Storm Flags Flying

Here in the U.S., we have a government agency that creates the official weather forecast. When severe weather threatens, the National Weather Service issues two types of alerts: A "watch" or a "warning". In this theme, I hereby issue a Cartel Raid Watch, effective through next Friday, September 14.

Astute weather observers will recognize that there is a difference between a "watch" and a "warning". Per the National Weather Service, a "watch" is issued when conditions are favorable for severe conditions to develop. A "warning" is then issued when the storm has materialized and hazardous conditions are imminent. Since I don't yet perceive that hazardous conditions are imminent, this advisory is simply a Cartel Raid Watch. Stay tuned for further updates and possible warnings.

My primary concern here is the continued deterioration in the Comex open interest numbers. You'll recall that the last two weeks of CoTs have been lousy as specs are buying and The Cartels are rapidly creating paper gold and dumping silver longs in order to satisfy the spec demand. I believe that this trend has continued this week and we'll likely see confirmation on Friday.

For this latest reporting week, gold was up $26 and total gold open interest rose another 18,000 contracts. As of yesterday, the total OI in gold stood at 444,849, which is the highest level since 3/2/12. (Does that date set you on edge? It should as it is just three days past this year's peak OI on 2/28/12 at 479,000. Recall that price also peaked that date at $1790.) Undoubtedly, the current trend in the CoTs is continuing and this week's report will show an 18,000 contract rise in the spec net long position and a similar 18,000 contract rise in the Gold Cartel net short position. If that is accurate, look what happens to the all-important net ratios:

Projected 9/4 CoT for gold:

Cartel short 361,ooo and long 139,000 for a net short ratio of 2.48:1.

Total large and small spec long 281,000 and short 59,000 for a net long ratio of 4.45:1.

On 2/28/12, The Gold Cartel net short ratio was 2.69:1 and the spec net long ratio was 5.37:1.

Conclusion: One more stout push higher in price will draw in enough new spec money that the ratios will likely reach the levels last seen on 2/28/12...and we all know what happened next. The price of gold fell $77 on 2/29/12 and it kept falling, reaching a bottom of $1614 five weeks later and $1528 five weeks after that.

For silver, things aren't quite as straightforward. Last week, instead of issuing fresh paper shorts, spec demand for paper was met by Cartel long liquidation. This has had the impact of minimizing open interest growth while still causing higher prices. Yesterday, the trend continued. For the latest reporting week, silver was up a whopping $1.45 but total open interest fell by over 2,200 contracts. And since the August 21st CoT cutoff, silver has rallied $2.90 (+10%) while total open interest has fallen by 8,200 contracts. (-6.5%).

Projected 9/4 CoT for silver:

Cartel short 76,600 and long 35,800 for a net short ratio of 2.14:1.

Total large and small spec long 63,700 and short 23,000 for a net long ratio of 2.77:1.

On 2/28/12, The Silver Cartel net short ratio was 2.32:1 and the spec net long ratio was 3.64:1.

Conclusion: Just like gold, a few dollars higher in price will likely bring the ratios into the danger zone last seen in late February of this year before silver fell from $37 to $26 in a matter of weeks.

NOW, LET ME MAKE A FEW THINGS COMPLETELY CLEAR:

  • Though the CoTs suggest that a raid may be coming, any raid that materializes does not necessarily foreshadow another 100-day correction.
  • London demand for physical metal remains robust and unceasing, even at these price levels, and this physical demand makes it very challenging for The Cartels to rig consistently lower prices.
  • It is widely acknowledged that further Fed "actions" including "renewed asset purchases" are right around the corner, if not prior to the U.S. election, then shortly thereafter. In late February, this wasn't the case.
  • I am still 100% confident of imminent changes to the "fundamental structure" of the metals price discovery scheme. Though I was nearly certain that these "changes" would take place before the end of climatological summer, the ultimate timing of these events is out of my hands. Historic vindication is most certainly coming, though. It's simply a matter of when.
  • Any raid may be significant in the very short term but it will only serve to be an opportunity for you to participate and position yourself for the days ahead. At this point, I'd expect a Cartel Raid to briefly drive metal prices back to their 200-day moving averages. In gold, this would be around $1650 or slightly below. Maybe even the top of the old range near $1635. In silver, we're talking about $30.45 or so with a possible dip all the way to near $30.

