Sunday Charts

Sun, Oct 28, 2012 - 4:20pm

Just a few things before we begin a stormy week.

First of all, this week's CoT was really, really least in silver. Where gold is acting "normal", whereby the spec longs are selling and the Cartel shorts are covering, silver is an entirely different animal. If you missed my comments on Friday, here's a reprint:

Submitted by Turd Ferguson on October 26, 2012 - 3:05pm.
With price down nearly $40 on the reporting week, the CoT was predictable. The large and small specs dumped 11,ooo gross longs and The Cartel covered 11,000 gross shorts. The Cartel also added some longs so the net short position declined by almost 15,000. The Cartel net short ratio is now 2.75:1. For perspective, three weeks ago on 10/2, the net short ratio was 2.98:1.

Here's where it gets really interesting. For the week, price declined well over $1 and the total OI fell by just 762 contracts. JPM et al covered 2000 naked shorts and also sold 400 longs.
But check this out. The common theme in predicting another "collapse" in silver (and gold, too) was that the specs had overbought and were going to be chased out by an attacking Cartel. New spec short money would speed the collapse and allow the Cartel to cover. Even I subscribed to this a bit as I figured that the spec position was turning over as longs were sold and shorts were added. The data, though, doesn't bear this out!

10/2/12 Large Spec Long Large Spec Short Small Spec Long Small Spec Short

$35+ price 47,236 9,118 30066 10344

10/23/12 47,463 10344 27437 10074

$31.60 price

Note that the Large Spec Long position is virtually unchanged! Price has fallen over $3 only because the Small Specs have sold 2,600 of their longs. By no coincidence, the Silver Cartel gross short position has, over the same time period, fallen from 93,628 to 91,285...a drop of 2,343.
Very important conclusion: The price of silver has fallen over 10% simply because a few small players decided to dump some longs. The Big Money...hedge funds, managed money, etc...has not budged. They are still core long and holding.

Now, as price begins to rebound, let's see what happens next. If I were Blythe, I'd be very frustrated and pissed off...and a bit nervous, too.

On the charts below, you can clearly see that we are forming out bottoms so I went back to the CoTs of January 2011 to look for clues and things we should be monitoring today. Though January 2011 saw the typical spec long liquidation and Cartel buying in both metals, the bottom materialized in late January when a short-covering bounce provided the spark. And from whom did the bounce originate? The large spec shorts. On the 1/25/11 CoT, the large specs in silver had a gross short position of 10,473. The very next week, that level fell to 7,203 for a reduction of over 10%! During and shortly after this "event", silver rallied from a low of $26.51 to $27.94 and the bottom was in. Will we see that type of action again this week or next??

Let's start with the Finviz hourly charts where both metals look like they have found bottoms.

Now, take a look at the daily charts. What I like here are the multiple days of full-range trading. Yes, the metals haven't yet broken UP and out of these ranges (bottoms) but they haven't broken down, either, and the onus is now on the shorts to sustain momentum by driving price ever lower. Failing momentum will eventually lead to a self-fulfilling cycle of covering shorts and higher highs off of these lows.

The 8-hour charts are insightful as they show the trendlines from the highs of early October. Note that silver is leading the way in breaking UP and through its trendline. Gold appears to be a day or two behind. Also note the deliberate manipulation on the gold chart. Gold was sold and smashed for three consecutive Friday/Sunday/Monday periods but, when they tried to start it again this past Friday, they were rebuffed. This is obviously a very good sign though they may try again overnight tonight and into tomorrow. If they do, I'm quite sure they'll fail as the support levels from last week look pretty solid.

And, speaking of support levels, you can clearly see them on these 2-hour charts. Not only support but you can also see our targets for breakout. Initially, those levels are $32.50 in silver and $1720 in gold.

OK, that's it for now. Trading kicks off in 100 minutes so be ready. Maybe the evacuations in NY for the next couple of days will cause the JPM metals desk to be undermonkeyed and a rally will result? We'll see...


