Strange Days, Indeed

Most peculiar, mama...

There's so much weird stuff going on, some days it's nearly impossible to know where to start. The Fed and other central banks have so gummed-up the system with their money printing, that almost all traditional methods of analysis, both technical and fundamental, are useless. The financial media, which is either completely uninformed/uneducated or complicit (or both!), SPINs and MOPEs nearly every headline into something it's not, adding significance to the unsignificant and downplaying or outright misreporting those items which truly are important. The result is this current state of bewilderment, a house of mirrors where nothing is as it appears to be.

I just wrote a lengthy essay about this back in October (http://www.tfmetalsreport.com/blog/4246/corner-copperfield-and-blaine) so it's not productive to plow that same territory again today. However, I have found some very strange divergences for you to ponder and I need you to consider them within this context.

Below is a table of data taken from various silver CoT reports over the last two years. I've tried to pinpoint information from six, different periods of either price tops or price bottoms. You'll note that, though this is not an exact science, we'll nonetheless be able to draw a few conclusions at the end.

BOTTOMS    L.S.LONG   L.S. SHORT   RATIO    CARTEL LONG   CARTEL SHORT   RATIO    PRICE MOVE

12/31/12           38,291           9,104            4.2:1            45,415                       90,751              2.00:1       $29--> ?

8/14/12             32,317          16,730           1.93:1          47,797                       71,199               1.49:1          28-->35

12/27/11           24,026          17,171            1.40:1          41,224                      55,356               1.34:1          27-->37

10/4/11             23,859          11,959           1.99:1           39,584                     58,507               1.48:1         28-->35

6/28/11             27,439          11,441           2.40:1          36,894                      66,060             1.79:1          33-->44

1/25/11              38,699         10,473          3.70:1           29,818                      72,964              2.45:1          28-->49

So, what deductions, if any, can we draw from this relatively small sample size?

  • First of all, don't get too sidetracked by the gross numbers as they are relative to the total open interest. This is why I've calculated the net long ratio of the specs and the net short ratio of the Cartel.
  • If you throw out the 1/25/11 data, which preceded the HUGE move from 28-49, you see that the average net long ratio of the specs at the bottoms is around 2:1. Additionally, the net short ratio of The Cartel at the bottoms is generally around 1.5:1.
  • Note the gradual increase in the gross long position of The Cartel versus the variance of the gross short position.

OK, now let's look at some data from price tops.

TOPS         L.S.LONG      L.S.SHORT    RATIO    CARTEL LONG   CARTEL SHORT   RATIO   PRICE MOVE

11/27/12      51,804             12,351            4.14:1            42,525                     99,317               2.34:1          34-->29

9/18/12       43,205             10,650           4.06:1            31,884                    82,358              2.58:1          35-->30

2/28/12       38,012             8,009            4.75:1             33,802                    78,395              2.32:1          37-->27

10/25/11      23,660            12,638            1.87:1            38,176                     61,692               1.62:1          35-->26

8/23/11       38,756              11,745            3.30:1            34,281                     81,380              2.37:1          44-->28

4/26/11       43,078              18,083           2.38:1            35,763                    78,297               2.19:1          49-->33

  • Note that all three price peaks of 2012 coincided with spec long ratios exceeding 4:1.
  • Outside of 4/26/11 (when they made a pile of $$$), the spec shorts are almost always near 11,000 or so.
  • With the exception of the 10/25/11 top (right before the MFG liquidations), all five other tops occurred when the Cartel net short ratio was in the 2.30:1 area.
  • Excluding the 11/27/12 top, The Cartel gross long position averages about 40,000 at the tops.

Now, what kind of general statements can we make, again given this somewhat small sample size?

  • The gross amount of large spec long contracts has grown over time.
  • Regardless of tops or bottoms, the large spec short position remains relatively constant, generally in the 12,000-14,000 area.
  • Though clearly larger in size at bottoms rather than tops, note how The Cartel gross long position has grown over time.
  • Similarly, note the steady growth of The Cartel gross short position.
  • Again, with the exception of the top that occurred with the failure and liquidation of MFG in early November of 2011, the most consistent indicator of tops and bottoms is The Cartel net short ratio. Anywhere near 1.5:1 is a clear buy signal and anything near 2.3:1 is a sell signal.

