More Fun & Games

Isn't it amazing how, if you leave your office for just one day, stuff just piles up. So we'd better get started before it's too late.

Fun & Games #1

It's clear now that Monday's huge rally in gold was based in short-covering, just as we postulated in the previous thread. Why cover Monday? It's all about the pending expiration of the Aug13 contract (next Wednesday) and the Aug13 options (tomorrow). That total gold open interest only fell 5,300 Monday also indicates to me that there was, indeed, some short call squeezing, too. Remember, if you are naked short the $1300 calls and price begins to move UP through $1300, you are left with two choices:

  1. Cover (buy back) those calls at a steep loss and close your position.
  2. Hedge your losses by buying an equivalent amount of futures contracts.

When combining the short covering (buying) with the options-related buying, you're left with a whole lot of buyers vs very few sellers and you get a $43 (+3.33%) UP day.

What happens next? You take yesterday to consolidate and kill some time and then you drop price back down today. This gives The Cartel an opportunity to execute the opposite of Monday:

  1. Entice some spec shorts back into the market.
  2. Squeeze any new longs and anyone who foolishly sold short the August puts, thinking it was free money right before expiration.

The key will be found in seeing just how far they can drop price back down. GOFO for one, two and three months remains sharply negative for the 13th consecutive day. Now you may be ready to write this off as meaningless (the usual Comex/Cartel apologists are emerging to gladly lead you down that path) but, before you do, I challenge you to pour through 25 years of LBMA data and show me where this has ever happened before. (http://www.lbma.org.uk/pages/index.cfm?page_id=55) Once you are satisfied that this is, indeed, unusual, have a go at deciphering why this is happening NOW.

Price continues to hover above $1330 as I type. Though down about $15 on the day, this is good. The 50-day MA for the August contract is at $1332 and we want gold to find support there if the trend has actually shifted back to positive/UP. If price slips below there, support should next be found near the $1321 lows of April 16. Staying above there would be very positive. IF we slip below there, I'd at least want to see gold maintain a 13 "handle". Falling back into the 12s would put off the rally/recovery indefinitely.

Though it remains in the low $20+ area, silver is interesting today. Take a look at these charts. Not only has silver been consistently catching a bid when it drops under $20, the daily chart now presents a pennant which looks to close sometime in the next week. The dominant trend is down some the likelihood of a downward resolution exceeds the likelihood of an UPside breakout. However, IF IT DOES BREAK HIGHER, and gets through $21 and the 50-day MA currently at $20.99, we can begin to get very excited about the permanence of the sub-$19 bottom and a return of the UP trend. Let's watch it very closely for the next few days.

Fun & Games #2

We first noticed this last week and wrote about it then. From Monday the 15th to Tuesday the 16th and then again the next day Wednesday the 17th, the GLD had nearly identical 1.5 metric ton withdrawals. (http://www.tfmetalsreport.com/blog/4846/gld-deception-reaches-new-level) In fact, all the way down at the ounce level, the withdrawals were identical. There were 48,310.51 troy ounces withdrawn on the 16th and 48,310.04 withdrawn on the 17th.  Remember, we're told that these withdrawals are based upon "investor liquidations". So we're supposed to believe that in the completely random world of global investing, the exact same amount of shares were liquidated and tendered each day, leading to identical AP withdrawals of physical. Again, I may have been born at night but it wasn't last night.

Well, whaddayaknow? As if thumbing their collective noses at us, the exact same withdrawal happened yesterday...another 1.5 metric tonnes! Well, I shouldn't say the exact same. They were off by 0.0000613%. The actual ounces withdrawn were 48,307.29. Again, I'm sure this is completely legitimate. The idea that three identical withdrawals are made over the course of just one week...based solely upon slowing investor demand and liquidation...is perfectly rational and a statistical probability, maybe even likelihood. <heavy, dripping sarc>

What a joke this has become. The GLD has now seen its inventory fall by 31.12% YTD while the SLV has seen its inventory rise by 2% over the same time period. (If you really want to have some fun, simultaneously consider this metric and the statistical "anomaly" of the negative GOFO rates.) Perhaps the same GOFO disinfo providers will have a go at the GLD info while they're at it. That would be a very entertaining read. Maybe their little blogs would get some more followers.