10:15 am EDT UPDATE:

With "holiday" trading today and likely tomorrow, I would expect a quiet and rangebound trade. Maybe, since so much of the selling has been Comex-based over the past three weeks, we'll get a break and see a gradual rally in price but don't count on it. For now, support held at higher levels this morning after the usual 3:00 am NY time selldown. Let's see if this trend can continue. Hang on. Hunker down and stay safe. TF


Just another quick update as, once again, the equity markets are closed and volume is extremely light in very thin conditions. Regardless, the basing trend spotted yesterday on the charts above is even more evident today. Let's look for resolution of this basing/consolidation pattern by mid to late week as things begin to get back to some kind of "normal".

I'll have a full, new post later today so please be sure to check back. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Oct 28, 2012 - 4:21pm



Oct 28, 2012 - 4:23pm

i'm confused

second, third??

El Gordo
Oct 28, 2012 - 4:27pm


let's get on with it. I've still got a little fiat that's just itching to turn itself into real money, so let's see what happens.

Oct 28, 2012 - 4:30pm

The election is a new factor, isn't it?

As someone from England, I don't have much of a feel as to how you guys will react to a Romney victory, and how likely that is. Seems to me it will create problems for the QE to Infinity bid on PMs since he wants to dump Bernanke. Welcome thoughts.

Oct 28, 2012 - 4:38pm

Stocks open tomorrow

But algo trading only. So what else is new? Isn't 80-90% of the daily NYSE volume algo-related anyway?

Oct 28, 2012 - 4:39pm
El Gordo
Oct 28, 2012 - 4:40pm


If Romney wins the election, the best he can hope for is to get taxes under control, create a little certainty in the business market, and allow the economy to unleash itself from the government and start growing again. Stopping or slowing government spending is politically impossible and tax increases merely slow private sector growth, so our only chance is to grow our way out of this problem, and it won't happen overnight, if it can happen at all. Getting rid of the Bernake is a good idea, but we will still have to print or default - those are our only short term options. I don't care if its Superman, he will not allow a default, so there you have it. Over a longer period of time, and with a proper foundation of tax and energy policy, we have a chance. With Zero, we have no chance. Either way, PM's look good to me for a while yet until some issues get settled.

The Watchman
Oct 28, 2012 - 4:43pm


QE must continue-otherwise "The House of Cards" WILL collapse.

Oct 28, 2012 - 4:45pm

Terror in the whitehouse

I have little regard for Obama. His track record is awful and he signed and defended signing, the NDAA.

I have however, recently read a book called "Without Conscience" by Dr. Robert D. Hare. This is a definitive study of psychopathy (the study of psychopaths) and I am very concerned that Romney may be a diagnosable psychopath. If so, America and world is in for a major shit storm. Psychopathy is not a mental illness per se but a mental condition that deprives one of any sense of empathy. His stare, his ability to change positions and strategy practically from one minute to the next without so much as a twitch, and the ability to present and deliver those changes with total confidence causes me great concern. At least I know what to expect from Obama. I don't think anyone really knows anything about Romney. It may be that the only truly patriotic thing to do is to write in your choice for president.

The Watchman
Oct 28, 2012 - 4:50pm

RE:Benghazi Attack

"A Liberal is a person who will give away everything he doesn't own."

Oct 28, 2012 - 4:53pm

QE will continue of course..

...but won't Blythe take the opportunity to smack the PMS down to August levels? Just because of the expectation? That's how it normally works, isn't it?

Oct 28, 2012 - 4:56pm


Hat tip for best use of the term "undermonkeyed"

Oct 28, 2012 - 4:59pm

Re: Terror in the Whitehouse

@alphamorph - I agree both on Obama & on Romney. I couldn't vote for Romney because he and Ryan would bring the religious right, whom I consider to be American Taliban, into the White House. R could well be a psychopath. Many corporate and political leaders are. Obama was an incredible disappointment. So what do you do?

Oct 28, 2012 - 5:02pm

Taking a flyer

Maybe the monkeys will take flight. At about the same time as the Owl of Minerva?

