Wrapping An Extraordinary Week

Fri, May 18, 2012 - 4:03pm

And why do I get the feeling that next week is going to be even more wild??

Before we get started, I thought I'd give away one more hat. I'm sure you've noticed by now that, once again, the financial world seems to be staring into the abyss. Of course, though, with all of da diffewent and scawey tings dat CNBS could tawk about, they instead are all-Facebook, all-the-time. So here's the new contest: On what day will the closing Comex price of an ounce of silver exceed the NASD closing price of Facebook? Please use this thread to log your guesses and I'll close it to new entries on Monday morning. (and can someone please log all of the guesses onto a spreadsheet? please??)

Great follow-through in the metals today. As you know, I was expecting this rally but I was also expecting a brief pullback and double-bottom. We didn't get that and that's a very good sign. Additionally, I was expecting a somewhat flat OI change for yesterday and boy-oh-boy was I wrong there. In the near $40 rally yesterday, total OI expanded by 17,000. WOW!

So, what's the deal? Well, there was certainly the short-covering that we talked about. However, there was obviously a HUGE surge in new longs, too. It's almost as if a spec short not only covered that contract, he/she/it then turned around and went long. This is GREAT NEWS. But 17,000 cannot be written off solely to this idea. Clearly, brand new longs came into the picture and who are they? In my opinion, most likely The Cartel. Adding longs to start the short squeeze but likely adding even more later in the day. As usual, we won't really even be able to make an educated guess until next Friday's CoT but this sure seems plausible right now.

On the other hand, silver OI from yesterday was exactly as predicted. While price was jumping 83c, total OI rose by just 100 contracts. Here's your pure short squeeze. Longs add new, shorts cover old, net effect is no change.

Again, though, the fact that we continued to add to the gains today, moving through expected resistance at 1580 and $28 is very encouraging. We eventually ran out of gas near more serious resistance of 1600 and 29. That's OK. It's perfectly normal for a few folks to ring the register after such a strong move, particularly ahead of a weekend. Let's wait and see what happens Monday. To that end, here are your charts. Note the steady climb higher on both of the hourly charts. Also note the next levels of resistance. In gold, once 1600 gives way, the serious battle will be near the intersection of horizontal resistance around 1625 and the 2008 trendline in the same area. Expect quite a fight. In silver, though 29 may offer resistance again early next week, I think the main battle will be between 29.50 and 30.

It's now 3:35 EDT on Friday and the CoT was just released. As expected, it's fantastically bullish once again. For the week 5/9-5/15, the Gold Cartel reduced their net short position by 12,538 contracts. This gives them a net short ratio of just 1.81:1. That's as low as I've ever seen it. On the flip side, the easily-manipulated large specs reduced their net long situation by 9,161 and the small specs reduced by 3,377. The lambs were led to slaughter. This report undoubtedly marks the bottom in paper price.

The silver CoT saw similar action. The Forces of Darkness reduced their net short position by nearly 2,000 contracts and their net short ratio now stands at 1.35:1, which is almost exactly how low it was at the price bottom of late December. Like gold, both large and small specs were selling longs and adding shorts. Though, I had hoped for a bigger drop in the EE net short ratio, given the tiny change in total OI for the reporting week, the 2,000 contract drop is pretty good news and confirms that, like gold, the silver price likely saw its lows this week.

OK, here's some reading material for your weekend. First, Eric Sprott was on KWN today. You should, of course, give this your consideration. https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/18_Eric_Sprott_-_Governments_Frightened_of_Panic_Liquidation_Event.html

And then there's this. Turdite "tabberto" turned me on to this author, Detlev Schlichter. His book and this column discuss what we shall loosely call "the gold standard". I plan to be discussing several "gold standard" ideas in the coming weeks, so this seemed like a logical homework assignment for you. https://papermoneycollapse.com/2012/05/by-abandoning-the-gold-standard-we-embraced-monetary-central-planning-chaos/

We're also going to be spending time discussing backwardation as this has become a near-constant condition on the metals markets, particularly silver in the spot vs futures area. I found this study from 1999 linked on Harvey's site a few nights ago. If you've got the time and the mental energy, give it a look. https://www.fame.org/PDF/Howe_War_Against_Gold.pdf. Of course, the seminal piece on backwardation can be found here: https://fofoa.blogspot.com/2010/07/red-alert-gold-backwardation.html

That's all for now. I hope everyone has a safe and relaxing weekend.


About the Author

turd [at] tfmetalsreport [dot] com ()


Vypuero · May 18, 2012 - 4:05pm


First - first time I was first, too!

SilverIsKing · May 18, 2012 - 4:05pm

Douchebag right above me

Check out the COT's. Looking good for a continued rally.

SV · May 18, 2012 - 4:09pm

The Man Who Sued the Federal Reserve Bill Murphy in Vegas

At Silver Vigilante, there are posted two very interesting videos featuring some of the market leaders in gold and silver analysis. David Morgan can be found online focusing on precious metals, especially silver. Bill Murphy has sued the Federal Reserve. It doesn’t get much better than this for a Las Vegas MoneyShow crowd interested in commodities generally, and not particularly precious metals. The event was sponsored by Liberty Coin & Precious Metals.

