Come Tuesday

Summer's almost over. I hope you're enjoying your weekend but get ready. Come Tuesday, it's game on.

We stand at the edge. Prices have broken out but Cartel resistance is steep. The latest CoT shows their malicious intent. In gold, The Cartel net short position grew by over 32,000 contracts last week with the gross short position growing by over 10%! A huge, desperate move which has brought The Cartel net short position to its "worst" level since 2/28/12. Yikes! In fact, over the 8/14/12 - 8/28/12 time period, the price of paper gold rallied $68 and the total Gold Cartel net short position grew by 59,000 contracts. It looks like someone would very much prefer that gold not rise much further.

Though the Cartel selling in silver is just as prevalent, it is of a different stripe. For the reporting week, to supply the paper necessary to keep price in check, instead of adding shorts The Silver Cartel dumped longs. Of course the question is: Why? Are they selling into strength and booking profits? I suppose. But are they also remiss to add new shorts? Of course, it's impossible to say. What is possible to say though is that the CoT situation has only "deteriorated" in the days since, particularly Friday.

Finally, it is curious to see so much of the fresh shorting and selling that is coming from the smaller banks. Uncle Ted calls these banks the "raptors". The raptors treat the paper markets as their virtual jungle where they prey upon the specs by collusively following the moves of the bigger banks. In gold, the selling last week was almost evenly split between the big banks and the smaller banks. In silver, though, 90% of the selling came from the smaller banks, not JPM. Again, why? Is this just a one-week trend?

So next week is set up for some significant volatility.

  • All market participants are back from holiday.
  • The charts are undeniably bullish, meaning spec money should continue to roll in.
  • Prices are reaching into areas where I would expect some major Cartel short selling/resistance, i.e. $1725 and $33
  • After a week of rising prices, we get the August BLSBS on Friday. It's hard to imagine anything but a negative print being met with a major attempt to rig prices lower.

For now, here's where we sit.

And do you recall this chart from last week? Notice that gold spent 17 weeks above the range in 2011 and now it has completed 17 weeks below the range in 2012. Next week, does gold finally move back within the range?

Silver is at a similar crossroads.

So, get ready for a crazy and wild week. Though I certainly wouldn't fault a trader for booking a few profits, everyone else just needs to prepare for some volatility. Prices are truly headed much, much higher but not without the usual shenanigans.

See you Tuesday.

TF

454 Comments

Dr Jerome's picture

32? Cmon, have some faith

Dagney, I admire your faith.

I might be mistaken, but didn't Jesus say something like "If thou hast faith as a mustard seed, thou shalt see silver shooteth to the moon" 

swefred's picture

BID vs ASK and spot

When you buy a asset you pay the higher "ask" price.
When you sell a asset you get the lower "bid" price.
The difference between the two is the "bid-ask spread," 
 
​The spred on silver seam to be $0,015.
 
Spot price is the price paid at the more recent trade.
 
The numbers that is used are usually the lover bid price. The todays high that netania shows is the bid price and it is 31.884.
Xty's picture

re Biotech and you are not being served ground up baby

If you are really appalled by this story, you might want to stop taking almost all modern medicines.  My daughter works in a lab that uses DNA and you should be glad - unless you really don't believe in helping people with wicked diseases.  If you are in the anti-vaccine, all modern medicine is a trap camp, then don't read on.  The use of a bovine derived surfactant probably saved the life of one of my children.  I should add that I am very much pro-baby, and don't appreciate the word fetus - there are many ways to harvest cells that are much more ethical.  But the story behind the Pepsi cell is not so simple:

The fetus-derived cell line we’re talking about was also created around the time I was born. This is 35-year-old technology. And it is widely used in cell biology. And there is no way you’ll consume them or that the cells would cause any health problems.

The cells, called HEK 293 cells (that stands for human embryonic kidney) were taken from an aborted fetus in the 1970s in the Netherlands. Bits of chopped up DNA from the adenovirus, a virus that causes a pretty severe cold. The kidney cells were forced to take up bits of DNA using a technique invented in 1973 that used a calcium solution. The resulting cells don’t act much like human cells at all, but they are very easy to work with and have become workhorses of cellular biology. That’s why they’re used in the development of drugs and vaccines. (Here’s the original paper on the creation of the HEK cells. ) No new fetal tissue has been used to keep the cell culture going; the use of this cell line isn’t leading to new abortions.

