Here They Come Again

Having covered a massive amount of shorts on Monday and Tuesday, the HFTs and momos reasserted themselves today and pounded the metals back down. Now the question is, what happens next?

Chew on this for a moment...It seems nearly everyone was excited by the CoT setup this week. The latest report, released last Friday at 3:30 EST, showed an exorbitant buildup of spec shorts and left nearly everyone excited about an impending short squeeze. Well, now you know one of the reason why the report is held for 72 hours before release. The squeeze began late Friday on the Globex, it carried over into Monday and then ran it's course (at least for now) yesterday.

Over the two trading days of Monday and Tuesday, total open interest in gold fell by nearly 12,500 contracts. This while price was rallying almost $43. There's your short squeeze. Similarly, the total silver OI fell by 11,400 contracts as price rallied 80¢. I mentioned yesterday that those new shorts still remaining would likely be left with no other option than to "double-down" and I'm convinced that that's what we saw today.

After being allowed to open higher, gold was pressured all day on the Comex. As mentioned above, the question now becomes: What happens next?

Will the late-to-the-party momos, who just got burned late last week into this week for anywhere from a $20-$40 loss, be willing to give it another try? IF they do, gold will likely fall back to at least $1585 or even $1570. However, if they choose not to be re-fleeced, gold will bounce from the $1590-95 area and begin to make another move toward the crititcal $1625 level. The action tomorrow and Friday will be your tell.

Not surprisingly, given that the silver shorts were squeezed just like the gold shorts, the silver chart is in a similar position. I'd like to see it hold it's little, mini-trend from the lows of last Wednesday. It should and when it does, the main battle will still be for $29.25, initially, and then $30.20.

Just two more things before I call it a day...

This week's CoT is going to be fascinating, too. For the reporting week, gold was up $10 but OI fell by 13,500. And silver was down 17¢ while its OI fell by 9,700. The question that I hope to get an answer to is: Who was buying (covering) and who was on the other side of the trade selling? Did the silver commercial long position finally drop an enormous amount? Probably. But what if it doesn't? What if all the swapping was within the spec arena and there is little change within the commercial space? We'll see. Unfortunately, the CFTC is going to make us wait another 48 hours to find out.

And this video is fun. I think that Santelli is a closet Turdite and he confirms my suspicions again today with a few jabs at the charade that is the GLD. It still amazes me whenever I hear this stuff on CNBS!

 

If you haven't yet, please be sure to listen to the podcast with Sandeep Jaitly that I posted this morning. It's highly informative and it will serve as good background the discussion with Andy that I'll be posting tomorrow. Have a great overnight!

TF

 

 

371 Comments

Turd Ferguson's picture

And because of the title of this thread...

MODERATOR

...I can't get this out of my head. Share my pain...

MrGuboci's picture

1st !

twippers's picture

Wow

Turd, you were first.  Isn't that a little unfair?  Those are the rules the cartel play by.

dgstage's picture

You got to Appreciate

Rick

Ircsum's picture

Tomorrow and....

Friday will be your tell. Sorry, Turd, couldn't resist.devil

Meanwhile, positive thoughts & prayers to Puck, who has a lot more on his mind than the prices of gold & silver. Get well, bro!

Modern Alchemy's picture

Bullish!

I love a good sale!! I just don't want to kick myself for waiting too long for a better deal! Buy now or wait and see? What to do!?
Bullish Silver and scuba gear! Can you imagine demand for both in a few years!?

Terabyte's picture

When do we eat the crow?

Question for the sages on this site.  How do we know when to look at the metals markets, what's going on out in the country side and world, and what's going on in the stock markets, and realize we've been riding the wrong horse all these months?  Do some people know something we don't?   Speak to me, oh ye of great wisdom!!!

Mudsharkbytes's picture

I coulda been second…

…but took the time to read it, oh well.  I just assumed the thread had been posted hours ago and I was a Johnny Come Lately.

