Not-so-happy Tuesday

Just some wild-eyed speculation here so proceed at your own risk.

Recall first the concept of "Happy Tuesday". The idea behind it is this: After a week of downside manipulation, The Cartels attempt to "cover their tracks" ahead of the CoT survey each Tuesday. The Cartel short-covering (buying) on Tuesdays would often lead to UP days, thus the term "Happy Tuesday". Pondering this yesterday, I came up with the idea that today would be a DOWN day. Why? The opposite effect, actually. The short squeeze in gold of late last week was likely initiated by new longs being added by The Cartel and their buddies. Yesterday and today, in order to "cover their tracks" and not make this week's CoT appear even more bullish, selling ensues. Ring the register, book some profits and paint the CoT, all in one move.

It looks like we have seen just that overnight and this morning. In fact, there even appears to have been some brazen attempts to jam price lower and back down through the 10-day MA. It didn't work...so far...but that doesn't mean they won't try again, especially after the London PM fix at 10:00 am EDT. It's the area around 1575 that they might be shooting for so let's watch that number closely later today.

Speaking of the squeeze last week, we can finally draw some conclusions now that the OI numbers are in. Remember that the gold OI on Thursday expanded by a whopping 17,000 contracts on the initial $38 move. This was exciting as it showed new LONG interest entering the pit. However, on the extension of Friday when price rose another $17, total OI contracted by 4,300. This is short covering. So, a bottom is made and a rally begins with the 17,000 new contracts but the bounce ends with short covering, NOT more buying. After yesterday's action, we are now in a bit of a tug-of-war zone, loosely banded by 1560 and 1605 and I expect this to continue for a little while.

The silver action was even less inspiring than gold. While price rose $1.52 on Thursday and Friday, the total open interest fell from 113,663 to 112,914. This tells us that some new longs were added but even more shorts were covered. No new liquidity bothered to show up and this is a continuance of the trend that began post-MFG. There simply isn't any, regular interest in trading silver. All that remains in the pit are Cartel monkeys and HFT algos. For this reason, it's still very hard to get excited about the short-term prospects of paper silver. Price once again found a floor under $27 and that's a good thing. However, where is the enthusiasm and liquidity necessary to drive it substantially higher? FOR NOW, it's just not there. Like gold, I see a rangebound trade for a little while, banded by 27.50 on the low end and 29.50 on the high end.

Now, please don't misunderstand what I'm telling you here. I'm still extremely excited about where the metals are headed, particularly silver. The ranges I've described above are for the short term, maybe the next week or two and into early June.

Here are some news items that merit your attention and discussion. First, ZH did a little forensic investigation and uncovered some rather interesting info. In summary, it looks like the Rob Kirby estimate of $18B in losses for JPM might be a little low. http://www.zerohedge.com/news/did-fed-just-give-us-very-big-clue-just-how-big-jpms-cio-loss-may-be

Here's a post from Gene Arensberg that seems to confirm what I've been saying for weeks regarding the CoTs: http://www.gotgoldreport.com/2012/05/cftc-managed-money-short-positioning-high-for-gold-silver-.html

Egon von Greyerz has gotten some bad pub recently because he's begun to give price predictions to KWN. (Bad idea, Egon. Remember, rarely/never give date and price in the same sentencewink). Regardless, the guy is knows his stuff and he is one of my favorite gold "commentors". I want to draw your attention to something else he told Eric King yesterday. This idea that, even in Switzerland, your gold is not really your gold, is something about which I've heard anecdotally before. Well, here it is again. Smoke or actual fire??

"Von Greyerz also told KWN that a major Swiss bank did not have a substantial amount of allocated gold which they claimed to possess for their client: “We are stressing to investors to take their gold out of the banking system, not only because there are runs on banks that will continue, but the risk of being in the banking system is major.  So you should take the additional step of not just owning physical gold, but also owning it outside of the banking system.
We (just) had an example of a client moving a substantial amount (of gold) from a Swiss bank to our vaults, and we found out the bank didn’t have the gold.  This was supposed to be allocated gold, but the bank didn’t have it.  We didn’t understand why there was a delay (in our vaults receiving the gold), but eventually we found out why there was a delay (the bank didn’t have the gold).  It’s absolutely amazing, but not surprising.
This confirms what I’ve always thought.  Not only should you not have gold in banks or even unallocated gold, but even allocated gold.  It seems that some banks don’t even possess that.  So the risk of having gold in the banking system is major.”

