Speechless Turd

We knew that this week's CoT was going to be interesting but I didn't expect it to leave me speechless.

Look, I know I've been banging this drum for months and all the metals have done is go down. Got it. I read you loud and clear. But we're talking big picture, positioning stuff here. I am 100% firm in my belief that QE∞ caught the bullion banks with their pants down. All of the price action since 9/13/12 has been designed to alleviate the gigantic financial risk and potential liability of being short paper metal. By smashing price, against the fundamentals, from $1800 to $1350 and from $35 to $22, The Cartel Banks have accomplished two things:

  • They've been able to transfer the vast majority of their potential liability from themselves to the speculator sector (hedge funds, managed money, small investors).
  • And now, instead of being trapped short, they are a in position to profit from the inevitable explosion in price.

Even though it's blatantly criminal, you almost have to give them credit. That they've been able to pull this off in broad daylight is simply astounding. On the level of Oceans 11.

Once again and with meaning: On 9/11/12, two days before the announcement of QE∞ and with gold already at $1800, The Gold Cartel was net short 237,091 Comex contracts. That's 23,709,100 paper troy ounces or about 737 metric tonnes of gold. As of last Tuesday, they are now net short just 59,221 contracts or about 184 metric tonnes. A reduction of just over 75%! Oh, and did I mention that, over the same time period, the GLD has been raided for 277 metric tonnes? Just thought I'd throw that in, too. Simply magnificent! The Crime of The Century! Ah, screw that. That's The Crime of The 20th Century, too!! Amazing.

So, here are your numbers. Keep in mind that, for the reporting week, gold was up $1.30 while total open interest fell ahead of June13 expiration by 35,086 contracts. Also keep on mind that for Wednesday and Thursday of this week, total OI fell another 25,110 contracts. One can only imagine how much more long-term bullish these levels are as of this weekend.

GOLD

For the week, the Large Specs dumped 16,836 longs and added 6,544 new shorts (quite a few of which got squeezed yesterday and put back on today). This brings the Large Spec net long total down to just 56,879 contracts. Do you think that's a lot? Hmmm. What if I told you that, back on 9/11/12, the Large Specs were net long 182,016? From a different perspective, back on 9/11/12, the Large Spec net long ratio was 6.62:1. As of last  Tuesday, it was down to1.49:1. And here's a little more perspective for you: At the price lows on 12/27/2011, the Large Specs were net long 130,788 with a ratio of 4.57:1 and at the price lows of last August they were net long 114,304 with a ratio of 3.43:1. Again, as of last Tuesday, the Large Specs were net long just 56,879 contracts and had a net long ratio of 1.49:1. 

The Small Specs also reduced their net long position by a little over 1500 contracts and they are now net long just 2,342 total contracts. Again, by contrast, back on 9/11/12 the Small Specs were net long 55,075. That's a reduction of nearly 96%!

And The Gold Cartel. What did they accomplish this week? Not much...No, they just reduced their net short exposure by nearly 25,000 contracts! Again and as stated above, The Gold Cartel is now net short just 59,221 contracts or 184 metric tonnes of paper gold. Back on 9/11/12, they were net short 237,091 contracts or 737 metric tonnes of paper gold. The new Cartel net short ratio is just 1.34:1. This means that they are now long 3 contracts for every four that they are short. Incredible!

Once again for perspective, at the most recent price bottoms near $1525 in Dec of 2011 and August of 2012, The Gold Cartel was still net short 163,932 and 143,940, respectively. Their net short ratios on those occasions were 2.01:1 and 1.98:1. Again, as of last Tuesday, the numbers are 59,221 and 1.34:1.

SILVER

While interesting, the silver CoT isn't nearly as wild as gold. It's still crazy, though, as you'll see. For the reporting week, silver was down about 25¢ and its OI fell by about 3,300.

The Silver Large Specs dumped another 1,474 contracts this week while adding another 2,750 longs. That net long reduction leaves them net long just a little over 4,500 contracts and drops their net long ratio down to an almost inconceivable 1.16:1. Again, consider these levels and dates for perspective:

  • On 9/11/12, they were net long 31,482 contracts and had a net long ratio of 4.18:1.
  • At the 12/27/11 price bottom, they were net long 6,855 with a ratio of 1.40:1
  • At the 8/14/12 price bottom, they were net long 15,407 with a ratio of 1.93:1.

The Small Specs in silver had little change and are of little consequence right now.

