Inexorable

223
Sat, Nov 17, 2012 - 12:48pm

Simply unbelievable and amazing in so many ways.

Not really sure where to start this morning. It's a Saturday and I don't really feel like taking two or three hours to type up a long and detailed post but I have to do it anyway. I have some significant issues/ideas for you to ponder.

First up, let's review again the weekly charts. The Outside Reversal Weeks of last week were followed this week by slightly down, red candles. This is no big deal so I don't want you to be concerned. The ORW is simply a sign of overall strength and sentiment and likely shows a general shift in momentum. That shift may have seemed hidden or inconsequential this week but, trust me, you'll notice it with the full benefit of hindsight in the weeks and months to come.

Note the powerful, long-term trends on these charts. The black lines are the primary long and intermediate term trends. The red lines are the BS, nonsense Cartel-induced corrective counter-trends and resistance levels. I am NOT fearful or the least bit nervous here. Any further weakness should be considered a Cartel gift, wrapped up in a big, fat bow, just in time for your holidays. In other words, buy the dips.

And we simply must take some time today to discuss the latest CoT and Open Interest numbers. First, let's talk about gold. This week's CoT period (Tue-Tue) saw gold rise about $10 while total open interest climbed by 12,607. So, what do you think happened? I'll pause here while you contemplate the obvious...

...

...

I'm sure these numbers will come as a great shock to virtually everyone:

Large Spec Net Long = +11,400 Evil Cartel Gross Long = -300

Small Spec Net Long = +5,600 Evil Cartel Gross Short = +16,700

TOTAL Spec Net Long Change = +17,000 TOTAL Evil Cartel Net Short Change = +17,000

Isn't that just freaking sickening? What an absolute joke. Managed money, hedge funds and small investors dramatically increased their exposure to gold after the re-election of President O'Bottom. In order to tamp down what should have been a dramatic increase in price, The Forces of Darkness took the sell side of nearly every trade and increased the outstanding inventory of unbacked, leveraged paper gold by 12,000 contracts or, stated another way, 1.2MM ounces or about 37 metric tonnes, roughly the equivalent of the entire alleged physical holdings of South Korea. Just another example of ongoing manipulation and price "management" that continues to be overlooked/endorsed by Cueball and Thunderlips. Way to go, boys!

But the intriguing story continues to emanate from the silver pit where things look quite a bit different from gold. The CoT saw spec positions that were nearly unchanged for the reporting week. While silver rose 46¢, the total Large Spec net long position only grew by 300 and the Small Spec net long position only grew by 100. So, what's the deal??

Do you recall back in mid-August I got all worked up over what I thought was a coming "Civil War" within the Silver Cartel? At the final bottom of the March-August "correction", suddenly the gross long position of The Silver Cartel began to surge. At the same time, the gross short position (JPM) was forced to also grow in order to suppress price and swallow this demand. What happened next did not play out as a "Civil War" (at least not that time) but the huge jump in Cartel gross longs did precede the dramatic, 6-week rally that took silver from $27.50 to $35.50.

On the Tuesday 8/14 CoT survey, the Silver Cartel gross long position surged 3,202 to 47,797 while the gross short position grew 4,752 to 71,199. Now, compare this to the numbers on this week's CoT:

Total Evil Empire Gross Long = +3,071 to 41,797

Total Evil Empire Gross Short = +4,354 to 92,758

Whether or not this is finally the start of my long-awaited Civil War matters little. What does matter is that we are seeing the exact same CoT structure and positioning that we saw in mid-August, right before a 6-week, 30% rally in price. Hmmmm........

And I'll give you a few more nuggets to chew on. Back on Thursday, the price of silver fell about 20¢ on the Comex. Regardless, the total OI continued to grow that day, adding another 1,200 contracts to 145,883. This is extraordinary and astounding! For perspective, take a look at these dates, prices and OI numbers:

DATE OI LEVEL PRICE

11/12/10 147,801 $25.94 QE2

12/31/10 136,275 30.91

2/25/11 136,560 32.90

4/1/11 137,580 37.74

4/29/11 129,712 48.58 Price Peak

8/5/11 119,241 38.20 U.S. Debt Downgrade

10/28/11 110,911 35.28 Demise/Theft of MFG

12/30/11 105,982 27.88

1/27/12 101,885 33.75

2/24/12 118,204 35.33 Price Peak

3/30/12 109,693 32.47

6/1/12 115,991 28.50

8/17/12 125,817 27.99 March-August correction ends

11/16/12 145,833 32.50

So, here are your tasty nuggets:

