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:

Visits
Old Record: 42,331 on 9/26/11
New Record: 44,521 on 4/15/13

Unique Visitors
Old Record: 18,153 on 9/26/11
New Record: 21,623 on 4/15/13

Pageviews
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.

TF

160 Comments

fats's picture

duece

duece!

haha- i was aiming for 2nd just to drop the duece and i totally missed with 1 and 3...

Anyway, I just wanted to add that your site has been mentally preparing me for yesterday.  I knew there would be a washout and therefore I didn't even flinch at the news of a ~10% drop in the metals.  I'm actually even more excited to see what's over the horizon, hoping this is the foundation for something BIG.

Also, as a resident of a Boston suburb, yesterday's attack was also not surprising.  Support for gun legislation is waning, patriots are gaining ground in local and national platforms, and Obama and the his cronies are losing credibility every day.  We knew this was coming.  On my drive into work this morning the police presence was strong.  I know who they want to blame.  The "liberty" people.  The "tax protestors."  The "constitutional extremists."  The fact that the FBI, ATF, and justice department are already taking the lead on the investigation only makes the outlook appear even more grim.  

That's why I'm here.  I'm holding my small physical position and ready to ride out the storms ahead.  Thank you for helping us keep the faith, Turd.

BTW, if you are in the Boston area, definitely check out the Muster on the Lexington Battle Green this Friday at noon with the Oathkeepers.   

CLE807's picture

1

1

wildstylechef's picture

YAA number 2 is gold

CBC doc is on this thursday

The CBC special on Gold is going to be awesome

Woke up this morning listening to CBC after a crap night unable to get a decent sleep and lo and behold they have the writer on talking about topics covered

1.      Gold is possibly not in fort Knox and how they refuse to allow it to be counted and how Germany asked for their gold back and all of a sudden it’s going to take 7 years

2.      China and Russian buying up all the gold they can get their hands on

3.      The war years of moving the gold from Europe to NA

4.      The amount of gold in the world and how gold you think the bank is holding for you and how when you go to get it  they will give you a piece of paper not real gold even though you gave them real gold.

5.      Paper gold to real gold is 100 to 1

6.      The manipulation of gold, but best of all is the power of real wealth behind gold and why people and governments manipulate it so they hold the real gold giving actual logic as to why it is manipulated

It’s going to be awesome whether people believe it or not that is something else but it has our stock TV show BNN  talking about the possibility that these thing are going on and they give the Sprott personnel a fair amount of time and you know what they believe

http://www.cbc.ca/doczone/episode/the-secret-world-of-gold.html

Thursday @ 9pm

fats's picture

double duece?

double duece

Nick Elway's picture

It's Tuesday

Silver Alert's picture

Why do predictions of volatility...

always seem to mean down?

(And fifth would be double deuce and a half.)

Mickey's picture

my post from end of last thread (just want the kudos seen)

Actually kudos to JS and Turd: they, probably others too called for a sudden big run down--the only problem was timing and since we here Turd and JS operate out in the open , giving a date or time frame or saying it looks like we are out of the woods is lethal.

I know others do this an I do too--play puts on down action--mostly GLD puts but they were good the past few days. Cushioned a lot of grief. But you have to understand what they are and the risks involved. Last night when I saw gold run up I know my puts would crap. But I had already rolled down a few times over the past few days so net net I am ahead.

I have no clue of  the timing on the rebound (there will be one because there is no available fix for the US monetary policy problem other than throwing in the towel)  so I bought giggle call spreads expiring this Friday in case we see a big move up, and more serious calls for May and  Jun.

There are a lot of tools available out there.

A note on the real value of gold. Whats the real value when you think back 50 years ago when paper money was silver certificates and before that gold certificates. With all the money out ther-paper in pockets , in accounts and digital all over the place, the true price of gold, and I seem to remember calculations, is prob into 5 digits. I think I saw 58k as a calculated prce a few years ago.

Its all a matter of how much faith based currency is out there-and of course if banking system collapses its what you really have in hand including paper currency even if FRN, If banking system shuts down, not out of the possibility, we have no credit cards to use, no checks to write, etc. and we already know that actual paper cash held in banks is far less than whats on the books which is why they are so terrified of bank runs. Rememebr the only reason bank balance sheets look good is a) mark to fantasy and b) low interest rates keeping a writedown of many of banks interest rate sensitive marketable investments from being written down.

Take a look at "Gibsons Paradox" written by Larry Summers .

btw: I had to have long puts in portfolio at nyse close yesterday fpr obvious reasons. After dinner last night they were looking pretty good. Bu tthen gold got back to break even and started running up o/n.

The futures market should be closed down--too bad its not going to be an orderly close down. I took a look at OI and inventories there and its absurd. Its a casino environment. Thats not how or why the futures market was originally set up. And speculation is from both sides.Futures market was good way back when farmers wanted to secure a good price in advance for their crops and users of crops were happy to lock in a reasonable price. Now its become a playfield for  speculation and games  not just in PM (although for PM its a major league playfield) but other areas too like oil.