The silver commercials continue to astound. Though the everybody-but-JPM crowd sold 1,326 longs last week, they're still gross long an amazing 66,428 contracts. All of this commercial and spec selling allowed JPM and The Forces of Darkness to cover 4,918 shorts, leaving them gross short just 74,762. This commercial net short reduction of nearly 3,600 contracts leaves them net short just 8,334 contracts and an incredibly, nearly-impossibly low net short ratio of just 1.13:1. Again, for perspective:

  • Caught with their pants down on 9/11/12, The Forces of Evil were net short 47,272 contracts or 236,360,00 troy ounces of paper silver or about 7,350 metric tonnes. They also had a net short ratio of 2.47:1.
  • As of last Tuesday, The Evil Ones were net short 8,334 contracts or 41,670,000 ounces. That's 1,297 metric tonnes or a reduction of over 83%!
  • At the $26 price low of 12/27/11, they were net short 14,312 contracts with a net short ratio of 1.34:1
  • And at the price low of 8/14/12, they were net short 23,402 with a ratio of 1.49:1
  • Again, as of last Tuesday, they are net short just 8,334 contracts with a ratio of 1.13:1

Look, I could probably keep typing for hours about the significance of all of this but I think I'll stop here. All you need to know is this: The Bullion Banks have now reduced their net liability in gold by over 75% and, in silver, by over 83%...all since the game-changing announcement of QE∞ last September. Rather than once again trying to cover into rising prices with disastrous results (see April of 2011 in silver and August of 2011 in gold), an evil, insidious and outright criminal plan was made and executed to crush the paper price of both metals. By flawlessly executing this plan, The Bullion Banks have so reduced their potential liability that there can be no doubt that prices will soon be allowed to rise again. When? That's impossible to say, of course. Maybe not until The BBs are net long both gold and silver. Who's to say for certain? But I do know that we are very, very close to a price bottom here when you take this CoT situation and the physical market demand into consideration. Plain and simple.

Finally, we'll have to see how things go once trading resumes Sunday evening. The action today certainly brings my Wednesday post back into play...the one where I speculated that one more washout could come before "a surprisingly disappointing NFP number" on Friday. I guessed that another test of $1350 was possible with a stop-running drop in silver to $21.50 or even a double bottom at $21. Again, given today's action and the $10 or so taken out of gold on the Globex this afternoon, that scenario certainly seems possible, if not likely. Here are two charts that I printed this morning, before this afternoon's decline.

So, anyway, keep the faith. Next week promises to be volatile but fun nonetheless. Enjoy your weekend and try to relax a little. Then come back on Monday with your game face on.

TF

284 Comments

Mr. Fix's picture

1

smiley

Have a happy weekend everyone!

ag1969's picture

2nd Amendment

A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.

erewenguy's picture

thurd

Although the price action of G&S have been disappointing, while the commercials were getting their books right for the next leg up I have also been able to better position myself. Although I would like to see some display of "strength" in price, I have come to the conclusion that there is no "strength" or "weakness" in prices of PMs. The prices have nothing to do with supply and demand,  are simply valued where the EE wants them to be at that time.

Peoples Front of Judea's picture

2ND

GOOD END TO A GOOD WEEK ...YES....AAWWW NUTS BUT 4 IS OK

Dimeboy's picture

a Fifth

of Scotch for anyone that can answer my question on Silver Keisers from the end of the last thread.!

Turd Ferguson's picture

And this is interesting...

MODERATOR

rl999's picture

4th

hooray. the shenanigans will continue until something breaks beyond their ability to conceal it. although I would not be the least bit surprised to see a comex default spun as gold negative.

Big Buffalo's picture

House

Seems seller and buyer have agreed on a price. We are moving forward with a home purchase!!

Can't wait to be able to add some silver and gold coins to the house.

Road_Scholar's picture

The stock/bond markets will crash

bullshit-meter-2.jpg

then PMs will sky rocket, or do PMs sky rocket then the stock/bond markets crash?!

Does it matter?  Keep stacking...

Al Huxley's picture

Once Commercials Are Net Long

... they can stand aside and let the paper market fail.  Given the supply-demand dynamics (which should be transparently obvious, except that people lose all common sense in the PM market, especially when being perpetually misled by the complicit/moronic MSM), and supported by the trends highlighted here, and obvious for months, it seems pretty apparent that this is the bullion banks' end-game.  Get net long, and then cease to play the paper game, leaving the speculators as the scapegoats for the collapse of the comex and LMBA ('why were they selling all those contracts if they knew they couldn't deliver - BAD SPECULATORS').  I think historically the idea of waiting for the turn in Commercial activity (for them to start increasing short positions - ala Jake Blues comments on other threads) would be a good plan, but I think they have no intention of playing that game this time around.

vonburpenstein's picture

I wonder...

