Mid-Week Gold & Silver Charts

As we barrel toward another fun-filled BLSBS Friday, I thought it was time to contemplate where we've been, where we are and where we're going.

Perhaps you've noticed a clear pattern this week of price suppression.

  1. The obvious manipulative event of Monday where JPM dumped 7500 contracts onto the Comex. This blatant and overt attempt to drive price lower was later written off as a trading error. "Oops. I fat-fingered and entered 7500 instead of 750. My bad." This trimmed $15 from gold just as it was threatening a move to 1680 and, more importantly, made a Comex close over $1672 extremely unlikely. Why was $1672 so important? It would have turned the month of April green on the chart and helped further set the stage for a rally in May.
  2. The less obvious but equally painful hammering of yesterday. After gold had rallied back from Monday's BS and was threatening, once again, to make a run at 1680, gold was struck for another $15 after the first release of a semi-positive economic number in weeks. Gold then struggled all day while stocks and crude oil surged.
  3. Today, gold rallied after the ADP employment survey came in weaker than expected. ADP is often considered somewhat of a precursor for the BLSBS and gold surged back over $1660. What happened next? To the surprise of no one, gold promptly fell another $15.

Does anyone see a pattern here?

But, of course, it is what it is. If you're going to trade/stack gold and silver, you're likely used to this by now. The primary question is: Why? Why three, successive manipulation days on the Monday-Wednesday ahead of BLSBS day? To engineer a lower price ahead of the number? I'll guess we'll know soon enough.

Another question of importance is: How? How is The Cartel still so successful at pulling off these raids? It's simple, actually. They're the only ones left in the pit. Well, them and some robots. Volume is so light and trading is so thin that the primary action in paper metal right now is Cartel manipulation surrounded by HFT WOPRs trolling for stops to game. When there's no depth or "muscle" on the bid side of the trade, it makes The Cartel's job that much easier. I'm not saying that we're going to be stuck here forever, mind you. However, I am saying that patience is going to continue to be required from those trading paper, hoping for another big, sustained move to the upside.

That said, there is some reason for hope. Over the past week, the total open interest in gold appears to have bottomed...at least for now. It banged around for a few days under 400,000 but has since turned and is now comfortably back above 410,000. This interest and willingness to play in the casino is vital for liquidity and liquidity must return for paper gold to surge higher again. Let's watch to see if OI continues to expand in the coming days. IF the BLSBS is metal bullish on Friday, let's look for an accompanying surge in OI as confirmation of trend change.

Lastly and along those lines, this week's CoT promises to be very interesting. For the reporting week, gold rose in price by nearly $20 and total OI rose by nearly 16,000 contracts or over 4%. How that rise in OI is dispersed among market participants will go a long way toward helping determine whether liquidity is returning. In silver, a different picture emerges. For the week, silver was essentially unchanged in price yet total OI fell by 11,500 contracts or 10%! Who was buying and who was selling? How did the net ratios of the specs and the EE change within this 10% drop? Again, the answers will be very interesting.

Here are your charts. Ahead of the BLSBS, I expect tomorrow to be a choppy, rangebound day with most traders unwilling to make a commitment either way. We'll be left with the same nonsense as today where WOPRs bang around, trolling for stops. $1645-50 should continue to provide support in paper gold as there continues to be buying support in physical metal at those levels.

Silver tried to rally and break out above $31.40 after bouncing off of $30 late last week. No such luck. It seems to have pretty solid buying support between $30 and $30.50. Let's hope for a continuance of support at that level as we head toward Friday.

<Having trouble adding charts. Keep checking back. Thank you for your patience.>

TF

195 Comments

Doc Scurlock's picture

Pressure

I understand the frustration of those in the physical market not getting the lift off  of the decoupling of the paper market.  Turd has it exactly correct.  The EE will not go down without a fight because they are in a fight to the death.  Unfortunately for them, they are defending a fundamentally indefensible position, and will eventually lose to the physical market. 

That said, when the break happens, it will likely be volatile and perhaps a bit violent.  However, remember, when a volcano or an earthquake go violent, they usually have a long period of time with some type of mild activity as pressure builds.  I believe we are seeing the early signs of the pressure building on the paper markets as they desperately claw for control.  The manipulation must continue, because not to do so is fatal.  The longer the manipulation pressure builds, the more violent the eventual decoupling will be.  Use this EE manipulation as an opportunity, BTFD and keep stacking.

