What A Week!

375
Sat, Dec 1, 2012 - 11:34am

First, I thought it'd be crazy. Then, by Tuesday, I thought it'd be dull. It turned out crazy. Just another week in the life of a Turd.

What did we see:

  • After the price surge of Black Friday, prices were pinned below $1750 in gold through option expiration on Tuesday.
  • Significant raids related to First Notice Day on both Wednesday and Friday.
  • Robust support appeared where we'd like to see it, namely $1705 in gold and $33.20 in silver.
  • On a personal note, I had a very successful week, after being notified that I was at once "retarded" and "dangerous". This comes just a few weeks after finding out that I am "morally bankrupt". Winner, winner, chicken dinner! That's the trifecta!

Before we look at the setup for next week, let's look back at yesterday so that we all can get on the same page regarding the mechanics of the selloff. Without doubt, the action of Wednesday and Friday was directly related to First Notice Day and contract expiration of the Dec12 gold and Dec12 silver. An overly-simplified way to explain this is:

  1. Bad Guy Bullion Bank builds up a very large position in the Dec12. BGBB is both long and short the Dec12 because the BGBB has taken turns, alternately buying and selling, in its attempt to pin price at a certain level for a minimally-damaging option expiration.
  2. Once Dec12 options expired at the close on Tuesday, BGBB needs to close all of its long and short futures positions in the Dec12.
  3. An entity without nefarious intent would simply liquidate both sides simultaneously and close the positions.
  4. Instead, the BGBB manipulates price for its own benefit by completely dumping the long side onto the market.
  5. This drives price sharply lower and initiates HFT-momo algo selling which drives price even lower.
  6. Into this HFT selling, the BGBB gradually covers the short side of its Dec12 position.

As it was happening yesterday, I printed these five charts. Note that the downward action was entirely contained within the metals. Other "risk" assets like crude or stocks or the euro were relatively stable and unchanged. Below are mid-day, five minute charts:

The resulting effect accomplished three, critical objectives for the BGBB.

  1. After all the selling, price is reset $20-30 lower and the chart looks unfriendly.
  2. Crushing price allows the BGBB to exit its entire position in a more profitable manner than if they had simply covered the thing at the market.
  3. All of the downside volatility frightens and coerces the longs, who might have considered delivery, into dumping, instead. This selling is also used as prey for the BGBB to cover the short side of its spread.

So, here we are. All of that nasty expiration and FND stuff is finally behind us and we're ready to roll into December. In the end, I expect this to be a very nice and positive month that will set us up for a big, exciting and explosive 2013. Getting there, though, will likely be volatile and challenging. To begin with, though the silver charts still look pretty good and silver remains above all of its moving averages, we'd be kidding ourselves if we thought the gold chart looked equally fine. It doesn't. So, first and foremost, we need to hold support early next week and begin a move back toward $34.20 and $1740.

Just a couple of "housekeeping" items before I knock off for the weekend.

First, yesterday's CoT was unremarkable as it once again showed that all the specs were buying and all of their buying was absorbed by the Cartels. Just once I'd like to see a nice, fair and even mix. Here's reprint of the comment I posted into yesterday's thread:

This week's CoT is just another sickening example of bullion bank control. Wait until you see the math.
GOLD
For the Tue-Tue reporting week, price rose by $19 and total OI expanded by 5,244.
Large Spec Net Long change = +12,927
Small Spec Net Long change = +3,056
Total Spec Net Long change = + +15,983
Cartel Net Short change = +15,983
Enough said.


SILVER
For the reporting week, price rose by $1.05 and total OI rose by just 392.
Same shit, different shiny metal.
Large Spec Net Long change = +772
Small Spec Net Long change = + 834
Total Spec Net Long change = +1,606
Cartel Net Short change = +1,606


The Cartel net short change was almost equally divided between covering longs and adding new shorts. The total Cartel gross short position is now 99,317. This is the highest level I can ever recall seeing. The last time total OI was this high on October 2010, the Cartel gross short position was 92,150.
And this is interesting...Back in October of 2010, the net short ratio of The Silver Cartel was 3.07:1, with price near $26. The Cartel was short 92,150 and long 30,023. As of last Tuesday, with price near $34, the gross Cartel short position was 99,317 but the long position was 40% higher at 42,525 for a ratio of 2.33:1. The only real difference, besdies price, between October of 2010 and today is this:
The Cartel gross short (+7000) and the Small Spec gross short (+4000) is nearly equal to the rise in Cartel gross longs (+12,000).