At this point, I'm so bored and disheartened by the long long long sideways grind and constant kicking back of any measly gains, that truly, I don't expect silver to ever go anywhere and if it does, I consider the gains will be fleeting.  Even if silver were to slowly rise to $150 an ounce or more I'd still just be anticipating the inevitable smack in the nads takedown that will eat up every bit of gain when measured in fiat.

I know logically it's inevitable that eventually the value of PM's will rise to reflect their true value, it's just that I no longer allow myself the luxury of believing in rally's anymore.  This last little mini-rally I had absolutely no faith in and when I saw gold and silver trending lower overnight and all day today I merely figured it was business as usual.

This is the only attitude that allows me to keep my sanity amidst all the daily manipulation.  Eventually I'll modify it when the situation changes, but it's going to take a long time before I decide the situation has truly changed.

Turd Ferguson's picture

Just goes to show ya

MODERATOR

So damn busy, I don't even know what Fng days it is anymore...

Response to: Tomorrow and....
Mantis's picture

I loved that quote

"If they choose to get re-fleeced"

hehehe

The Watchman's picture

Ready for the Fleecing

ancientmoney's picture

The Watchman posted this on previous thread . . .

While the above statement is currently true, government gains it power through control of the money.  According to Jim Willie and many others, the dollar as reserve currency is on its last legs.

This would explain the speed-up of all the actions taken by the government to prepare for what's coming.  They no longer care that everyone is noticing their haste in trying to take away what little freedom is left.

The good thing is that when the dollar is toast, their power will vanish with it.  When government paychecks of $6,000 or $7,000 per month gets you a tank of gas there will be little reason for the people who make up the government to keep doing its bidding.

The breakdown is accelerating.  All efforts to keep it at bay are now employed, except the most dangerous--announcement of FX and price controls, military law, and the other obvious signs of failure of a society.

Prepare.  Confusion dead ahead . . .

Prize Fighter's picture

Terabyte, your question to me

Terabyte, your question to me reads like, When is honest accounting wrong?  or How do we know when 2+2 doesn't equal 4?  I'm not quite sure how to respond to that.  When fraud is accepted and encouraged I guess would be my answer.   Wait, what just happened?

Sure it's nice to be rewarded for doing the "right" thing but it takes patience when most people are rewarded for playing dumb and creating a positive feedback loop based on hopium.  They can keep their 2 year stay of execution because when this ponzi turns it will be for keeps.  Games and wars.  Know thy difference!

Byzantium's picture

Clarification sought

I'm a bit disappointed that the massive selling pressure that brought the price of silver down from $32 to $28, only merited a $1 short covering rebound. Similar proportions for gold. Is that it?

Hopefully I misunderstood, and that this short squeeze was just a prelude to the main event, the MOASS.

Otherwise, the picture is pretty grim, no?

¤'s picture

Those darn shorts!

There's never a shortage of them and they're always hanging around...

mota_ru_1062731-preview.jpg

VAT Man is Robbing's picture

20c drop after globex close??

I just noticed that Silver is currently trading at $28.80 on goldmoney?? Could be a gap down when the market reopens in a few minutes.

No comparable move down is visible for Gold.  Weird.

Edit: Goldmoney price jumped right back up when the market re-opened. Hope somebody enjoyed their 20c discount!

ag1969's picture

Prize Fighter

+1000yes

Terabyte's picture

@Prize Fighter

Hopefully you're right.  I'm sitting on a pile right now and not moving.  But sometimes one does wonder about their own sanity.  Hang tough!

Admiral Ag Bar's picture

Bix Wier is insanely bullish for next week...

All the pieces of a "perfect storm" are lining up for commodities (esp. silver) over the next few days such that next week will be like no other.
 
From man-made natural and unnatural disasters (hint, hint)  to the chaos in Washington NOTHING happens by accident anymore. Get ready to hear the term "Act of God" being tossed around like popcorn.
 
This weeks Friday Road Trip will connect the dots for you.
 
Last chance to buy silver if you are still interested :-)
 
May the Road you choose be the Right Road.
 