Now lets's look at the data released yesterday, based off the closing positions of last Tuesday, the 5th.

          L.S.LONG       L.S.SHORT      RATIO      CARTEL LONG     CARTEL SHORT     RATIO

            42,449               6,588             6.45:1             46,293                        98,239                1.99:1

So what in the world do we make of this? Can you see where this is all so confusing?

  • At 42,449, the Large Spec gross long position looks more toppy than bottomy.
  • And 6,588 gross shorts is an amazingly low number. The only number even close is the 8,009 from the highs of 2/28/12. Additionally, this puts the spec net long ratio is all the way up 6.44:1.
  • But, before you conclude that the data is indicating a major top, look at the Cartel gross long position. At 46,293 it's just below the high of 47,797 that we saw at the price lows of August, right before the announcement of QE∞ and a price rally from $28 to $35.
  • And the overall Cartel net short ratio is neutral at just under 2:1.

So, I'm not even going to attempt to draw conclusions from this...because I don't think you can! The main items that I think are significant are these, however:

  1. Currently there's hardly any spec interest in being short. Therefore, very little fuel for a spec short squeeze.
  2. Though there is some fuel for a long liquidation, at $31 how many can be forced out on a dip?
  3. An even if they did, would other "commercial"  buying inhibit the ability of JPM et al to cover extensively?
  4. In the end, the single most intriguing aspect of the current reports is the brewing/ongoing Civil War between JPM and everyone else. Uncle Ted has proclaimed that this current data shows that JPM has become the "seller of last resort" and the only remaining "fresh shorter". I think he's right and the stage is set for a massive squeeze, not of the specs but of JPM. We simply need a spark.

The charts would seem to confirm this stagnation, too. Though I was hoping that the pennants on the hourly charts would close and propel prices higher, instead prices broke down and out back on Thursday. So now we await the closing of the pennants on the daily charts, instead. March, it would appear, is going to be a very interesting month. Until then, it looks like more sideways churn.

Just a couple of other items you might like before we call it a weekend. First, several folks found this presentation yesterday and emailed it to me. Basically chart porn but fun to look through anyway: http://www.businessinsider.com/frank-holmes-gold-charts-2013-2

One of our sponsors, JMBullion, sent me this handy link. Please take a moment to check it out. You'll likely find it helpful. http://www.buysilvereagles.com/

And I'd like to close with this. There has been lots of debate here over the past few days over what information is important on "Main St" and what should be taken to the forums. Frankly, since I can't police the site 24 hours a day, you all have quite a bit of latitude. The number one thing that we all must keep in mind is this: I built this site to help and to educate. Though prepping and conspiratorial topics are sometimes interesting and enlightening, the main focus must remain on metals and investing. To that end, please consider this email that I received late yesterday. My goal is not to be some type of draconian czar who rules content with an iron fist, however we must remain relatively on-point at all times if we are to do the greatest good. I ask you to always use discretion when posting and to consider whether or not your are helping the site to succeed in its overall mission.

Hi Turd
I've been a member of this site for a year and 4 months and a reader for a while before that. I am not typical of those who make up the vast majority of membership. I am female, unmarried and make under $40k a year. I am just an average person who, by a most fortunate turn of events, found your site and it changed my life. Blinders came off and I began to see the world for what it really was. My very small stack is held by very strong female hands. Thank you for helping me see ways to save my financial future. I suspect the creation of this site was to reach as many people like myself..former sheeple.
I live on Mainstreet...I read every post, every day and am energized by the thoughtful and insightful posts...even the provocative ones..however..
I am in the camp of common sense. This is a metals blog and all things relating to it, and I accept and appreciate the ancillary topics that get brought up and the subsequent discussions that result. What I am really really REALLY finding difficult these days is the proliferation of all these posts that you have repeatedly asked folks to take to the forums, ESPECIALLY the political wing nuts. The "you must have issue with my smarmy, irrelevant and arrogant posts which push my own agenda and bring nothing of value to this blog because you're a liberal bastard" kinds of thing going on. I adore Dr. J, Ivars, Steve, Green Lantern, Cal Lawyer and of course..DPH! Many others too...Mainstreet is FILLED with wonderful minds and I am in awe of these folks. I know you make requests periodically to us members to keep Mainstreet "clean", but these same individuals will behave for a short while then decide to vomit all over this forum yet again.
I have an ignore button and yes, I do know how to use it, but it's the discourse that those posts create that I find particularly distressing. I can only speak for myself, but I suspect there are many many more like me who have fled in silence rather than deal with the muckrakers. So I respectfully ask...as someone who truly loves this site and visits every day and listens to your message..can something be done to keep Mainstreet focused?
Thank you for all you do, **********

Have a great weekend. See you Monday and be prepared for volatility as the Chinese New Year holidays begin.

