CoT and Chart Review

Sat, Dec 8, 2012 - 1:29pm

Considering where we began the week and, also considering where we were on Tuesday, last week didn't turn out half bad. Suddenly, the charts look pretty good and the FOMC meets this week. Got your rally hat on? I do!

But first, before we get rolling, check out these two charts. On the left is a 15-minute Feb gold. It shows a classic, non-news BLSBS pattern. After initial hesitation, the news is aggressively gamed by those in charge. Price gets jammed lower to blow out some stops, panic some longs and inspire some fresh shorts. Then, in the blink of an eye, price reverses and everyone playing gets screwed again. Within the hour, calm is restored and it's as if nothing has happened...unless you're one of the unlucky ones who tried to battle Goliath. On the right is a daily chart of the Jan13 crude. LOTS of noise out there regarding Syrian invasions and chemical weapons but none of it seems to be bothering the crude pit. In fact, there seems to be no reason to even pay attention to crude until and unless it breaks UP through $90 or DOWN through $85. Until then, maybe just trade the range with tight stops?

OK, onto the main set of charts. First, let's look at gold. I did not print off a daily chart but you should know that we put another "engulfing candle" on the chart yesterday and this is usually a very good sign (if it's a bullish one...which it is). On Thursday, the Feb13 gold had a high of $1704.80, a low of 1687.10 and a close of 1701.80. Yesterday, the Feb13 saw a high of 1706.90, a low of 1684.10 and a close of 1705.50. Note that Friday's low was lower than Thursday's low and Friday's close exceeded Thursday's high. Quite bullish, indeed.

Look closely at the 4-hour chart but look even more closely at the 2-hour. On the 4-hour, gold has clearly broken through the two-week long downtrend, regardless of how you draw it. On the 2-hour, notice the almost-perfect, reverse head-and-shoulder bottom and the clear resistance at 1710. Taken in concert, gold certainly looks poised for an UP week next with future resistance near 1725 and the old Iron Dome of 1735-1740.

Silver looks nearly identical to gold. It has also quite clearly broken its 2-week downtrend and is poised for a resumption of the rally. With a similar, reverse H&S in place, silver needs to first clear resistance near 33.30 and then move on toward 33.80 and 34.40.

And now on to the CoTs. I recognize that the reports are almost always groomed and painted by The Cartels in order to mislead the reader, nevertheless, I knew that this week's survey would be significant simply due to the scope of open interest reduction and size of the price moves, all related to the expiration of the Dec12 contracts. I was not disappointed.


For the reporting week, price fell nearly $50 while OI fell by a whopping 45,000 contracts (9%). There's really nothing unusual here but you need to see the numbers because they will be quite instructive when we compare them to silver.

Large Spec Net Long = DOWN 34,671

Small spec Net Long = DOWN 6,445

Gold Cartel Net Short = DOWN 41,116

As you can see, it was exactly as expected. For every net long contract a spec sold, The Cartel covered a net short. Some of the internals are interesting, though. For example, the gross short total of The Cartel fell by 46,346. That is a nearly 12% reduction in just one week. It takes their total gross position down to 353,483 and brings the Cartel net short ratio down to 2.6:1. For perspective, at the last price peak near $1800 in early October, The Gold Cartel was short a gross number of 405,520 and had a net short ratio of 2.98:1. At the last, major bottom in mid-August, The Gold Cartel was short 291, 358 and had a net short ratio of 1.98:1. At this point, the gold CoT has reestablished a neutral structure and does not stand in the way of a rally in price.


Boyohboy. This is where the action and intrigue are. First, read the paragraph above again and commit some of those numbers to memory. For full perspective in silver, those gold numbers are very important.

For the reporting week, silver was down about $1.25 and the total OI fell by 9,000 contracts or so (5%). The casual observer would rightly expect the silver CoT structure to show roughly the same changes as gold. The casual observer would be dead wrong.

As noted above, on the price drop last week, the Large Specs in gold shed 34,671 net long contracts. On a similar price drop in silver, the Large Specs shed a grand total of 3. That's right...3! The Large Specs dropped a rather miniscule 880 longs but also covered 877 shorts. That's a net change of 3. The Small Specs played along a little but but still nowhere near what JPM et al would like to see. The Small Specs dumped 1,324 longs but they, too, covered shorts to the tune of 507 for a net change of just 817.