Dr Jerome's picture

EE Short covering?

I would think that the momentum chasers are still in sell mode after counting up their pain and seeing calls in the MSM for metals to head even lower. Volume seems very high today--higher than any days last week except for the past two days of selling. I wonder if the EE has been buying back shorts while other investors have been getting margin calls to sell off their long positions. The COT may have much to say indeed this week (inasmuch as we can trust it).

Mammoth's picture

LCS Report

LCS Report:
Yesterday I stopped by my local coin shop.  After going in there for a year now, the proprietor knows me and we are on friendly terms.  Up until two weeks ago he has always sold his pre-1965 Silver coins at spot, but was recently selling at 5% above spot. 

Anyway, yesterday afternoon he stood behind the counter with his arms crossed and told me that he had packed up all of his Silver coins, brought them home and locked them inside his safe.  "Those coins are NOT coming out of there until the price of Silver comes back up," he told me.

Although this is only anecdotal evidence, this speaks volumes about the shortage of 90% which a number of people have observed.

As a side-note, this LCS has also been sold out of Silver Dollars for the past two months; in the past he'd always had these on-hand.

s1lverbullet's picture

Top 10

Woohoo!

Mr. Fix's picture

Ten!

That was close!laugh

wildstylechef's picture

Andrew Maguire

Yesterday, Andrew Maguire said, “all they (central planners) are doing is delaying an extremely disorderly rebound (in the price of gold).  Give it a few days because at least 90 tons of central bank buying today was seen below $1,550, into the afternoon fix (in London).  As we cascade down here you can guarantee that what they (Eastern buyers) are doing is ‘spot indexing,’ which is basically locking in the price in the paper market and will allocate that at an upcoming fix (in London).

So I give it (at the most) two to three days before this has a massive rebound effect, and the short fuel above the market now is at absolutely unprecedented levels.”

stormtx's picture

Why go long before the smash unless...

If the insiders really know what's going on, why were they buying longs and covering shorts so aggressively the last few months unless their intention was to send it higher?  All those purchases are now out of the money unless it comes back and then some.  The commercials got hit by this way more than the hedge funds did, and it conveniently happened in the middle of the quarter to give plenty of time to reverse it before any paper loss has to be marked for earnings.  IMHO.

AlienEyes's picture

1 with a zero....or maybe not

G & S

Like a couple of drunks, swimming up shit creek.

OughtImpliesCan's picture

JPM 401k Restrictions

I have a friend who works for Chase. Yesterday, he decided to transfer a bunch of his 401k into a precious metals fun, so he went into his account and couldn't find a single PM fund among the 30 or so funds offered for his investment. So he called up whoever manages his account and they said, "Sorry. We don't offer that here. You'll have to take money out of your 401k and purchase it on your own." Thought that was anecdotallyinteresting.

billhilly's picture

Giffin good

Can there actually be such a thing as a DOUBLE Giffen Good ?

It seems to me that Gold and Silver may qualify as the demand certainly appears to have increased on the price drop, and demand also appears to rise on price increases. Just asking.

Ah, ya gotta love this place !

Missiondweller's picture

TFMetals is more relevant than ever

Thank you once again for providing this community on days like yesterday.

I was especially impressed by everyone who provided "intelligence" from their LCS. I found this very helpful in getting a feel for what was going on all over North America.

Yesterday Turk asked some great questions posted on KWN that puts in all into perspective:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/15_Turk_-_Gold_%26_Silver_Smash,_Monetary_Train_Wreck_%26_Apple.html
 

1) Is the Federal Reserve decreasing the quantity of dollars every month by $85 billion to bring about a deflation and enhance the dollars’ purchasing power?  No, they are increasing the money supply by $85 billion every month, further debasing the dollar by transforming debt into currency.

2) Is the high level of unemployment being reduced so that more people are working and bolstering the economy?  No, there are 113.3 million people employed in the US in private industry, or in other words, those employees creating goods and services for profit.  Amazingly, it is fewer people than were employed in February 2006, over seven years ago.  

3) Is the future of the euro secure?  No, it is still hanging by a thread, moving warily from one crisis to the next.  Importantly, we now know from the Dutch Finance Minister to the EU that confiscating depositor money in banks in Cyprus will be the template for future bailouts, meaning the uncertainty about the euro and European bank solvency remains at scary heights.

4) Is the yen going to strengthen to decrease the attractiveness of holding gold in that country?  No, the Japanese government and central bank have laid out a blueprint to debase the yen even more rapidly than than the speed at which currencies of other industrialized countries are being debased.

5) Are all of the banks in the world solvent so that there will not be another crisis like Cyprus?  No, many banks - including some of the largest in the world - are so financially weak and undercapitalised that if you take away central bank support like the ECB did to Cyprus, they would collapse just like the banks in Cyprus collapsed.

6) Are crude oil and gasoline prices matching the fall in the gold price this year?  No, while gold is down about 18% since the beginning of the year, energy prices are basically unchanged for the year.  By the way, the gold price this year has fallen less than Apple, which has dropped 21%.

