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

Cottonbelt21's picture

'Puke' ...

... some graphical follow-up to the GLD 'puke' indicator - sustained follow through to upside key IMO

http://1.bp.blogspot.com/-RFlGLfr0fq0/T7wTbw1nPDI/AAAAAAAACdA/5viz4joLKG8/s1600/GLDPuke52212.gif

ClinkinKY's picture

Why The U.S. Doesn't Include "None Of The Above"...

...in general elections. (Can one of our European Turdites confirm that this option is available in your elections? Or is that a myth?)

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

 

Obama struggles in Kentucky, Arkansas

President Barack Obama continued to have trouble on Tuesday performing in Democratic primaries in traditionally conservative states, barely eking out wins in Kentucky and Arkansas.

The president didn’t even have an opponent in Kentucky, but with 99 percent of the vote counted, Obama took just 57.9 percent of the vote, with the remaining more than 42 percent of ballots cast for “uncommitted.”

ivars's picture

I need education on short squeeze-please

How does the numbers analyzed by Turd every day (open interest etc) relate to these definitions:

I understand that instead of stocks we have Ag/Au contracts, each of which contain some defined number of Oz.

Short Interest
Short interest is the total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out. This can be expressed as a number or as a percentage.

When expressed as a percentage, short interest is the number of shorted shares divided by the number of shares outstanding.
Short-Interest Ratio
The short-interest ratio is the number of shares sold short (short interest) divided by average daily volume. This is often called the "days-to-cover ratio" because it determines, based on the stock's average trading volume, how many days it will take short sellers to cover their positions if positive news about the company lifts the price.
Typically, if the days to cover stretch past eight or more days, covering a short position could prove difficult.
Short Squeeze
Some bullish investors see high short interest as an opportunity. This outlook is based on the short interest theory. The rationale is, if you are short selling a stock and the stock keeps rising rather than falling, you'll most likely want to get out before you lose your shirt. A short squeeze occurs when short sellers are scrambling to replace their borrowed stock, thereby increasing demand and decreasing supply, forcing prices up. Short squeezes tend to occur more often in smaller cap stocks, which have a very small float (supply), but large caps are certainly not immune to this situation.
If a stock has a high short interest, short positions may be forced to liquidate and cover their position by purchasing the stock. If a short squeeze occurs and enough short sellers buy back the stock, the price could go even higher. Unfortunately, however, this is a very difficult phenomenon to predict

When stock prices start to rise rapidly, short sellers want out. This is because an investor who shorts stocks only profits when the stock goes down. However, an investor's losses are a short squeezer's gains, because the short squeezer is able to predict the window of time in which a stock will be on the rise, buy into the stock and sell then it at its peak.

 

 

Groaner's picture

FTSE is tanking

down 113 now.. dow futures -95. not looking good kids.

This ticks me off.. The markets should have no effect on the way gold trades.. the crooks made it that way..

The markets are saved now! Needham just came out with a buy rating on FB. target $40!

Tube's picture

Possible voter fraud in Arizona

ClinkinKY's picture

New stock symbol for Facebook...

...FB is now FP. Figure it out.

koan's picture

I predict a riot

...in the PMs (and in a good way, eventually!)

Groaner's picture

Greece wants out of the crooked banking system

All the countries should tell, the IMF FED to take a flying you know what

Investors new motto for FB..

Its called.. Slap in the Face book.

ivars's picture

Thanks Cottonbelt21-decided to put this picture in

To improve sinking spirits:

ivars's picture

Thanks Cottonbelt21-decided to put this picture in

To improve sinking spirits-double shot will help ( as allways, accidental) :

recaptureamerica's picture

Turkey is a candidate to

Turkey is a candidate to become a member... Why anyone would at this time is beyond my understanding

Dr G's picture

Support so far at areas that

Support so far at areas that we have been watching. Low for gold was 1550 and for silver Turd nailed it at 27.50 (27.49 was the actual print). 