So where was the action? All of it was within The Cartel category. The Cartel members who held some long contracts (not JPM) dumped 4,134 longs and The Cartel members who are short (including JPM) covered 4,954 shorts. So, on the $1.25 price drop, The Silver Cartel only saw their net position fall by 820 contracts and their net short ratio barely budged at 2.52:1. Again, refer back the the gold CoT. The Gold Cartel reduced their net position by over 41,000 contracts or, roughly, 15%. On a similar price move, the Silver Bad Guys were only able to reduce their net short position by 820 or, roughly, 1.3%.

What the heck is going on here? Since time immemorial, price shakeouts like the one last week have been staged to force the specs to sell in order for the banks to cover. During last week's beatdown, the only ones selling were the smaller commercials. The large specs barely budged. This is an extremely unusual and potentially significant development and it continues the trend we've suspected of strong hands becoming the primary longs in silver.

And now, for perspective, check this out. Back on 10/2/12, The Silver Cartel was actively working to cap price below $35.50 in order to keep silver within its 2012 range. It worked, obviously, and price fell below $31 before recovering to current levels. But here's the crazy and wild part:

10/2/12 Large Spec gross longs = 47,236

Current Large Spec gross longs = 50,204

10/2/12 Silver Cartel gross shorts = 93,628

Current Cartel gross shorts = 96,924

And let's throw this log on the pile, too. Since 10/2, the "everyone but JPM" Cartel has also added gross longs, growing from 35,788 to 38,410.

What in the name of Ted Butler is going on here?? Are we finally seeing the beginnings of our "Civil War" in silver? It increasingly appears that JPM is being painted into a corner. Where normally The Big Short would sell into rallies and cover on selloffs, that doesn't seem to be working this time. The non-panic, non-selloff of the Large Specs is extremely encouraging for all of us. I'm so stunned by it that words fail me. Not only last week but in the two months since the early October peak, the Large Specs have been buyers, not sellers. Even from a net perspective, the totals are astonishing. On 10/2 and with price above $35, the Large Specs were net long 38,118. As of last Tuesday and with price below $33, the Large Specs are net long 41,272.

I could go on and on but I think you get the picture. For the first time in memory, the Large Specs seem emboldened and willing to hold paper silver, even in the face of orchestrated Cartel raids. The key now will be the everyone-but-JPM commercials on the next rally. Will they aggressively re-add longs, buying back the 4,000 they sold this week and then even more? Time will tell. For now, this week's silver CoT is very, very encouraging. The charts look good, too, so let's see what the rest of the month brings. I'm still an ardent believer that 2013 is going to be an historic year for silver. The data and price action from this past week only bolsters my confidence.

I hope that everyone has a safe and restful weekend. Please come back on Monday, recharged and ready to go. With the FOMC meeting coming up, the week ahead promises to be wild one.


About the Author

turd [at] tfmetalsreport [dot] com ()
Does Feb19 Comex gold close above $1250 on Friday?
Total votes: 185


mack · Dec 8, 2012 - 1:32pm

top 5?

time to gom to work on the stack

Havenstein · Dec 8, 2012 - 1:33pm


Now to read.

Ed. Seconds work.

mack · Dec 8, 2012 - 1:33pm
SilverDog66 · Dec 8, 2012 - 1:39pm

Andrew Maguire Trade updates

I've been doing some research into Andrews past and after watching last Wednesdays free Webinar, I'm very interested in joining his army! Can anyone here vouch for his past success that he posts on the COGHLAN CAPITAL website? He claims to have 100% profit success each month for the last year, are there any turdites out there that can confirm this? Does Turd use him?

Sorry to be off topic, Thanks

Ilya Repin · Dec 8, 2012 - 1:44pm


Technically speaking, the target would be 1750 EUR and this would correspond to 2250$

Charting should be for perspective only, I’m long physical and will not sell, just so you know.

Oh and thanks for the podcast TF. Jim is a great analyst with a sharp wit.. Most pleasant listening.

Lets see how things unfold

Anonymous · Dec 8, 2012 - 1:56pm

Removed comment

Removed comment.

Ilya Repin · Dec 8, 2012 - 1:56pm


OK so I mentioned in a comment on Wednesday 5th on TF’s post titled “Why” that XAUEUR was signalling a major bottom and that this would coincide with all other currencies.. And that we should not be overly concerned by short term shenanigans in XAUUSD alone.

It’s essential to consider other currencies when doing PM analysis.

A major break out on EUR gold, one of this magnitude, would be very RISK OFF for most risk correlated assets due to the implications it would have on EURUSD. The so called “Fiscal cliff” comes to mind.

tyberious · Dec 8, 2012 - 2:09pm

@TF Silver Longs

Do you think they will hold for delivery or are these simply cash players, that "know" something? Could be that they are aware of the precarious position of JPM?