....does anyone have any thoughts about what the "Mania Phase" is going to look like?

gearhead_24's picture

Have to agree that the paper price...

of Gold & Silver will not rise until the Bullion Banks are net long.  That means the price may have to drop even further.  smiley & sad  Hang in there and stay strong.

GH

DirkDirkler's picture

Lowest commercial net shorts

Lowest commercial net shorts I have on record for both gold and silver. I think this is the lowest since at least the year 2000 for silver, not sure about gold. Gene Arensberg will have more on this.

I think I don't need to mention it, but this means this right now is the best buying opportunity since this bull market started.

ancientmoney's picture

@Turd . . . excellent post . . . tied it up neatly . . .

I am a silver hound, though I like and own gold, too.  So, i picked out this passage of yours:

"The silver commercials continue to astound. Though the everybody-but-JPM crowd sold 1,326 longs last week, they're still gross long an amazing 66,428 contracts. All of this commercial and spec selling allowed JPM and The Forces of Darkness to cover 4,918 shorts, leaving them gross short just 74,762. This commercial net short reduction of nearly 3,600 contracts leaves them net short just 8,334 contracts and an incredibly, nearly-impossibly low net short ratio of just 1.13:1. Again, for perspective:

  • Caught with their pants down on 9/11/12, The Forces of Evil were net short 47,272 contracts or 236,360,00 troy ounces of paper silver or about 7,350 metric tonnes. They also had a net short ratio of 2.47:1.
  • As of last Tuesday, The Evil Ones were net short 8,334 contracts or 41,670,000 ounces. That's 1,297 metric tonnes or a reduction of over 83%!
  • At the $26 price low of 12/27/11, they were net short 14,312 contracts with a net short ratio of 1.34:1
  • And at the price low of 8/14/12, they were net short 23,402 with a ratio of 1.49:1
  • Again, as of last Tuesday, they are net short just 8,334 contracts with a ratio of 1.13:1"

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

What is really astounding is that JPM is still net short more than the commercials as a whole are net long--and by a landslide.

However, their ace in the whole (actually, there are 4 aces in a deck, and they play with three decks' worth of aces), is they are custodian and an AP of SLV, the largest cache of phyzz silver in the known universe.

And remember, rule of law= Bwaaaaaahahahahahahahah!

rl999's picture

prices rise when?

would it be possible to estimate the time until the bb are net long by averaging out the rate of their movement from short to long?

something like the chart that is being done showing the comex depletion rate and estimate (based on average)

WhyMeLord's picture

Don't be fooled by the false economic recovery

Scarfed from Jessie's site, which BTW has some awesome Chris Rea Blues posted...

The reason to maintain skepticism of good times a-coming is that an economic recovery can – and is – used to package a lot of political snake oil. As long as people believe in a recovery, Congress can keep ignoring the unemployment and equality crises and enjoy ginning up imaginary problems like the plague of corporate tax rates. If Americans believe in a recovery, CEOs can keep claiming that they don't need to invest in the United States or hire American workers.

A recovery allows real estate agents and banks to tell Americans that they can't borrow money for the home they want, that they can't participate in the housing market, while wealth private investors scoop up as much as they can. A recovery allows lawmakers to pretend that their destructive policies of deficit cutting and austerity were productive, rather than destructive.

A mythical recovery, in short, gives cover to a lot of irresponsible people hoping that Americans won't look behind the curtain.

LINK

DirkDirkler's picture

Gearheard

The probability of this coming true is high. This right now is a great buying opportunity, but I really really really doubt when they were already able to get it to 20$, that we'll stay above 20. They'll probably let it go sideways or maybe even slightly upwards for a while, weeks, months, and then drop the last and final hammer and take us down to 18 or even 16 and something with a 1200 handle for gold. We likely won't stay there for very long, but it will be enough for them to go net long at this point. This would also be the greatest buying opportunity anyone could ever imagine, because it will be an utterly complete washout. Anyone who is not in this with all their conviction will sell. It will/would be a panic sale for the ages.

That_1_Guy's picture

Looks like im Still Stacking.... Again. Same Story....

LCS hunting this weekend.

Looking for a deal....im sure ill find a couple.

