WOPR in Charge

It's the one, overriding thought I've had since having to endure 30 minutes of CNBS this morning.

First, let's recap. I've been predicting for over a week that today's NFP-BLSBS would be "disappointing". By late yesterday, so many folks had jumped on that bandwagon that, in hindsight, the PMs were set for an opposite reaction. And that's exactly what we've gotten.

Think about it...A little less than 24 hors ago, The POSX was down OVER A FULL POINT. In currency terms, this was a monumental, if not historic, move. Currencies aren't supposed to move that much in a single day. It used to be a big day was 10 or 20 basis points. Now, The Pig can fall over 100 basis points and it's just another day in the market. This is all about WOPRs, too, but more on that in a minute.

Back to The POSX. After today's paltry 175,000 payroll number and UPTICK in the unemployment rate, the POSX is rallying. How much? Is it back UP 100 bps? No. It has barely retraced half of the elevator shaft it fell down yesterday. But that hardly matters. Though the POSX is still 50 bps LOWER than yesterday at this time, gold is $15 lower and silver is 50¢ lower. In our human world, this seems illogical but in the WOPR world, all is well.

And you see this on CNBS, too, if you look closely. Back in the day...actually WAY back in the day...I had the privilege of visiting the floor of the NYSE on two occasions. It was a crazy, bustling place. There were specialists manning their posts like watchmen and traders maniacally criss-crossing the floor with orders. It was a human process. By no means perfect but at least it had some semblance of reality, a connection to fundamentals and actual intelligence.

Today, the floor of the NYSE is a veritable ghost town. A majority of the trading action now takes place on computers based in places as close as Hoboken and as far away as Kansas City. Gone are the days of actual liquidity provided by real human beings with rational intentions, replaced by computers trading for pennies in a rapid fire shell game that would make even the most accomplished 3-card Monte dealer wince.

The same is true for the metals trade. Physical fundamentals are completely trumped by the contract-flipping computers. Oh sure, from a distance, there appears to be a functioning "market", replete with liquidity, but it's all a ruse. Total open interest in gold is now at a multi-year low of 375,000. For perspective, this is down over 40% from a peak above 600,000 back in 2010. Sure, the CME can print daily volume of 150,000 or 180,000 contracts but don't confuse that with liquidity. Most of this volume is simply WOPRs swapping the same contracts back and forth for dimes at a time.

The result is a gold (and silver) market that is completely divorced from fundamentals. Consider just this example: Back in December of last year, when he confirmed QE∞, The Bernank gave two conditions for slowing or ending the $85B/month money-printing plan.

  1. Inflation, as measured by the CPI, would have to exceed 2.5%.
  2. The unemployment rate would have to fall below 6.5%.

The Bernank clearly stated that he did not see either of these events occurring before mid-2015.

And what did we see today? Because of a seasonal adjustment of "people entering the workforce", the participation rate ticked up and the stated unemployment rate actually ROSE from 7.5% to 7.6%. This means that, if you simply go by The Bernank's own words, we are now even farther away from a "taper" of QE than we were yesterday. Try telling that to the WOPRs, though. They create their own momentum and have smashed price by $25 as I type. It's silly. It's nonsense. It has no basis in reality. And it has zero connection to the actual supply/demand fundamentals.

For now, however, paper price as set by The Comex still rules the day. But prices cannot remain permanently disconnected from reality any more than water can run up hill. Eventually, certain laws of nature (and economics) take over and a natural equilibrium is reestablished. This day is coming.

Anecdotal signs of this event are everywhere. Here are just a few:

In the end, the WOPRs trade amongst themselves and the Bullion Banks quietly position themselves against them. Last week's CoT report showed a record low level of Cartel net shorts. Given that today's report will be based upon another 38,000 contract drop in open interest, the level of Cartel shorts will likely fall even more, ensuring not just a turnaround in price but a significant trend change in the weeks ahead.

So, hang in there and understand today's price action for what it is...a simple, computer-algorithm based game of tic-tac-toe. And please, PLEASE, do not try to play along unless you are doing so under the professional guidance of our pal, Andrew. The WOPR itself gave you the only advice you really need:

"A strange game. The only winning move is NOT to play".

Buy the dip and take delivery.

TF

451 Comments

Turd Ferguson's picture

And don't forget!

MODERATOR

Another Hat Contest closes today at the Globex close of 5:15 pm EDT.

All of the guesses can be found here: http://www.tfmetalsreport.com/blog/4698/slow-start-fast-finsih

Good luck, everyone!

Turd Ferguson's picture

WOPR

MODERATOR

Mr. Fix's picture

Tradition, tradition, tradition!.............................1st

If we cannot express our long held traditions here, what point is there left?

Thank you TF, this place rocks, and we owe it all to you.

I have spent most of my last week working, then lurking.

It is still the best place on the Internet to find out what the hell is going on.

Keep stacking, your opportunity to do so is being cut off.

Edit:

Thanks for the reminder:

Mr. Fix's picture

Hat contest:

 
Hat Tip!
2

Gold: $1399.99

Silver: $21.99 wink

No triple crown, (and one less yellow hat).

reefman's picture

Miners chart.