¤'s picture

Yep...Pressure

exiledbear's picture

Cheer up

It'll be OK.

opticsguy's picture

Check out Bollinger band width

use a weekly chart to minimize noise.  Using 8 or 10 weeks, you get a BB width contraction several times in the last 6 years.  All of those preceded an upward move in gold.  8 week BB width is the lowest since August '07 (move from $680 to $1000+) and the 10 week BB width hasn't been this low since June '11, Dec '10, or Aug '09 (all the start of 30% moves).  Anemic price movement seems to proceed these upward movements.  Perhaps a dull market with low volatility encourages the EE to short-cover.

Bottom line, if you haven't sold yet, you might as well hold on for the ride.

exiledbear's picture

Weekly is all I look at, baby

1660, 1660, 1660, 1660, 1660, 1660. We're basing.

Turd Ferguson's picture

Yes this sucks

MODERATOR

Watch 1645 overnight. $30 silver, too.

buffalo3's picture

Paper trash

The only thing that will have true price discovery is what is happening now. Let the big banks trade among themselves and screw each other. Price doesn't move, pit boss's are going to start raising hell, because their is no new money coming in. They cannot trade on a 0 % margin & make money. Everybody stay out and the greed will fix it.

¤'s picture

Long haul

We're all in it for the long haul. It doesn't even bother me anymore. 

It's not like TPTB debt is going away anytime too soon and currencies are suddenly going to get more trustworthy and get stronger in any meaningful way.

Try not to sweat these gyrations. It won't be held down for long and always pops back.

Xty's picture

Euro Remains Lower on

Euro Remains Lower on Prospects Draghi to Signal Stimulus

The euro remained lower following a three-day decline on bets that European Central Bank President Mario Draghi will hint at further stimulus measures to counter the region’s debt crisis after today’s policy meeting.

The 17-nation currency was 0.2 percent from a two-week low versus the yen before Spain auctions debt. The dollar strengthened against all of its 16 major peers on demand for an investment haven. New Zealand’s currency touched the weakest in three months after data showed the nation’s unemployment rate rose to the highest level since 2010.

“There’s a very good chance that ECB President Draghi is going to be very dovish,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia. “There’s potential there that demand for Spanish bonds is quite weak and that would, I expect, push the euro down as well.”

The euro was at $1.3143 as of 10:19 a.m. in Singapore after sliding 0.6 percent to $1.3158 in New York yesterday. It fell 0.1 percent to 105.37 yen after touching 105.13 yesterday, the least since April 16. The dollar was little changed at 80.18 yen.Japan’s markets are shut today and tomorrow for public holidays....

http://www.bloomberg.com/news/2012-05-02/euro-remains-lower-on-prospects-draghi-to-signal-stimulus.html

Xty's picture

IndigoS7

I agree - I am no longer much bothered either.  The day is coming - the mantra keeps me calm.

Irksome's picture

BIG weekend coming up...

They may be just trying to set up low to minimize the gains...

BLS on Friday.  ADP came in at 119k versus 170k expected.  If the true number tracks that result, even with incredible statistics (read:  damned lies) they will have a hard time spinning it to positive.

Elections in France and Greece on Sunday.  Socialist winning in France that talks about breaking all sorts of EU bailout solidarity.  Greece is basically going to completely replace the government that promised the austerity to avoid disorderly default, which should lead nicely to a disorderly default.

Spain is crumbling before our very eyes.  Can't put a date on it, but looks like days, not weeks, and possibly hours.  

All of this is bullish for PMs (after an initial crush as everyone sells to cover their margins).  So the movements in the last couple days may just be prep to try to minimize the upside.

Personally I expect a very exciting ride over the next month.  This little $15/oz here, $10/oz there isn't fazing me at all.  ;)

Xty's picture

Fearless

thanks IS7 smiley

balz's picture

@Irksome

You will NEVER see 10$ or 15$/oz. in this bull market.

In fact, sub-25$ is HIGHLY unlikely. We are close to a bottom.

Fat Willie's picture

Manipulation

After watching this garbage for over a year, I believe that we have fallen exactly into the position the EE was desiring.  Please let me explain.  In the runup last spring/summer, many believed that the manipulation was ending.  There were lots of stories about investors overrunning the EE,  blowing up inventory, taking delivery, gunning stops on the shorts, creating a squeeze, and on and on.  We even had rumors of insiders who knew what would come next.

After all that, we are now at a point where the manipulation is being conducted essentially in the open.  Bloomberg, WSJ, and even CNBC idiots can notice the "fat finger" BS.  While this may be good in some ways, it however confirms for those on the periphery of the market that it is indeed manipulated.

Another example, B.Masters makes an appearance, and everybody goes crazy, pointing out that she is lying.  Why do you think she came on TV?  Because they knew we would all jump and down screaming that the market is manipulated.

How about MFGlobal?  No one in prison right?  No prosecutions?  No enforcement?  This is further justification to shun the metals/commodities.  