Groaner's picture

This needs repeating.

I put a buy in silver futures last night at $27.53 and hit the bottom exactly.. thats amazing.. no kidding.. 

usd is now coming off its highs, down 15 ticks..

I see the Bernank warming up his Helicopter engines now...

Bobbejaan's picture

None of the above ...

Quote:
Submitted by ClinkinKY on May 23, 2012 - 1:34pm.

Why The U.S. Doesn't Include "None Of The Above"...
...in general elections. (Can one of our European Turdites confirm that this option is available in your elections? Or is that a myth?)

Unfortunately, it's a mythbroken heart

Monedas's picture

Jimmy Carter Please Come Home !

Stop embarrassing us ! We need you to monitor elections in Cook county, IL !    Scrape together what little dignity you have left....and clean up the Chicago Islamic Republic and Detroit !      The third world can muddle along without you !  Put some meddle in your peddle !   Put some muddle in your puddle !  Put some middle in your twiddle !        Monedas     1929     Comedy Jihad Tehran's Favourite American Tour     devil

Groaner's picture

So their government can steal money from

their citizens at a much faster rate! They all love debt!

Harald's picture

Actually

Good points.

Did he have sex with that woman?  Ok here.

Did he sell weapons to (insert regime here)?  Fast & Furious

Did he start illegal wars?  Not yet.  

Did he subjugate the human rights treaty?  I don't understand this one.  

Did he bypass the American legal system?  NDAA.  Killing U.S. citizens in foreign countries.  In contempt of court.  Trashing the fourth admendment.  Ignoring FOIA requests.    

Did he break into that hotel?  Ok here.

Did he use illegal subterfuge to cement his position?  Who didn't do this, BO included.  

Did he get elected fairly?  Didn't need to cheat, he was running against McCain and the compliant MSM had his back.  Anyone think he won't cheat if he has to?

Did he do the willing of the corporate backers?  Yes.  Corzine, Wall Street, Hollywood, MSM etc.

Did he fight in the war or hide?  Is this either or?  Did someone who didn't fight, hide?

He didn't fight.  I can't see BO joining the Army in his youth.

I'm not disagreeing with you, they're all sleazy.  But, I'd say the last three years have proved that Obama can run with the worst of them.  

 
Big Buffalo's picture

Facebook

Up 2.84%, lets see if they get their first green day. (or is this a rope-a-dope)?

Can you imagine the "talk" tomorrow if it ends in the green today?

Groaner's picture

This action ticks me off.. we get a big spike up..

then a big spike right back down again..  make up your minds!!!!

ClinkinKY's picture

@ Bobbejaan

Unfortunately, it's a myth

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

Damn, I was hoping it was true. I think it's high time we start a new party  named  "None Of The Above"wink

Xty's picture

re good points

Did he do the bidding of the central bankers?

Did he re-appoint Bernanke?  

The banks wag the dog, mostly.  And as the financial system fails, the wagging gets faster and the dog, by necessity, needs to be more 'flexible'.

Dr G's picture

I'm sure most are thinking

I'm sure most are thinking about this, but if Greece leaves the Euro that is HUGE dollar positive and will crush the metals in the immediate short-term. As in sub $25 and 1450. That is not out of the question. 

Groaner's picture

IF they leave?

I say its already priced in the markets.

achmachat's picture

Dr G

you really think so?

amputating the ever-hemorrhaging  body part sounds rather positive for your blood household...

Xty's picture

I am thinking

that Greece leaving the Euro will be both gold and dollar positive.  Flight to safety isn't just into one thing, especially when that thing is made of paper.   If there is a liquidity crunch, then yes, but the flight from Euros should be positive for most tangible assets.  I think repeating low calls is not really very helpful.  I understand that bickering is out - but how then to address the constant repetition of lows?  If there is a new piece of information that backs up a point you have been hammering on, please post it.