Big Dutch's picture

Moving Forward after the Joke that is Today

Todays action makes me want to puke, it seems to have gone on forever, but we all know what the endgame is.
 

I was and still am expecting something big to happen soon.  Rather than explain it myself I want to point out two articles about George Soros.  Love him or hate him no one can deny his credentials or freakishly good timing.  Look at roughly a month and a half ago when Goldman Sachs decided to bail out JC Penney to the tune of $1.75 billion and turns out Soros had scooped up almost 8% of it’s stock.
 

Everyone knows he started buying heavily into junior miners at the end of last year, but we need to think about his moves last month.
 

First, he’s dumped roughly 80% of his financials:
 

http://www.zerohedge.com/news/2013-05-31/why-smart-money-suddenly-getting-out-stocks-and-real-estate
 

Second, he bought $25 million in CALL OPTIONS on junior mining stocks (on top of stock positions he’s been building):
 

http://bullmarketthinking.com/soros-reports-over-239mm-in-gold-positions-buys-25mm-in-call-options-on-juniors/
 

Ok, so assuming he keeps his freakishly good track record in place one has to ask what event would be bad for financials and good for junior miners?  What in the giant game of whack-a-mole that is our markets would cause money to fly out of financials and into junior metals?  Why is he focusing on junior miners vs. say GLD?  Call options?  Why now?
 

Now my grapes have been crushed to the point I can no longer make predictions, but I can think of two scenarios that would cause money to flow out of financial stocks and into junior miners.  Both scenarios would be very good for my fellow Turdites.

benny_bomb_boom's picture

in the top 10 and a new disc

for the collection.this is the year to slither through. pick your spot and blow some fiat!!

not in charge here on the west coast mrF. makin my own rules. not an ounce leaving here anytime soon

 
PeterLemonJello's picture

Crazy

It just seems like everything is a complete farce right now. You can’t trust any reports, I don’t believe anything I read in the papers, it’s just a weird world right now.

Crazy that my $22.00 silver guess might actually be close….

Patrancus's picture

Pull the plug and its game over

WOPR.jpg
alwaysbullish's picture

india central bank prohibits sale of gold coins

Down Range's picture

SEVEN

Nothing to say, other than Good Morning, in spite of the beat down!!!

¤'s picture

Last post syndrome repost...

From the last thread...

http://www.tfmetalsreport.com/comment/319750#comment-319750

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Reefman & others

I don't know about it being a problem...to each his own.

While the defense or hope that PM's are always bullish might seem to permeate on here strongly (Ok...it does by some or many) it can easily be overlooked also and not become an irritant to you.

I read your posts and found nothing offensive or bearish in a personal way that I thought smacked at me or anyone but that's my personal view. Others might see it as bashing...I don't know.

Look...facts are facts whether they suck or seem to reflect people's emotional and financial attachment to mining shares they still hold. I get that point, it's been very difficult to watch what's happened. I've been there, trust me, when the May massacre of 2011 happened and I stayed in one weekend too long against my better judgment and almost pulled the sell trigger....but didn't. crying

It behooves everyone (if they want to) to consider the opposite viewpoints of some because you know what? Some of those folks were spot on whether it feels good to admit or even to want to see or read.

Live, experience and learn. It might be sacrilege to some....but it's ok to buy puts against miners or whatever even if you think long term the bullish trend will continue.

I'd like to see everyone keep an open mind to some degree and even if you can't stand the message maybe consider some of them and then decide if it's not for you instead of slamming the messengers....some of whom have been right.

Long term... I'm bullish and I'm hoping like heck to be positioned for when this market downturns and then scoop some mining shares up when they are lower. If your a long term holder of shares then buckle up and try not to worry about the uneasy feeling in this short term cycle. Trust me, I know it's painful and unpleasant and it cost me a good penny 2 years ago. This period is the opposite of fun and exuberance and doesn't feel good at all.

However...no one likes a "I told you so" type of thing no matter what side of the bullish/bear fence you sit. Were all in it together in some respects and some of these seemingly bearish folks are friggin' smart about this stuff and see things differently from both sides.

Respect it or bash it...the choice is yours but live and learn from it even if it's painful to grudgingly consider. enlightened

I have and it's not always fun but it seems smart to do or you'll stay myopic. Stackers need not worry yes

ag1969's picture

I love this sentence

"Gone are the days of actual liquidity provided by real human beings with rational intentions, replaced by computers trading for pennies in a rapid fire shell game that would make even the most accomplished 3-card Monte dealer wince."

10th Amendment

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

H8Fiat's picture

India CB advises

"Advised banks against selling" not "prohibits".  Don't want to startle the herd. 

Mickey's picture

believe the jobs data

same as believing in IRS, or the justice dept or the comex gold held.

its looking like everywhere you look there is a problem with data.

wait till obamacare kicks in 1/1/14  and premiums go running up-except for those who do not buy ins until they need it.

You begin to wonder even if the intended consequence of obamacare and the 30 hours was to get more part time workers.

Hondo's picture

NUTS!!!!

