Mid-Week Gold & Silver Charts

Wednesday, May 2, 2012 at 5:48 pm

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.

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.
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.
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.

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Comments

Ivars: "I am planning to enter Silver trading finally"

Submitted by RuNuts on May 3, 2012 - 3:43am.

Get some! ;-)

Chinless Charles

Submitted by TeaDrinker on May 3, 2012 - 4:04am.

When Elizabeth falls off the perch it will be Charles' profile that will adorn all UK coinage and bank notes.

Scary thought however being a profile we will be spared his 'wingnut' ears.

At this point Australia, Canada, etc may decide that enough is enough.

Thanks Liz

Submitted by bulliondan on May 3, 2012 - 4:47am.

Being a proud Brit I am very happy that Her Majesty is on our coins:

Means that they are Capital Gains Tax free in the UK!!! - Thanks Your Highness!

your highness

Submitted by ink on May 3, 2012 - 5:12am.

That would be the same Highness who is scooping up enormous amounts of European farmland subsidies because being the richest woman on the face of the earth she just happens to own a lot of farmland? The coins may be tax free but your royalty is getting their share of the pie anyway.

Ivars

Submitted by grinners on May 3, 2012 - 5:33am.

Fingers crossed! :)

Stay safe out there in leveraged land :)

re IMF and mortgages

Submitted by Xty on May 3, 2012 - 5:33am.

From pg 17 of Hammer's link:

"In general, fears about moral hazard––by letting individuals who made excessively risky or speculative housing investments off the hook stood in the way of progress."

Let me just shorten that for you, to reveal the twisted thinking:

In general, fears about moral hazard ... stood in the way of progress.

This is the thinking that has screwed us all.

Your right, I am sure that

Submitted by bulliondan on May 3, 2012 - 5:36am.

Your right, I am sure that the Dutch Royal family always put the people before their own interests - if only she could be entirely selfless, humble and always do the right thing in the way that the European Parliament do then the world would be a better place!

7500 contracts, no wonder the

Submitted by Silverling on May 3, 2012 - 5:41am.

7500 contracts, no wonder the price got slammed!

and the money quote

Submitted by Xty on May 3, 2012 - 5:48am.

again from page 17:

Policymakers must guard against overplaying the risks related to unconventional monetary support and thereby limiting central banks’ room for policy maneuvering. While unconventional policies cannot substitute for fundamental reform, they can limit the risk of another major economy falling into debt-deflation trap, which could seriously hurt prospects for better policies and higher global growth.

But really they are only saying not to mention the risks related to 'unconventional monetary support' - so I think this means don't mention the fact that the printing presses are on full time, because then people might question the policy. I.e. if we were to understand the risks inherent in their policy, major economies would fall into a debt-deflation trap (that the banks set) that would prevent the higher growth they need to continue to rob us blind. I also noticed a nice idea to increase consumption in the developing countries to bail out the IMF and the entire western banking system.

edit:

And there we have it - the IMF work for the central bankers - heaven forfend that they would do anything to constrain the banks 'policy maneuvering'.

Last week's renewed optimism

Submitted by York Rite on May 3, 2012 - 6:14am.

Has been replaced with despair - again!

Those huge physical buyers who had been hoping against hope for $1,645 have had their prayers answered today by those generous owners of plump fingers.

Jim Sinclair, who informed us recently that he'd received a record number of hate mail, can expect his postman to have a hernia soon due to him stating (with an exclamation mark) on Monday that $1,650 would provide support only to be proved wrong within 36 hours and even more wrong a day later. http://www.jsmineset.com/2012/04/30/in-the-news-today-1176/

what do you think of this type of chart?

Submitted by traderJJ23 on May 3, 2012 - 6:41am.

do alot of traders use this type of charting ?

http://justjoecharts.com/download-charts/gold/

7,501 Contracts & Nanex

Submitted by S Roche on May 3, 2012 - 6:53am.

I've asked Nanex to have a look at that trade because nothing much about it makes sense. So, a single trader dumped 7,501 contracts between 08.30 and 08.31...and that did not trigger any other sales? I suspect it was an HFT algo selling and buying, rolling the price down. I don't have any pull there but I hope they take up the challenge to examine what happened.

What is interesting is that the volume, or the price drop, triggered a trading halt. Has that ever happened before?

Enquiring minds want to know.

OBummer's 2012 Chariot doesn't seem so light....

Submitted by Be Prepared on May 3, 2012 - 6:58am.

Afghanistan... where tax dollars go to other people's pockets...

Submitted by Be Prepared on May 3, 2012 - 7:01am.

you decide why he is here:

Submitted by Xty on May 3, 2012 - 7:02am.

http://www.yorkrite.org/

The only place your Student Debt won't matter....

Submitted by Be Prepared on May 3, 2012 - 7:03am.

Banks can dispense with their debt when it suits them... but, We, The People, will have to take it to our grave.

Yeah, right.......