TF

505 Comments

Sheetrocker's picture

@ClinkinKY

Sorry for the misunderstanding. It was meant as sarcasm, a little jab at the complainers and self-appointed moderators. Does this sound like I'm anti-gun.

http://www.tfmetalsreport.com/comment/254592#comment-254592

P.S. I enjoy a lot of your cartoons and often hat-tip your posts. Peace.

P.S.S. Do a little checking. See how many of my posts have been on-topic. Not Many. Peace again.

Mr. Fix's picture

@ Sheetrocker

Thank you for posting that link,

it's like bringing back the good old days.

Libero's picture

Mr. Fix- Do you ever sleep?

... or are you so coked up, that you can't shut it.  Did Facebook kick you off because you sucked up all their bandwidth?

Please tell me when you are not posting on this TF Metals Report.

That's all I have to add to your mind numbing treati.

Karankawa's picture

Warning! Anyone that doesn't want to read about basic rights ..

and thinks they are irrelevent to PMs.  Ignore this!!!  Just scroll and don't look!  Simple ;)

Mr. Fix's picture

The value of money:

The Impossibility Of Economic Calculation In A Fiat World

The purpose of keeping accurate accounts is to quantify net worth at any given point in time – as well as the change from a prior date. It goes without saying that the measure used, money, should be constant if comparisons over time are to mean anything. Only then do prices of capital goods, consumer goods and services truly reflect their changing values, giving important signals to businessmen. With unstable fiat money market signals lose much of their meaning. But those of us who understand that currency devaluation only serves to defraud the majority of society must be alarmed that the governments of nearly all the advanced economies are racing each other to rob their citizens in this way. Instead of bringing about a Lazarene recovery in the economy, this approach is already failing, because the very basis of economic calculation is being destroyed. Who knows the value of anything anymore? We do however know the inevitable outcome of this lunacy, and it is not good.

http://www.zerohedge.com/news/2013-02-10/impossibility-economic-calculation-fiat-world

 
Mr. Fix's picture

Reply to Mr. Fix- Do you ever sleep? Submitted by Libero

Good Night,

Happy nightmares!surprise

Karankawa's picture

Mr. Fix- Do you ever sleep?

Mr. Libero.  I have yet to find a post of yours that addresses the end of the Great Keynesian Experiment.

I hope you will become aware that this group is addressing a topic much bigger that just predicting PM prices.

If not, this site will be a huge disappointment.  When it comes down to it, this site is miserable at predicting PM prices for the last couple of years.

I came to this site because of the community that respects individual freedom.

Not every post here addresses that specifically.  But most do.

There are tons of forums, some dedicated solely to PM's.  Why not just go there?

Why waste time asking about Mr. Fix's sleep habits?  Does his awakeness bother you?

Karankawa

Odin's picture

Amen Brotha

atarangi's picture

Close your eyes and think of England - -

Exploitation of the masses is perfectly natural. No person or collective group is to blame. It is simply the way nature works. The evil exploiter is no more to blame than the sheeple who cough up the taxes.                                                Without the cyclic evolutionary dynamic we would still be monkeys.                   Puck.T. has nailed it. Pissing and moaning is a total waste of talent.                   Natural cycles cannot be stopped. What is about to happen is all good for the advancement and harmonic integrity of life.                                                        125642342_b45c5f13b2.jpg

Motley Fool's picture

@Rui

I must applaud you for your concurrent sidestepping of my question and it's implication, and your masterfull beheading of that strawman. Keep up the good work. 

Motley Fool's picture

@Rui

double

Karankawa's picture

Everyone scroll but Libero, Please!

http://www.dailypaul.com/274120/chris-dorner-triggers-an-avalanche-of-support-on-the-internet-some-hailing-him-a-truth-fighter

Mr. Libero, truth is unstoppable.  I don't have personal information about the LAPD, but I do have personal experience with the GOP that I supported most of my life.