Frankenstein Government · Dec 8, 2012 - 2:09pm

Well Struck

We are running out of silver. It is increasingly harder to permit, find, smelt, and deliver because all of the easy stuff has been picked up. Any idiot claiming that it only takes 5 bucks to get an ounce of .999 silver is nuts. The absolute best grades of ore are costing 15-20 bucks an ounce t process.

On the gold front, Kinross is producing gold at about 800 bucks per ounce. Most producers are running out of ore bodies. Some grades are as low as 2 grams a ton. Thats a lot of earth moving and sifting...16 tons to get one ounce of gold. Existing gold claims with proven reserves are going to become very valuable. I am going to plug a spec junior that I own. MNRLF. At 30 cents a share, it might be worth a lot to some big player like they start looking for proven ore that assays at 15g a ton. Please do your own DD.

People cannot afford 1700 dollar gold. But they can afford 32 dollar silver. I expect this to be where the action is. Silver is getting every bit as scarce as gold with an enormous price discrepancy to boot.

Flatsfisher · Dec 8, 2012 - 2:10pm


As a lurker here, I just wanted to thank Turd (who I have fed in the past) and all of the other informative posters. Very informative/entertaining site!

Damn -- hit a wave and lost everything on board!

Keg · Dec 8, 2012 - 2:22pm

$1 Trillion coin anyone? No more debt limit.

Insane: Liberals Contemplate $1 Trillion Platinum Coin to "Solve" Debt Limit Issue

Welcome to Zimbabwe. This is not a parody -- it is an actual report from the Washington Post:

Some economists and legal scholars have suggested that the “platinum coin option” is one way to defuse a crisis if Congress can’t or won’t lift the debt ceiling soon. At least in theory. The U.S. government is, after all, facing a real problem. The Treasury Department will hit its $16.4 trillion borrowing limit by next February at the latest. Unless Congress reaches an agreement to raise that borrowing limit, the government will no longer be able to borrow enough money to pay all its bills. Last year, Republicans in Congress resisted lifting the debt ceiling until the last minute — and then only in exchange for spending cuts. Panic ensued. So what happens if there’s another showdown this year? Enter the platinum coins. Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases. Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

Rest of story:

Anonymous · Dec 8, 2012 - 2:23pm

Removed comment

Removed comment.

Sisyphus · Dec 8, 2012 - 2:24pm

Indeed, it's a mystery

Do they expect a different outcome in silver from gold?

The COT is from Tuesday, yet when we had the spike on Thursday, gold rose and silver zoomed. Same in the post-BSBLS dip and recovery on Friday.

They can't think gold is going to rally while they desperately manage to keep silver in a cage. Doesn't make sense.

opalboy · Dec 8, 2012 - 2:25pm

Everyone have a great weekend!

I think stuff is gonna have to get a lot shittier before any moon shots, but we are accumulating not selling.

Has anyone here ordered any MRE's from cheaper than dirt?

any recommendations?

Turd, have you decided on the metals store yet?

Keg · Dec 8, 2012 - 2:31pm

Pray for a Silver Crash

I'm not praying for a silver crash. But I would not complain about a nice dip. Due to some unexpected circumstances, I came into a decent amount of fiat a few weeks ago. Need one more major PM purchase before the exciting 2013 predicted by our fearless Turd. smiley

pickaxe Frankenstein Government · Dec 8, 2012 - 2:34pm

Gold Grades

FrankieCo, you overstate the grades for many mines being permitted or being brought on-line in recent times.

Bulk tonnage, low grade Gold mine grades are now often only 1/2 gram per ton or even lower if there are some byproduct credits to be had. Imagine the effort and energy inputs that are required to mine, transport and process this low grade ore just to produce less than one gram of Gold, as out friend with the EROI moniker is so fond of pointing out.

If the Au price doesn't increase, we'll continue to see marginal mine be put on care & maint. or close permanently, like recent actions of Alacer on their Australian operations or Richmont in Canada. Projects under permitting or construction are also being curtailed due to high costs and low returns.

pickaxe Frankenstein Government · Dec 8, 2012 - 2:37pm

Gold Grades

Oops - duplicate post.

babaganoush2307 · Dec 8, 2012 - 3:07pm

@ Keg

Reading that really really really makes me want to pick up some platinum. I could see them pulling that out of their ass and if they do platinum is suddenly going to be worth a lot lot more. Best to have a little just in case! wink

Silverbugs mack · Dec 8, 2012 - 3:08pm

Gold and Silver really do

Gold and Silver really do seem to of formed a bottom this time. Were going to see a rally into year end and possibly into the beginning of next year. All that stacking is going to pay off. Hold you gold and silver.

rocoach SilverDog66 · Dec 8, 2012 - 3:19pm

Maguire's trading record

As my good mate Bernie Madoff often said: if it sounds too good to be true, it probably is.