Just picked up some IKE dollars in original Styrofoam sleeve in blue box. :) Those are basically proof 71 S for all you collectors out there. 4$ each...;)

Great listen here to understand a macro manipulated market. G Edward Griffin today with some late 60s backroom interview clips. great stuff.

http://www.youtube.com/watch?feature=player_embedded&v=PnrA2IHx3gc#!

Happy Hunting.

GUY

Urban Roman's picture

Alternatively,

... is the EE simply catching its breath, and getting ready to lay on another salvo of shorts next Tuesday? 

WhyMeLord's picture

All I wanna do is take your money

The Banksters Mantra:

And Oh yeah, there is a GREAT cocktail named after this song...

Knock U on Ur But, very enjoyable.

Cry Me A River's picture

Huxley

Says, "I think historically the idea of waiting for the turn in Commercial activity (for them to start increasing short positions - ala Jake Blues comments on other threads) would be a good plan, but I think they have no intention of playing that game this time around."

Everyone is entitled to their opinion, but assuming you're right, then what? Are they just going to decrease net shorts until what?

Right now, They are 74,762 short and 66428 long. What happens when they are 72000 short and 72000 long? Does the operation just stop? Do they go home and play video games?

The reason why I'm asking is that in order to make such a statement, you must be willing to answer what happens if they actually do what you think they'll do. This is what I mean about one-sided statements. Sometimes, they can appear hype-y such as "I think silver goes to $5000". But tell me where you get this notion?

The COT Report has been around for a long time. When charted, it shows a distinct cycle of shorting into rising prices and covering into falling prices.   They've NEVER ,as a group, been net long.

Historically, the commercials have also never been this close to net long, but as I said in my previous response to Stock Canines, HERE: http://www.tfmetalsreport.com/comment/317774#comment-317774 getting excited about a number that makes history isn't going to help prove anything. 

If a fundamental indicator such as the COT turns out to be inadequate, that's one thing, but if you're going to look at it and use it as I have, then I think it's prudent to use it as intended until it's proved to be worthless.   

I am willing to let it prove or disprove itself, but up to now, no one else seems to be interpreting it with conclusions each week. This is the only way the reporting of a fundamental indicator can be useful. 

To sum this COT indicator up, I've said in the past that if we see rising silver prices along with falling net shorts, I'll be forced to conclude that each cycle preceding it, where "normal" conditions have consisted of INCREASING net shorts into rising prices, are just random events.

In other words, it may be that the net short condition of the commercials MAY have no correlation with silver prices. If so, I'll be the first one to admit and announce it.

philipat's picture

@Turd

I think your "Final Washout" hypothesis is highly likely. If indeed the BLSBS is going to be bad, better for the cartel to have PM's rally off a lower figure. The rise in Treasury yields on the back of stronger consumer confidence and more "Tapering" BS is being seen as Dollar positive and negative for PM's in an accelerating economy, which is fine if that's what you believe. Or if you are the cartel who can use that sentiment as another opportunity for the monkeys to play.

Alternatively, however, rising bond yields could be signaling higher inflation:

http://www.zerohedge.com/news/2013-05-31/34-words-may-have-caused-todays-crash-stocks

¤'s picture

Good luck...

...to anyone in the tornado alley region.

I'm watching bad things 'live' on The Weather Channel...holy cow!

billwilson's picture

gold, miners, S&P, yen ...

As much as we like to focus on just one item, everything these days is linked, hedged, intertwined, you name it.

The last half hour today was emblematic. The broader market started to crater and wham UP went the miners, like a rocket. Goldcorp, Agnico, and Yamana being the key beneficiaries. It looks like someone was unwinding a long S&P short a few miners trade ... in a big hurry (big buying in these names after the close also in Toronto through Morgan Stanley).

Why is this important?

I have felt gold will not move higher until the broader market corrects ... that may now have begun.

A correction in the broader market implies an unwind of the S&P/miners trade. As the miners are already oversold, some forced buying is just what the doctor ordered to spike miners higher. AND as the miners usually lead gold, could it be that this will also lead gold higher as well?

As for the yen ... seems to be pegged in the 101 range. It would be nice if it would do nothing for a while.

Next week will be interesting.

