As you might imagine, yesterday's action has changed the complexion of the charts just a bit so I figured we should spend some time today trying to figure where we are going from here.
First of all, the FB/Ag contest is already over. I know of at least one winner, "thesandbox". Did anyone else have 6/1/12? At any rate, Mr. SandBox needs to email me his shipping info so that I can send off his new, genuine and authentic TF hat.
Next, if you haven't yet watched all or parts of "Rollover", I suggest you do it soon. The links are all contained within the "sticky" post at the top of the homepage. Santa expanded a little bit on this theme last night. Here's the email he sent out:
My Dear Extended Family,
QE to infinity is for certain. About that there is no question whatsoever. It cannot be avoided.
Operation twist is a damn joke stimulation wise. At this point in time it is a dark joke.
The Fed is playing with something worse than fire. That fire is posted in a video today on www.jsmineset.com. This video references a worldwide financial crisis that if it starts cannot be stopped by any power on the planet.
They are already easing up on the rhetoric. The Fed will downright panic as the world's economies go from slow to dropping out of sight. That is what is on the plate tonight, this night, right here and now.
Safety only exists in gold bullion and in the outrageously depressed good gold shares now shorted out of sight.
Yikes! Sounds like everything really is as serious as it seems. Perhaps you should read this next: https://www.dailymail.co.uk/news/article-2153324/Markets-facing-rerun-Great-Panic-2008-Head-World-Bank-warns-Europe-heading-danger-zone-bleakest-day-global-economy-year.html And this: https://www.zerohedge.com/news/why-grexit-would-make-lehman-look-childs-play
Regardless, it looks like next week is going to be quite interesting. One item not getting a lot of national attention (yet) is the recall election in Wisconsin on Tuesday. Sort of like the French elections of last month, the vote on Tuesday will be framed as an American referendum on "austerity". Watch this one closely. https://www.nytimes.com/2012/06/01/us/politics/wisconsin-recall-vote-could-foretell-november-election.html
This week's CoT is even more bullish than I had hoped, particularly in gold. Here is a link to the report: https://news.goldseek.com/COT/1338579201.php And here is a C&P of the comments I posted immediately following its release:
Submitted by Turd Ferguson on June 1, 2012 - 2:48pm.
Granted, we've already worked off some of this. Regardless, nearly historic numbers.
In gold, the Cartel net short ratio fell to 1.76:1. The lowest I've ever seen it. Again, for the sake of comparison, the 4/5/11 net short ratio was 2.64:1 and the 2/28/12 net short ratio was 2.69:1, so the Gold Cartel net short position has now been cut in half from those peaks. Additionally, LargeSpecShorts added 5281 contracts (10%). This is exactly what I've been telling you for weeks and is, in large part, the cause of the explosive rally today.
In silver, the Cartel net short fell to 1.31:1 and a total, aggregate number of just 14,334. This likely means that JPM is now under 10,000 in net short. By far, the lowest I've ever seen. For the sake of comparison, the 4/5/11 ratio was 2.69:1 and the 2/28/12 ratio was 2.32:1. This means that the net short ratio of The Silver Cartel has been trimmed by 75% since 2/28/12. Additionally, the total long position of The Cartel is 45,817 contracts. On 4/5/11, it was 33,413 and on 2/28/12 it was 33,802. So, the total Cartel long position is up almost 36% in just 3 months. Large specs went short silver, too. Spec longs shed 1519 and spec shorts added 720. Ooops. Dummies.
All in all, another great CoT.
I want to draw your attention to the underlined part of the commentary as I have not heard anyone else mention this yet. Recall that on 2/28/12, silver was winning The Battle Royale and breaking out. Despite the announcement of LTRO2 the next day, the metals were smashed lower and the bottom to this latest manipulation has only recently been found. On the 2/28/12 CoT, the net short ratio of The Silver Cartel was 2.32:1. As of last Tuesday, their net short ratio was just 1.31:1. This is a reduction of over 75%!!! Claim what you want about fair and free markets and no manipulation. If you do so, you are a fool. This entire "episode" was manufactured to allow The Evil Empire to reduce their short position...and it worked!
I'll give you one more. On 4/5/11, just prior to the beginning of The Great EE Panic which led to a near signal failure later that month, the cumulative net short position of the EE was 56,414 contracts, i.e. they were short 89,827 and long 33,413. As of last Tuesday, the cumulative position is just 14,434 contracts as they are currently short 60,151 and long 45,817. Do you see how significant this is? Do you understand now why silver has been mercilessly attacked over the past 13 months?
75% is a huge reduction but they're not net long yet, are they? Perhaps this is why silver is still rangebound between 27 and 29 while gold broke out yesterday? I don't know. We'll get some answers next Friday. Regardless, I think that silver is about to run away from them for reasons they aren't anticipating. If they were smart, The EE would BUY here, cover as many of their remaining shorts as possible and then get out and let silver run free. If they don't, they face disaster. This is your chance, Ms. Masters. I encourage you to act now, before it's too late.
Here are your charts. First, let's look at gold. Here's the long-term, weekly chart:
On the daily chart below, you can see the importance of maintaining a toe-hold above 1610. For the week ahead, let's hope that gold extends its gains on Monday and then survives some attempts to sell it back on Tuesday. After that, let's hope that gold can begin to solidify and base above 1650.
Here is your updated, long-term silver chart. It looks just fine.
As mentioned above, silver remains rangebound on the shorter-term charts. Perhaps The Forces of Darkness will attempt to keep it there while they continue cover and flatten their net position. Perhaps they may not be afforded that opportunity. The next few days will tell us a lot. For now, $29 is our target. After that, $30.
OK, that's all for today. Remember that London is closed on both Monday and Tuesday for Her Majesty's "Diamond Jubilee". Not having a physical trade will allow for greater level on shenanigans on the Comex so be prepared for some volatility. Now, go get some R&R. Next week promises to be crazy.