S Roche
Oct 28, 2012 - 5:04pm
thurd aye
Oct 28, 2012 - 5:06pm

Gold confiscation article. D.L.Ganz

. David L Ganz is a prominent New York City attorney who specializes in precious metals and numismatic law.

Snippet: There are powerful interests that don't want you to plan for your gold coin retirement. They want your investments in a different media. The same is true if you want to buy gold bullion or gold coins. It may be that gold seizure (or the fear of it) is how they move your investment choice, or it could simply be what naturally occurs in a Darwinian selection of investment vehicles (survival of the fittest).

Regardless, what's clear to me is that if you are serious about using gold coins as an investment vehicle - whether they are French Roosters, Swiss Vrenelli, British Sovereigns or an American quarter eagle (or even double eagle) - you need to consider where gold bullion versus "rare and unusual" gold coin fits into your financial strategy.

I just broke my small stack open....;O)) kidding ,of course.

Link to the full article,interesting read I thought.

Oct 28, 2012 - 5:12pm

Don't the old-timers like to

Don't the old-timers like to say that prices don't rise until the last seller has sold? Which patently hasn't happened yet.

Oct 28, 2012 - 5:14pm

El Gordo Do you really think

El Gordo

Do you really think Romney will make any difference? The goal is not economic growth, it's survival.

There is not real GDP growth when factored for inflation, and take away the extra $100 billion per month of spending, and we would have negative GDP.

Romney winning will not make any difference, I am surprised anyone around here would think this election will change anything.

Oct 28, 2012 - 5:27pm

Removed comment

Removed comment.

Oct 28, 2012 - 5:30pm

Removed comment

Removed comment.

Oct 28, 2012 - 5:36pm


On the old thread. Do I get a prize?

Anyways, in the interest of redundancy:

Day of the algos, cont'd

Wouldn't it be just tragic, if a little seawater in the servers resulted in the morgue comex algos becoming confused between up & down? What a terrible shame if something like that were to occur just days before options expiry. Being an international market, I would think it would take some delicacy to reverse all the trades they didn't like. On the other hand, Jamie could just throw up his hands, quote Doris Day ("que sera, sera"), and pony-up some 300 million ounces of silver. I'd be OK with that.

Oct 28, 2012 - 5:37pm

Can you spot 'Waldo'?

It appears we've had some type of divine or constitutional intervention between the last thread and this one that the MSM (or Wiki) hasn't caught onto yet. But I did. Pretty funny!

Where's Waldo?


This will give everyone a good overview of the structure.

I don't believe I saw anyone mention the VP as being the second in command if something should happen to the President.

Oct 28, 2012 - 5:43pm


Now that's a successor most of us would agree on, I bet!

Oct 28, 2012 - 5:45pm

"The Troika will have the power to raise taxes automatically"

Germany rattled as taxpayer losses loom in Greece

7:46PM GMT 28 Oct 2012

The EU-IMF Troika of inspectors in Greece has called on European bodies and official creditors to write off a chunk of their loans, opening the way for first taxpayer losses since the sovereign debt crisis began.

A draft version of the Troika report obtained by Spiegel magazine said EMU governments and the European Central Bank must accept their share of losses in order to bring Greece’s public debt back to 120pc of GDP by 2020, deemed the sustainable level.
Greece must carry out a further 150 reforms, some involving a drastic loss of sovereignty. Troika payments will be held frozen in a special account under creditor control.

The Troika will have power to raise taxes automatically. There must be new laws to make it easier to fire workers and adjust the minumum wage.

In exchange, Greece should be given two extra years until 2016 to meet budget targets, costing up to €38bn.
German finance minister Wolfgang Schauble said over the weekend that taxpayer "haircuts" were unthinkable. "The question has very little to do with the reality in eurozone member states," he said.

Until now all losses from debt restructuring in Greece have been concentrated on a diminishing pool of pension funds, insurers, and banks, which have suffered an implied `haircut’ of 75pc. They have been squeezed dry.

The ECB’s president chief Mario Draghi says the ECB cannot accept write-downs on its estimated €40bn holding of Greek debt since this would amount to illegal state financing, so the losses would fall on EMU governments and the bail-out fund (EFSF).