  • First and foremost, why is total silver OI at the highest level in 24 months?
  • Price is exactly the same as 3/30/12 but OI is UP 36,000 contracts.
  • For 2012, total OI is UP 40,000 contracts or nearly 40%. What percentage likelihood would you have given that type of liquidity growth given that MFG disappeared on 11/1/11?
  • Why did total OI decline by nearly 20% in early 2011 while price nearly doubled?
  • With OI back to late 2010 levels, will it continue to grow or are we on the verge of another, significant short-covering rally?
  • Though there are many, possible answers to those bullets above, one thing is certain...The multi-year high in total open interest that we are currently seeing in silver guarantees that some extreme price action and volatility is just around the bend. Consider this your warning. Be prepared for a lot of fun...and angst...in the days and weeks ahead.

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    OK, time for me to sign off. I need to get out and cut the grass, put the snowblade on the John Deere, string some outdoor Christmas lights and watch some football. I hope you have a great weekend and then return on Monday, ready for volatility and fun.

    TF

    About the Author

    Founder
    turd [at] tfmetalsreport [dot] com ()

      223 Comments

    Frankenstein Government
    Nov 17, 2012 - 1:27pm

    Interesting Points

    Thanks TF. Thanks for discussing the COT. I am beginning to think that I am living in some bizarro universe where demand and supply have nothing to do with price.

    This could only mean one thing. Bankers distorting true price discovery. The CFTC is a fucking joke. The PM markets are like a free for all- with no referees. I am going to speed up my timing and add to silver positions based on your analysis.

    Motley Fool
    Nov 17, 2012 - 1:36pm

    "Just another example of

    "Just another example of ongoing manipulation and price "management" that continues to be overlooked/endorsed by Cueball and Thunderlips. Way to go, boys!"

    Is it possible to establish a long position if somebody does not take the opposite position? If it is possible, with who do you establish the position?

    Motley Fool
    Nov 17, 2012 - 1:48pm

    You are overlooking the key point

    The entire speculator buy position was eaten up by The Gold Cartel.

    In a free and fair market, there would be a mix of buying and selling from the specs and the comms, just as there are longs and shorts spread across retail and institutional equity investors.

    In gold, 100% of the buying was spec and 100% of the selling was Cartel.

    القراع عصفور
    Nov 17, 2012 - 1:48pm

    MUX owners

    what am i supposed to do? too busy to wade through the legalese. anyone? TIA.

    القراع عصفور
    Nov 17, 2012 - 1:50pm

    thanks TF

    whack a mole. back on ignore, troll.

    Nov 17, 2012 - 1:57pm

    Long term charting

    I loved the spikes in price of the past two years, but I take comfort from that bottom uptrending line of the AG chart. For all their manipulation, they have not been able to keep the floor from continuing uphill. Ivars posted a very long term chart yesterday that clearly show this.

    Somebody posted yesterday that cost averaging over the past two years leaves on at about break even. but where else are you going to park your assets that provides protection from this inevitable collapse that is approaching--someplace that allows you to ignore the day to d ay markets and news. I'd rather be in metals than in mutual funds.

    The best fund my provider has for my retirement is at about 2010 levels still. It dips, then comes back, but never makes any headway. And I really do like to sleep at night. Soon that fund will be in metals or a permanent residence.

    Motley FoolTF
    Nov 17, 2012 - 2:01pm

    You are overlooking the key point

    Thank you for the response.

    "In gold, 100% of the buying was spec and 100% of the selling was Cartel."

    This does seem strange, if everything was normal one wouldn't expect this to be the case I would think.

    Mind if I run through an example just to see if I have the dynamics right? Anyone else is welcome to correct my misunderstandings.

    Let us say a mine approached a bank looking to hedge some production, as they expect a price decrease. Let's say in platinum.

    So the miner sells the metal short, and hedges that with a comittment to supply metal to the market and repay the loan.

    Assuming the bank agrees to this, it then has to take a long position in the metal to correspond to the miner's short position. The bank is in essence taking a bet against a decline.

    Banks however generally do not like net exposure, they get some service fees for setting up the contract.

    So in order to make their book net neutral, as Blythe claims they do, they would have to go net short the metal in the open market right?

    So on the open market we would see a net short position for them, where in fact they are net neutral, and the mine has the short position.

    Is this right?

    Thanks for any asistance. These things seem complicated.

