Glad To Be Wrong....So Far

Sometimes it's good to be "documented wrong 99% of the time".

As I mentioned in the podcast from Saturday (Have you listened to it yet? If not, why not?), though I am still wary of another "Gold Delivery Month Beatdown", the charts were actually looking pretty good and all of the fundos are flashing green. Perhaps, once a dope like me spots the trend of mid-Dec, mid-Fed, mid-April and mid-June beatdowns...well, maybe that trend is over. Additionally, given:

  • GOFO negative for 26th consecutive day
  • JPM absorbing 71% of all August gold deliveries so far and 95% of the deliveries last week
  • The latest Bank Participation report showing U.S. banks net long 59,500 Comex gold contracts
  • JPM being net long a minimum of 85,000 contracts and effectively cornering the Comex gold market

Well, maybe just maybe the need to crush price has passed and it's time for the bull market to resume.

Here are the charts that show it all. Both metals have moved well clear of their 5-day, 10-day, 20-day and 50-day moving averages. If I was short, I would be getting awful nervous 'round about now. The next key and primary tests will come at the points I've marked on the charts and the critical 100-day moving averages. For Dec gold, the 100-day MA is currently at $1393 and falling. The 100-day in Dec silver is also still falling and currently at $22.59.

Let's start with silver, as you can see it is making great progress. However, as I've consistently stated since breaking down two months ago, the key for silver will be getting back above and closing above $22. Why? Because $22 marks the bottom from April 16, when all of this madness began. A close back above there would be a signal to me that this is all finally over. A further close above the 100-day MA would cement that idea in my mind.

Gold is also looking positive and a close today or tomorrow above the $1335 and $1337 closes of 7/22 and 7/23 would be another step forward. A close above the 7/23 high of $1349 would be another big step. Our next target would be the declining 100-day MA, currently near $1393.

Finally, today, an update on the subscription stuff. I had expected things to start up over the weekend but we wanted to make things 100% right before we got started. So, we decided to hold on the launch pad for about 48 hours. All systems are "go" but we just want to do a beta-test double check first. For now you'll notice that nothing has changed. Frankly, once everything goes "live", not much is going to change, either, except for a bunch of additional content.

Thanks again for your patience as we work through this process. I assure you that it will all be worth it in the end. TFMR isn't going anywhere. In fact, it is only going to grow and expand. This community is unlike anything else in the PM blogosphere and our best days are ahead.

TF

p.s. I was on with Dr. Janda again yesterday. I think it went pretty well. You should listen to it.

http://www.davejanda.com/guests/turd-ferguson/sunday-august-11-2013

214 Comments

twippers's picture

Happy

To be 1st on a glorious green day

treefrog's picture

twain

silver rocks!

benny_bomb_boom's picture

thurd turd

and i'm out! metals go green this week and we see 1350/22 hold into the close. that is what i am hoping for.  i will be soaking up the free access for another 48 hrs....thx mrTF for the peek behind the curtain

agNau's picture

was the Beta testing ...

Causing the problems with "access"?

*if so, it still is.

Missiondweller's picture

As I wrote yesterday, is JPM desparate for gold

And now buying with both hands to get physical to meet COMEX deliveries?

After all, knocking down the paper price has been a disaster as it only INCREASES demand for more deliveries to Asia

Turd Ferguson's picture

Thank you for the reminder

MODERATOR

This is an ongoing problem. 

If you've seen that the site can't be accessed, it's an internal problem here. Even I was blocked for a while back on Friday.angry

REALPMONLY's picture

You only human turd.

You only human turd. Sometimes we cant get all the info right in this crooked market

SilverSurfers's picture

Niner!

Top tenner!!! No worries, just get better than 50%, and you be rockin!!

Top Hat's picture

Top 10

Of course they had to do it different after you saw the pattern!

lamare's picture

Repost of previous thread about JPM

Short version: they are now no longer positioning themselves but are liquidating their established position into physical metal.  I'd say there are 4 chances in 5 that the we will rally from here, because JPM no longer has anything to gain by hammering prices down.

Turd wrote:

  1. First and foremost, what do the 4 largest U.S. banks know? And maybe this change is all JPMorgan? Remember that Uncle Ted pegs their net long position to be 85,000+.
  2. But following along with that...In May, the U.S. banks were net short 16,781 contracts. Three months later, they are net long 59,473 contracts. However, the 20 non-U.S. banks have barely budged. In May, they were net short 27,474 and last Tuesday they were still net short 22,039. So again I ask: What do the U.S. banks know that their non-U.S. counterparts do not?
  3. And notice that this is purely a U.S. bank phenomenon and it's only in gold. The U.S. bank net silver position has deepened over the past 90 days, from a net short ratio of 5.25:1 to Tuesday's 6.94:1. Once again, I must ask you: What are the four largest (and perhaps simply JPM) U.S. banks doing with respect to their position in gold futures and why?