Silver had a good day and is now, once again, green on the year. Before the end of April, silver was the best performing asset year-to-date. Gold, also, has had one of its biggest up-days. Interestingly, though gold climbs steady like hair grows on a head, when it gets a haircut, man – it really gets buzzed. Quick falls and steady climbs is the norm for gold, but today something different was afoot: 2.2% greener for gold. As one Youtuber said “Morgan & Murphy = #NWO Ponzi Slayers.”

Among other things, David Morgan discusses that the amount of silver bullion available today is one half of what it was in 1990: one billion ounces. The supply of gold in bar form is over two billion ounces and this supply has increased over the last eleven years. There is half the amount of invest-able silver in the world today than gold.


Sharkysmachine · May 18, 2012 - 4:11pm


or so I believed.....

Desert Fox · May 18, 2012 - 4:13pm

What's with the Dollar Drop?

Going into a G-8??? What's up with that????

PM Stackin' Fool · May 18, 2012 - 4:14pm

FB vs. AG

I am going with 7/24/12. Thanks for all of your tireless work!! Love this site.

Big L · May 18, 2012 - 4:16pm


for the reading......

Also, in case you haven't see this via zerohedge



Istack · May 18, 2012 - 4:17pm
Vypuero · May 18, 2012 - 4:19pm

first is just harmless fun

...and yes, I think we continue to rally now. PLUS - PMs were UP and everything else, including the dollar, TANKED

silver and gold, bitchez!

¤ · May 18, 2012 - 4:19pm

The 'short' of it...

It's only a matter of time before the gold bull gets the best of the Matador 'shorts'. 

Have a great weekend TF and thanks for everything!


Fired · May 18, 2012 - 4:20pm

JUNE 22, 2012

JUNE 22, 2012

murphy · May 18, 2012 - 4:20pm

thx TF

Have a great weekend

FB vs. AG crossover = Oct 5, 2012

NW VIEW · May 18, 2012 - 4:21pm


Iam looking for FB @ $32 soon but silver crossing @ 8-1-12.

abreik · May 18, 2012 - 4:21pm

July 11th

Silver's spot price surpasses FB's share price on July 11th at 2pm EDT.

The Springbok · May 18, 2012 - 4:21pm

This could be the week

All eyes on the Eurozone for next week. Greece has passed into the Rubicon. These bank withdrawls will be the trigger point. When there is no more money....there is NO MONEY!

koan · May 18, 2012 - 4:23pm

why not

Thursday is my guess.

Fat Willie · May 18, 2012 - 4:24pm

COT silver

Looks to me like the %LCNS vs open interest may be at decade lows. I can't check- airport challenged right now. It looks like it is somewhere around 11.5%. That would be a tremendous number if you are looking for a bottom. Rock n roll. FW

Tube · May 18, 2012 - 4:28pm

My stab at it

I pick 10/23/2012.

And I always thought it was funny how matadors hats look like mickey mouse ears...

Defiler · May 18, 2012 - 4:30pm


My guess is September 12 2012

Fat Willie · May 18, 2012 - 4:30pm

FB vs silver

July 10, 2012. Fb has no chance long term.

Torpedo Fish · May 18, 2012 - 4:30pm

@Big L

Everything is fine here in EU, relax.
ZH "Phoenix Capital" is trying to sell his shit by scaring people. 

RTMoney · May 18, 2012 - 4:31pm

All I want for Christmas

Is a big yellow hat.

My guess is 12/25/2012

Edit: Make that the market day before Christmas... Early close on the 24th;)

Magpie · May 18, 2012 - 4:32pm

good a day as any


Anonymous · May 18, 2012 - 4:32pm

Removed comment

Removed comment.

mapleleaf · May 18, 2012 - 4:34pm

AG vs FB

Looking into my crystal ball (a.k.a. a blindfolded monkey throwing darts at a calendar), silver will overtake Facebook on June 15th, 2012 at $33.

ivars · May 18, 2012 - 4:34pm

Very interesting and positive

Very interesting and positive week ( for PM bugs, of course). GSR down to 55,5.

FB bugs may start to feel some doubts.

ag4me · May 18, 2012 - 4:35pm
LONER · May 18, 2012 - 4:35pm

FB and Silver Crossover

Greetings from the great green north(could stay that way at least to September-please god!).

 Hooray, another flip of the hat. I got it this time!

May 25th, 2012

No foolin around- get er dun!

The miners I bought Tuesday are screaming up and I am happy.

I'm going to reward myself with a couple half liter bottles of my homemade Munich Dark Lager tonight.

Kind of dreading Monday though :-)

Safety and Perfection

CBDooper · May 18, 2012 - 4:37pm

Open Interest

I have a bit different take on yesterdays gold open interest. It seems to me for open interest to increase a higher percentage than the actual price gain(4% vs 2.5%), a good amount of shorts had to have been added to slow the advance. Who added them is unknown, but either way it still leaves a huge short squeeze potential still on the table. Maybe I'm totally wrong, but it makes sense to me

Eric Original · May 18, 2012 - 4:39pm

Why not June 14th???  Kind of

Why not June 14th??? 

Kind of a magic date here in TurdTown. I can't believe it's still available.

I can feel the karma washing over me right now....

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