Gold and Silver Rebound
Well, we appear to reached halftime in this event. Will the home team mount a second half rally and send the game into overtime or will the rout continue? The action right after halftime usually tells the tale.
Well, ole Turd's sure got his neck on the line this time. So far, I've avoided the pitfalls of ingesting Chinese-made yellow plastic foam. For now. Will my luck hold?
But a little hat-eating is nothing compared to the potential ramifications of being wrong on this one. Yesterday, I laid out two possible scenarios for the why and how of the past two trading days. If either one is accurate, I will feel as though I've served my purpose. If neither is accurate, I'm going to need to go back to my old job of guessing weights at carnivals and amusement parks. (Luckily for me, it's almost summer and most of the traveling carnivals are still looking for workers!)
So here we are...a sort of "moment of truth". After being dead wrong about a rally post-QE∞, I've hung my hat on the notion that the rally is still coming and that it has simply been postponed until The Cartels can reduce or eliminate their naked short positions. Once price had come all the way back down to the bottom of the 19-month ranges, it seemed logical that the final step would be to harvest all of the sell-stops that undoubtedly resided immediately below. Lo and behold, this is exactly what happened. And now I'm actually hoping that today's rally remains contained because today is CoT survey day and I really want to see how these "markets" look after all the carnage.
The open interest numbers for Friday were telling. Gold OI surged by 14,000 as every Fool crowded into the short side as gold broke down through $1525. What irritates me is that so many of these jerks have made money on this trade...so far. Silver OI actually fell on Friday but keep in mind that silver didn't break down through $26 until Sunday night. It then fell almost $1.50 in an hour as stops were tripped. Therefore, expect the big OI jump in silver today. Maybe.
Notice I wrote "maybe". This will be a very interesting point of order. If silver OI fell yesterday as price dropped $3, then we have primarily long capitulation. If OI rose...and rose dramatically like gold did on Friday...then we've got the true "Greatest Fools" rushing in and establishing brand new short positions while the longs remain resolute. Usually, the numbers are released by about 2:00 EDT so look for some comments then.
And back to that CoT report. What will it show? Provided we don't get a $200 rally in gold and a $3 rally in silver today, the changes are going to be very, very interesting. To what degree has JPM covered their shorts? Have the other commercials added again to their record-breaking gross long position? Are the Large Specs completely net short? Too bad we have to wait until Friday to find out. What are the odds that JPM and their pals will also be waiting breathlessly for 3:30 Friday? Freaking zero! No doubt in my mind that Cueball and Thunderlips pass along this info as soon as they have it. No doubt at all.
OK, so here we go. As I type, I've got $1387 and $23.70. If I'm going to be right about Scenario #1...which is what I've been concerned about for weeks...then price needs to begin to recover here. A double-bottom is possible but, in this case, I'd actually look for a V-bottom, instead. Why? Because of the reasons laid out above. Now that the final remaining sellers have been harvested, the music stops. The metals are allowed to regain their natural momentum to the UPside and a new trend emerges. Slowly at first and then accelerating. A glance at the marginally-useful charts gives us some levels to watch. Why would these levels be important? Because if I were a money manager who was short and looking to take profits (buy and cover), I would become increasingly wary as price moved back UP and through them.
From a fundamental standpoint, just a couple of anecdotal items. First, there are reports everywhere of retail silver being sold out. Of course, some of this is due to coin shop owners being unwilling to unload their inventory at a loss and at such temporarily-depressed prices. But the reports of shortages at the wholesale level appear real. I know The Doc and he's not lying or making up the shortage stories on his site. See for yourself. Click the Provident or JMB banners on the side of this page and check their silver inventories. Mr Hyde even reported yesterday that his local dealer is not only picked dry, the owner informed him that his next allocation of 45,000 ASEs is already entirely sold out. This is all very good news! People are awake and unafraid. We stand collectively on our watchtower, taunting The Cartel and farting in their general direction. Have no doubt, this pure physical fundamental will eventually translate into paper price.
Second, this site enjoyed record-breaking traffic and attention yesterday. I point this out for several reasons:
- As further evidence that, despite the short-term paper price declines, the interest in precious metals investing continues to grow.
- To draw attention to the successful implementation of all the new "technical improvements" and issue a big "Atta-boy" and "Thank You" to Ron and Stephanie.
- And to assure you that, even though "Turd is wrong 99% of the time", your site remains relevant and vital. Thank you all for your support.
Here are the specifics, in case you're interested:
Old Record: 42,331 on 9/26/11
New Record: 44,521 on 4/15/13
Old Record: 18,153 on 9/26/11
New Record: 21,623 on 4/15/13
Old Record: 151,919 on 6/15/11
New Record: 172,606 on 4/15/13
Finally, I'm been so overwhelmingly busy that I frankly have not had the time to surf the interwebs and find great, new analysis for you from our usual cast of analysts. If you, my dear reader, have recently read something pertinent and helpful, please be sure to post a link in the comments of this thread. Be careful not to cause copyright issues, though. Links only, please. Moochas Grassyass.
OK, go have a great day. Relax and be happy. You are doing the right thing.