Looking For a Squeeze

Fri, May 11, 2012 - 10:40am

Even though he knows it's dangerous to venture into the Hall of Falling Knives, The Turd proudly gazes into his crystal ball and foresees the following:

It simply makes very little sense for the metals to decline much further here. Yes, I know that we are talking about the paper price and the paper pits are now entirely ruled by Monkeys and WOPRs, but, stick with me on this.

Total gold open interest has surged by nearly 9,000 contracts on Tuesday and Wednesday as price declined by nearly $45. Andy Maguire tells me, and the Bullion Bank Cartel is fully aware, of the massive orders for physical metal below $1600 in gold and $30 in silver. Huge demand. Therefore, it would be nonsensical for them to be adding shorts here. This surge in OI and accompanying price drop has to be spec/WOPR/weak-handed shorts. Has to be. And remember, for every new short, there's also a new long. Just whom, do you think, is on the other side of those new shorts? Has to be The Cartel.

So, let's see. Does The Cartel have any incentive to spark a short-covering spike in the same manner that they've always caused long-liquidation selloffs?

  1. If the spec money is allowed to continue driving paper price lower, ever larger amounts of physical metal will be purchased by the likes of China, India et al, further depleting the vaults (and leverage capability) of The Cartel. Driving price back higher will slow this demand...for the time being.
  2. The Cartel is long 9,000 contracts new contracts. I'll let you do the calculation of how much money they might make by scaling back out as prices rally $50 or so.

Anyway, that's all for now. I've got stuff to do and what-should-be a very interesting podcast to record for release later today. Have a great day! TF

About the Author

turd [at] tfmetalsreport [dot] com ()


May 11, 2012 - 10:41am



May 11, 2012 - 10:44am

Turd, crystal ball? It looks

Turd, crystal ball? It looks like you enjoyed some Collie Budd and are reading your eyelids.. I might be third here

Fr. Bill
May 11, 2012 - 10:45am

Graciously second

Making others to enjoy first, as always.

May 11, 2012 - 10:52am

First (and last) time I ever do this...

...damn it, I'm declaring first. I refuse to acknowledge the posts before mine and hereby declare that I'm #1. Carry on.

May 11, 2012 - 10:52am

monster box

so the goods finally arrived after BTFD ... question is do you leave it sealed or open to verify contents on the inside?

Eric King
May 11, 2012 - 10:53am

Hope so

Let's hope you are right Turd. To me it looks like we will be between 27.50 and 32 until October 8th at the latest.

Dr G
May 11, 2012 - 10:53am

IF there is large demand for

IF there is large demand for physical prices under $30, why have we spent the entire week under $30 and why do we have zero traction in getting over $30?

I mean, we aren't just talking about demand but "massive" orders. Doesn't make sense to me, but WDIK?

A little run-up in silver this morning that probably got some hopes up, but it is already dropping back to a 28 handle again. Not that I'm complaining. :)

May 11, 2012 - 10:53am

Not giving enough credence to the political implications...

I don't think we have much more to go on the downside, but I'm not seeing a squeeze here. It's not all about Bullion Bank profitability imo. If the cartel needs to take a hit for the good of the whole, they'll do it (albeit, not gladly).

Bernanke and crew need gold to stay 'calm' right now. If Gold skyrockets, its pretty hard to pull the trigger on another couple trillion dollar 'public' QE.

I'm guessing we see muted metals for a while now. Going to depend on Europe and how fast cracks widen in the overall system.

Be Prepared
May 11, 2012 - 10:53am

No No... ClinkinKY..... I declare...

First! and your post is null and void! and hereby declare all posts above yours and mine as #1..... :-)

May 11, 2012 - 10:56am

Let's Recap...

1) The morgue announces a surprise 2 billion loss in just the last 6 weeks alone.

2) Metals down

3) DOW up

Yup, looks about par for the course.

Seriously, as I was going to bed last night I started thinking the dominos might start falling today but then I slapped some sense back into myself. Fortunately I don't paper trade, but if I was looking to gamble, I'd stick with a Russian video roulette table - better odds!

Dr G
May 11, 2012 - 10:56am


This is a very large and complex picture. Not just one buyer with one order at $30 for a few ounces. Paper prices fluctuate but the real action is in London. Below $30, physical silver is being rapidly purchased. Price can go down there, and it has, but it is highly unlikely that it will stay down here. The demand is too high and the reduction of supply too great.

May 11, 2012 - 10:57am



Eric King
May 11, 2012 - 10:57am

Hey, you may be right

But a move from $29 to $32 is still 10% and can make someone quite a bit of cash.

May 11, 2012 - 10:57am

@ Dr G

>IF there is large demand for physical prices under $30, why have we spent the entire week under $30 and why do we have zero traction in getting over $30?

>I mean, we aren't just talking about demand but "massive" orders. Doesn't make sense to me, but WDIK?

All of these physical orders are not bought and filled on the COMEX. Likely only on the LBMA.

So, all these orders ARE being filled right now at these prices. So the bullion banks are getting drained. Does not affect price though.

The COMEX is really only a price setting mechanism these days.

This is why the PM market is so f-ed. Price doesn't reflect demand.

Big Buffalo
May 11, 2012 - 10:57am

Come on...

No Whammy, no whammy, STOP!

May 11, 2012 - 10:58am

"Andy Maguire tells me, and

"Andy Maguire tells me, and the Bullion Bank Cartel is fully aware, of the massive orders for physical metal below $1600 in gold"

Turd you have been saying this the whole way down at progressively lower prices. Be honest and stop changing your story.