Full text found here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/21_Greyerz_-_Customer_Shocked_Allocated_Gold_Not_in_Swiss_Bank.html

Finally, some serious homework for you. IF YOU HAVE TIME, please utilize it to read these two essays/presentations from Alasdair Macleod. This material was presented last week at the Sprott Hard Assets Investment Conference in NYC. The first "lecture" was primarily focused upon economics and the root causes (Keynesianism) of our current predicament. ( http://financeandeconomics.org/Articles%20archive/2012.05%20Economic%20speech.pdf). The second lecture focused primarily upon gold and silver and their role in the future. ( http://financeandeconomics.org/Articles%20archive/The%20gold%20bullion%20market.pdf) Again, there is a metric ton of information here but, if you take your time, you'll learn a lot.

That's all for now. Have a fun day. TF

334 Comments

Einherjar's picture

First?

A Bad Market is Feeding on Itself Today

Stratajema's picture

Uh oh

Some retail PM coins carrying larger premiums (e.g. Perth Mint coins) are showing out of stock.  My view is that the coin dealers are pulling them so they don't sell them at a loss. 

But coin dealers gotta cash flow, so they are still selling the low premium coins.

Groaner's picture

Just think where the metals would be trading if they didn't

smash them early this morning.. they cant resist because they get more bang for their naked shorts on globex.

Eric King's picture

Connecting several peaks,

Connecting several peaks, especially the top of the most recent downtrend points the resolve date to July 26th. The Fed is meeting on July 31st and the market is telling us that silver will not resolve until we hear the outcome of this meeting. 

As painful as the last year has been, I adopted James Turk's philosophy of regularly buying physical no matter the price. Over time, this has served me well and in particular the last 8 months have been a fantastic opportunity to build my stack to a level I didn't think I would reach for a few years to come.

Buy the dips under 28, keep stacking and wait for benny to hit turbo at the end of July.

Eric King's picture

Poll - How much physical silver are you stacking?

agNau's picture

Derivatives?

What's going on behind the scenes with those pesky derivatives and the Morgue? I'm smellin something.

Roger Godberd's picture

Queazy Money

Eurobonds, IMF, Club Med...all demanding more cash. Ching ching baby, roll those presses & stack that phyzz.

Punk-Assets's picture

I just hope the metals stay

I just hope the metals stay at least below $1600/ $29 for the next several months because I should have plenty of extra cash to REALLY stack em up. Everybody has their plan I guess. Wishing for higher prices at this point is not part of mine.

Groaner's picture

Big brother is watching.. more than ever

How easy it is for them to track down every person on this site and do a cavity search when Uncle Sam wants your metals.

Big Buffalo's picture

WOW

metals on the move.

achmachat's picture

@L

what good is that poll if I can't see people's addresses and security setups?

Xeno's picture

Face Morgan Morgan Face

(repost from last thread, thanks Eric)

If the F*face IPO wasn't the biggest money laundry operation in history, I don't know what was. John Law's Mississippi scam maybe? Billions in FB IPO vs. billions in losses for JPM seems kind of obvious.

Anyway, it's obvious that the Silver and FB prices will soon cross but does anyone have any guesses where the price of FB and JPM will meet in the dark of night? $10 seems about right.

CBDooper's picture

Mondays Open Interest

Looks to me like new Cartel shorting. Gold OI went up by 5638 contracts, While Silver went up 979. Given the price drop yesterday, it appears to be substantial shorting. It also appears like they may have already just started covering.

ivars's picture

@Eric Original - tight stop

Well, that was my second trade, guess i do not know even the basic rules. Since i wanted to loose as little a possible, I put it below the previous low of 28,03 smthg, just a little bit. Now I know it should not be round number, so it would have been 27,95.