Fun & Games #3

Speaking of statistical anomalies, this one cracks me up. Check out the latest ASE reporting data from the U.S. Mint. Keep in mind that The Mint has been reduced to reporting updated data just once per week. Another negative impact of "the sequester", I guess. wink

Month  
January    7,498,000
February   3,368,500
March        3,356,500
April          4,087,000
May           3,458,500
June          3,275,000
July           3,456,500

OK, let's throw out January. It is consistently the biggest-selling month of the year and January 2013 was the biggest sales month for ASEs on record. Let's look at the rest of the months year-to-date. We have a range of 812,000 ounces and an average figure of 3,500,333 ounces. In fact, four of the six months show total sales that fall just 4% or less from the average. And if you exclude April which no doubt reported higher sales due to the deliberate price smash of 4/12-4/16, the average gets even tighter. February, March, May, June and July total 16,915,000 with an average of 3,383,000. Using just these five months, the greatest deviation from average is June when sales fell 108,000 below the average or only 3.2%.

(And if you think I'm cherry-picking, I invite you to go back to previous years and look at the variability of the numbers: http://www.usmint.gov/about_the_mint/index.cfm?action=PreciousMetals&type=bullion)

Drilling down even farther...We are supposed to believe that the total sales difference between Feb and March was just 12,000 ounces (0.35%) and that, if The Mint fails to add to July's figure, July will come in at exactly 2,000 ounces less than May? Perhaps I'm reaching and jumping at shadows here but this all seems pretty fishy to me. And remember, the statute was changed last year to allow the production of ASEs at the discretion of the SecTreas. (http://www.law.cornell.edu/uscode/text/31/5112) No longer must The Mint manufacture as many ASEs "as the public demands". They must now only manufacture as many as "the SecTreas determines are sufficient to meet demand". Does it look to you that the SecTreas has determined that about 3.5MM per month is "sufficient"?

And now chew on this. The Mint is supposed to utilize first U.S.-mined silver as their primary source of bullion. Hmmm. That's good in theory but, in 2012, the U.S. only mined 32.6MM ounces (https://www.silverinstitute.org/site/supply-demand/silver-production/) and that was before the giant, Kennecott mine in Utah went offline after the massive landslide back in April.(http://www.silverdoctors.com/tag/kennecott-mine-collapse/) What will the U.S. produce in 2013? 28MM ounces? 30MM? OK but YTD, The Mint has already sold 28.5MM ounces. Do you see a problem here? Will Little Jack Lew soon determine that 3.5MM ounces per month are more than "sufficient" and cut back ASE production to 2.5MM or less? From where are U.S. manufacturers getting their silver if The Mint is going to suck up 2X U.S. mining supply this year?? What a conundrum...

OK, that's enough fun and games for today. As I close, I see that prices remain under pressure but right in line with the ideas laid out "fun & games #1" above. Keep the faith and remain alert. The rest of this month and into August will not be the usual "doldrums".

TF
 

160 Comments

Siwy's picture

First!

First!

Istack's picture

It feels like a game

Gold Miner Special Edition

Classic Gold Miner Game

but when does the fun start?

Zoltan's picture

Turd!!!

3

Z

tyberious's picture

Silver & Crude: Interesting

Silver & Crude: Interesting Parallels

deviantinvestor.com / By GE Christenson / July 24th, 2013

Silver

Silver bottomed (weekly data) about 11/23/2001 at $4.01. It rose erratically for several years, hit another low on 2/5/10 at $14.78, and then rallied dramatically to a nearly all-time high of $48.58 on 4/29/2011. Subsequently, silver collapsed to $18.53 on 6/28/2013.