So, let's summarize. This is a "watch" not a "warning". If, next week, gold rallies toward 1750 and above while silver pushes through $33 and toward $35, I may be forced to issue a full-scale warning. Even then, the warning will simply be to alert traders to lighten positions and hedge for imminent weakness. Long-term stackers should still use any and all dips to add to their positions in preparation for much higher prices in the weeks and months to come.

TF

252 Comments

Istack's picture

It does feel calm

too calm

and keep stacking

ancientmoney's picture

BTFD

Anywhere and everywhere.

peckerwood's picture

have I

been 3rd yet?

ancientmoney's picture

Turd, remember . . .

For the PMs to blast off and ultimately for there to be a gold standard of SOME sort,as you have stated is a given on numerouis occasions, paper trading must end.  Meaning paper gold/silver must approach zero.  Then silver and gold will be in free markets again.

Hanuman's picture

Structural Changes to Price Discovery

What "changes to the 'fundamental structure' of the metals price discovery scheme" are you expecting?

sdstacker's picture

Cumulative Gold

This is in response to SRSRocco in the last thread:

SRS, first I want to say that I love the work that you do, and us Turds are very thankful.  However, I just want to play devils advocate here and perhaps inspire more discussion.  There is talk in the conspiracy world about gold not being as rare as it is thought to be.  Specifically there is talk about hidden caches of gold, as much as 10 times as what's believed to already exist above ground.  These caches include Yamashita's gold, Nazi gold, Vatican gold, and even undeveloped deposits conveniently kept as a national secrets, hiding out in national parks.  Why would someone want to understate the amount of gold by up to 10x?  That's easy.  It makes the gold you do currently own worth up to 10x more.  Basic supply and demand.  I'm pretty sure that Jim Willie mentioned that a lot of the gold came from Rome.

Even if you think these secret caches are impossible, here is what we do know: the ancient Egyptians loved gold.  They also built the pyramids.  According to many, building these pyramids was an impossible task with the technology that the ancients had available.  Who is to say that they couldn't have mined way more gold than we could ever know about by using the same technology that was used to build the pyramids?  How about the possibly that over a few thousand years, much of that ancient gold has made its way to the Vatican?  My point is, we don't know. But it does make things more interesting to watch. It also makes a more bullish case for silver.

SilverTree's picture

I am tempted to cash-in a bit

I am tempted to cash-in a bit of my PM's to buy a Geo Metro.

Should I? Would you?

Thanks

foggyroad's picture

Thanks TF

I like the new warning system. :0)

El Gordo's picture

This must be serious stuff...

No one even claimed first.  What's this blog coming to?

snoochieboochies's picture

  Jim Comiskey Turd Today!

 

Jim Comiskey Turd Today!

LongGoldLongSilver's picture

46 million and counting...

Another record has been set. The article is spot on regarding the inaccuracy of the unemployment data.

"The unemployment data is not really telling us the true story of how many people are underemployed," says Peter Cardillo, chief market economist at Rockwell Global Capital in New York. Food stamps are "a good indication of how the income of the workforce has stagnated and more and more people are applying for food stamps."

With 22.4 million households using food stamps, fully 15 percent of the American population is on the program. The costs, at $6.025 billion for the month, are just off the all-time record though the average monthly benefit per person has declined modestly to $132.96.

While the unemployment rate actually has come down from the 10 percent readings it showed in 2009, the amount of participants for the SNAP program has soared. https://miningstockvaluator.com/news.php?id=62

Stock_Canines's picture

Turd Are You Saying

That a rally tomorrow and Friday due to ECB news and ADP/BLSBS news should be used to lighten up on paper levered to Gold/Silver prices? You don't think these two events which you refer to as 'The Drama' could be the catalyst to push the metals up through key resistance? 

CBDooper's picture

COT Report - Holiday Week

With the holiday this past Monday, will the COT report even be released this Friday. I was thinking they delayed it during the last holiday week. Hopefully I'm wrong, as I am anxiously looking forward to this weeks report....

MrGuboci's picture

good warning

thanks for the watch warning . My own warning system is watching for when the price nears 34$(38.80 is my target) . I think there will be a "correction" to about 31$ level . It just feels right . Plus , there is no QE3 to fire up the rocket , yet .

kingboo's picture

it wont be pretty

PMBull's picture

Watches / Warnings / Threats

I appreciate the weather analogy.  

Growing up in an area with many tornado and thunderstorm watches / warnings, the distinction is not lost on me.

Yet I'm wondering if given the nature of JPM, etc., it might be appropo to use a color coded terror threat system ala Home Land Security as well.  