Then, speaking of random volatility, what is a reasonable minimal stop for silver? 1%?

achmachat's picture

quadruple bottom

as silver goes towards the 30s, we'll have a massive quadruple bottom forming on the weekly chart.

does anybody know if there is a precedent for this?

And if not... what would classical TA dictate in such a case? 

bernard's picture

This is a nice FUBM day

after douchebags came in overnight and sold 5 million of ounces in the illiquid premarket, our friend comes roaring back (now at 28.70) for a nice FUBM! let's see if it holds, ladies and gentlemen. Clearly they do NOT want to see a 16 handle on gold.

gold prices

SRSrocco's picture

REPOST FROM YESTERDAYS BLOG

KILLING SILVER MARKET SENTIMENT...

I hope you all don't mind, I wanted to repost this for any of those who did not get a chance to see this yesterday.

It is really fricken hilarious to see what is taking place in the precious metals market community.  I see we have a bit of a RIFF going on in the forum here today between the so-called PERMA-BULLS and those who are tired of the folks on KING WORLD NEWS and etc.  No one was complaining about KWN and its GOLD & SILVER BULLS when silver went from $17 clams an ounce in SEPT of 2010 to $49 in May 2011.

Now that market sentiment and the price is reaching lows, the fighting between the ranks now takes on a new passion.  I see DR G believes that the short term charts look TERRIBLE.  I don't follow charts, but trends.  I thought I might provide some more LOUSY-TERRIBLE trend charts for DR G's enjoyment.  These come from Gene Arensberg's GotGoldReport.  Below is his brief description.

Well, what it usually means is that silver is getting close to a bottom if history is any guide.  To quantify the chart above, Managed Money reported an increase of about 3,700 new contracts short over the past two reporting weeks, to show a relatively high 12,518 lots short, with 3,334 contracts of that increase coming in the May 8 reporting week with silver then closing at $29.43. 

The high short position for Managed Money traders is in part the reason that their collective net long futures positioning was so low in this May 15 report.  As shown in the chart below (above) traders the CFTC classes as Managed Money reported holding a combined net long position of just 5,703 lots – not very much higher than the 4,752 contacts net long they reported at the end of 2011 in the December 27 COT report with silver then at $28.67.

As should be clear from the chart above, when the combined net long position for Managed Money traders (blue line) reaches the lower limits of the chart it often corresponds with lows in the price of silver.

--------------------------------------------------

So there you have it.... MORE LOUSY CHARTS to make DR G happy in the short term (my sarcasm added).  

What is taking place on this blog is typical.  People don't realize there is a WAR going on in the GOLD-SILVER MARKET vs FIAT MONEY.  Psychology and Sentiment are the KEY in markets.  This also is true in war.  During WW2 the allies fooled the Germans into believing that they were going to invade France at the Pas De Calais instead of Normandy.  They created a complete fake army to convince the Germans that they would indeed attack at Pas De Calais.  The plan worked... Psychology beat the Germans as they wasted a large numbers of troops defending the wrong port.

Today, we have the same tactic taking place in the precious metal markets.  In the beginning of 2011, the price of silver was climbing higher, Hedge Funds had come aboard in a big way for the ride.  Max Keiser was pushing BUY SILVER KILL JP MORGAN.  The silver inventories were dropping to all time lows as investors and Hedge Funds were taking delivery.  Everything was set for a HUGE SHORT SQUEEZE and panic on the COMEX as they did not have the metal to back up the shorts.

Well in May 2011, 5 silver margin hikes and 10 days later... the GREAT SILVER RALLY was over.  However, this did not kill market sentiment as buying of Silver Eagles increased in May and hit a new record high in 2011.  You don't kill market sentiment with one SHOT TO THE FOREHEAD... several are needed.

This took place in SEPT 2011 when silver was heading back up to the $45 area and gold to new highs at $1900.  Well in just three weeks, silver went from $44.38 to $26.15.  Of course this was legitimate selling by those who wanted to exit the market at the BEST POSSIBLE PRICES (more sarcasm).   If we look at the chart below in which I have posted before, we can clearly see the manipulation at work as the ACCUM-DIST chart reveals the truth:

For those who still have FUNCTIONING BRAINSTEMS something very fishy took place in SEPT 2011.  The price of silver declined 41% in just 3 weeks while the ACCUM-DIST just kept on rising.  Again, I don't like charting as it pertains to candlesticks and etc, but overall trends such as this.... which may reveal what is truly taking place.