Next, if you haven't yet signed up for the free webinar on Wednesday, you really should do so. It's scheduled for Noon EST and will be recorded for replay if you can't make it at Noon. Not only will Paul Coghlan be speaking and demonstrating his technical analysis, but our pal Andrew Maguire has promised to make an appearance, as well. Just click this link to register: https://www1.gotomeeting.com/register/240678176

And here's something on which I need your feedback. We have the opportunity to construct our own, "private label" bullion and coin store. It would be directly linked here but the guts of it (the infrastructure) would be an already-existing bullion and coin service. Call it the "TFMetalsMart" or something. My questions are: Is this a good idea? If the pricing was fair, would you buy from it? Would this seem a conflict of interest in that I'm such an active promoter of stacking physical metal? Please use the comments section of this thread to share your feedback.

Lastly, if you consider yourself an outstanding "prepper" or a "survivalist"....if you are prepared for anything, willing and capable of living off the land...and if you are competitive by nature, please send me an email at turdistheman at gmail dot com. I may have something for you to consider. Serious inquiries only please.

OK, that's it. We survived last week and, though we're damaged, we're still battling and expecting big things ahead. Go now and relax but return on Monday, ready to continue the fight.

TF

About the Author

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

  375 Comments

Hagarth
Dec 2, 2012 - 3:13am

Please some repect for our fellow Turd

Although I do not know how much experience in all this PMs industry that you all have, mine is remote.

Therefore I can and attempt to be a TURD: Trainee Under Rapid Developement

philipat
Dec 2, 2012 - 4:24am

Fed Dilemna

Everyone thinks that EUR/USD should be going down towards 1.15-1.18. Instead it went up to 1.30. Same for Gold and Silver. Why? Same reason the Fed and the EE either don't want it that way, or make more money playing their own game, using massive leverage uniquely available to them.

That said, with apologies, I repeat an earlier post because I still think it very relevant and may help explain the PM situation.

The Fed, and by extension the Bullion banks, has a dilemna with the manipulation of the Gold market.

It is now obvious even to the brilliant Ph.D. Central bankers that Physical Gold is scarce and getting scarcer. The Chinese have a long-term plan to finish off the Dollar as the World’s reserve currency by re-launching an RMB as a fully-convertible currency backed by Gold. They are already implementing this plan via bilatera tradel deals in RMB with India, Brazil etc. which entirely circumvent use of the Dollar and the "International" Banking system. It will take about another 3 years to complete the transformation of the domestic Chinese economy into a consumer consumption driven economy and to acquire the 8-10K tons of Gold necessary to back a fully-convertible, Gold-backed RMB.

The Fed knows this and also knows that right now the Chinese are acquiring every single bar of Gold anywhere that isn’t nailed down.

So, back to the dilemna. On the one hand, they don’t want Gold to soar, because that would expose the Green Fiat game for the Ponzi that it is and hasten the demise of the Dollar. On the other hand, they don’t want to collapse the price of Gold either, because that would just allow the Chinese (And miscellaneous domestic Stackers, but they care less about that because the domestic US physical can always be confiscated later) to accumulate Gold at a lower price and hasten the demise of the Dollar.

If this logic is correct, perhaps we should expect to see a very narrow trading range in Gold for the forseeable future?

Chris P. Bacon
Dec 2, 2012 - 4:33am

Does it have to be a round?

I suppose custom blanks would probably be cost prohibitive, but I'd sure buy some 1 oz Turd "Piles"!

Excalibur
Dec 2, 2012 - 4:45am

Narrrow trading range

Philipat, I think it is more likely that managed ascent is how it will play out to balance the forces that you state, with increased volatility from the long term trend line.

Of course if there is a delivery failure, then the price will jump to a new level. I think I could live with that

Excalibur
Dec 2, 2012 - 4:52am
Cononish1314 Chris P. Bacon
Dec 2, 2012 - 5:50am

Turd Piles

What if a year's production suddenly got dumped?

(And we'll obviously need some paper.)

tpbeta
Dec 2, 2012 - 5:56am

@MUDbone @Torpedo FIsh

Don't go dissing Norcini just because he doesn't believe in exactly the same conspiracy theories that you do. This isn't the People's Front of Judea. IMHO his weekly calls are right more often than not in my experience, and he's always full of smart thinking.

Slick
Dec 2, 2012 - 6:07am
Ernie Pantusso
Dec 2, 2012 - 6:18am

Dec. OI at the Comex = 14 Mio/oz

Dec. OI at the Comex = 14 Mio/oz

Dec. OI at the Shangai Futures Exchange = 14 Mio/oz

Big discussions and speculations here about New York while no one cares about Shangai

We still think american while we finally should get used to think global

boatman
Dec 2, 2012 - 6:18am

norcini

has FORGOTTEN more about commodities than anyone here, except the mayor, has ever learned.

and then there's his politics....................i suspect you scratch a norcini-hater deep enough n you might, BUT NOT ALWAYS, find an obozo disciple.

but, hey, this is just MY OPINION.

*********************************************************************************

XTY...........yes hard to imagine...........me, a beer drinker......gotta have one vice.....having given up sleeping around

but i am trying to eliminate wheat bread from my diet

and no more used vintage patagonia jackets from ebay...............well, maybe just a couple.

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