We need degrees of danger.  The nuances will allow us to fine tune our complex stacking and trading algorithms.  :-)

¤'s picture

EU Bonds

That was a good conversation earlier by everyone about the JW 60,000 tonnes of gold story and what it may imply. There were many interesting takes on what could be going on or how credible or possible it might even be.

But what of the EU bond sitution and how they're milking this bond issue in front of the world and almost using a MSM bullhorn to show how inept  and clueless/desperate they are right now?

Are they doing this on purpose and do they realize the effect they're having on their own market? Do they actually care? Why should they care if they're going to buy their own bonds from themselves in place of any investors who are spooked out of the bond market in the future?

And what of Bill Gross talking down his own industry with the volume and regularity that he does so? It seems almost too honest and bullhorn-ish.

Bill Gross: The cult of bonds also is dying

http://www.tfmetalsreport.com/comment/208503#comment-208503

So what gives and what will they end up doing tomorrow? Does it even matter? And what of the German court decision on Sept. 12th? That seems to be the key going forward besides a complete capitulation of Spain's/Italy's sovereignty and them begging for help. (a.k.a. giving up their gold).

To myself, it almost looks like they are almost too inept and putting on some weird banker play loaded with monetary drama and sound bites that almost ensures that the EU bond market remains rickety and vulnerable to a collapse.

So I have to ask myself ( and all of you) what the heck is their plan or play regarding these bonds besides all the capped and short dated gyrations were hearing off and on? What would be the result of a slow motion (in progress)  or epic EU bond failure?

The disintegration of the EU and Euro is what would happen as every country would have to fend/borrow for themselves. It couldn't be effectively blamed on any one country or group. It could be at a moment like this where gold could be  introduced as some sort of last resort in future monetary policy and we hear talk of gold bonds, bunds, gilts etc. that can never be redeemed for gold. Just a lucrative premium or rate of return paid in fiat of some sort, maybe a golden hued one at that.

If big money individuals and sovereigns wealth funds etc have been buying/selling  paper of all sorts for seemingly ever it might be more alluring to buy something that implies gold and a rate of return on it. They could only accomplish this by letting the price of gold rise at some point to keep ahead of the fixed rates of return they sold on those early gold bonds they might offer. I'll stop there, but I can see where they might easily pull something like that off in lieu of the bonds they are now thinking of offering up in  a really lame way day after day in the MSM.

Bill Gross punking off the entire bond market system? What gives?

Any thoughts on what appears to be a crucial test in the coming days if they can actually pull this lame attempt off? What happens if they fail miserably? (Were already seeing the start of it.)

Maybe long dated gold bonds, bunds, gilts etc. happens payable in golden-hued fiat? enlightened

new-us-100-bill-1.jpg

jx07's picture

ECB Chief to Propose Unlimited Bond Buying

"The euro gained versus the dollar and European stocks got a short-lived boost after a report that Mario Draghi, the European Central Bank chief, would propose unlimited bond buying at a meeting on Thursday."

*Read more*

The man who stole a leopard's picture

OH F#$%

JOINING US NOW LEGENDARY HARBINGER OF BAD LUCK, JAMES TURK...

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/9/5_James_Turk.html

"James, with the recent spectacular rise in Gold, I just gotta ask you, how the f#$% are you doing?"

----

It's now confirmed, intermediate top is in, see you guys at 1650 to the BTFD.  Seriously, I like James, he's the wise grandpa I never had.

Zoltan's picture

Countdown to Two Months since Swaps Defined

/quote

Statement of Support

Chairman Gary Gensler

July 10, 2012

Further Definition of the term “Swap”

I support the final rulemaking to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requirement to further define “swap” and other products that come under swaps market reform. The Commodity Futures Trading Commission (CFTC) worked closely with the Securities and Exchange Commission (SEC), in consultation with the Federal Reserve, on the final rules and interpretations to further define “swaps,” “security-based swaps,” “mixed swaps” and “security-based swap agreements.”

/quote

I had posted the day that they finally got around to defining swaps (think it was two months ago) but couldn't find it again.  Now will they actually enforce some position limits?  Is this the big event that Turd has been hinting at?  Was there an exemption given on this till January 1, 2013 (some other measures were given an extension).  That will be two whole years after the law came into effect before the CFTC will do anything.  Not that I have much faith in them doing anything.  But their latest excuse for not doing their jobs would appear to be coming to an end.

Z

Kuchek's picture

Bill Murphy on Capital Account

¤'s picture

Hopefully this saves someone's pooch a belly-ache...

