FUSS

Looks like it's time to add a new acronym.

As discussed here ad nauseam for the past several weeks, our current battle is against the spec shorts, both large and small. These momentum-following, bandwagon-jumping leeches were the primary culprits in driving price all the way down to $1528 and $27. After the initial squeeze on Thursday, the heat was turned up even higher on Friday. Overnight and earlier today, these HFTers tried to push things back down but have since been stymied on the Comex. Let's hope this continues but don't expect them to give up easily.

Over the weekend, Trader Dan pointed out that gold had moved back above its 10-day moving average. This is step one in alleviating the pressure and flipping the WOPRs to "buy" from "sell". Step two will be getting above the 20-day near 1615. He's right about this. Remember, many WOPRs are programmed to run off of technical signals so moving back above key moving averages will help to halt the barrage of sell orders generated by the downside momentum. http://www.traderdannorcini.blogspot.com/2012/05/gold-continues-its-bounce.html

I'm seeing chart resistance in that general area, too. Gold held support quite nicely earlier today near $1585 and has since rebounded nearly $10. I suspect that we'll continue to drift around here between 1585 and 1600 for a while, maybe into tomorrow or even Wednesday. I suspect, though, that another surge is coming that will drive price through resistance of 1600-1605 and take it up near the 20-day that Dan mentioned, near 1615. Chart resistance will enter again near 1625.

In silver, price has clearly broken out of the nasty and brutal downtrend channel that had contained it for days. Now, it just needs a spark to begin spooking the weak-handed shorts. It may simply be that gold strength will spill over into silver and drag it higher. Regardless, I firmly believe that the recovery process has begun and I expect silver to begin basing between 29 and 30 very soon. From that "staging area", silver will eventually mount a breakout move toward Battle Royale II.

That's it for now as it's almost 11:00 am EDT. You need a new thread and I've got a bunch of other stuff to do. We are about a week away from launching the new, subscription podcast site. I'm really excited about how it is turning out and I can't wait to offer it to you. Besides near-daily podcasts from yours truly, the site will also offer webinars and conference calls with some of the biggest names in metals. There will be plenty of in-depth interviews, too, where members will be able to submit questions. (That should be fun surprise) Anyway, I'll have more details as we get closer to launch and I hope you'll consider supporting the site. Revenues generated there will allow me to keep TFMR completely as is (FREE) and they will also help fund a possible "Turdapalooza".

Have a great day!! TF

301 Comments

Irish-Mic's picture

Short, interesting take on what bushwhacked gold bears last...

Short, interesting take on what bushwhacked gold bears last week, rising open interest vs. short covering, gold shares, and Veneroso's seemingly bullish take of late:

"By Peter Brimelow
MarketWatch.com
Monday, May 21, 2012

http://www.marketwatch.com/story/gold-bushwhacks-bears-2012-05-21

NEW YORK — Gold bushwhacked the bears last week. It’s even got gold bugs talking about gold stocks … again.

After breaking gold bugs’ hearts by plunging to a new low for the year on Thursday, gold violently reversed. Measured by the CME floor close, the benchmark gold contract gained $38.30 on the day. It followed up on Friday by adding another $17, for a two-day gain of 3.31%.

The NYSE Arca Gold Bugs Index (HUI) jumped 5.29% in these two days.

Gold stocks’ outperforming the metal is significant, because they have been atrocious this year. As of Friday’s close, the HUI was down 20.5% on the year, while gold was actually up 1.4% on the year. Just a restoration of late 2011′s multiples could produce serious gains.

If gold’s reversal sticks, it will be a triumph for the contrary opinion sentiment indicators. Nothing else had been offering any comfort.

The Hulbert Gold Newsletter Sentiment Index has been negative for a record 29 days. The previous record, which ended in early 2005, was followed by a 72% rise in gold over the next 15 months.

When MarketVane’s Bullish Consensus for gold hit 51% on Wednesday, it was at the lowest except for one day — 49% on Nov. 13, 2008 — for many years.

The far-sighted Australian bullion commentary The Privateer thinks something really significant has happened.