I've seen corruption like I never belived possible, because I was decieved before I participated.

Does that mean I support killing innocent people?  Absolutely NOT.  I detest but realize I've supported it by being ignorant and asleep.

Do I care about when you go to bed.  NO

Do I wonder about your motive here.  YES

Am I glad you are here.  Double YES

Sleep well,

Karankawa

Hammer's picture

They are coming for you (part

They are coming for you (part 2) I think that increasing taxes is actually a far more important topic than either metals (oh the horror ! Surely not ! Oh alright AS important) or political grandstanding (circus)

http://www.dailymail.co.uk/news/article-2276700/150-annual-motorway-charge-poll-tax-wheels-Ministers-consider-reforms-charge-drivers-use-main-roads.html#axzz2KZWNdriB

atarangi's picture

Some local talent doing well at the Grammies - - -

silverstool's picture

Always preferred the Fokker myself.

Joke from 0.35 mark.

 
Counterfiat's picture

Motley Fool

It is a real pity that FOFOA isn't honest enough to write date and time when he updates his posts. His glaring and obvious mistakes get 'corrected' and absolutely no mention anywhere at the bottom of the post, or in the comments by him. They call that a cult, when 'the leader' rewrites their teachings as if it has never happened. Back to your brainwashing you go. Or maybe if you can just get everyone to swap their ag for au, your delusions just might come true. Pity there are countries like the Brics who would even spoil that plan.

indosil's picture

Base Metals

Anybody following Base Metals??Let's keep the focus on Metalswink....be it precious or be it base

JY896's picture

Blast from the past + some intentional 'playing dumb'

Sometimes it's fun to click through to the origins/references of the stories blaring in the headlines. Sometimes there is a deflator, and the hoopla is much ado about not much. But often, the underlying is a seriously f-ed up situation that has become part of the 'normal' background noise, and no one even bothers to think about it anymore.

Case #1 'DHS Watchdog OKs ‘Suspicionless’ Seizure of Electronic Devices Along Border' from Wired magazine:

“We also conclude that imposing a requirement that officers have reasonable suspicion in order to conduct a border search of an electronic device would be operationally harmful without concomitant civil rights/civil liberties benefits,” the executive summary said.

http://www.wired.com/threatlevel/2013/02/electronics-border-seizures/?cid=co5746764

OK, that's bad enough (though not in the least unexpected.) But looking at the precedents (why was this report initiated, and WHEN) one finds even scarier stuff.

This is something I had not seen or been aware of before. Would be curious to know whether the assertions made here stand up to closer scrutiny, though the fact that in the interim since 2008 VIPR checkpoints and other sundry hom'lan'sec' improvements have become commonplace makes me suspect that it could very well be true:

http://www.wired.com/threatlevel/wp-content/image.php?u=/images_blogs/photos/uncategorized/2008/10/22/imagemap.gif

(the map shows a 100-mile zone along borders and coastline of the US -- which according to the article is home to 2 out of 3 Americans -- where the .gov can suspend 4ht amendment in the name of border security)

ACLU Assails 100-Mile Border Zone as ‘Constitution-Free’ – 2008. October 22.

"Government agents should not have the right to stop and question Americans anywhere without suspicion within 100 miles of the border, the American Civil Liberties Union said Wednesday, pointing attention to the little known power of the federal government to set up immigration checkpoints far from the nation’s border lines.

The government has long been able to search people entering and exiting the country without need to say why, which is known as the border search exception of the Fourth Amendment.