The International Monetary Fund has made it clear that it will no longer provide any money unless Greece is put on a sustainable course. ...


No one can give Greece any more money, because they don't have any. The "power to raise taxes automatically" sounds a tad ominous. This repatriating the gold is beginning to sound like me searching the couch for quarters.

Oct 28, 2012 - 5:48pm

I have a stupid question

I'm trying to find out if copper is quoted in avoirdupois pounds, or in troy pounds?

It really makes a difference on the ounce to pound conversions.

Oct 28, 2012 - 6:02pm

Joe Biden

Hi Maryann...nice to see you. Yep, I agree

Joe Biden almost scared me as the possible next in command if 'O' would've been sidelined for awhile during the first four years. Fortunately he stayed healthy.

I'm willing to bet lots of folks felt the same way about Dick Cheney.

Jimi Hendrix - Hey Joe (lyrics on screen)
Oct 28, 2012 - 6:07pm

Dr C

Nominal design weight of a copper penny per US Mint isn't 3.1. It is 3.11, which to 4 digits is exactly 1/10 troy ounce.

1 Troy Ounce = 31.10(34768) grams

They can measure it in any system they want to. Commodity copper is traded in avoirdupois, but the mint can (and apparently did) design the copper penny to weigh whatever they wanted in whatever system they wanted, and they clearly and purposefully chose it to weigh 1/10 troy ounce. That means a roll of pennies weighs 5 Troy Oz, and a box 250 Troy Oz. And interestingly enough, that also causes a nominal box of copper pennies to weigh exactly 7775 grams, a semi-round metric number, even though the piece weight is in troy oz.

Note that they chose for the new penny to weigh exactly 2.50 grams, in keeping with the nickel, dime, quarter, and half (except 40% Ag) being in the metric system of 5, 6.25, and 12.5 grams. Nominal net content box weights in grams for 1, 5, 10, 25, and 50 are 6250 (zinc), 10000, 6250, 12500, and 12500 (non 40%) grams.

Oct 28, 2012 - 6:15pm


Your list is certainly NOT undermonkeyed (Waldo excluded)

Oct 28, 2012 - 6:17pm

Don't bite me - they have a cool process to reclaim metals

Start-up turns water into gold

A Magpie Polymers employee does research experiments in the small French start-up's headquarters in Saint-Pierre-les-Nemours, south-east of Paris. Photo: AFP

A small French start-up company is selling a technology with a hint of alchemy: turning water into gold.

It does so by extracting from industrial waste water the last traces of any rare - and increasingly valuable - metal.

"We leave only a microgramme per litre," according to Steve van Zutphen, a Dutchman who founded Magpie Polymers last year with a fellow 30-year old Frenchman Etienne Almoric.

"It's the equivalent of a sugar lump in an Olympic swimming pool."

Magpie Polymers operates from slightly shabby premises at a factory at Saint-Pierre-les-Nemours 80 kilometres southeast of Paris.

But it is at the leading edge of technology with a procedure developed at the prestigious Ecole Polytechnique in 2007.

The process is based on the use of tiny pellets of plastic resin through which waste water is pumped. Gold, platinum, palladium and rhodium, the world's most precious metals, little by little stick to the pellets and are thus separated from the waste water.

A single litre of this patented resin can treat five to 10 cubic metres of waste water and recover 50 to 100 grammes of precious metal, equivalent to "3000 to 5000 euros ($3743 to $6239)," Almoric said....

Read more:

Interesting that this would be becoming economic. Assuming that it is.

edit: I love the saucepan. At least we can be sure it is a start-up.

Oct 28, 2012 - 6:17pm

This should be interesting: Beware

"Algos-Only" Tomorrow As NYSE Shuts Floor Trading Due To Sandy

Submitted by Tyler Durden on 10/28/2012 - 16:07

The NYSE has just released a statement clarifying its hours tomorrow - due to the storm:


So, hold tight as all those low-lying humans will have left the building in the calm thoughtful hands of Johnny-5 and his friends.


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