This weekend it observed: “What is interesting about the snap-back this week — in both the physical and paper forms of gold, including gold stocks — is that gold has once again started to rise, while other asset markets (especially stock markets) are still falling.”

Another positive voice, from an unusual source, is veteran gold analyst Frank Veneroso.

As I noted during last Christmas’ gold gap-down, Veneroso earned an important place in gold-market history for conceptualizing, in the 1990s, the importance of Eastern physical demand to the gold price, then a new factor. But for several years he had dismayed gold bugs by ignoring the metal.

After the Christmas gap-down, I reported that Veneroso had surfaced expressing a “hunch” that efforts by “a bunch of traders” to cause a technical breakdown would be defeated by central-bank buying. And, indeed, by Feb. 23, gold had risen 14%.

Now Veneroso has circulated another essay entitled “At the Threshold of the End of Central Bank Independence, Gold Is Compelling.”

He writes: “It may finally become clear to market participants that the body politics around the world will demand that central banks implement debt-eroding inflations.”

“With the death of the myth of independent central banking, gold should assume a unique position as a monetary asset. I think we are very close to this point.”

This represents a tremendous shift for Veneroso, formerly a dogged skeptic about the influence of monetary matters on gold.

Gold bugs are also excited about some strange technical news about Thursday’s rally. With bearishness previously so intense, it would have been normal for Thursday’s big jump to involve considerable short covering, which would have slashed the number of outstanding contracts on the CME — the “open interest.”

But precisely the reverse happened.

As Bill Murphy, proprietor of the LeMetropoleCafe website, put it on Friday evening: “The gold open interest rose a whopping 16,891 contracts yesterday to 433,847, which is new recent high, by a substantial degree. Almost everyone thought yesterday was about short covering. … It was new buying. The sort of major-league buying brought to your attention for weeks now in this space.”

A correspondent at Le Metropole Café remarks: “If indeed gold is underpinned by some enormous strategic buyer — probably a central bank — which is what the data implies, a number of market participants will have to do some serious rethinking.”

Rethinking the value of gold shares will be top of that list."

tmosley's picture

Yes, Turd, it is directed at you

All this "covering" yet the paper price continues to fall.

One upward spike among the volatility, and you declare victory.  When it falls the next day, you lose credibility.  Continuous bottom calling is no better than the trolls continuous top calling over the last ten years.

The doublethink going on here is so thick you could cut it with a knife.  On the one hand, the markets are manipulated downward by banks with access to an infinite amount of fiat through the Fed, and possibly other CBs, yet on the other hand, buyers with non-infinite fiat are supposed to be able to overcome them?  Rather like trying to win a game of Monopoly against an opponent who uses money from the bank as his own personal money, don't you think?  In such a situation, the best one can do is survive.  Basically, go to jail as much as you can, while he continues to go around the board, landing on your properties and giving you more of his infinifiat.  

In other words, just stack silver.  To your great credit, this is your most fundamental and highly repeated advice, but your reliance on the paper price as a guide to valuation damages your credibility.  The price is artificially low, so more will be consumed in industrial applications than would be the case otherwise (in marginal applications), if it isn't drawn down by sovereign buying for strategic stockpiles, or by regular stackers.  This will run down the supply until there is none and then those of us who hold silver win.  Not a minute before.  It will be unexpected.  "No-one could have predicted it."  And it will be accompanied by the collapse of the COMEX and the LBMA.  Think of the price of paper silver as the stock price of those two, and the fall will make sense.  That is EXACTLY what it is.  There might be some correlation between the price of real silver and paper silver, and paper silver might allow you to get real silver, but the relationship is similar to the one between Enron stock and electricity prices, and we all know how that went.

This is intended to be brutally honest, in the hopes of being constructive in the long run for the debate and for the readers here.  It is not intended to be a personal attack.  

murphy's picture

@TFish

Agreed.

But don't shoot the messenger for delivering the acronym. Just having some fun.

BillAuAg's picture

Is this a Head and Shoulders forming?