A tiny company called Senomyx, whose stock is trading near its 52-week low, has been working to use this new technology to create food additives. Senomyx has isolated receptors found on cells that detect taste, and added them to the HEK cells. This allows them to test thousands of potential taste additives to see whether they might taste sweet or savory with a speed that would be impossible with human taste testers. (You can find a scientific paper on the Senomyx sweetener work here. ) Synomyx has announced collaborations with Pepsi, Nestle, and Coca-Cola.

http://www.forbes.com/sites/matthewherper/2012/01/27/fetal-cells-in-soda-not-quite-the-discomfort-behind-the-controversy/

Xty's picture

Oh, and good morning

I'm going for ground up monkey, personally.

Xty's picture

I much prefer Netdania to Kitco

http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChart.aspx

Very flexible - the volume seems wonky, but the bid/ask seems pretty accurate.  You can drive yourself crazy watching bid/ask on some platforms, but it doesn't leave much time for smelling the roses.

Xty's picture

Currency Wars - Everybody has a printer these days

European Stocks Advance Amid China Stimulus Speculation

By Sarah Jones - Sep 3, 2012 4:50 AM ET

European stocks rose for a second day, led by basic-resources companies, as an unexpected decline in Chinese manufacturing boosted speculation the government will announce further stimulus. U.S. index futures and Asian shares were little changed.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, climbed 1.8 percent as copper gained. Davide Campari-Milano SpA (CPR) surged 5.8 percent after agreeing to buy Lascelles deMercado & Co., the Jamaican maker of Appleton rum. Rhoen-Klinikum AG (RHK) sank 21 percent after Fresenius SE decided against reviving a bid for the rival German hospital operator.

http://www.bloomberg.com/news/2012-09-03/europe-stock-futures-are-little-changed-bankia-may-move.html

Xty's picture

Gold getting good reviews:

Gold Wagers Jump To 5-Month High As Fed Spurs Rally: Commodities

By Elizabeth Campbell - Sep 3, 2012 6:08 AM ET

Speculators increased bets on rising gold prices to the highest since March as mounting speculation that the Federal Reserve will expand its record stimulus drove bullion to its second-biggest monthly gain this year.
Money managers raised their net-long positions by 19 percent to 131,687 futures and options contracts in the week to Aug. 28, U.S. Commodity Futures Trading Commission data show. Combined bets across 18 U.S. commodities fell 1.9 percent to 1.3 million contracts, still near the highest in 15 months. The Standard & Poor’s GSCI Spot Index of 24 commodities gained for a fifth straight week, the longest rally since June 2011.
Investors accumulated a record hoard of gold in exchange- traded products last week, exceeded only by the U.S. and Germany when compared with national reserves. U.S. sales of bullion coins jumped 28 percent in August. Fed Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.” The metal rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011.
http://www.bloomberg.com/news/2012-09-02/gold-wagers-jump-to-5-month-high-as-fed-spurs-rally-commodities.html

S Roche's picture

@Xty re Netdania Volume

Netdania volume is troy ounces sold OTC...it confirms the OTC market is 20+ times bigger than Comex and sometimes 100 x Comex. I have had several email conversations with them and they get their volume from 5 of the 6 largest liquidity providers to the OTC market...so Netdania volume is only part, plus the other OTC dealers, plus Comex futures, plus TOCOM, Shanghai, Dubai etc.

In August 2011 a minimum of 5.5Bln troy ounces of gold were traded OTC...more than have been mined in history.

TD's picture

DrkPurpleHaze You've got my

DrkPurpleHaze

You've got my vote! Keep thinking... I like what you come up with... if only those in power were capable of thought.

TD

PS... I do like the Floyd clips

TD's picture

Chinese gold shops

achmachat ,

Any chance we could talk you into snapping a few photos in those gold shops? or maybe a quick video tour?

TD

Mickey's picture

Never did like taste of Pepsi products

And I am a cheap sob, and when candy gets expensive I stop buying. I will buy a car when the old one wears out, usually after 10 to 15 years. 

About the only thing I buy frequently is new pc and internet equipment to keep my trading platforms running optimally.

Mickey's picture

What I have not seen posted today was

David Axelrods comment yesterday on Sunday tv that now is not a time to try to balance the budget or reduce deficit.

I would think that's highly bullish for gold and silver.

Both parties/tickets are avoiding spending cuts and using the strategy of growing us out of this mess.

Bodes rather well for inflation and precious metals if they are successful.but then again, how often do politicians deliver on promises. This one is a lay up. Print money , spend to boost the economy.

Dr Jerome's picture

A little help from our friends

Looks like the other side of the world from the Americas has held up the silver prices nicely since last night. Are there any exchanges  trading during the US holiday hours today?

¤'s picture

China Gold

Xty's picture

re Netdania Volume

S Roche - Thanks for the explanation - those trading numbers are ridiculous.  Everything is fractionalized.  Why anyone plays hot potato with gold is beyond me.