After 9/11, Congress gave the Department of Homeland Security the right to use some of its powers deeper within the country, and now DHS has set up at least 33 internal checkpoints where they stop people, question them and ask them to prove citizenship, according to the ACLU."

http://www.wired.com/threatlevel/2008/10/aclu-assails-10/

___________________________________________________________________________

Case #2: The 'playing dumb' part comes (IMHO) from the Guardian story about the Raytheon program 'Rapid Information Overlay Technology' or Riot for short. I am not sure if anyone took the time to click through to the video and look closer at the 'technology' being displayed:

http://www.guardian.co.uk/world/video/2013/feb/10/raytheon-software-tracks-online-video

http://www.guardian.co.uk/world/2013/feb/10/software-tracks-social-media-defence

The only reason I am wasting any time presenting this is that while everything in this 'video obtained by the Guardian' is probably true and certainly possible, it is also SEVERAL YEARS OLD. Outdated by at least a generation if not more of similar (just more advanced) tools. That notwithstanding, the obvious admonitions of :

- NOT using social networks under your own name

- NOT 'checking in' to become the 'Mayor' of your local coffee shop

- ALWAYS use a simple, compact EXIF cleaner app when posting images on the web,

- and in general using anonymous proxy for any kind of personal business on the web

just make common sense.

Motley Fool's picture

@counterfiat

More excellence. Ad hominem combined with claims that cannot be falsified. Do you have any proof of your baseless accusations? One counter I could think of is that I can go to old posts and show you that there are still mistakes in them, and they have been left as they are. You however will say it proves nothing right? The funny part is that the masses are irrelevant. Whether you continue buying silver or not does not matter. And ffs have you even been paying attention to what the Brics are doing before making such stupid claims? Brazil? Russia? India? China? They are buying gold you ...ugh.   

Hammer's picture

Strange days, let me

Strange days, let me introduce you to strange drummer :) He has the yellow turd jacket just needed the hat !!! :)

Louie's picture

Longs getting faces ripped off

BTFD

GS_PHYS's picture

Pathetic price movement in metals !

<SARC ON> Looks like there is plenty of tonnage available and there is no demand at any price. Sure looks like 1250 and 20 <SARC OFF>

Counterfiat's picture

Motley Fool

I am not talking about spelling mistakes or the like. I am talking about mistakes that are obviously picked up afterwards that undermine the freegold position. I myself have cut and pasted some of his work, to make a post on his blog, and have found after carefully checking my post with his blog entry prior to submission, that in the meantime he has 'updated' his work, without addendum.  I have proof, they are recorded in the comments section itself. You are a shill and shout 'baseless' in your all-knowing cult-like attitude - you blinded simpleton. However my being a guest, unlike you, out of courtesy I didn't find the need to rub his nose in it. Some of his writings are very good you see, his conclusions not so. Your lack of courtesy as a guest here is poor form old chap. If I didn't rub his nose in it out of courtesy as a guest at the time, I suppose you would just love it if I went over to the blog and lay out all the Freegold absurdities, but the hypocrisy in responses preclude my wasting any more of my time with the rantings of those who willfully delude themselves, accompanied by the wall of insults they seek to defend themselves with.

On another occassion due to the intellectual dishonesty, a fact that needed to be said to keep the group honest, FOFOA made a total fool out of himself and Freegold. Actually it was a fanciful statement that Fofoa foolishly made that needed to be put into perspective. My needing to post this, only because of the way he and others conducted themselves, and only after a refusal to engage the obvious - you should of seen the s*storm response devoid of any respect for the truth or facts presented.   To this day Fofoa has not engaged an obvious defeating argument against Freegold - it is an embarrassment to him and all the cult followers. What was it you ask - I have hinted at it repeatably in previous replies to you, that you have decided not to engage me with. That is why you remain a simpleton, you cannot even ask questions made so apparent that they are handed to you on a platter.

Your counter comment about the BRIC's shows the simpleton that you are. The facets of 'the big game' are obviously beyond you. Oh dear, everything positive about gold is 'a proof' of a freegold cult. You know, gold could be freed without all the rules and regulations and suppositions of freegold. We may be on the inevitable road to freemarket gold, but freegold is going to take something a whole lot more to come into effect. Be a simpleton if you want, and keep on using every positive bit of gold news as proof of the impending cult VERSION of freegold. Even hyperinflation would not guarantee this cult VERSION of freegold, though it would be economically wise to hold gold, dah. Oh like if only the people of Weimar knew about freegold... You see the hubris of freegold plagiarises all the positives of gold ownership, to prove its supposed relevance. Freegold is so much different to gold operating in a freemarket with all the gold positives therein. 

I am sure that like any cult, there could be 50 different breakaway movements (blogs) with any number of freegold-stylised gold outcomes, all trying to employ the benefits of gold ownership to prove that their gold system is the elegant truth. Hey even the odd comment over there bespeaks diffidence in the leader, with a new blog version of freegold just itching to begin with followers of that flavour of freegold. Wonder how long it will be before a breakaway Freegold blog gets invented?