Chart for U.S. Dollar Index Cash

ClinkinKY's picture

Chief Spewing Bull and Fauxcahontas

Like Warren, Obama Claims Cherokee Ancestry--But Offers No Proof

President Barack Obama and Massachusetts Democratic Senate candidate Elizabeth Warren have more in common than just their liberal political ideology, Harvard Law pedigree, and Democratic Party affiliation. Both claim Cherokee ancestry, and neither can prove it.

Ms. Warren's claims are current and well known, but President Obama's claims were made back in 1995, when his memoir, Dreams from My Father, was published. On pages 12 and 13 of the 2004 paperback edition, the President unequivocally asserts his Cherokee ancestry:

If asked, Toot [Obama’s maternal grandmother, Madelyne Payne Dunham] would turn her head in profile to show off her beaked nose, which, along with a pair of jet-black eyes, was offered as proof of Cherokee blood.

But an old, sepia toned photograph on the bookshelf spoke most eloquently of their [grandparents Stanley and Madelyne Dunham’s] roots.  It showed Toot’s grandparents, of Scottish and English stock, standing in front of a ramshackle homestead, unsmiling and dressed in coarse wool, their eyes squinting at the sun baked flinty life that stretched before them…in their eyes one could see truths that I would have to learn later as facts…that while one of my great-great grandfathers, Christopher Columbus Clark, had been a decorated Union soldier, his wife’s mother was rumored to have been a second cousin of Jefferson Davis…that although another distant ancestor had indeed been a full-blooded Cherokee, such lineage was a source of shame to Toot’s mother [Leona McCurry Payne] who blanched whenever someone mentioned the subject and hoped to carry the secret to her grave.

Read more: http://www.breitbart.com/Big-Government/2012/05/21/Like-Warren-Obama-Claims-Cherokee-Ancestry-But-Offers-No-Proof

Grigeo's picture

No Time For Victory Laps

Title of Turd's article on May 17th - "No Time For Victory Laps"

And tmosley types "One upward spike among the volatility, and you declare victory"

I don't care and I don't get aggravated.  Just another person to the Ignore User list.

dropout's picture

Fundamentally? We Are F.....

"The US financial system and probably, the financial system of Europe, like the police, no longer serves a useful social purpose. In the US the police have proven themselves to be a greater threat to public safety than private sector criminals."

http://www.paulcraigroberts.org/2012/05/20/recovery-or-collapse-bet-on-collapse/

Some may think the author a 'crackpot' as do others about that other Doctor Paul. Do yourself a favor and read the short article. He speaks the truth about gold and silver and where the global economy is going. Oh yah. About the police; Feeling uncomfortable around them are you? Maybe a bit of fear? Who is the terrorist?  

California Lawyer's picture

Hey Turd: Issue Regarding "Proof" of Manipulation

Turd:  I love this place, and I most certainly appreciate your wisdom and efforts to educate us all.

And, let me help out a little on the issue of "proof" of manipulation.

The concept of proof is not absolute.  It is relative, on a continuum.  Some things are just beyond dispute, like, for example, a human being will eventually die.  There is no way to refute that, so there it is.  Theoretically, though, there will always be some folks who want to argue minutiae.  They might, for example, say: "even when one dies, the spirit lives on . . ."  So, there you have it, even when presented with irrefutable, conclusive "proof," there will always be doubters.

That is why there are differing standards of proof in the law.  Here in the USSA, for the state to take one's life or property, the state must prove its case "beyond a reasonable doubt."  That means there can still be some theoretical doubt, but any doubt based on reason, is sufficient to derail the state's case.  In a civil case, for example, one party is suing for breach of contract, there can be plenty of reasonable doubt, but the one with the burden of proof must only prove the case to a standard of proof that is "more likely true than not true."  That means, there can be a LOT of doubt.

So, the question becomes, relative to manipulation in the precious metals market, NOT whether there IS or IS NOT manipulation.  Instead, the question is what quantum of proof does one need to be convinced that manipulation is occurring?

I am contrarian, by nature, and by years of being a lawyer.  I ALWAYS question EVERYTHING.  My first though when being presented with something new and different, is to ask "Why?"  Then I ask "For whose benefit?"  Usually, that moves the conversation to the proper area in inquiry and focus.