The THIRD TAKEDOWN on FEB 29th, really did it in for the Silver Bugs.  Investors are now believing the garbage coming out of the likes of MSM, NADLER and SCHMIDT to name a few.  They believe the so-called silver surplus and Comex Inventory build is now showing that Industrial Demand is indeed falling..... which is controlling the price.

However convenient this looks, this is furthest from the truth.  I am putting together the article on this very subject... but I will reveal the updated chart for your eyes only.

Again, if you have a well FUNCTIONING BRAINSTEM, you will notice a very interesting trend in the chart.  When we had so-called deficits, the price of silver remained around $5 clams an ounce.  However, mysteriously, when the so-called surplus began to rise.... SO DID THE PRICE.   Ain't that a KICK IN THE PANTS.

Investors who listen to the rubbish coming out of the bowels of MSM and etc, do not realize that it has been INVESTMENT DEMAND that has been responsible for pushing the price of silver from $5 BUCKS to $49..... NOT INDUSTRIAL DEMAND.

So... if you can follow my lead, in order to kill the price of silver... you have to KILL INVESTMENT DEMAND.  PERIOD.

My article coming out shortly will explain this in detail.

LASTLY... for all those on this site who are calling KWN folks BLOWHARDS, you should think twice.  They are the only ones out there ADVERTISING OUR GAME.  Have some fricken respect and get behind them and be on the RIGHT SIDE OF THE WAR.  If you can't realize that... then of course you are still welcome to regurgitate your drivel.  I have no problem for someone to voice their opinion... even though its a stupid one.

all the best...

SRSrocco

A1Topgun's picture

@ Groaner

Your address is already in the GPS installed in the black Cadillac Escalade driven by the black shirts.

Groaner's picture

Health is wealth on ZHedge.

I just lost 12lb.s in 2 1/2 weeks and gained 6 very nice suits that I couldn't wear before..

I need to lose another 10... cant wait, hope it gives me more energy and better attitude, not that I need to change... haha

Urban Roman's picture

Re: Poll - How much physical silver are you stacking?

Due to an unfortunate accident on the ski boat (we thought the girls would be impressed) my silver stack has been lost.

Of course, if the Texas drought continues, we can simply walk down into the dry bed of Lake Travis and pick it up ;-)

Big Buffalo's picture

Silver/FB

Silver doing all it can to meet FB somewhere in the middle.

This is fun to watch.

Dr G's picture

How easy it is for them to

How easy it is for them to track down every person on this site and do a cavity search when Uncle Sam wants your metals.

​Won't happen. There is a list of ways to get wealth from people, and tracking down internet posters to take their gold and silver is so far down the list that you would fall asleep before you got to it.

And who is to say anybody here actually has any? People lie constantly. That guy boasting about a monster box could have picked up 2 silver eagles in reality. Furthermore, who is to say that anybody actually stores anything at home? My metals, if I actually ha any, would be strewn across multiple states. No way they would be found.

No, the easy route is for them to raid the retirement accounts, then the bank accounts, in conjunction with increasing taxes. Going door-to-door simply won't happen. Too much manpower and not enough payoff.

Dr G's picture

...And silver just got a nice

...And silver just got a nice pop. Let's see if it can breach $29 resistance.

A quadruple bottom signifies some really crappy price movement, doesn't it? But I suppose it is better to have a quadruple bottom than no bottom at all.

Here is a triple bottom:

[Moderator Note: Picture removed. Remember: We have active female members of this site; please be respectful.]

​EDIT: really?! really!? One of our favorite Turdisms is "TITS" and I can't post bathing suit bottoms. Of course. That makes sense.

[Moderator: Yes, REALLY. It's one thing to say TITS. It's another thing to post photos of women's behinds here. Do you want to login to see pictures of men's behinds? No, you do not. As a doctor and an adult you think you'd have a bit more common sense and respect for others. Stop playing dumb. You're just trying to be a jerk right now. And this is what you get for arguing with the moderator in this manner. So don't argue with me again.]