First of all, we now see a clear change of tactics on the part of JPM: it is hoarding metal. That means it is showing it's cards for everyone to see. Together with the fact that the non-US banks' position "barely budged", it is tempting to conclude that JPM has been cornering the market on it's own, because otherwise other banks would also be taking delivery out of the Comex now. And remember, JPM handles 45% of all transactions at the LBMA and thus has a 100% exact picture on all positions and orders for 45% of the LBMA market.

Now suppose they were net short on both the LBMA and the Comex in the beginning of this year. On the Comex, all the way trough the price decline, they managed to covered their shorts and built up a sizeable paper long position, meanwhile luring the large and small specs out of their long positions.  

When we look at the non-US banks, their net short ratio INCREASED from 1.69 in May to 1.85 now in August. In other words, we have the evidence right there that JPM managed to lure *some* banks into increasing their net short position. So, this brings up two questions:

1) Why would the other US banks act any different from their European colleagues if JPM were the only one cornering the markets?

2) Why would any bank behave differently on the LBMA compared to the Comex?

I would say it is reasonable to expect JPM to have not only flipped their position on the Comex during the past couple of months, but also on the LBMA.

In other words: I suspect we are looking at JPM having wrung itself out from under massive short positions both in London and New York, meanwhile unloading their liabilities on the backs of others INCLUDING other banks, such as their fellow LBMA members.

And now that they are finished positioning themselves in the paper markets, they are ready for the next fase of the game, whereby they are forced to show their cards.  This next phase is switching tactics from positioning themselves in the paper markets to openly hoarding physical metal at the exchanges for themselves. In this phase, it is no longer effective to crash paper prices, either for paper positioning nor physical hoarding, because they have shown their cards now. 

In other words: they are now no longer positioning themselves but are liquidating their established position into physical metal.

Conclusion: The bottom is likely to be in. I'd say there are 4 chances in 5 that the we will rally from here, because JPM no longer has anything to gain by hammering prices down.

Estimating JPM's short position:

If we take the Non-US net short ratio of 1.85 and apply that to the August shorts of the US banks, we would expect an overall long position of: 31,476/1.85 = 17,014.

When we substract that from the actual long position of 90,949, we can estimate JPM to be net long 73,935 contracts.

When we assume JPM to hold 25% of the total US big-4 short position, then it's short position would be 7,869, while the short position of the other three would be: 23,607. The long position of the non-JPM US banks would then expected to be: 23,607 / 1.85 = 12,761 contracts.

From that, we can estimate JPM to be net long 90,949 - 12,761 - 7,869 = 70,319 contracts.

Thus we can estimate the net long position of JPM to be between 70,000 and 74,000 contracts at Tuesday, the 6th. That is pretty close to Uncle Ted's estimate of 85,000+ and therefore the assumption of JPM cornering the market on it's own does make sense.

Does JPM have any shorts left?

If we take the long/short positions of the US banks as of Tuesday, the 6th, 90,949 long and 31,476 short and combine that with uncle Ted's estimate of 80k+ net long, we can do some calculations.

Without JPM, the other US banks would then be long 10,949 contracts. If JPM would have no shorts, that would give us a net short ratio of 2.87, which would be very high already compared to the non-Us banks. For these we get from May to August short ratio's of 1.69, 2.04, 1.70 and 1.85. So, these vary between about 1.7 and 2.0.

I made a little spreadsheet, wherein I take the long estimate for JPM to be 80,000 and then enter a number for the number of JPM shorts. Since JPM is estimated to be net long 80,000, it can be no more short than 10,949 contracts. In that case, there would be no longs left for the others and their net short ratio goes to infinity.

For just 500 JPM shorts, the net short ratio of the other 3 US banks would be: 2,96
For 1,000 JPM shorts, it would be: 3.06
For 2,000 JPM shorts, it would be: 3.29

So, if JPM is indeed net long 80,000 contracts, it would be hard to believe they could more than just a handful of short contracts given the BPR of August the 6th, since then the other US banks would be way out of line with their net short ratio compared to the non-US banks.

However, since the net short ratio of the other non-US banks is already out of line with the non-US banks at 80k net long and no shorts, one would say that uncle Ted probably has over-estimated JPM's net long position.