Here, as to whether the precious metals markets are being manipulated or not, it is totally proper to be curious, and doubtful about it.  But, faced with the quantum of evidence, including years of hard data, charts, actual witness testimony [Mr. Maguire], as well as a compelling incentive structure [fiat chicanery vs. sound money discipline], there can be no logical, reasonable doubt that manipulation is alive and well.  

Anyone who disagrees is either not being reasonable or is a disinformation agent.  And, mind you, there are plenty of folks who are unreasonable, just like I have no doubt that plenty of disinfo agents populate this site.  It is free, after all, and what better place to spread disinfo than this free site with a huge concentration of intelligent folks all tuned in?  

I meet unreasonable people every day.  There are racists, homophobes, etc., who all have a compelling belief system, that is simply, unreasonable.  Some of my best friends are completely off the rails.  I still like them, but they do have their shortcomings.  There is no way to convince them to change their beliefs, so trying to do so is a waste of time and effort.  That I am a lawyer and still have friends ought to be proof that most of my friends are unreasonable.  So there! 

There will ALWAYS be those who refuse to see what is obvious--look at the Elvis sightings?

So, the focus should not be upon those few that ignore reason.  The focus should be on the vast majority of us who get it, who are tuned in, and are preparing for the end of the Keynesian experiment.  

Thanks again for all that you have taught me.

By the way, when can I sign up for the new site?  And, am I ever going to be able to meet you or learn more about you?  One day it would be good to know that I fought in the trenches with a truly great man.  Thanks again.

bernard's picture

@tmosley

This was one of the more eloquent posts I have read here. It is the truth, I believe, that you are right.. we are playing a rigged game 100%. They have succeeded in making the COMEX their lap dog. Where will the buyers of /SI come in to prop up the spot price, after everything that has happened? It may take a generation to forget the CRIMEX margin increases, collusions, etc, or perhaps eventually the spot price will diverge from the real price, making our beloved COMEX totally irrelevant. This is all setting us up for one gigantic "no silver available" event.

Urban Roman's picture

It's probably worth noting

that the "commodity complex" tends to move together, and opposite to the POSX. And there is another commodity that the EE is really touchy about these days: oil.

While outright price controls never work, they like to spread rumors of a SPR release now and then, just to torpedo the price at the pump. Of course, keeping gasoline down is bound to have side effects like keeping POSX up, and therefore putting a damper on everything else. (iow deflation)

In other news, we hear that the China bubble might be about to pop, and they are known to be stockpilers of commodities, for example copper.

So there are real market forces that come from other manipulated markets, and there are real market forces that can come from big sovereigns buying or selling, and there are artificial smackdowns from the EE every now and then, and then there are the hedgers and SS's.

The bottom line is there's a kind of fuzzy line between "manipulation" and "market" and you need to be aware of all of it to have a clear view in your crystal ball.

tmosley's picture

Grigeo, you do realize that

Grigeo, you do realize that he was claiming credit for having predicted that spike, right?  And now it appears to have been nothing more than volatility.  

If you don't want to listen to even minutely dissenting opinion, then you are going to be smashed by reality again and again, and never make any progress.  If you want an echo chamber, then feel free to ignore all dissenting opinion, but you aren't doing yourself any favors.

Groaner's picture

could be

He has scalped the nation trillions of dollars.

Fulgurite's picture

@ Stratajema

Quote:

Why so serious?  Still waiting for $1,400's on gold and $24 on silver.  Meanwhile all the bottom callers on KW News are chirping... as usual.   I still expect Santa to have to talk people off of the ledge. 

KWN is a complete joke and 100% partial to the silver/gold bug community. 

The guy sounds as stoned as a house doing his 'interviews' and the people on his show always appear to make a direct profit from encouraging more and more sheeple to pile into silver or gold.

In the last year or so I've become increasingly skeptical of the whole precious metals market and it is appearing more and more like a big scam with a close resemblance to a religious cult.

Sure, perhaps JP Morgan manipulates the market, but at the same time I can't help but think that there are others out there that also try to manipulate public opinion (and thus the market!) in order to take their vested interests higher by the growing army of naive 'loyal followers' joining the frenzy hoping to get rich quick.

