The View From 37,000 Feet
In-plane wifi allows The Turd to end his vacation and get back to work.
Well, that was a whirlwind. It was good to get away for a few days but, sheesh, I almost feel like I have a better chance in the Comex casino than I did at the MGM Grand. If it wasn't for Sweetness being such a lousy golfer, I wouldn't have won anything over the weekend! Oh well, back to work and there's certainly no shortage of things to discuss.
I've got to start with The Pig this morning as the level of sustained BS in the markets these days is simply amazing. Back on Friday, little Ole Turd was able to predict that the POSX, rest precariously upon some critical support near 79, would soon need to be rescued via some Fed Goon-speak or negative Euro headlines. Whaddayaknow, we got both. There's a big surprise! Oh well, as you can see on this daily chart, the drama is slowly building to a climax. Look for the decisive breakdown by the end of this month and, once through 79 and 78, the next target is 73.
<Unfortunately, the airplane wifi is so slow that I'm unable to add charts>
Speaking of lousy fiat, it looks like Abe is going to get his wish. The Yen is continuing its historic puke-job this morning and is now just above 108. Next support on the weekly chart doesn't look to come in until 105 or so but Abe's goal of 100 certainly looks within reach. Please don't underestimate the long-reaching geo-political effects of this.
Crude is selling off after failing three times to get through the $98 level, which we had been watching here for the past several weeks. I'm hoping to watch it fall even farther so that I can re-establish a position somewhere near $93.
And Sylvia finally broke through $1700 overnight. Once it did, it tripped some buy-stops and sprurted all the way to 1710 before pulling back and establishing 1700 as support. Let's hope it can draw clear now as a continued move higher will, undoubtedly, add some spillover strength for gold and silver.
Speaking of which, both are rallying smartly as I type on the backs of reported very strong physical demand in London today on the earlier price drops. Let's see if we can keep this up as we go trhough the day and the week. Gold needs to exceed last weeks highs of 1685 or so before it can begin a run on 1695 and then the all-important 1700-1705. Silver will see continued resistance at 32.20-32.50 and we're going to need to plow through there before we can get excited.
Finally, just a few words no last week's CoT. It was simply remarkable, not only for the size of the moves but the divergence in structure between the metals.
In gold, The Cartels covered a net short of 28,900 contracts, a truly remarkable amount. This brings their net short ratio all the way down to 2.04:1. This has likely fallen even farther in the three days since the survey as total OI contracted Wed-Fri by another 6,600 contracts and stoof Friday evening at just 424,150. This is the lowest OI number since the price lows of 12/27/12 and, before that, late August of last year. Additionally, the large specs reduced their net long by 25,000. Between the OI numbers, the CoT structure, the charts and the physical demand, there is simply very little chance that gold is going to decline much father from here.
In silver, The Civil War continues and The Monkeys on the JPM silver desk have apparently decided to adopt the ultra-successful, Bruno Iksil-model of doubling down while praying for salvation. Like Iksil, they will ultimately fail in spectacular fashion.
For the CoT week, while price was falling by over a dollar, JPM was forced to add shorts. This never happens. As you know, JPM always rigs declines on order to ring the register on the LargeSpecSheep. However last week while price was falling, the LSS were covering shorts and adding longs, to the tune of net +3,700 contracts and the other commercials added 600+, too. This forced The Forces of Darkness to create 3,483 fresh, paper shorts when the would otherwise have been able to cover, instead. In fact, Uncle Ted estimates that JPM alone added another 2,500 nakes shorts last week, bringing their total Comex short position to over 33,000 contracts. When you take out the 47,000 spread contracts, JPM is short over 33% of the entire open interest!! This is brazenly unfair and manipulative yet Thunderlips and Cueball continue to look the other way and allow this criminal concentration to continue. Simply disgusting.
On the bright side, JPM has built themselves a funeral pyre of epic proportions. It's made of kindling, fireworks, TNT, gasoline and gunpowder and it could literally explode at any moment. When it does, the spectacle will be truly breathtaking.
OK, that's all for now. This old MacBook can barely carry a charge anymore so I'd better sign off before it cuts out. Back to work with a full post and lots of pretty charts tomorrow. Have a great day!