I played a bit with the assumed JPM net long position in a spreadsheet. When I also enter an estimate for JPM's short position, I can calculate what net short ratio we would get for the other US-banks. These are the results for a JPM net long position of 75k:

10,000 : 3.61
5,000 : 2.41
2,000 : 2.11
1,500 : 2.07
1,000 : 2.03
500 : 2.00
100 : 1.98
0 : 1.97

So, if JPM would have a net long position of about 75k, one would say it would not hold much more shorts than 2,000.

And for a JPM net long position of 70k, we get the following numbers:

15,000 : 2.77
10,000 : 1.96
8,000 : 1,81
5,000 : 1,66
2,000 : 1,56
1,000 : 1,53
500 : 1,51
0 : 1,50

In that case, one would say they would not hold much more shorts than 10,000.

I think I just let you ponder on these numbers...

lakedweller2's picture

Mental Illness

It's not cured over night and the patient refuses treatment.  Keep an eye on the bullion banks.

Citizens United:  Corporations are people...sick people

ag1969's picture

dgstage

I fear exactly that.  The more the metals run, the closer we are to war.  These psychopaths will not give up power without a fight.

Hunt brother's picture

For the new thread...

Hunt brother's picture

Royal Gold call options update....

 
1
  • Reply to: The Paper Armageddon Portfolio

    Royal Gold call options update... by Hunt brother

    1 week 3 days ago

    • Reply to: An Amazing CoT and BPR for Gold

      Royal Gold Royalty by Hunt brother

      3 weeks 1 day ago

      I purchased some Royal Gold RGLD oct2013 calls this morning with the stock below $42. RGLD should perform better than the miners if the stock market tanks and gold bullion prices rise.

    Update Aug 1: Royal Gold is over $52 this morning despite metals weakness. The stock is being bought on every dip.

    The oct2013 call options with a 55 strike are $2.80 this morning. I paid 85 cents on July 9. The options position me for a short squeeze. Gold pops over 1500 and Royal Gold should run into the 70 or higher level. I will hold the options until oct. or the stock hits 80 (this would be a 30 bagger for me).

    Entering the options now offers a 6 to 8 bagger. The metals weakness today is providing a decent entry before the next move higher.

  • August 12 update: The gap higher open this morning has made the options too expensive for new entry to the position. The stock is 58.50 with the options price of 6.20. As the options get a little deeper in the money they will rise dollar for dollar with the stock.
  • I hope some of you were able to enter the position last week on the pullback. I plan on holding until Oct. or the stock hits 80. Losing 100 percent is still a very real possibility.
 
NonoverlappingMagicCereal's picture

Off Topic - Jim Willie dissertation

(TF - apologies for the OT post, I said on Friday I would post my findings here and can't see throwing them in a 3 day old thread)  

First off, I ask no one to take my word on anything I say here.  I provide all data and evidence, and invite everyone to draw their own conclusions.  

Last week, I asked here why there was no record of Jim Willie's PhD dissertation in the database here that has all Carnegie Mellon dissertations.  I was told that Jim Willie was a pseudonym, and on Friday TF contacted Jim, who related the following to describe his thesis:  

"O'Shaughnessey 1977 with thesis about Bayesian extensions of testing hypotheses"  

If O'Shaughnessey is his name, then it's trivial to look him up and determine that he did not receive a PhD from CMU.  I assume therefore that name must be a dissertation advisor, although that would be odd given that there is no one by that name in the Mathematics Geneology Project.  Whatever the case, the year and gist of the topic is really all you need.  I set to looking through all theses and dissertations from CMU in 1977 and 1978.   CMU indicates here that all theses/dissertation are in their library database, which is different from the searchable ProQuest database mentioned earlier but has the advantage of providing a complete list of every CMU thesis.  You can see all of them by clicking the link in the bullet point starting with "For a complete list of theses...".  This brings up a list of all theses ordered by date of publication.  The theses for 1977 begin on page 333, and it doesn't take too long to page through them (there aren't that many, and very few on straight up math/stat).  I have collated all theses from 1977 and 1978 into a document here.   

There is not a single dissertation from 1977 or 1978 that could be the one described by Jim.  

There are a handful of dissertations that are remotely related to Jim's claimed topic (which is about as broad as it could possibly be), but all of them are by authors whom are verifiably not Jim Willie.  They are the following:  

  • "Stochastic Ito-Volterra equations" by this guy
  • "Market analysis with rational expectation : theory and estimation by this guy.
  • "Bidding for contracts" by this guy
  • "Approximation techniques and optimal decision making for stochastic Lanchester models" by this guy.
  • "Equity and estimation problems in air quality managment programs" by this guy.
  • "A Bayesian approach to the spectral analysis of stationary time series" by this guy.
  • "Estimation of markov chain parameters and an extension of recursive estimation techniques" by Mao, Bor-Jiin (pretty clearly not Jim).