Bix Weir
 
To sign up for the Private Road and get all the Road Trips click here:
 
¤'s picture

ECB bond plan in jeopardy... Italy's voters reject austerity

ECB bond plan in jeopardy as Italy's voters reject conditions

Italy's electoral earthquake is “a catastrophe for the euro and the European Union”, according to Luxembourg’s foreign minister, Jean Asselborn.

Five-Star Movement leader and comedian Beppe Grillo gestures during a rally in Turin February 16, 2013
The Five Star movement of comedian Beppe Grillo, which won 25pc of the vote, has called for a euro referendum and has a return to the lira Photo: Reuters
 

The verdict was much the same in chancelleries across the eurozone, especially in those countries already starting to feel the first wave of contagion.

“The result touches us all,” said Spain’s foreign minister, Jose Manuel Garcia-Margallo. “It is a jump into the void that bodes well for nobody, neither for Italy, nor for the rest of Europe.”

Almost 57pc of the Italian vote went to parties that have vowed to tear up the EU austerity script. Together they control a majority of senate seats.

The Five Star movement of comedian Beppe Grillo, which won 25pc of the vote, has called for a euro referendum and has a return to the lira as one of its manifesto pledges, while ex-premier Silvio Berlusconi has threatened to pull Italy out of the currency bloc unless the EU switches to a reflation strategy.

Even if the centre-left leader, Pier Luigi Bersani, can put together a “grand coalition” with Mr Berlusconi, there is no going back to the hairshirt regime imposed by Mario Monti’s technocrat government at the EU’s behest over the past 15 months.

“A deal with Monti is impossible,” said Mr Berlusconi on Tuesday. “His austerity policies have put the country into a dangerous recessionary spiral, with rising debt and unemployment, and the closure of a thousand firms a day.”

The great fear is that the European Central Bank (ECB) will find it impossible to prop up the Italian bond market under its Outright Monetary Transactions (OMT) scheme if there is no coalition in Rome willing or able to comply with the tough conditions imposed by the EU at Berlin’s behest. Europe’s rescue strategy could start to unravel.

Andrew Roberts, credit chief at RBS, said: “What has happened in these elections is of seismic importance.

“The ECB rescue depends on countries doing what they are told. That has now been torn asunder by domestic politics in Italy.

“The big risk is that markets will start to doubt the credibility of the ECB’s pledge.”

It is a widely shared view. Luigi Speranza, from BNP Paribas, said: “We fear the markets could lose faith in the OMT’s effectiveness.”

Bond buying under the OMT can begin only after countries in trouble request a rescue from the EU’s bail-out fund under strict terms. This then requires a vote in the Bundestag.

Germany’s ECB board member, Jorg Asmussen, backed the plan when it was unveiled in August, signalling the crucial acquiescence of Chancellor Angela Merkel. The concern is that Germany could withdraw that assent if provoked.

Mr Roberts said: “The big unknown is how much Germany is going to buckle over the next six months. German leaders want to keep up the appearance that the eurozone crisis has been solved, at least until their elections in September.”

In one sense, Italy is in a weak bargaining position. It must raise €420bn (£368bn) this year, making it acutely sensitive to the latest surge in borrowing costs. Yields on 10-year bonds surged 34 basis points on Tuesday, pushing the spread over German Bunds to 330, with traders eyeing the 400 level where stress begins in earnest. Italian bank shares tumbled in Milan, with Intesa Sanpaulo down 8.4pc on fears of losses on sovereign bonds.

Yet Italy is big enough to bring down the eurozone if mishandled. It is also the one Club Med country with enough....

http://www.telegraph.co.uk/finance/financialcrisis/9896222/ECB-bond-plan-in-jeopardy-as-Italys-voters-reject-conditions.html

Charles S. Hamlin's picture

Re: Bix Weir

Hey Admiral, I get the same email blast.  I haven't followed him for very long, so I cannot tell yet if he is another KWN cheerleader.

Swift Boat Vet's picture

Sh*t from Shinola ---- Hey Ancientmoney !