Submitted by Be Prepared on May 3, 2012 - 7:05am.

Buy in May, then go

Submitted by recaptureamerica on May 3, 2012 - 7:06am.

Buy in May, then go away...

Can apply this rule to the other 28 day- containing- months too...

B-cup-acuda

Submitted by koan on May 3, 2012 - 7:06am.

You know in that movie Good Will Hunting (no, not my favourite) how the genius' buddy says everyday when he pulls up outside the genius' door to pick him up for another day laboring that he has hope that he won't be there and the world will be a better place for it, and then disappointment ruins his day when he answers.

Me = the buddy pulling up at the pm market, the morgue = the genius always answering and disappointing me!

One day I tell ya, one day...

(mmm, not sure about painting me the peon and them the prodigious mind but wadyagunido)

HRH King Charles

Submitted by TeaDrinker on May 3, 2012 - 7:10am.

Some head hey, coming to a coin near you in the future. I would not go short on that bet though.

Upset the House of Windsor and you may just come to a sticky end. Ask Diana - oh, we can't.

God bless the queen

Submitted by Mantis on May 3, 2012 - 7:10am.

cor blimey govner you got to luv er majesty, she has a hell of a time innit. Specially with people accusing er of bein a lizard person

I sometimes wonder about the royal role in our world today. I mean if anyone is above the Rothschilds in the global power pyramid it would be her wouldn't it?

Dear BM

Submitted by Maximillion on May 3, 2012 - 7:12am.

Dear Blythe

I am now getting rather p*ssed off with your continued slow manipulation of the PM prices downwards. Since the 9th of April this year you have slowly lowered the price of Silver by over 5% as of this morning compared to Gold (excluding the $'s price movement influence).

It must surely be apparent, that you are ultimately just wasting both JPm's and your Countries reserves, and through your actions simply transferring the Western worlds remaining real assets eastwards.

As a such, please either stop now, or in the alternative drop the paper price to 1cent p/oz, in order that I and my fellow Turdites can take delivery of your remaining physical metal

I reckon royalty

Submitted by koan on May 3, 2012 - 7:18am.

are just the presidents/prime ministers etc of yesteryear shoved out front by the Rothschilds to take the brunt of any uprising.

Sure I read a bit about them infiltrating freemasons/illuminati and using those as agents to organise royal marriages to fit their purpose over the centuries. But who knows, anything is possible when heading down that line of thinking/conspiracy theorising.

drip...drip...drip

Submitted by TexasStacker on May 3, 2012 - 7:33am.

There is no fun in this. What will be the catalyst to turn us back green, then disorderly to the upside?

I will say I prefer drip...drip...drip to "LOOK OUT BELOW" 6-dollar drops in silver.

Sigh. Will be buying again this weekend...and the next...and so on...and so on...

Maybe the dripping I hear is my silver bucket filling up one Franklin half at a time...

"And don't forget the SLV

Submitted by Dr Jerome on May 3, 2012 - 7:40am.

"And don't forget the SLV call option volume this week - over 10,000 June 35's were bought on Tuesday"

That is a bunch of calls! We have seen similar action in puts before the big slams. When markets are "normal," if that ever happens again, the number of open call or put contracts tends to cluster around the current strike price and becomes higher in the direction that the collective investment community expects the underlying security to move.

Now I ask, in a market where a growing consensus of investors recognize clear manipulation and understand the reasons why and means how, why, I say, why would some entity buy 10000 SLV 35 calls? What idiot investor/sucker would put on that trace knowing that the cartel will smash price down by $1.20 every time it approaches 32.50.

Or maybe somebody knows something? Or a whole bunch of somebodies? Look at the open interest in SLV on the Call side. These are investors who are bullish? I think so.

Now some would say that investors are trading bear-call spreads that make money as the price stays flat or goes down. But this kind of trade requires an equal number of call contracts bought and sold higer than the current price. If that were the case, we would see a better balance between the numbers, like we see on the put side: 3120/2609 at 25-27. I don't see that kind of balance on the call side.

Somebody correct me! I am tempted to dip my toe. $100 of fiat will get me 8 contracts and the possibility of earning 1K if SLV really hits $35ish.

they're gonna do what they can

Submitted by boatman on May 3, 2012 - 7:49am.

to base PM's low before the coming, next, onslaught of printing.

and oil too........which is much more of a campaign issue.

This is a must read from Hugo Salinas

Submitted by Groaner on May 3, 2012 - 7:52am.

He puts things very clear. He explains how and why they dont care how much paper money they throw at the metals,, they must maintain their Fiat, which is POWER to the elite..

No wonder the market does not trade sanely

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=186

@Groaner - Hugo Salinas Price

Submitted by Be Prepared on May 3, 2012 - 8:06am.

.... does speak in straight terms and, at least, he willing to come out say that there should be "sound" money for the benefit of the people that hold it. Of course, he is speaking is own book since he owns a lot of silver mines.... :-)