Having said all of that, if you are hedge fund manager, and you are watching the Fed pump up equities and fixed income, while routinely crushing commodities and metals in particular, why on earth would you go back to metals?  EVERYONE knows they are being suppressed.  No one wants to be the first to get in the water and go long, because it is much easier to just ride it out on the equity side until something changes.  

The Fed is doing everything it can to create a negative environment for metals, while pushing everyone into equities.  The more we scream about the manipulation, the happier they get.  After all, NONE of them will be going to prison any time soon, for blatant fraud.  Who will go get them?  They ARE the government.  And the more manipulation they can show, the less likely people will be to get into the market.

Long term, I believe in the fundamentals.  And I do expect higher prices as the printing continues to increase.  But I no longer expect a sudden impulse of investors getting back into metals.  It is going to take something big to change the paradigm.  Maybe QE3 ( if they would announce it, but why would they do that when they can do it without saying it?).  Maybe an attack on Iran?  Maybe a sudden move in the dollar?  Perhaps a "zero" print on a monthly jobs report on Friday?  Debt ceiling increase in Sept?  Obama re-election in Nov?

I truly hope things change, not just for us metals investors, but for the country as a whole.  I just can't see anything changing this correction until something major happens.

On the bright side, it looks to me that weekly downward sloping trendline in silver is roughly 32.50 this Friday.  If somehow we could close above that on Friday, that would seem to me to indicate the start of trend reversal.  And don't forget the SLV call option volume this week - over 10,000 June 35's were bought on Tuesday.  

Anyway, if this terrible post is a good sentiment indicator, and we are at bottom, I will be happy to have contributed in some small way.  Besides, WTFDIK.

Turd - thank you as always, for this awesome blog and for taking the time and energy to allow this great group of people a place to express honest, truthful ideas.   Every day, tell the Trolls to go fuck themselves.  You are doing important work, and we thank you very sincerely for it.

FW

El Gordo's picture

Who wins?

I submit that the guy with the biggest stack will eventually be the winner.  Size does matter.

Hammer's picture

Seriously...........am I

Seriously manipulation...........am I bovvered...nah but seriously am I bovvered ?

Irksome's picture

@ balz

"You will NEVER see 10$ or 15$/oz. in this bull market.

In fact, sub-25$ is HIGHLY unlikely. We are close to a bottom."

I meant, $10-$15 MOVEMENTS here and there don't bother me.  I expect that we're soon to see $50+/oz price increases per day, once people start fleeing the crumbling stock market.  

And if not, I'm still not too worried about it.  In the long run, it will work out.  =)

waxybilldupp's picture

@Xty

Nope, I sure don't think you should sit back, nor do I think you could.  I've read enough of your posts to know that you will defend truth, justice and the Canadian way at every turn.  I was just troubled by the comments directed at the concept of  "pension" as if it was being on the dole.  There were several.

I really feel as though I earned every penny of the pension checks I get every month.  I consider every month they show up to be a gift.  They can, and perhaps will, end some day.  Nothing is certain any more.  Now that I'm 66, social security checks are showing up also.  Since I've been paying in to the Al Gore "lockbox" for 50 years, I kind of feel like I have some of that stash coming too.  Oops, I guess it really is just a stack of IOUs.  How did that happen?  Al said it was all in a lockbox.  Was he making sh*t up?  Would he really do that?  Would he make up sh*t about global warming too?  OMG?  What can I believe any more?

wax off

rocoach's picture

The Other Hot British Chick

I wouldn't be at all surprised to soon see lovely Queen Blythe appearing on our silver bullion.

S Roche's picture

Target/Target 2 The Dark Heart of The Euro

For once a well explained and straightforward look at the structural flaws of the Euro via Target/2 imbalances...their payments system was designed to avoid price signals being transmitted via interest rate differentials, and it worked. 

http://prudentbear.com/index.php/thebearslairview?art_id=10660

Markets quiet? How about it is waiting for The French Election...not the one with Popeye Doyle, btw.

SV's picture

Long Live SLA!

man more midweek doldrums!!! Personally, It seems the illuminati might be underestimating silver demand and letting us peasants get our hands on more and more of the devil's metal!

http://silvervigilante.com

JY896's picture

Mandated paper.gov purchases - coming soon to a theatre near you

This was highlighted on Mike Krieger's blog -- and is a truly frightening 'real-world' sighting of a prospect raised by many 'tin-foil brigade blogosphere commenters' in the recent past. Highlights/additions to original text are of course my own:

"An alternative emergency approach would be to mandate, on a temporary basis [these emergency measures are, of course, always TEMPORARY, at first, aren't they?], bond purchases by Spanish [US/UK/Canadian/any deficit-bearing nation] households and businesses. Here is how such a plan might work.