ChocoHotDog's picture

Turd, thank you for doing

Turd, thank you for doing what you do. No one is right all the time, but you bring knowledge in a presentable format to those who need it. 

The trolls can sit on cacti. 

Missiondweller's picture

@Turd

Any chance you could do a podcast with Andy Maguire?

I'd love to hear more about what he saw going on Friday and Monday.

CLE807's picture

Eagles

Just ordered a 1oz Gold Eagle and two 1/10 Gold Eagles from JM Bullion.

Notice: Please note that due to extremely high volume, order processing may take an additional 10-15 business days. Thank you for your patience.

But I'll take that.

ForWhomTheTollBuilds's picture

The trolls can sit on cacti.

Hear hear!

Also, I believe the word you are looking for is "Cactusises"

mrneutron's picture

Maguire - LBMA Default Triggered Gold & Silver Takedown

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/15_Maguire_-_LBMA_Default_Triggered_Gold_%26_Silver_Takedown.html

Maguire:  “Gold and silver only have this type of selling when there are extreme shortages of the physical metal.  I am totally aware that before this takedown occurred there was an imminent LBMA default.

We had already seen COMEX inventories plunging.  In 90 days COMEX inventories saw an incredible decline.  So immediately available physical gold was disappearing.  People around the world don’t understand what has been happening since Cyprus....

“Entities went to the LBMA and said, ‘We don’t trust anybody anymore.  We want our physical metal.’  They were told they would be cash settled instead by a bullion bank.  The Western governments have been trying to plug holes, and the reason for it has to do with the default that was taking place at the LBMA.

This is why this smash has been orchestrated because of the run that has been taking place on physical metal.  So Western governments had to do this because of an imminent run on the unallocated LBMA system.  The LBMA bullion banks had become so mismatched at one point on their trading positions vs real world demand that they had to orchestrate this smash.

This orchestrated smash in gold and silver was nothing short of a bailout for the bullion banks.  So there is a run on physical gold that is taking place and the Ponzi scheme the West is running is being threatened because of it.”

Maguire also added: “We are nearing the end of this decline.  Physical demand is already beginning to catch up with leveraged paper.  If gold were to trade into the low $1,300s it would be unsustainable for very long.”

Mickey's picture

401k restrictions

this will sound contrary to the general attitude here but the plan is run by fiduciaries, most of whom do not want to stick their necks out. But I can see why big banks might  not want people to own gold.

But I was a plan trustee many years ago. Worked with other trustees. Found they knew absolutely nothing but made decisions.

When I first became a trustee, the HR people were the other trustees (I was treasurer) . They put people into fixed income because it was safe w/o regard to growth. In 1973/74 there was a huge stock selloff--they closed down the option for equities. Our sales group, smart people, went nuts. So it was reinstated.

Then I changed options (ability to pick and mix) to a) fixed income, b) balanced. C) equity indexes d) aggressive equities and e) pick your own-this came later and we set up a situation with either fidelity or schwab where participant could do  mutual funds or stocks. This was early on in the 80's. But the other  fiduciaries thought the dumb blue collar workers and some of the white collar workers were too stupid to make this decision. They would fit into Congress quite well!

So less on conspiracy (its stil there) and more on ego and incompetence.

Turd Ferguson's picture

This is what I alluded to yesterday

MODERATOR

In the end, the banks are unloading the risk of being short onto the private sector.

http://www.zerohedge.com/news/2013-04-16/guest-post-gold-slam-massive-wealth-transfer-our-pockets-banks

Terabyte's picture

Missing Audio File???

Repost from previous thread.

I'd swear that early yesterday morning there was a link in Turd's early short post to an audio file of an interview between two of the "big boys" in the metals business.  I believe it was on KWN.  They discussed the miners and metals prices.  After Turd updated his post that link seemed to be missing.  Or am I loosing it?  Does anyone remember the one I'm talking about and have that link?  I've looked on KWN and can't find it there either.  Thanks!

Also, thanks Turd for all you do here. 

Silver Alert's picture

What would Andrew McGuire

since he plays on the Comex, think of this:

Force Majeur Was the End Game All Along, COMEX Will Default in the Next Week!

If Turd does an interview, or talks to him, inquiring minds want to know.

Juggernaut Nihilism's picture

I doubt the drop is over

May stabilize for a time, but they're not through with us.  The simple reason is that although a lot of speculative traders were smashed out of their long positions, very few gold bulls were changing their minds.  Until that happens, the cartel won't be satisfied.

Stack'em High's picture

Ni

¤'s picture

N. Korea Sabre Rattling: Thin-skinned NK's

Military officials applaud together with North Korean leader Kim Jong-un, during the Unhasu concert in Pyongyang, in this picture released by North Korea's KCNA news agency April 16, 2013. REUTERS/KCNA
 
 
 
 
 
 
 
 
 

North Korea makes new threats against South

SEOUL - North Korea issued new threats against South Korea, vowing "sledge-hammer blows" of retaliation if South Korea did not apologize for anti-North Korean protests the previous day. 

Reuters.com

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