Cry Me A River's picture

rl999

Asks, "Would it be possible to estimate the time until the bb are net long by averaging out the rate of their movement from short to long?...something like the chart that is being done showing the comex depletion rate and estimate (based on average)"

Of course this is possible...and it's already been posted but without a projection. I can do that right here if you want: Here is the data chart first:

We can use the data from the last time an inflection point showed as a top on 12/04/2012, Then Linear Fit That Data And Project It Until It Hits "1":

Viola!---The Commercials Should Become 1:1 Short : Long By 6-16-2013.

bullclip's picture

Silver supply

  Just received a monster box of Canadian Silver Maple Leafs,   paid for on April 17 th from my wholesale supplier today. ( What's 6 1/2 weeks of delivery time.)   Nice to be able to have some more capital  again to make more purchases for inventory.

gearhead_24's picture

Yea Dirk...

Not only do they want to take our money, they want to demoralize us while they do it.  No better way than what you just suggested.

I got into silver because I wanted to get rich quick.  That didn't work.  Funny thing happened along the way, I got educated and I sleep better at night holding my phyzz than holding digital 1's & 0's in my 401K.

A bird in hand is worth 2 in the bush.

Cry Me A River's picture

OKLAHOMA CITY TORNADO AREA

Al Huxley's picture

@JakeBlues

I understand your point which is why I agree with you in general - the paper game's been around for a long time, and it's served a lot of purposes as well as put a lot of money in the pockets of the bullion banks.  But the debt-based fiat system we're currently operating in is destined to fail, and nobody knows this better than the bullion banks (probably not everybody in them, but certainly the ones running the show).  So when it fails, what happens?  Probably a systemic reset, maybe along the lines of what's talked about at FOFOA, maybe something more messy and less contained.  At any rate, clearly the bankers don't have any REAL liability being short when the system resets, but to the extent that they can be long physical (and I suspect that the individuals, if not the institutions, have plenty of PMs in their private vaults) AND long paper, they can avoid the reputation damage of being 'the ones responsible' when the system breaks and everybody finally learns why REAL GOLD AND SILVER IN YOUR POSSESSION is quite a bit different than contracts purportedly tracking the price of those metals.  At some point of course the metals will trade, but then it will be under different circumstances and for different reasons (assuming the current system eventually falls over, as all fiat/debt based systems have in recorded history).

I will ask your question of me back to you - how does the bullion bank continue to profitably take the short-side when it becomes undeniable that the paper market has failed?

As long as the pretense of a 'physical market with plentiful supply' can be maintained, then it makes perfect sense for the banks to take the short side of the equation and work the system up and down.  But when the risk that the physical reality will no longer support that pretense (think 7 years for Germany to get their gold, ABN forcing paper settlement, HKMex closing and settling in paper, weeks delivery wait for coins in North America, delivery delays to India, etc.....) then why take the short side.  Default is inevitable at that point (given that the paper contract volumes grossly exceed deliverable supply) so why take any exposure at all?  Or any exposure at anything less than say, $10,000/oz (just a random number there, for illustration, not a prediction).

Here's my prediction of what will happen once the commercials are long.  Suddenly the price will start rising, and rising quickly.   The complicit and moronic MSM will suddenly be awash with stories about how

- the debasement of currencies by the Central banks, and excessive sovereign debt and derivative exposure are driving people to purchase real stores of value.

- the problem's been grossly aggravated by EVIL SPECULATORS who've sold out the west by selling gold they don't have, and then reselling it, allowing the East to steal all our gold

- The Comex and the LBMA will default, and the blame will be laid firmly, and finally at the feet of the EVIL SPECULATORS, who sold out Western civilization's true wealth for their own selfish gain.

If they were just playing paper games, the situation wouldn't be as ridiculously overstretched as it is right now....

Al Huxley's picture

JakeBlues PS

By the way, I agree with you generally that it's unwise to use speculation on what MIGHT happen as the basis for investment decisions (particularly if they're short-term TRADING decisions as opposed to 'saving' decisions.  So I'd have to agree with you that there's a chance that this is just another cycle and eventually we'll see the commercial side heavily short against rising prices.  I just don't see how that's going to reconcile with the obvious supply issues in the market right now. 

As a concrete example, my LCS is STILL charging $4.50 over spot for Silver, with a 3 week delay in delivery.  I asked the guy when premiums would be coming back down - his response - 'every time the price goes down, demand goes up, so once people stop buying the dip and putting all this demand pressure on, then the price will be able to go down, but otherwise it won't'.  So this is so twisted, its actually hard to even articulate it - price is down, because there's no demand, but the price is still high because theres too much demand.  Only in the PM world would such self-contradictory 'logic' be accepted and regurgitated by so many.

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