Groaner's picture

We are ok now.. Appl is green..

FB is up?? 

My RGLD is green too!

ClinkinKY's picture

Fast and Spurious

Harvard Law succeeds in taking down anti-Holder Fast and Furious protest website

Comments
Permalink

Posted by William A. Jacobson    Tuesday, May 22, 2012 at 5:24pm

This is an update to my post yesterday regarding the protest organized against Eric Holder’s visit to Harvard Law School tomorrow, specifically his stonewalling the Fast and Furious investigations.  The protest was organized by a website using the name Harvard Law Unbound which has been operating since early April.

Despite the fact that Harvard Law Unbound used a banner which specifically alerted readers to the fact that it was not affiliatied with “Unbound – Harvard Journal of the Legal Left,” the editors of that Journal along with the HLS administration alleged that the website misled people as to the source of the opinion.  (See link above for details on the threats and the involvement of the HLS administration)

It is interesting that this action came only after the website challenged Holder’s appearance tomorrow.

I wrote to the HLS Dean of Students, as follows:

Dear Dean Cosgrove:

As you may be aware, I have been covering the protest at the website Harvard Law Unbound regarding Eric Holder.

I am aware of your letter to students in which you say, among other things,

Whoever is responsible for the wordpress site is free to disseminate his/her/their content via any number of legitimate means or channels. But I wish to make sure that no one is confused about whose speech, and whose content, is being advanced on the wordpress site, which appears to be infringing on the use-of-name rights belonging to Unbound and to Harvard Law School.

Given that Harvard Law Unbound has a disclaimer at the top in the banner which says “no affiliation with Unbound: Harvard Journal of the Legal Left,” I am wondering on what basis HLS claims likelihood of confusion as to the source of the opinion.

Additionally, since the website has been operating since early April, is this the first time HLS became aware of the website, and if not, why did HLS wait to assert the claim?

I would appreciate your response.

William A. Jacobson, HLS ’84
Legal Insurrection Blog

Now the website has been taken down.

The RSS feed still works.  And if not, here’s a pdf. of the posts, preserving the content solely for news and historical purposes.

Read more: http://legalinsurrection.com/2012/05/harvard-law-succeeds-in-taking-down-anti-holder-fast-and-furious-protest-website/

Xty's picture

Why didn't (and don't) people in finance listen to Mandlebrot?

Why didn’t people in finance pay attention to Benoit Mandelbrot?

 

OCTOBER 18, 2010

Mathematician Benoit Mandelbrot was not one of those great thinkers who was ignored in his own time. He won lots of prestigious prizes. He wrote acclaimed books. He even gave two TED talks.

But it’s curious how little of the acclaim and attention Mandelbrot received over the years, andafter his death last week, came from the world of finance. Mandelbrot was, believe it or not, one of the founding fathers of modern quantitative finance. In the early 1960s, he and scholars at Harvard, MIT, Chicago and a couple other places began to explore the meanings of random walks in stock prices. (I spent several years immersing myself in this history for a book; hence my obsessive interest. Here’s an excerpt from it related to Mandelbrot.)

In the early days, Mandelbrot was very much one of the random walk gang. He considered Eugene Fama, then a grad student at the University of Chicago, to be his student and protégé. A1965 article by Mandelbrot in the Chicago B-school’s Journal of Business proved that a rational financial market would be an unpredictable one, providing an essential building block for what soon came to be known as the efficient market hypothesis.

Before long, though, Mandelbrot and the finance crowd drifted apart....

http://blogs.reuters.com/justinfox/2010/10/18/why-didn’t-people-in-finance-pay-attention-to-benoit-mandelbrot/

Bsong's picture

Video: Ted Anderson, Owner of

Video: Ted Anderson, Owner of GCN & Midas Gold, is a Minnesota Delegate to Tampa! http://bit.ly/JHiGPo #RonPaul2012
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