The Spanish [and ANY fiat-issuing] government could use the income tax system to levy a temporary "lending surcharge" on individual incomes. In exchange for those surcharge payments, the households would receive an interest-bearing government bond with a maturity of five to 10 years. A similar surcharge could be levied on businesses based on corporate profits or the businesses’ value added.

Having this back-up plan in place to fill any shortfall in Spain’s [and ANY fiat-issuing country's] finances could give private sector investors the reassurance they need to provide the necessary funds. With private sector confidence that a default would be avoided, it should not even be necessary to draw on the ESM or to levy the surcharge on households and businesses. The Spanish [and ANY other fiat-issuing] government should therefore move quickly to enact such a plan before it is overcome by its current liquidity problems."

The writer is professor of economics at Harvard University and was president Ronald Reagan’s chief economics adviser

The full article can be accessed by registering (for free) at FT, or by accessing the article through a search engine by seeking the title: "Time for householders to buy bonds and save Spain".

Tick-tock, tick-tock... Would you like your complimentary cranial/facial massage apparatus in an anterior or posterior version?

Mariposa de Oro's picture

JY869

OMG!  those are just awful to look at!  blush

Woody Mornings's picture

Physical data

TF mentioned the following today...
"$1645-50 should continue to provide support in paper gold as there continues to be buying support in physical metal at those levels."

How does one going about finding data on the physical market?

Please PM me with a copy of your response. Thanks!

ivars's picture

I am planning to enter Silver trading finally

Within next two weeks, having hopefully accumulated enough paper to make sense of doing anything.  Must walk the talk, otherwise, what is the point of making reasonable predictions? The predicted dip on Late April-early May 1st  is here (green line) , the uptrend must begin soon. Supported also by technicals and fundamentals. |What more one could wish?

I will let know- may be someone is  interested- what investments I have made where and how are they faring. They will be simple and slowly changing ones, possible to follow (except if I get wiped out in the first day:().

Technical support also here- Malloneys video:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&start=1760#p37369

JY896's picture

Sorry for the gratuitous shock pics...

...but in fairness they do accurately represent my reaction to the prospect raised.

Yes, it is (as yet) only a trial balloon. The problem (const. law experts please chime in) is that at least in the US, the constitutionality of a tax may only be challenged AFTER it has been levied and paid. The various elements of 'temporary emergency' legislation already passed give Congress plenty of room to play with this, not to mention the simple administrative/executive diktat. Hey, tax refunds are a priviledge, not a right, after all...

Remember this? (the last new feature is not yet announced, of course -- and perhaps never will be. Perhaps.):

How can I use my tax refund to purchase paper I Bonds?

When you file your tax return, include IRS Form 8888. Complete Part 2 to tell the IRS you want to use part (or all) of your refund to purchase paper I Bonds. Purchase amounts must be in $50 multiples and you can choose to have any remaining funds delivered to your either by direct deposit or by check.

What's New for this tax year?

New for the 2011 Filing Season - in addition to buying savings bonds for yourself, you can purchase bonds for others, including your children and grandchildren.

Also, if you don't use all of your refund to purchase savings bonds, you can have the remaining balance issued in the form of a paper check

What is a Series I savings bond?

I Bonds are a low-risk, liquid savings product. While you own them they earn interest and protect you from inflation. The earnings rate has two parts: a fixed rate and an inflation rate. (Details)

What's New for the next tax year?

New for the 2012 Filing Season - the IRS will automatically use all of your refund to purchase paper I bonds on your behalf. Completion of  IRS Form 8888 will no longer be required.

PS: The wonderful mask above can be yours for about a grand, from this outfit -- they also have a large collection of other masks in stock, depicting the TRUE faces of banksters, politicians and other cronies if you REALLY want to spice up your Halloween this year.

__________________

Turdland Jobs Forum

Hammer's picture

Tail risk. Page

Tail risk. Page 17........

(but don't be single minded and do take the time to read the whole thing please)

http://www.imf.org/external/pubs/ft/weo/2012/01/pdf/text.pdf

El Gordo's picture

Trade?

I will gladly give you an IBond on Tuesday for a hamburger today.

RuNuts's picture

Re: Target/Target 2 The Dark Heart of The Euro

S Roche wrote:

For once a well explained and straightforward look at the structural flaws of the Euro via Target/2 imbalances...their payments system was designed to avoid price signals being transmitted via interest rate differentials, and it worked. 

http://prudentbear.com/index.php/thebearslairview?art_id=10660

Thank you for another informative article.

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