Everyone go get drunk, smoke "the ganja", or your mind altering vice of choice.  Maybe someone will have a psychedelic epiphany to share come Sunday night.

Have a good weekend Turdtown.

Urban Roman's picture

Last !11!1

Burned some more dry powder this week.

... a few 0.1 OZ AGEs. From TPM. High premium, but they are cute. 

Carry on, Cracker Crockers!

[edit] 
Might burn a little more on silver next week, unless there's a reversal. 

[edit2] 
Never mind, not last any more. And never mind on the hat contest prediction ... it wasn't pessimistic enough. About to capitulate on PSLV and its ilk. I know, it's what they want. Tired of waiting for HEH. 

CaribSurfKing's picture

Turd, your not getting it yet

Bad data means more QE = sell metals\commodities to buy equities bubble.

BagOfGold's picture

What does cereal...doughnuts...& Bernanke...

have in common?...Besides being National Doughnut Day...

https://en.wikipedia.org/wiki/National_Doughnut_Day

we have...

Today...
 
 
Bag Of Gold
 
 
 

 

El Gordo's picture

Big O's plan

always has been the destruction of America, or at least bringing her down to third world status.  He's still doing an excellent job and may yet achieve his goal.

OC15's picture

Last time

they nailed gold and silver, it went down harder on Monday than Friday (Apr 12th and 15th).

EdRooney's picture

GS Other Moves

http://www.marketwatch.com/story/soros-shorting-yen-buying-japan-stocks-report-2013-06-06

http://www.zerohedge.com/category/tags/george-soros

Keep up the good work TF, new here and already appreciate all you do...just scratching the last month or so of articles.

Kcap's picture

This could be another capitulation Fri/Mon setup here...

Watch out below....

Kcap

Peoples Front of Judea's picture

STILL GOING DOWN

Silver now south of 21.75angry

tyberious's picture

Bix

US Treasury Secretary Jack Lew is a ruthless bastard as he continues to sit on the paper price of gold and silver. His motto:
 
NO EXCITEMENT IN PRECIOUS METALS...EVER!
 
But like all previous commanders of the metals rigging squad he's gonna have to let the beach ball come to the surface and it's gonna skyrocket when it does. 
 
I figure he'll let go when all the physical metal is gone from the warehouses.
 
Which will be any day now!
 
I have posted the latest Friday Road Trip here:
 
 
Topics include:
 
- SHIT STORM: Self Regulating Exchange Claims No Association with COMEX Warehouse Data!
 
- West Point Mint Insider's View
 
-The LAST Bilderberg Meeting EVER!
 
- New OZ Movie Released to the Masses with Hidden Timing Message?
 
- Timing is EVERYTHING
 
 
Mr. Fix's picture

"STATE OF METALS MANIPULATION":

GATA’S CHRIS POWELL WITH ALASDAIR MACLEOD ON STATE OF METALS MANIPULATION

Chris PowellIn this MUST WATCH interview, Alasdair Macleod talks with Chris Powell from GATA. Fascinating from the get go, Chris details how he became involved in the founding of GATA all those years ago back in 1999.  Well known in the gold circles, Chris has tirelessly fought against the collusion to control the price and supply of gold and is widely admired for his erudition in this matter and the time he dedicates to GATA, a non profit organisation, which pursues justice and free financial markets.
Alasdair enquires as why the evidence of this collusion that GATA has obtained over the years never seems to be mentioned or investigated by mainstream financial writers who still remain somewhat reticent to the GATA case.
Chris elaborates on the treatment of the media, the last few years’ relationship with the US regulators, whom have heard the arguments of GATA, before moving onto the recent downward price moves.
GATA’s Chris Powell’s full interview with Alasdair Macleod is below:

[Read more...]

mrneutron's picture

Today's menu

reefman's picture

Gap fill to the downside on miners?

If we break below 29.13 on GDX then the miners will swiftly drop (this is the one hour chart):

Turd Ferguson's picture

Wow, I suck

MODERATOR

Just goes to show you how incredibly challenging it is these days, when "markets" are divorced from fundamentals and completely driven by Fed money and WOPRs.

My $22 floor just fell. Looks now like the double bottom near $21 that I thought would happen before the NFP...like, maybe last Friday or earlier this week...is instead coming early next week!

And gold looks almost certain to take another stab at $1350. Again, I thought we'd see this before today and then rally. Instead, it's the complete opposite. A rally before today and then the test. 180 degrees out of phase.

<Turd shakes head and walks away from computer>

murphy's picture

Welcome, Ed

reefman's picture

Turd, I believe you are correct in metal analysis, but not paper

Turd, 

I believe you are correct in your analysis about the metal known as gold and silver, however the paper price of the trading is following along nicely with technical analysis. We could very well see much lower prices of the paper trading according to technical analysis.

I am hyper bullish on gold and ultra-sonic bullish on silver. Too bad there is no known price for them. 

My GDX puts are up 50% and 61% respectively today. I cashed out some near-dated puts and bought JPM puts. I should have waited a little since JPM has been rallying, but this is a bull trap for the stock market. 

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