The comments section of this website underscores my last point with people trying desperately trying to join the bandwagon by posting all sorts of total incoherent crap, from the latest conspiracy nonsense to YouTube video clips.

I've seen enough here, from useless tea leave reading charts (good luck trying to predict a manipulated market...) to the rag tag army of Turdites posting "first!," and I'm definitely not going to pay for access to a subscription based podcast site.

@ tmosley, I completely agree!

murphy's picture

DSK faces gang rape

How bout a little distraction scare crow? Slow news day in France? More interesting than the French banking crises.

According to France's Liberation newspaper, two female "escorts" interviewed by Belgian police in Lille say they accompanied two of Strauss-Kahn's associates on a trip to Washington. The group stayed at the W Hotel, where one of the women told police Strauss-Kahn raped her.

"I didn't scream, but I said clearly and out loud that I didn't want to," she said in her deposition, according to the paper.

http://news.yahoo.com/blogs/lookout/dominique-strauss-kahn-facing-gang-rape-allegation-152535259.html

murphy's picture

@Fulgurite

We welcome your opinion. Please close the door on your way out.

IU- check.

Eric Original's picture

Manipulation

It was just as true at $300 as it is at $1600.  We are not screwed.  The manipulators have been steadily losing.  Look at the charts.

Eric Original's picture

Allocated gold not in the vault? Really?

Seems like a great time to link up a new KWN post.

I'm shocked, SHOCKED, to find there is no gold in this vault!

El Gordo's picture

What's not manipulated?

With Fed intervention everywhere you turn, what markets are not being manipulated these days?  Stock are pumped, bonds over valued, derivatives etc. to kingdom come, QE with a Twist - the list goes on.  Metals are not unique in this respect.

dropout's picture

@ Fulgurite

from the Latin 'fulgur' meaning thunderbolt.

Commonly called 'petrified lightening.' 

You throw much innuendo and opinionated anecdotal claptrap. Where is your constructive evidence? Your comment shows a complete lack or disregard of the facts presented here. This is a forum of like minded people who come together for stimulated, constructive conversation. If this does not serve your purpose, then I would suggest that you find your own forum elsewhere ~ where you may vent your spleen. Have a nice day.

Turd Ferguson's picture

See, this is what is so frustrating...

MODERATOR

...and why I rarely respond to questions or complaints in the comments section.

Tmos: You've been around a long time and I value your opinion. You are always welcome here as a stacker and physical metal advocate. However, posts like yours drive me crazy.

I've been taking daggers and arrows for weeks as paper price has fallen due to the momentum-chasing spec shorts. I've stated endlessly that this selling would be finite and, eventually, lead to a short squeeze that would stabilize price and lead to a longer-term turnaround and rebound.

The squeeze (finally) develops and its for $70 over two days, which is more than even I had expected. Because it fails to continue for third day (and, again, I didn't expect it to continue for even two days), it seems like you are claiming that I've "lost credibility" after "declaring victory". Frankly, my friend, this is bullshit. There's certainly no victory to be claimed yet and when did you think I "claimed it"? Today's post is simply a continued explanation of the internal mechanics affecting today's price. It's also bullshit to claim that the folks on this site are deluded in "doublethink" just because we don't agree with your theory that all paper is going to zero. Maybe it is but that doesn't give you license to disparage everyone that doesn't see it that way.

In the end, I guess I still have trouble managing my emotions. You see, I write volumes of stuff here, day in and day out. I incorrectly assume that everyone has read every word and firmly understands my posts from day-to-day. This is an unfair expectation of mine but that doesn't make it any less frustrating when I feel my posts are taken out of context or, at worst, deliberately parsed and spun against me.

Tabberto's picture

TMosley

Dissent is always patriotic and your duty but I fear you too are too focused on one viewpoint.  While I accept the premise that the paper price can and may go to zero, Turd's comment about imminent short covering and the COTs is also entirely valid.  If you really believe what you say then you really SHOULD be aggressively short in paper while buying physical with the other hand.  I very, very much doubt you are doing so.  When the European bank runs extend beyond Greece into Italy and Spain in scale do you really believe that there wont be a major bid for 'paper' and physical precious metals?