There is one other dissertation from 1976 that is slightly more plausible than those above, but I will not name it here on the very long shot chance that it actually is Jim Willie (whose right anonymity I respect whatever the case may be).  On Friday I asked TF privately to confirm that this is not Jim Willie, and am still awaiting a response, but I am almost certain it is not because it is the wrong year, wrong advisor, no mention of Bayesian anything in the title, and what little I can find online about the author is inconsistent with Jim's bio.  

The evidence appears to show that Jim has lied to his readers, TF, and the world about his credentials, and that his PhD is a fabrication.  If so, this obviously throws into serious doubt any other unverifiable claim made by Jim (most notably, his secret inside sources abroad).  I welcome any counterargument to this conclusion.  

Thanks to TF for getting Jim's response on this.  Jim is his friend, and I'm just a pain in his ass, and he could have easily brushed me aside by telling me the dissertation was in the database.  I would have believed him and dropped it.    

Hawkman's picture

All systems appear 'Green for Go', liftoff imminent?

Slightly unsettling, albeit in a good way, to see a Monday-morning ramp in Constitutional monies.

Good thing the Dear Leader is hard at work again out on Martha's Vineyard. Things are right with the world.

Thanks TF for your consistent and thoughtful attempts to make sense of the nonsensical. Also can appreciate what it takes to spin up the paywall.  QA/QC time is always time well spent. When it's ready I'll be signing up.  Had I not discovered you a few years ago, I would have no clue as to what the hell was going on in the metals markets. I know for a fact that the DCA on my stacks is much lower than it would otherwise have been.  Again, thanks.

-Jack - who, after a brutal years long run can only hope we're near the end...

"Well, maybe just maybe the need to crush price has passed and it's time for the bull market to resume."

El Gordo's picture

Beautiful Nature Picture

An unusual photo of a Falcon nesting in a tree.

http://i.imgur.com/YW6Fufm.jpg****

Hunt brother's picture

Silver Wheaton call options update..goo

  • Reply to: Happy Tuesday? Not so much... Update on Silver Wheaton 10 bagger strategy... by Hunt brother 1 week 6 days ago

    Good progress thus far, with the stock rising from under 20 to over 23.

    The sept2013 call options are now 90 cents. I bot a batch July 2 for 50 cents and a second batch July 9 for 38 cents. I did not buy the third batch on July 16 as planned. I bot a batch of Royal Gold calls on july 9 instead.

    The Silver Wheaton 10 bagger objective remains in place. The stock needs to rise to $30 for the options to be $5. The trade is still a viable 5 bagger at this point for those who are now entering the strategy.

  • Update Aug 12: The stock is 24.50 today with the options price of 1.20. The options took a big plunge last week and I hope some of you used this dip to enter. The price is now to high for new entry. SLW reports earnings Aug 14, the stock may be hesitant to punch higher until the earnings release. 
  • I am looking for 30 on the stock. $25 silver should run the stock to at least 30. The options expire sept 20.
Xty's picture

I thought this was interesting, well-thought out, and relevant

Internet trolls: What to do about the scourge of the Web?

By Nick Thompson, CNN updated 5:10 AM EDT, Mon July 15, 2013

London (CNN) -- Curtis Woodhouse earns a living punching people in the face, so it's fair to say he's one of the last men you'd hurl insults at if you saw him on the street. But people tend to be a bit braver once they don the anonymity cloak the internet provides, and the 32 year-old English boxing champ faced a flurry of ugly abuse from trolls online after he lost his most recent bout in March.

One particular troll, @Jimmyob88, had been harassing the boxer in tweets and in direct messages for six months, according to Woodhouse. "He'd threatened my children saying 'be careful where you send them to school,' he threatened my wife. He'd written me saying he hoped I'd die in my next fight so I could go and see my dead dad ... it just went on and on." But after the bully branded the boxer a "disgrace" and a "complete joke" and urged him to retire following his fight last month, Woodhouse finally snapped and, rather than trade blows online, he used Twitter to turn the tables on his troll.

Woodhouse put a "Twitter bounty" out on @Jimmyob88's head, offering anyone £1,000 for information about the user's real identity. Within minutes he had his troll's real name -- James O'Brien -- some photos of O'Brien and his home address. Woodhouse decided to make a house call.