Your observation/reminder is a very poignant  reminder of something important.   The gross hindrance that most government employees are is bad enough, but when their paychecks (sadly, along with ss checks etc) cease to be of any purchasing value, we, AND THEY, will see how utterly useless they are to society.  I have met very few who had a genuine grasp of the value of labor and the production of goods.   They will become part of the masses who need gov't help just to eat.  But of course,  the good old gov won't have Sh*t for Shinola to give anyone.  I have an Dept of Agriculture employee neighbor who is among the most talented of his peers I've ever met.  He can do some crude woodworking and grow some string beans and tomatoes each summer.  All well and good, but he almost had a heart attack when I told him we can enough tomatoes and fruit to last us the year.  His gov't line?  One should NEVER eat home canned food.   YOU COULD DIE !!!!  Ah well.  That was three years ago and I've just shut up.   Hopefully he's forgotten.  If his paycheck was worthless and he was hungry,  he'd probably be the first to want my food.  As a matter of fact,  I've stopped talking up PMs to anyone who knows where I live and have secured my concealed carry. 

Swifty

Admiral Ag Bar's picture

Charles

As far a silver conspiracies go Bix is waaaaaaaaaaaaaaay out there.  He has been pretty off on his last few calls - particularly with Ron Paul winning the 2012 election, but I like hearing all arguments.  I can't recall when he was so bullish on such a short-term prediction.  Maybe this crazy train is REALLY about to leave the station???

I personally believe that this almost two-year correction is nearly over and we are about to head up.  Big Time.  2013 will be BIG for silver.  But maybe that's just what me and my literal and figurative underwater stack want to believe?

¤'s picture

Whose responsible for the big shorts...China?

Or is it one of you out there holding them? wink

BigUnderwear.jpg

ancientmoney's picture

@swift boat vet . . .

"They will become part of the masses who need gov't help just to eat. But of course, the good old gov won't have Sh*t for Shinola to give anyone."

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

The government produces nothing, as you infer.  Good reason for them to be building ammo supplies, spreading heavily armored vehicles to areas across the country, buying 7,000 fully automatic machine guns (the real assault rifle), etc.

They will use their might to take from the producers, and give to themselves.  Police, DHS agents, etc. all need to feed their families. 

Also good reason to ban any kind of weapon among the producersthat  could slow their foraging when the SHTF.

Texas Sandman's picture

Please forgive me...

Not a troll, but a trader.  I made out ok today trading primarily the short side.  I came in with a neutral bias, but "when in rome, do like the romans... when in the ee,...".  I try very hard to trade what I see & not what I wish for.  What I saw was a range bound market with a bearish bias strengthening as the day went on.  Sometimes Murrey Math lines & trading ranges are awfully useful as the tell for that.  And you can get important clues from the trend of cummulative market delta.  That's why I always chart them.

As I've said many times, a market can't bottom from something like we've seen in a day.  Either we back & fill for a long while, or after this brief rally, they smash it down again hard, perhaps all the way to lower support at 27. And that means what I see doesn't justify a longer term paper position long.  Not until my long term model clicks into place & gives the yes.

Just be nimble for now & don't bet the farm long until after we've seen one of these two happen.  And only enter when everything falls into place.  You may miss a little, but probably not much.  And you may even get a better entry than what we have today.

Disclosure: Short as many as 4 contracts intraday.  Flat, flat, flat tonight as of close.

Byzantium's picture

@ Texas Sandman

Just a note of appreciation for your posts; I always look out for them & find them very insightful.

Sad-descent's picture

@DPH

Those are some really unhappy cats.  I'm glad I wasn't the one to have to fish them out after the photo.

tpbeta's picture

If anyone's interested...

...my tables have edge back into the black on silver

Factor Commentary rating Total
       
Technical $ A possible bottom, or a relent in the downward flow. Dollar looking toppy. But the pattern is higher lows 10 45
Sentiment In the toilet outside the hard core bugs. No sign of inflation. -75  
Fundamentals QE and US debt. recovery implausible. Equities looking toppy 70  
Manipulation Don't think JPM can push much more without diminishing returns. Bernanke can't do much more. 40  
Opportunism Hedge funds selling and probably shorting. Arguably oversold 0  

..although I may have overcooked the fundamentals. Deflation is a bit of a wild card.

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