MrGuboci's picture

22$ ?

22$ ? nah , they won't give us such a gift guys ... 27.5 maybe 28 , but 22 ? If it goes to 22$ I will borrow all the money I can and put it into silver :-) I will sell everything I own too , maybe one of my kidneys as well

Mickey's picture

State of the Union tomorrow

Means markets unsettled which in turn means let the games begin. 

Everybody see McDonalds revenues decline?

Must be part of the economic recovery.

The Green Manalishi's picture

Anything to do with the corruption in the Vatican Bank?

Pope Benedict XVI to resign

Pope Benedict XVI has announced he will resign on February 28th, saying he no longer had the strength to fulfill the duties of his office.

The 85-year-old Pope announced his decision in Latin during a meeting of Vatican cardinals on Monday morning.

"After having repeatedly examined my conscience before God, I have come to the certainty that my strengths due to an advanced age are no longer suited to an adequate exercise of the Petrine ministry," he told the cardinals.

"I am well aware that this ministry, due to its essential spiriual nature, must be carried out not only by words and deeds but no less with prayer and suffering.

Vatican spokesman, Federico Lombardi said: "The pope announced that he will leave his ministry at 8:00 pm (1900 GMT) on February 28."

More: http://www.telegraph.co.uk/news/religion/the-pope/9862194/Pope-Benedict-XVI-to-resign.html

Motley Fool's picture

@counterfiat

Okay. I will suck up what consisted mostly of insults and work on the assumption that I am blinded and brainwashed.

Obviously my stupidity precludes me from having picked up on the hints you have offered.

Please share this obvious argument that defeats freegold with this simpleton. I will try my best at getting it into my dullard brain. 

Excalibur's picture

If he had said he was going

If he had said he was going to resign on 29th Feb, then that would have proved his failing mental powers.

Or, seriously GM, do they need to install someone that will 'lend' the Vatican gold to the CBs? I hope your young baby Turdite is doing well. Nice blanket of snow in Bucks to wake up to.

Edit: Motley Fool I thought you had had it with this place.

The Green Manalishi's picture

Excaliber

This guy will probably be installed:

You know your days are numbered when Tony Blair comes a calling.

The little one is fine thanks, he brings us a lot of joy smiley

Xty's picture

Good Morning - and prepare to scroll

Mr Fix:

Since there is absolutely nobody left in power that can possibly do anything about our predicament,

I am going to assume that it is a good time to man the lifeboats,

because the ship is going down,

and at this point, all we're just trying to decide is whether it hit an iceberg, or if it was torpedoed.

One is an accident, the other is an act of war.

This is your message, day in and day out.  It is defeatist and simplistic and extremely US focused.  In your endless rants about the deliberate undermining of your country, you leave out vast aspects of history.  You claim to see things clearly, in black and white - but there are 7 billion people on this planet, and they all have competing needs and wants and philosophies and religions and systems of government.  The formation of the United States, wrapped in excellent rhetoric about freedom, was a huge land grab, and immense dislocation of other peoples and a screaming economic opportunity, as was the colonization of Canada.  The point was well made above that the attendants at Jekyl Island wanted to make themselves rich, and their children - so I'll bet did the Founding Fathers and pretty much any other parent out there, so they tried to implement a system that would get them that end.  But even the entire Russian Revolution has come and gone in the 100 years since the Fed was formed - they can't have predicted that too?    As you point out, I am a Canadian, not an American, and so you say much of what you write doesn't apply to me ... with an ominous yet.   I sometimes think we Canadians know rather a lot about what goes on in the States, and your policing and border stuff is our problem too.  Your War on Drugs has become my War on Drugs and yes, we resent the domination and cling to the military protection.  But perhaps you could try to take off your local blinkers and  try to fit more of the world into your black and white frame.   People are not either evil or good.  People come in moral shades of grey.  Have you never told a lie?  Even to spare someone's feelings?  There have always been corrupt and powerful rulers, but actually their powers have been greatly reduced over the past 1000 years.  Are we in a dangerous moment of lost liberties?  Yes.  Is it hopeless?  No.  

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