Go to link below and click on pic there for much bigger text.

http://dailyinfographic.com/

Dead Canary's picture

FIRST

YES! YES! I knew if I was patient and refreshed my screen every 2 seconds someday I'd.....

(what?  I'm, I'm not first?    Well how low am....... oh....... THAT low.   Grrrrrrrr)

Just wait till tomorrow! First shall be MINE!

Patrancus's picture

Turds's EBS

This is only a test, if this had been an actual emergency, Turd in cooperation with the membership would likely have directed you to disregard what the main stream media is telling you,  and to keep on stacking, this is only a test.

http://www.airraidsirens.com/mp3/model7t.mp3

SRSrocco's picture

REPEAT POST FROM PRIOR BLOG...

WEIGHING IN ON THE ABOVE GROUND GOLD HOARDS CONSPIRACY

I at times have wondered just how much gold there is in the world. I have read some of these articles and reports of the so-called hidden huge hoards of gold. While these conspiracies sound nice on paper... if we look at the gold-silver ratio of production, we may find some answers.

I have had an email exchange with David Zurbuchen some years ago. He did the research and wrote the article THE WORLDS ACCUMULATIVE GOLD AND SILVER PRODUCTION. Zurbuchen doesn't just use one source.... he uses 4-5.

If we look at the total figures of both gold and silver production we can see the historic ratio:

A Complete Summation of the Silver Data

zurbuchen011506i.gif

Average Cumulative World Silver Production= 44.542 billion ounces

----------------------------

Now, for the total world gold production:

A Complete Summation of the Gold Data

zurbuchen011506p.gif

Average Cumulative World Gold Production= 4.25 billion ounces

-------------------------

Again, both of these gold and silver figures are up until 2004. If we do some simple math:

44.54 billion oz silver / 4.25 billion oz gold = 10.5 to 1 RATIO

In 2011, the world produced the following:

2011 TOTAL GOLD = 87 million oz

2011 TOTAL SILVER = 762 million oz

2011 GOLD-SILVER PRODUCTION RATIO = 8.75 to 1

We must remember, the gold-silver production ratio was higher 300-2000 years ago. So, the 10.5 to 1 overall ratio of silver production to gold seems very plausible. I highly doubt a huge amount of gold was produced over and above what was stated in Zurbuchens article and from the World Gold Council.

If there was this supposed 50-100,000 extra metric tonnes of gold hidden in secret hoards, then it would certainly skew the gold-silver historic production ratio substantially. Even if there are hidden stashes of gold, I highly doubt they are large enough to make much of a difference.

So, if we consider the COMMON SENSE APPROACH of the GOLD-SILVER PRODUCTION RATIO.... there really can't be huge amounts of gold hidden as it does not past the historic geological ratios.... that is gold and silver in the ground.

FINAL REMARKS

Some believe there may have been serious gold production in the ancient Egyptian times and etc.  Even though these ancient civilizations may have possible advanced technologies, their population was a fraction of a fraction compared to today.  Some estimates put their numbers at 2 million Egyptians at its peak.

I hardly doubt they could produce tens of thousands of metric tonnes of gold at this time.  Again, I am not stating that there isn't hidden stashes of gold, I just don't believe its anything near 10-50,000 metric tonnes.

Fred Hayek's picture

Eeeeep! Eeeeep! Eeeeep!

THIS IS A TEST!

THIS IS ONLY A TEST . . OF THE EMERGENCY PRECIOUS METALS SYSTEM!

IF THIS HAD BEEN AN ACTUAL CARTEL EVENT, YOU WOULD HAVE BEEN INSTRUCTED WHERE TO BUY PM'S IN YOUR LOCAL AREA!

I REPEAT, THIS IS ONLY A TEST!

Eeeeep!  Eeeeep!  Eeeeep!

phanophite's picture

I think the probability of a

I think the probability of a raid is 100%. I bought a roll of mercury dimes today at 50 cents over spot. Raids always happen when I buy.

Very strange though...usually there is quite the premium at the LCS. Perhaps the guy appreciates my business.

Oh well...in a couple of years, I wont care :-)

¤'s picture

SILVER MINING - Making Doré Bars

Fred...yes laugh

Turd Ferguson's picture

Thanks, Kuchek!!

MODERATOR

For posting the BM interview with Lauren. I'm reposting it because everyone needs to watch it.

Marblesonac's picture

Hehehe

Lauren said "deep throat" and "bang it around"
I love it when she talks that way!!!

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