High to Low Ratio: 48.58 / 4.01 = 12.11
Total time: 11/23/01 to 4/29/11 = 9.44 years
Final blow-off Ratio: 48.58 / 14.78 = 3.29
Time for Blow-off: 2/05/10 to 4/29/11 = 1.23 years
Collapse Ratio: 18.53 / 48.58 = 0.38
Collapse time: 4/29/11 to 6/28/13 = 2.17 years

READ MORE

thurd aye's picture

show

only a place to go to,like Moscow

thurd aye's picture

no way optic

no way optic)))

opticsguy's picture

7th, oh well

I was hoping someone would chime in on the Dallas Cowboys analogy.

ggnewmex's picture

Supply..... #3

TF

Thanks for all your insights.

Your third point is so poignant! When one looks at supply and demand, it is simply irrational. It does seem that at some point, the "masses" or simply the manufacturers who need silver, will understand this dichotomy that exists. It goes with what SRSrocco always claims. When more companies are being squeezed financially, eventually this will lead to less supply coming out of the ground.

I guess we will see in time.

thanks to those who make this site very readable

gg

ggnewmex's picture

Supply..... #3

duplicate, sorry.

I

gg

tyberious's picture

Call Your Reps: Defund NSA Spying!

PLEASE DO THIS! EVEN IF YOU HAVE NO FAITH IN GOVERNMENT! Numbers are on the page below!

http://action.firedoglake.com/page/s/amash-call?source=email&subsource=v2

The House of Representatives is voting on an amendment to the defense authorization bill that would defund the NSA's massive domestic spying programs.

A major bi-partisan effort to rein in the surveillance state is under way and passing this amendment would be an important step in doing just that.

Call your representative NOW in support of the 'Amash Amendment' to defund the NSA's dragnet surveillance programs.

Dr Jerome's picture

Prospecting

Istack's post is right up my alley.

I am struggling with a decision buy out some fellow's prospecting equipment (he's got everything--goldspinner, vacuum, metal detector, dry sluice, and more for $1900) and get in the field... or ... use the money to buy more PMs directly and then sit at the computer causing controversy here. The decision  is a no-brainer if I persuade the wife's uncle to take me along to some of his hotspots where he has had multi-ounce days with his detector. He is pretty tight-lipped about locations.

Decisions Decisions

dgstage's picture

Dr J

I say go for it!

tyberious's picture

The Great Deformation and the

The Great Deformation and the Coming Economic Ice Age

     

Jay Radio Header

Current Episode Direct Audio Links:

    Hour 1        Hour 2

David Stockman, former U.S. Congressman and OMB guru in the Reagan Administration, visited for the first time in person to provide an historical account of the impending doom of American capitalism and a retreat into country wide poverty. The discussion centered on his recent book titled, "The Great Deformation."

Dr. Robert McHugh returned to update us on his latest forecast for stocks, bonds and gold from his vantage point as a technical analyst. McHugh believes we have one last gasp higher in stocks before the "Jaws of Death" lead to a vision not dissimilar from that of Stockman.

To give us more of a near term view of where the market is heading, David Gurwitz of Charles Nenner Research shared the brilliant Charles Nenners' view on gold, stocks, bonds and other markets. And, Ian Berzins, Pres. CEO and COO of San Gold, talks about efforts to turn that company's fortunes around.

tmosley's picture

A reminder on the

A reminder on the significance of gold backwardation:

http://www.financialsense.com/contributors/casey-research/permanent-gold-backwardation

*snip*

Why Gold Backwardation Is Important

Could backwardation happen with gold? Gold is not in shortage. One just has to measure abundance using the right metric. If you look at the inventories divided by annual mine production, the World Gold Council estimates this number to be around 80 years. 

In all other commodities (except silver), inventories represent a few months of production. Other commodities can even have "gluts," which usually lead to a price collapse. As an aside, this fact makes gold good for money. The price of gold does not decline, no matter how much of the stuff is produced. Production will certainly not lead to a "glut" in the gold market pulling prices downward.

So, what would a lower price on gold for future delivery mean compared to a higher price of gold in the spot market? By definition, it means that gold delivered to the market is in short supply.

The meaning of gold backwardation is that trust in future delivery is scarce.