...

So what kind of person trolls strangers online? Jerry Holkins and Mike Krahulik, creators of the Penny Arcade webcomic, offer up an explanation known as John Gabriel's Greater Internet F**kwad Theory, consisting of the following equation: "Normal Person + Anonymity + Audience = Total F**kwad". The math may a bit fuzzy, but there's something to that equation. The anonymity users have on the internet is a big factor in the "online disinhibition effect," which Rider University psychology professor John Suler says enables people to say things to each other online that they wouldn't say in person. ...

Ultimately, Phillips says, it's impossible to definitively say what makes trolls tick when you don't have any demographic details about them. "We can't very easily or in any kind of verifiable fashion sit a troll down and ask him what is in his heart, and if you could he would lie. They would tell you some bulls**t about what's in their heart."

http://www.cnn.com/2013/07/11/world/internet-trolling

ancientmoney's picture

@lamare re: what does JPM know?

JPM is the Fed in the markets.  Therefore, it acts for the U.S. Treasury as well as other TBTF U.S. and foreign bankers.

It seems that JPM surely is onto something--maybe of its own creation.

To go from net short to net long (about 100,000 contracts, or 10,000,000 ounces of gold) in 10 months is heroic in scope, if not character.

Are they front-running a one-time revaluation?  Do they intend to allow PM prices to rise now, so when the one-time revaluation occurs it will seem more "normal?"

Or, will they essentially buy out SLV and GLD's phyzz, along with CME stocks of phyzz, and close them down as paper trading entities?

Or both, in time?

mack's picture

keep the faith!!

the unfolding of world events, as discussed at this site. is a marvel.  We DO live in interesting times.  Today seems to be a green day.  HOORAY

tmosley's picture

GOFO rates slightly higher

GOFO rates slightly higher for the second day in a row:

06-Aug-13 -0.08833 -0.08000 -0.06333 0.02000 0.15667                    
07-Aug-13 -0.11000 -0.09667 -0.08500 0.00167 0.13833                    
08-Aug-13 -0.12167 -0.10000 -0.08333 -0.00600 0.13333                    
09-Aug-13 -0.11500 -0.09667 -0.08000 -0.00500 0.12833                    
12-Aug-13 -0.10833 -0.09000 -0.07500 -0.00167

0.13000

I asked this question last week, but I didn't really feel that it was answered to my satisfaction.  Why is it that the Fed funds rate correlates nearly 100% with the degree of contango and backwardation in London, but NOT on the COMEX?

The original post: http://www.tfmetalsreport.com/comment/338733#comment-338733

Any ideas?

tmosley's picture

@xty:

@xty:

Maximus's picture

G20 Showdown

G20 Showdown On Dollar Hegemony is the title of a contributor article that ZH has left up for an uncharacteristic amount of time.  It explains the confluence of events that Turd has analyzed so well in recent days.  It also jibes with what the Voice is saying on JW's site (Jim doesn't appear to be giving these very specific statements out for free).  Funny that, about having to pay a man for his time, work and information.  To me, Turd has stepped up his game since announcing his new arrangement.  I think to many the new payment matches their previous yearly donations.  Unfortunately, it has also enraged a surprising number of freeloaders and cheapasses.  Gonna miss you guys.

Turd Ferguson's picture

PLEASE WATCH THIS ENTIRE CLIP

MODERATOR

And pay special attention from 1:30 - 2:30

 

Xty's picture

Off the top of my "head"

I would say it is because London is much closer to real gold, and tracks more closely the cost of borrowing gold vs dollars, and the Comex is much further away from real gold, and tracks the commodity price of gold more than the money price of gold.  

???

(note to all: head not working well today.  But if I had continued and got my PhD, you can bet my opinions would be righter.  I decided to breed instead.)

Turd Ferguson's picture

Excellent, Xty

MODERATOR

Right on.

NonoverlappingMagicCereal's picture

Just to reiterate...

(note to all: head not working well today.  But if I had continued and got my PhD, you can bet my opinions would be righter.  I decided to breed instead.)

I am not arguing in the slightest that the PhD itself is important.  All that matters is that it is a lie, and what that entails about the character and trustworthiness of that person.  The reason I have been so careful in this research is that this is such a serious charge (in my view) to make, and should not be made on shaky evidence.  Apparently, it seems that many people don't think it's a serious charge, that it is perfectly acceptable to tell whatever lie you have to in order to trick people into giving you money.

If it is indeed the case that people don't regard falsifying a PhD for this purpose to be a 'bad thing', I am simply at a loss for words.

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