    MF

    Magpie
    Nov 17, 2012 - 2:06pm

    re: "Housing recovery is real" headline from last thread

    In the little town where I live there are houses sitting vacant....some for as many as three years. NO sign in the yard, NO MLS listing. The yards have been maintained, the eviction notices have been removed from the doors, but they are NOT for sale. From personal observation: Houses that sold for $200,000-230,00 during the buying frenzy had dropped to $35-$45,000 (maybe $75,000 if the upgrades were were extensive) at the height of the foreclosure crisis. Now the prices have stabilized closer to $100,000...and the MLS list is SHORT. A large majority of those listing are non-distressed properties. The buy-and-flip people left a few years ago. Here, at least, the shadow inventory still exists, and I think it's by design......maybe those banksters don't want true price discovery.

    And now we're seeing a whole new flood of people losing their jobs due to cutbacks, while thousands of other workers are having their hours cut due to Obamacare. And, if we get shoved off the fiscal cliff, and food prices continue to rise, even more homes will be at risk. Rather than a housing recovery, I think we're at the front end of another housing crisis. Time will tell....I guess it all depends on when the banks and the government think enough wealth has been transferred to them.
    _________________

    Foreclosure rate up 3%

    https://www.marketwatch.com/story/foreclosure-activity-rises-3-in-octobe...

    “We continued to see vastly different foreclosure trends across the country in October, depending primarily on how each state’s foreclosing infrastructure was able to handle the high volume of delinquent loans during the worst of the foreclosure crisis in 2010,” says Daren Blomquist, vice president of RealtyTrac, in a news release.

    Millions of families lost their homes to foreclosure after the housing crash six years ago. Now, some of those families are back in the housing market.

    ”Unfortunately, the three states dealing with the biggest rebound in deferred foreclosure activity — New Jersey, New York and Connecticut — also had to deal with the devastation to homes inflicted by Superstorm Sandy,” Blomquist says. “The foreclosure moratoriums being put into effect as a result of the storm will likely extend the already-lengthy time to foreclose in these states, further prolonging a fundamentally sound housing recovery.”

    New Jersey foreclosure activity was up 140% from October 2011, while activity in New York was up 123%, and activity in Connecticut was up 41%, according to the report.

    _________

    https://www.fox5vegas.com/story/20103200/nevada-foreclosure-rate-climbs-...

    Nevada foreclosure rate climbs to No. 2 in nation

    Posted: Nov 15, 2012 2:09 AM PST Updated: Nov 15, 2012 2:09 AM PST

    LAS VEGAS (AP) - Nevada's foreclosure rate has climbed to second in the nation even after activity dropped significantly year-over-year.

    RealtyTrac reports Thursday that Nevada's October foreclosure rate is down 47% year-over-year, but up 41% compared with September. The state jumped from its No. 5 ranking in September.

    One in every 352 properties in Nevada saw some sort of foreclosure filing last month. That rate was behind only Florida.

    BagOfGold
    Nov 17, 2012 - 2:08pm

    Green Lantern & Mining Requires Brass Balls...

    https://www.tfmetalsreport.com/comment/143410#comment-143410

    As Rick Rule says..."You are either a victim or a contarian"...I am a true believer & contrarian!...As a long time Turdite...with "the list" of winning penny miners since 2009...all for free & no subscription required...your research begins here...

    https://www.tfmetalsreport.com/forum/1932/bag-golds-penny-stock-arcade-e...

    Thanks to everyone for the continuing support!!!...

    Bag Of Gold

    Sisyphus
    Nov 17, 2012 - 2:09pm

    Sarcasm is the lowest form of...

    ....commentary?

    https://thefundamentalview.blogspot.ca/2012/11/the-silver-manipulation-c...

    "Those damn manipulators at the CME group!!! In what appears to be a blatant attempt to manipulate the price of silver higher, the CME Group has lowered margin requirements for silver. How dare they try to manipulate the price of silver up at a time when the market looked like it was going to go down! Thieves I tell you! Thieves! "

    Meanwhile, QE hasn't really got started yet. No change on Fed balance sheet; new Chinese leadership still wondering what to do; Draghi still waiting on Rajoy who is dragging his sorry arse.

    And an observation. Seems like Indians use classic economics to buy (BTFD) - they buy when prices are low. The Chinese seem to be trendspotters - if prices are rising then buy before it gets more expensive. Given China seems to have overtaken India as the largest PM buyers, a rise in prices should pull more Chinese in and give some real momentum to an uptrend.

    If we're allowed to have an uptrend!

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