking customers but it is unclear how many have been affected.
The issues extend to users of Royal Bank of Scotland (RBS) and Ulster Bank, which like NatWest are part of RBS Group.
Ulster Bank said about 100,000 of its customers experienced difficulties.
While the original technical glitch has been fixed, staff are now working through the build-up of transactions which have not been processed....
http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/...
Thanks Turd - would appreciate your view on following..
Thanks for this great article Turd - very helpful to review the OI numbers and implications. Your logic looks good and glad to know you have real info on silver availability. Your contacts and insight are invaluable. Whilst it would be great if JPM are working to be flat on their Ag positions, if they can make easy money driving the price up and down repeatedly (from say $26 - $34 and back again ) then why should they not continue ad infinitum? Easy money - no regulators /CFTC concerns, just easy money?
Secondly and more fundamental in your outlook model must be the role that you ascribe to the US Gov/ Fed in pulling JPM's strings.The poster ' Pforth' in an earlier post raised the question which I am amplifying - IF the Fed is either the main Customer of JPM or actually really pulling their strings, they do NOT want Ag ( nor Au) to rise, so will NOT allow it - if they have this power. SO are you now assuming that the Fed cannot/does not control JPM and they are free to make their own decision on PM plays ( and now look like wishing to go flat) OR how can Ag/Au rise dramatically , which you propose is very likely to happen later this summer? Any additional thoughts would be appreciated....ta.
Don't Feed the Trolls
Just saying.
Z
@QE to infinity re:Italian banks
I don't want to misreport info from memory, so I'll ask them this eve (if time allows) and PM you. At the moment I believe there is no problem with most cash withdrawals ( ie limited in size). I think they were referring to larger amounts, but will check.
You probably have read about this and so far it is an isolated case:
June 11, 2012 – ITALY - BNI depositors are unable to make withdrawals / payments, payments of utility bills, mortgage payments, taxes says Peter Giordano, Adiconsum: “Grave of the Bank of Italy’s attitude that takes action without considering the impact on depositors, and especially on single-income families and pensioners.” Adiconsum Bank of Italy asks for an urgent meeting and the lifting of the moratorium. The Bank of Italy authorized the suspension of payments by Bank Network Investments SpA (BNI) without communicating anything to the depositors. Very serious and unacceptable – says Peter Jordan, Secretary General Adiconsum – the attitude of the Bank of Italy SpA in each BNI, because highly prejudicial to the interests of customers. Bank of Italy, in fact, after extending the receivership of the bank, thus giving the impression of an imminent rescue, then gave the green light for compulsory winding up, without giving any prior notice to the depositors, leaving them in no condition to perform any type of operation, even basic ones for daily survival, such as withdrawals / payments, utilities payments, rates, taxes. We must unfortunately note that offensive measures as those adopted to customers BNI – Giordano complaint – not an isolated case. Decisions without taking into account the heavy impact, particularly on savers in possession of a single bank account on which accrediting salary or pension, are not new to Bank of Italy, and also affected depositors of Banca MB.
Sounds like your Dad just needs a bit more encouragement/scaring. A few days of taking out the max from an ATM should give him enough to tide him over, even if he wants to keep most of it in the bank. So, I don't think there is panic, but as we know being prudent no longer means keeping all you money in the bank.
All it takes is waking up in the morning from things being OK to a panic. The MSM will then write pages about who didn't close the barn door, and how nobody saw it coming.
Will report back with the latest.
PS I think N 47 is in N Ireland.
link to forum
http://forums.moneysavingexpert.com/showthread.php?t=4026289
Just found this forum from the UK, there are a plethora of different complaints. Some people requested money from ATMs but were denied only to find later that the money requested was debited from their accounts. Some can access funds, some can't. Some have access to online banking, some don't. Some direct debits have been paid, some have not. Others are finding transactions they didn't make. Lots of people missing money without reason. (Me included)
It doesn't make sense, the problems appear to be random. ATMs working then not. Internet banking working for some but not others. Phone apps on and offline. balances screwed up but never to the upside. Payments being debited but not recieved. Surely these systems are not likely to fail in this way?
Why do ATMs work or not when the issue is with balance updates? Where are the missing payments? Why are some people who have made no transactions finding themselves massively overdrawn?
The one thing that IS clear. There is a LOT of money missing from a lot of peoples accounts.
To the waxy guy on silver
To the waxy guy on silver testing.I got this from the auction site I use to buy PM coins.
Yes, this is one of my few
Yes, this is one of my few concerns...That JPM might eventually decide or be chased from the silver market, only to have another bank "pick up the slack".
A mashup from a South Park episode a few years ago.
I just can't get enogh of this video.
Apparently Ulsterbank has seen it and is using it as their business model.
@excalibur
I'm not in the north. I'm in the republic. Qe to infinity is correct about the charges for holding debit/credit cards. It is an annual 20 euro for each card. Ulsterbank is the only bank still offering free banking here (except for the card tax). All other accounts cost money.
We used to be with the Halifax but they up sticks and jumped ship in 2009. Left us in the lurch big time.