Xty's picture

Forex and World Market Hours

Forex and World Market Hours

 
Legend
 New York - Closes in 8 Hrs. 18 mins.
 London - Closes in 3 Hrs. 18 mins.
 Tokyo - Opens on Sep 4th, 2012
 Sydney - Opens on Sep 4th, 2012
 
 
 

I know I posted this earlier - but I just found it recently, and it makes a great bookmark.

¤'s picture

What Confidence?

JACKSON HOLE, Wyoming | Sun Sep 2, 2012 5:39pm EDT

JACKSON HOLE, Wyoming (Reuters) - Increasing political encroachment on the Federal Reserve, particularly from the Republican Party, could threaten the central bank's hard-won independence and undermine confidence in the nearly 100-year old institution.

That was the pervasive sentiment among economists gathered at the Fed's annual monetary policy symposium in Jackson Hole, Wyoming. Against the dramatic backdrop of the Grand Teton mountain, many said a closely-contested presidential race has turned the monetary authority into a political football.

"I do fear for it a bit if the election comes out that way, especially if some of the more radical voices, that happen to be Republican voices nowadays, get reelected," said Alan Blinder, Princeton economics professor and a former Fed vice chairman, adding that historically opposition to the U.S. central bank had come predominately from the left.

"There's a lot of hostility," said Blinder, who was appointed to the Fed by former president Bill Clinton.

The primary topic of conversation at the rustic mountainside resort was whether or not Fed Chairman Ben Bernanke and his colleagues would deliver another round of monetary stimulus soon.

But, when probed on the issue on the sidelines of the meeting, many participants voiced concern about the heated political rhetoric aimed at the Fed, including a bill that would audit the conduct of monetary policy that is gaining increasing traction among Republicans....

http://www.reuters.com/article/2012/09/02/us-usa-fed-politics-idUSBRE88109Q20120902

Xty's picture

Good summary of the upcoming mope events in Europe:

In Pivotal Week for Euro Zone, a Test for the Central Bank’s Leader

FRANKFURT — The last time Mario Draghi addressed the news media after a meeting of the European Central Bank, on Aug. 2, he disappointed investors who wanted him to crack his whip and immediately bring bond markets to heel. The markets dropped even before Mr. Draghi was done speaking.

Only in subsequent days and weeks did the bond markets calm down, as investors evidently absorbed his underlying message: that the central bank intended to take meaningful action against the euro debt crisis even if quick remedies were not possible.

But this Thursday, when the central bank meets again, Mr. Draghi, the bank’s president, could have a far harder time reconciling the expectations of twitchy financial markets with the limitations of his power. Although investors are counting on bold action, analysts say the bank probably needs more time to resolve internal differences and deliver on a promise to use its financial clout to tame runaway borrowing costs for the most troubled euro zone countries.

....
http://www.nytimes.com/2012/09/03/business/global/03iht-ecb03.html?pagewanted=all

Xty's picture

re Central bank's "'hard-won independence"

whaa?  Whatever happened to never failing a sitting president?  (Almost).  I think they are independent from reality, but that is about it.

¤'s picture

Xty

It just goes to show how reality is dependent upon who is looking at it and from what vantage point.

They sound worried to me and the "A" word must fill them he with some type of terror. Just imagine being able to run your financial dealings and no one can hold you accountable, literally.

An audit, a honest and accurate one, is their worst nightmare. Possibly our's also.

I'm not really sure we actually want to know (do we?) what the real numbers are. I'm guessing it would shock normal human sensibilities and we'd become numb with "OMG!"  goose bumps of incredulous despair at the real number.

I'm guessing the real numbers are beyond belief. Literally.

Bollocks's picture

Okay, I'm really late to the Larson party...

BUT...

pbreed's picture

@XTY

Cool link... but it shows NY open today... I thought NY was closed today?

Xty's picture

1690 and rising!

Hope is springing eternal again.

Xty's picture

re hours

pbreed - hopefully someone else understands this better than me (or we really are all doomed) but I believe the New York Stock Exchange is closed today, but that gold and silver trade on Forex - and elsewhere.  The price is certainly moving.

¤'s picture

America's Gold: How The Earth Was Made

Turd Ferguson's picture

Our pal, Ned

MODERATOR
TomMack's picture

Stack vs IRA

it is getting harder to hold that stack.  cost of living up salary down dry powder is running out.  i know the question has been asked before just looking at the options....

ag1969's picture

Another lingering question

When I was indoctrinated into financial planning and investing for retirement early in my career, I learned about thinks like 401k, Ira's, Roth IRA's, whole and universal life Insurance, etc.  I was taught that I had better prepare for my retirement early and the markets would go up and down, but over time, I would have my "money" working for me and when I retired I would have some pie in the sky figure and life would be good, and I would complete the American Dream.  I had it all, a good business, a life of abundance, a Roth IRA, life insurance, yippee!