I think your comment is interesting but also blinkered - you are guilty of exactly what you accuse Turd of....you have had this view for a while and you are making the current vista fit your argument.  Noone in the mainstream investment world is invested in PMetals and when people flee the banks and the currency/bond markets it will only take a trickle to send the paper price sky high.  Let me know if you are or aren't shorting the paper price, I for one would be interested to know and am sure others would too.

Turd Ferguson's picture

sheesh

MODERATOR

"I'm definitely not going to pay for access to a subscription based podcast site."

I don't understand why you're even bothering to visit this FREE site.

Since you're so dissatisfied here, can I go ahead and delete your account for you? I'll be glad to do it and save you the frustration of dealing with all of us cult members.

Just let me know.

Response to: @ Stratajema
recaptureamerica's picture

JPMorgan Chase loss only

Big Buffalo's picture

Oh snap!

SIT DOWN BIT*HES!

(I Love it)

edit: Turd SMASH

(Somebody, put a yellow hat on this guy.)

murphy's picture

JPM losses

It will be interesting on how close the figure gets to Jim Willie's source of $18B last week.

The number being bandied about now is closer to a range of $6 billion to $7 billion, according to several people working on trading desks that specialize in the derivatives JPMorgan Chase (JPM, Fortune 500) used to make its trades and from two sources with knowledge of the bank's positions.

ClinkinKY's picture

@TF--Just to piss off some "regulars" here, might I suggest...

...that the graphic for the first Turdapalooza be this?devil

Turd Ferguson's picture

YEP

MODERATOR

$2B goes to $4B. Now it's $7B.

Oh, that's right....Jim is just a sensationalist, making shit up as he goes along. No matter that is was Rob Kirby who gave Jim the $18B number. Right out of the playbook: Don't argue the message. Instead, disparage the messenger.

Response to: JPM losses
Turd Ferguson's picture

Fine with me

MODERATOR

I like it!

As I said last week, the Cult Leader is always nailing all the hot chicks, too. Sounds like a sweet deal!

murphy's picture

Hat tip to Pining

I don't think he would mind some of us cult followers to borrow it at this time.

The Cult of Turd:  'After a rise in the metals we band together to sing the sacred songs'...  cracks me up!

Vermilion's picture

Even more on Manipulation

Perhaps I shouldn't have used the word 'proof' - difficult for both sides of the debate to to prove or disprove manipulation. I was railing against the attitude of some here who try to forbid any opinion that differs from their own. Even Turd concludes his post above with a sarcastic and patronising 'Seriously? Whatever. Sheep come in all forms, I guess.'

I'm not a sheep - at least I don't think I am. I just am not convinced (but remain open-minded to be persuaded if the argument is sound) that silver is as manipulated as many here maintain. Here's why:-

1. If the price was forced lower, then the industrial users (hereafter called the 'physical buyers') would increase their purchases (all other things being equal), increasing demand, and we would see increased deliveries the following month. Now this could certainly happen for a month or 2, but 5+ years? No way - when there's a sale on you usually see a ticket saying 'While stocks last', and for good reason. Comex/LBMA would soon empty of silver.

2. 85% of silver is purchased by physical buyers - and I have never heard of any of them being denied their silver when delivery was due. (Although Eric Sprott alluded to a hard time he had had -I would love to hear details of his problems)

3. The physical price has never deviated from the paper price EVER.

In 2008(?) Crude oil was around $60-70 - it then went parabolic to $150. Massive 'paper' buying sent the price sky-high, and investors were storing their crude on tankers parked out at sea, determined not to sell and keep prices rising. However, there could only 'manipulate' the prices to this level for a couple of months before the lower physical demand forced their hand, and prices fell dramatically  to $40. Even Obama intimated this type of speculation was manipulative.

But the point is that you can only manoeuvre paper commodities prices up or down without regard for the underlying physical supply/demand dynamics for a limited time before the realities of the market reestablish themselves. 

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