Keg · Dec 8, 2012 - 3:24pm

@babaganoush - it's called diversity.

I do keep hearing about how great "diversity" is. I believe in "diversity" in weapon systems: Rifle, handgun or shotgun? Revolver or semi-auto? Glock, S&W, or Springfield? What the heck, get as many as you can of each. I have diversified with 90%, Eagles, Leafs, and different types of bars and rounds. I see no reason that diversifying into platinum would be a bad idea. Helps to make sure you are politically correct by promoting diversity in your household.

babaganoush2307 · Dec 8, 2012 - 3:29pm

@ Keg

I have some platinum (and palladium and guns) but it is quite literally a joke when you put it next to the silver and gold stack. Just reading that made me want to increase the holdings lol Diversifying is great because you always feel that you have something that somebody will want no matter the type of person! yes

silver66 · Dec 8, 2012 - 3:32pm

Silver66 needs some help

Mrs. Silver has been busting my chops as to what I want Santa to bring.

I was mulling over and remembered a post here or on SGTreport about a guy who has started to make rings out of silver coins. I remember thinking that that would be a cool ring to wear

Can a fellow Turdite direct me to or make a recommendation to a website that sells these.

My preference would be to have a Canadian ring made and I would like to buy from a small guy making a honest living and not some commercial shop

Thanks in advance


Keg · Dec 8, 2012 - 3:34pm

Rally until the end of the year?

I think the bias is definitely that direction. But remember the swings in the markets that last time we we at a budget "crisis". This is going to be a wild ride.

Intimidator 305 Roller Coaster HD REAL Front Seat POV Kings Dominion
BagOfGold Frankenstein Government · Dec 8, 2012 - 3:36pm

Frankentstein Go...

I had Mineral Mountain on "the list" previously...however I deleted it because they never have put together an NR-43-101 compliant & it's hard to say when they will!...Hmmm...Minerals Mountain "Starting to look for proven ore that assays at 15 g a ton"...isn't that what ALL the miners are doing?...Beg to differ...there are a number of them already on "the list" which have the goods!...Take a peek!...Click on this link to get to my thread...

& then click on the link below my signature in each of my view "the list"!...

Here are 2 candidates with the goods!!!...

Market cap of $14.23 at 13 1/2 cents per share...Gold/Measured & Indicated: 519,000 Ozs @ 12.5 GPT...Gold/Inferred: 636,000 Ozs @ 12.2 GPT...

Market cap of $24.84 at 14 cents per share...Gold/Indicated: 538,000 Ozs @ 10.05 GPT...Gold/Inferred: 822,000 Ozs @ 8.76 GPT...

Bag Of Gold

Bollocks · Dec 8, 2012 - 3:40pm

Just a day after I said I keep getting calls from the banks...

Which? says bank staff 'still push unsuitable products'

Major mis-selling scandals have failed to stop banks pressuring staff into pushing potentially unsuitable products, Which? has said.

The consumer group found 65% of bank staff with sales targets said they were being placed under more pressure than ever to hit them.

Which? interviewed more than 550 bank staff, of which 371 have a sales role. And, of those, 298 said they had sales targets to meet.

Its executive director, Richard Lloyd, said it was a "shocking state of persistent sales culture".

1min 45 sec interview here:


Like I said, goddamn VULTURES, desperate to get everyone into debt and keep everyone enslaved via that debt with money they produce out of NOTHING.

I'm really glad I'm not in debt and that nearly all the fiat I had saved over the years is now out of their THIEVING system and in PM's.

Hurrah smiley!

rocoach · Dec 8, 2012 - 3:42pm


Absolute BS. Andy's record is fully-documented on the Coghlan Capital site. He does an outstanding job.

rocoach · Dec 8, 2012 - 3:48pm


I'm sure he does an excellent job. I was just joking. Jeez.

¤ · Dec 8, 2012 - 3:49pm

Gold/Silver Ratio

6 month gold silver ratio

6 month gold price per ounce

2 year gold silver ratio

2 year gold silver ratio

15 year Gold/Silver Ratio
15 year gold silver ratio

36 Year Gold/Silver ratio

36 year gold silver ratio

rocoach · Dec 8, 2012 - 3:50pm

sorry, rooach

Lots of people coming out of the woodwork to defame Andy these days. Not taking any chances.

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