*snip*

It is important to read the whole thing.  With GOFO negative for this amount of time, I think it is safe to say that this IS the permanent backwardation event, and that we are about to experience a currency collapse.  Prepare accordingly.

thesandbox's picture

Dr J

I say go for it as well.....looks like your upfront cost is only about 1 oz AU and that doesn't take into consideration what the equipment is actually worth if you ever go to sell it again.  Plus the the family fun and knoweldge gained seems like a win win.

Turd Ferguson's picture

This is good....

MODERATOR

...and pretty much in line with what I've been saying, though I'm not sure I'd call a move to $27 "massive"...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/23_Gold_To_Surge_%24180_%26_Silver_Set_For_Massive_35_Advance.html

ctob's picture

Getting taken down hard right now

As I write GLD is getting beaten down to below 1320.  I feel pretty confident we see a 12 handle some time in near future.

I don't think the TA stuff about rally at some price point means much right now, but I do think the Cartel is starting to run on fumes.  The GOFO and steady movements in physical are winding this down.  But GLD will be contained all the way until they pull the rug out.

There will probably be something in August, then I give it 50/50 chance of another iteration then 25% of a third and pretty remote after that.

Keg's picture

I'm shocked!

I'm shocked I tell you.  Absolutely shocked!!!  An article on King World News that says there is going to be a massive upside move in gold.  I have never heard of anything like it!

OK, I admit it.  I read the stuff there.  And keep hoping that they get it right sometime.

tmosley's picture

Talking about future price

Talking about future price moves is pointless if gold is really in permanent backwardation.

I don't think everyone has made the connection.  I know it didn't click for me until this morning.  NEGATIVE GOFO RATES==GOLD BACKWARDATION.  We have thus been in backwardation for 13 trading days now.  If there was a gold seller planning on coming forward to collect, they would have done it by now.  This signals a fundamental loss of trust in the futures mechanism.

We have been talking about this causing gold (and silver) to rise over the next three months, as it has the last three times this has happened, but this is fundamentally different.  My Doom-meter is pegged past the red zone right now.

Keg's picture

$20 getting tested.

Will it hold?

49Pan's picture

Gonna just sit tight and be right!!!

You all know how hard it has been over the past 2 years.

I know that my best investment has been education on what I and others believe and know to be true.

I hope we all teach ourselves and others to keep reading and encouraging one another.

All the more as we see the day drawing nearer....... we are close.....so keep in touch with like minded individuals...

we must NOT give in.....to them bitchez

Pining 4 the Fjords's picture

Great post TF

Excellent analysis and explanation of "where we are" right now, and some interesting things for us to watch for-  thank you!  Seems we are fast reaching the point where literally every single publicly available statistic and figure related to the metals is manipulated for effect...  that in and of itself has to be a sign that we are closing in on the day of reckoning for the cartel and its enablers.

And Doc J-  I wholeheartedly concur that you should invest in the prospecting equipment.  Doing something interesting, physically active, and potentially profitable is a great way to spend your free time. Total win-win.  HOWEVER- you have to take pictures and post here along with descriptions of your adventures, so that all of us wanna-be prospectors can enjoy it too!

And, I hate to break it to you, but you also have to grow some epic facial hair.  It is clearly a requisite part of the experience:

dropout's picture

A Matter Trust - YES!

Trust that there will be delivery on futures.

From Uncle Harvey's site;

The current spot price of gold is higher than the near future contract price. Very unusual.

It could normally be resolved by selling spot price gold and buying the cheaper future one month out. Thus, in one month, you would reap an apparent locked-in, riskless profit.  

Yet no one seems to be doing it! Why? There is doubt that there is gold in storage, that will be deliverable in a month.

Darth Smoker's picture

Dr J

Just keep whatever "Colour" you find. Don't want you go flooding the market ya' know.

Willy's picture

US Dollar

Just realized UUP has traded between 21 and 23 for 2 years now and for the bulk of the time it's been between 21.75 and 22.75.  Strong US Dollar?  More like flat.  I'm not a technician but could this be a long lasting bear flag before major support is breached?  I'm talking on a 20-30 year chart.