In my business of 19 employees, we produced a great surplus and I paid for the best health insurance I could provide, along with dental and life insurance for all.  Life was good.

Even after giving back what all of my employees considered more than fair, I still had a tremendous surplus, and I bought a big house in a nice town, and then a couple of commercial buildings for my business and others, and then a vacation home, and then I began investing in the stock market.  I made a lot of money, I spent a lot of money, and I invested a lot of money for the future, and I got pieces of paper in the mail every month that told me how rich I was.

One day, some people decided they needed to blow up the twin towers and murder a few thousand people.  This had a profound effect on my little life.  I knew the world had changed forever, I wanted to bomb the living shit out of Afghanistan and this new evil enemy Al Queda because it was the right thing to do.  Heaven only knows how much money I dumped in to firemen's boots on the side of the road to show my support for the USA.  Donation plates were everywhere, and I had no clue at the point just how big the donation plate was going to get.

The first and most immediate shock was a six figure loss on technology stocks that were supposed to double, and then double again, and then split, and then double again.  I didn't freak out on my stock broker for recommending these stocks, he didn't blow up the world trade center, it wasn't his fault.

Then, one month I got my IRA statement that said I was not so rich anymore, and my pie in the sky retirement number was threatened.  I did not freak out on my financial planner, it was not her fault that the mutual funds tanked.  God Dammit!  We need to blow up Afghanistan.

Then I fell in love and got married. Soon after that (exactly nine months after that, honeymoon was good) I had my first child and life was incredible.  Creation is hands down the most wonderful thing in the universe.  But, even with the best health insurance I could but, it cost me three thousand dollars to have my baby and I remember thinking man, if I had no health insurance, I could have marched my wife into this hospital and had that baby for free, but I have the best insurance I can buy, and it costs me three grand.  I never picked up the phone and called the person that sold me the health insurance and ripped him apart, that is just the way it was and it was the policy I had chosen, and by the way, I did have maternity coverage. 

Then, around 2007, my business started to decline, and my traditional sources of dependable lead generation were no longer so dependable, so I played blackjack, and kept doubling down.  When $50k worth of advertising in a month produces no results, what do you do?  You do it again because you need to feed the machine and keep it rolling.  Well you can only double down so many times before you need to get up from the table.  I never called my ad agency and flipped out on them, it wasn't their fault the world had changed forever, it was my fault that I did not find new and innovative ways to get leads, not realizing at that point that people only bought my product with bubble money.

When my banker came to take away my commercial buildings, I did not chastise him for stealing the $175k I had put down on them.  We had a contract, and it was not my bankers fault that advertising did not work anymore and people only bought my shit with bubble money!

When I had to sell my home and move to my vacation home, I considered it a blessing that I was able to keep my vacation home.  I did not yell and scream at my real estate agent or mortgage broker, it wasn't their fault.

It was at this point that I had gained a full understanding of what is money, what is not money, and whom in the world has my true interest at heart.  I started trading my fake money, what little I had left, for real money.  I learned that paper is just paper and anyone selling shit made out of paper is just a snake oil salesman.

Anyway, my point in all of this, is why would I get ripped off in all of the aforementioned real life events, and then freak out on people who tell me to trade all of that shit for real money that has been real money for thousands of years.  I still believe in saving for the future, but now I believe in saving money that I know will be around in the future.  Not something that on any given day, some asswipe in an ivory tower can take away from me by hitting enter.

So my question is:  Why is it that the average person will get the shirt ripped right off their back by bankers, lawyers, insurance, politicians, and thieves without raising so much as a wimper, but when silver goes down ten cents, Turd, Sprott, Turk, Jackass, KWN, and all the others telling the truth are ripped apart?  It is so amazingly weird to me that the average person will spend a lifetime believing the paper fools, but only have 10 seconds of patience for real money and its proponents.

So if you are one of those people who freaks out every time the bankers raid real money, what is your alternative?  To jump back into paper?

Fake money or real money, what's in your wallet?

Rico's picture

@roark

Excellent explanation of drought/cattle dynamics--thanks!yes

Monedas's picture

Pepsident !

As a kid, I thought .... WOW ! Pepsi flavored tooth paste !        As a young socialist, I thought .... POW ! Corporate America rotting the kid's teeth while they brush !       As a seasoned, patriotic hoarder, I thought .... Pepsi Cola has done more for America than Hillary Clinton and Barack Obama and the whole Democrat party !        Monedas      1929         Comedy Jihad Coke And Pepsi Go Together Like Gold And Silver .... You can't have one without the other !      devil

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