May 11, 2012 - 10:58am

I've heard this morning that

I've heard this morning that the real number is not $2B. It is multiples higher than that. We'll likely never know.

Santa's Elf
May 11, 2012 - 10:58am

As an aside.....

Over the past few weeks of this beatdown, I've noticed a sentiment here expressed by many that borders on desperation. Seems we're witnessing the struggles of many culminating to a head, as the metals have free fallen. Let me first say that I feel a great deal of empathy for many of you, as I understand all too well what you're going through. I too find myself in a bit of an income predicament, as the company I contracted for submarined back in January. Since that time, I've been doing odd jobs (whatever I can find, frankly) while I work on putting together a new business. 

If I may, I just want to offer one quick thought....and forgive the seemingly dismal future outlook: I firmly believe the trials we are going through now pale greatly in comparison to what lies ahead. Financial trials are surely uncomfortable and sometimes feel like a personal apocalypse. However, I believe we are on the cusp of financial trials of a magnitude beyond what we have collectively experienced. And while all of our temporal prepping will help soften the blow, our future problems may exceed economical impact. Our hearts will fail us if we haven't devoted ourselves to spiritually preparing to tackle the challenges that lie ahead. I know where I need to put my trust if I personally expect to get through this in one piece.

(And please spare me the flaming for what might be perceived as a "religious" comment here)

May 11, 2012 - 10:58am


I spoke to a large broker in gold/silver bullion yesterday and they indicated that there are large purchases by individuals here in the US. it's been crazy since silver shot below $30 and gold below $1600. It's like a double off sale at Macy's or something.

NOt sure if others are hearing the same thing from other bullion dealers. But this one is a big one. Im not saying the name though, then everyone will dump on them.

May 11, 2012 - 10:59am


Excellent. Right on. You are hereby promoted to Junior Turd status!

Dr G
May 11, 2012 - 11:00am

Thanks for the

Thanks for the responses!

Also note that JPM has actually moved HIGHER since opening. Still in the crapper from yesterday but up from after-hours/pre trading.

Nuclear Rocketman
May 11, 2012 - 11:00am

Dr. G

DR. G, I agree that, with the info we have, these massive orders under $30 don't make sense. My guess is that some orders were filled, and the rest are scaled in at successively lower prices that haven't been reached yet.

May 11, 2012 - 11:02am

APMEX question

What do you think is the criteria for APMEX to offer a discount on certain coins/bars? I see they are currently offering $0.99 over spot on any quantities of 10 oz sunshine bars. I used to think they only had these specials when price was relatively too high and people weren't buying, but I got to think demand is crazy right now when silver spot number starts with a 2 and an 8. Do they know something we don't?

May 11, 2012 - 11:03am

I agree

Glad you made the call turd-i agree. I think we seen the worse of this move. Everytime gold dips into the 1500's massive central bank buying occurs. This is a fact. The bullion banks know this and they know there limits. I don't see This market going below 1500.

May 11, 2012 - 11:06am

I think Turd and other people

I think Turd and other people who value their metals by the paper price are going to sound increasingly shrill and desperate as the paper price continues to fall.

THE PAPER PRICE ISN'T REAL. Stop pretending like it matters. Understand that the system is failing, and that the price is set by the system. On the day the system crumbles to dust and ashes, the "price" of "silver" WILL BE ZERO. Between now and that point there will be much wailing and gnashing of teeth. Posting foolish things like "this has to be the bottom, it has to be!" accomplishes nothing but your own discreditation.

There are two possible ways that metals bottom here. First, is if the cartels decide that they should for some reason. The second is if JPM is allowed to fail, and no-one else is willing to take on the Fed's brutal task, and the markets are actually honest, and were just being gamed by one bad player, and no-one noticed it (lol). The first possibility is bad for us, as it makes the suppression last longer, and the second is just a fantasy.

The only way up is down. Until you understand that, you will never break free of their control.

brokerk22 Eric King
May 11, 2012 - 11:06am

Worst prediction

That is probably the worst prediction and analysis in the world Lindsay. Absolutely no chance silver is staying in a 5 dollar range for next 6 months.

May 11, 2012 - 11:13am

JP Morgans 2 billion loss due to hedging?


derivative security degree day swap


A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.

Hedging employs various techniques but, basically, involves taking equal and opposite positions in two different markets (such as cash and futures markets). Hedging is used also in protecting one's capital against effects of inflation through investing in high-yield financial instruments (bonds, notes, shares), real estate, or precious metals.

Ads by Google

Read more: https://www.businessdictionary.com/definition/hedging.html#ixzz1uZe9t3aQ

This guy says JP Morgan's loss is due to hedging, huh? I though a hedge was to eliminate loss by offsetting a opposite position? This guy's explaination doesn't pass the smell test!


May 11, 2012 - 11:15am

@Santa's Elf - I will

@Santa's Elf - I will probably eat these words, but I'd prefer an all-out apocalyptic conflagration to the Chinese water torture I'm experiencing now in the PMs (although it could be much worse). Let's call it MORE (management of Revelation expectations).

Dr G
May 11, 2012 - 11:16am

tmosley, don't disagree with

tmosley, don't disagree with anything you said. The paper price matters to me because it defines how much I can successfully purchase at any given time. Other than that I don't care and would love to see it go to $10 oz and $1300.

bam TF
May 11, 2012 - 11:17am

@ Turd

Do I get a yellow hat?

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