Also I feel the hit on PM's is a good thing today.  We've had a few very strong days.  Need that wall of worry to keep this thing going.

Willy's picture

Obama/CNBC

Also PM's getting whacked when Obama is giving a live speech on CNBC about the economy.  No surprise there, just like when Bernanke speaks.

Turd Ferguson's picture

Look, here's the deal.

MODERATOR

You're right. Price doesn't matter but that's not why I give you this TA.

What we are waiting for in the short-term is a trend change that will cause The Large Specs to begin to cover en masse and spark a self-sustaining rally. These Large Spec HFTs primarily trade off of technicals and I'm giving you the technical points at which the algos will respond.

tread_w_care's picture

So much for support . . .

A thirteen handle and twenty handle did you say?

Ugh . . .

tyberious's picture

Secret gold mines

The response from my latest interview has been exceptional. 37,000 views in the first few days and most of those people had never heard any explanation of how gold and silver are manipulated, the reasoning behind it all and the ramifications of ending it. Basically...
 
THE TRUTH IS GETTING OUT THERE!
 
The interview is posted here:
 
 
One of the more shocking revelations I present here is my comment about about "massive amounts of hidden gold". This has thrown longtime gold bugs into self defense mode claiming that there has only been 170,000 tons of gold that has ever been mined in the world so how could there be massive amounts of gold we don't know about?
 
This I find interesting because even those in the camp of GATA have a hard time believing it even though I've laid out all the information in my "Golden Secrets" article. I have also shown (thanks to Jeffrey Christian) that the official 170,000 tons number actually came from "Bad Guy" bankster Harry Oppenheimer. Here's a quote from one of my Private Road articles...
 
"Christian tries to back up his argument by showing us how his historical numbers are derived. This is the first time I've heard him tell the world where his historical gold numbers come from and I find it fascinating that the origins come from the 1960's estimates commissioned by Harry Oppenheimer. Oppenheimer was a key henchman for the Banking Cabal controlling the Gold and Diamond trades coming out of South Africa. If there's anyone who would have a vested interest in claiming that there was very little gold available in the world it would have been Harry Oppenheimer!"
 
This fact backs up my analysis that the official numbers are just another one of the bankster's cons and the actual numbers are many times higher. Potentially over 1M tons of gold has been mined and even MORE lay waiting in hidden gold mines in the Grand Canyon and in the Chocolate Mountains of California.You can find my older research on the topic here:
 
Golden Secrets
 
The fact that there is much more physical gold than ever imagined should not deter you from investing in physical gold as the price is 100% rigged lower and there are many plans for physical gold in our new monetary system. Physical Gold is my second favorite investment choice.
 
Physical silver on the other hand is #1 with a bullet! I have only found one secret stash of silver and that was the 500M ounces used at the Y12 facility in Manhattan Project. Today all that silver has been melted down and sold into the market to keep the price suppression of silver going for the past decade. You can find that info here:
 
The Great Silver Mystery...Revealed!
 
At some point, when silver and gold are released from the paper price suppression con, I expect silver to surpass gold in "price per ounce" or if there is no more fiat currency for a while in "purchasing power per ounce"! Yes! Silver is much more valuable, scarce and necessary for modern society than gold. I know it's hard to believe it now but the silver/gold ratio has been rigged for so long that NOBODY KNOWS THE TRUE "FREE MARKET" SILVER-GOLD RATIO! I guarantee you it's not 65-1.
 
I know that we are all tired of the gold/silver manipulation con but it is in the process of ending. It's been a very long, drawn out process but each day we get closer and closer to a free market in gold and silver....
 
AND THAT WILL FREE OUR NATION!
 
May the Road you choose be the Right Road.
 
Bix Weir
PS - The "Free Silver" promotion is still going on and will continue to go on until silver reaches $50/oz or the physical supplies run out. You can find more info here:
 
FREE 1oz Limited Edition Road to Roota Coin!
 
 
 
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