Mudsharkbytes's picture

That silver poll…

…should not have had the first choice as 0-999 ounces.  Theres a BIG difference between somebody who has a couple of coins in their dresser and somebody with 800-900 ounces, or a monster box.

Eric King's picture

@Mudsharkbytes

good point, Ill make another one tomorrow. The 1000-5000 range could be diced up also.

Dr G's picture

Also please include options

Also please include options for 10,000-20,000 oz and 20,000-25,000 oz as well as 25,000+. Thanks.

Turd Ferguson's picture

Absolutely terrific stuff

MODERATOR

Great job, SRSrocco!

Everyone MUST READ this comment.

Lanikai's picture

rationale for manipulation?

Could it be?

http://www.silverdoctors.com/could-jpms-silver-short-position-be-backed-by-massive-base-miners-forward-contracts/ from anonymous SD reader

JP Morgan was buying silver in the ground at approximately $4 back in the 1990′s.  As a result, JPM can now use their forward purchases as an excuse to short-silver, so they are protected against any drop in the silver price, since they have fixed contracts with clients who they signed forward hedge agreements with.

This is a massive fraud, so of course they will never let it be known that the silver is in the ground and not above ground!

JPM probably doesn’t have the physical, because it is still in the ground. I believe Jason Hommel wrote about this in the past, but he hasn’t tied it clearly into this BIS $96 billion short sales of silver.   That revelation could potentially set the market on fire.

It may seem counter-intuitive that JP Morgan would short the paper silver market if they held massive forward hedging contracts, but it is all about derivatives and interest rate swaps.

Higher silver prices -> end of debt super-cycle -> imploded global economy -> closed base metal mines -> silver in ground can’t be produced -> JP Morgan can’t profit on the higher silver prices.

They never did it to profit on the silver in the ground.  The cartel manipulates the gold and silver markets so they can extend the debt super-cycle, because they have $1.2+ QUADRILLION in fiat derivatives.

If the futures markets can’t provide enough gold and silver, then the price would skyrocket as well as the demand for physical, thus ending the bond bubble and the current fiat system.  It is critical to realize most derivatives are
hinged to interest rates which continue to go down. Bond investors gain value when interest rates go down.

Once interest rate reverse, that is the end game. Gold and silver will skyrocket and the fiat system will reset, backed at least partially by gold.

¤'s picture

Thanks

Appreciate the update yes

Late start here after some lousy non-sleep last night but I like what I'm seeing in the PM's right now and a quick scan of  the posts earlier had talk of a Swiss Gold franc and other currency related news. It's gathering steam just like you alluded to last night.

It's unfolding right in front of us in slow motion one step at a time. We're watching the slow cracking and disintegration of the EU/euro day by day. I'm left with the notion that the still unraveling JPM saga might not let the USD get as strong as it might seem it would when the euro gets drastically altered. It will strengthen  to a point, and for how long I don't know, but I think as this evolves (JPM's losses/scope of them) will erode the USD strength due to the implications of those losses.

I've read repeatedly over the years that when the euro goes the USD will follow relatively soon afterwards. Something would be needed at that point to erode confidence or the strength of the USD, if the USD was strong at that point relative to the weakening or dying euro as we have been seeing them play off one another.

Would the revelation of JPM's losses or potential scope of them going forward from here be the catalyst that does the USD in because of the weakness it would signify in the US banking system and thus the confidence in the US banking system and the USD overall?  I'm starting to think it could basically line up that way.

If at some point the USD weakens drastically  after the euro I think it will be because of the wobbly domino that JPM represents going forward. All of that is in motion and were in the day to day moment part of this and watching it unfold pretty much like we've been talking about on here for quite awhile.

Also, the next round of debt ceiling talks and credit rating agency warnings/downgrades that will eventually happen and will add a whole new dimension to this when those two issue's start to crop up. The combination of JPM's losses and these other two factors won't let the USD scream higher vs. the euro as some might envision.

Damn, I need coffee...now!

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