Saturday Stuff

Sat, Feb 23, 2013 - 12:28pm

Just a quick wrap up of some assorted stuff as we prepare for what will be an eventful week ahead.

First of all, the big news from late yesterday...Moody's downgraded Her Majesty's debt. Though this is once again a fundamentally gold-positive event, I wouldn't expect an immediate jump in price because of it. Remember that in the fiat world, Pound weakness inversely means Pig strength.

In the absence of a podcast here at TFMR, please take the time to listen through all three segments of Andy's visit with Eric King yesterday (once they're finally posted). When we spoke yesterday, Andy told me not to expect anything too earth-shattering but I'm confident that it's worth your time, nonetheless. He and I plan hope to record something either Monday or Tuesday so look for that early next week. In the meantime, here are the KWN links:

If you haven't already, you're going to be reading a lot this weekend about yesterday's Commitment of Traders report. As you know, I like to review it right when it comes out and then post a sort of "instant analysis". Here's a c&p of my thoughts from yesterday, in case you missed them:

GOLD: For the week, price fell about $45. While this was taking place, the LargeSpecs added 1900 longs and a jaw-dropping 25,000 shorts! The LS net long ratio falls to an very bullish 2.12:1. The SmallSpecs got in on the act, too. They dumped 400 longs and added nearly 5,000 new shorts. This is an extremely bullish, contrary signal.
But the real action was by The Cartel. They added 4,300 new longs and covered an incredible 24,200 shorts. Again, who was buying while the specs were busy shorting? And who do you think will, ultimately, profit??
The Cartel net short ratio now stands at an extremely bullish 1.83:1.

SILVER: Almost identical to gold. Simply astounding, amazing and incredible.
For the reporting week, the price of silver fell about $1.60. Look what was happening internally:
The LargeSpecs dumped 1,150 longs and added 4,450 shorts. After reaching an unheard of extreme of 6.5:1 just two week ago, the LSpec net long ratio is all the way back to a mildly bullish 3.1:1
The SmallSpecs added 500 longs and 3700 shorts. Again, as in gold, the specs are racing to get short.
The "commercials"...pretty much all big firms except JPM and their con-conspirators...added another 2,026 longs, bringing their total gross long position to a never-before-seen 54,208. Simply incredible! They've continued to add longs all the way down. What do they know? What are they expecting??
The Silver Cartel...namely JPM and their two or three pals...were finally able to cover 6,800 of their disgustingly large short position. It's still disturbingly high at 92,164 but the total commercial net short ratio, which last peaked in September of last year at 2.6:1 has now declined to a quite bullish 1.7:1 Nearly every drop in The Cartel net short ratio to near 1.5:1 has preceded a substantial rally. We are very close!
All in all, both CoTs are extraordinarily bullish and indicative of a bottom very soon. Hang in there, now. Your patience will soon be rewarded!

Now, let me just add a couple of things:

  1. Getting the Gold Cartel net short ratio all the way down to 1.83:1 is a very good sign. For perspective, at the lows of late December 2011 and summer 2012, the Cartel net short ratios were 1.98:1 and 2.01:1, respectively. And this week's data was surveyed on Tuesday, before the big drop on Wednesday. All in all, the gold CoT is very bullish.
  2. Please also consider the net short ratio of The Silver Cartel. After the last four price washouts, here are your net short ratios at the bottom: On 8/14/12 it was 1.49:1. On 12/27/11 it was 1.34:1. On 10/4/11 it was 1.48:1 and on 6/28/11 it was 1.79:1. As of last Tuesday, it had fallen 1.7:1.
  3. And, finally, this theory....note the emphasis on theory. Regular readers know how perplexed I am by the silver OI situation. The primary outlier is the Commercial Long position. It "should be" somewhere near 30,000-35,000 contracts by this point in the price cycle. Instead, it grew again last week to 54,208. Chew on this: What if the 20,000 contract difference is, in fact, JPM trying to square away their naked short position that Uncle Ted estimates to be around 30,000. Now, stick with me on this... They tried to lessen it by covering back in April 2011 and the result was a near-cataclysmic event for them that was only rectified by the Sunday Night Massacre and the collusive CME margin hikes. Since then, they've maintained their position as The Big Short but, beginning late last summer, they began to build an equally-large long position. Again, stay with me here... They've added shorts through the fall to keep a lid on prices until they're ready to let it go, either voluntarily or involuntarily. If this is the case...and that's a very big IF...JPM could be approaching the point where they would be short 25,000-30,000 contracts AND long 25,000-30,000 contracts. At that point, if forced to exit the shorts, they'd be fully hedged and even profiting on the UPside.

Anyway, just chew on the 3rd point over the weekend. The more I think about it, the more it explains the "commercial long anomaly" and it provides JPM an exit strategy should the toothless CFTC ever choose to call them out.

Here are your updated charts. Given the CoT structure, I feel very comfortable declaring that a bottom is near. (And obviously hope that, by doing so, my Google ad revenue will increase.)

And just a couple of other items that have found their way into my inbox. First, this interview from last fall that details the whys and hows of gold manipulation:

Gold Market Manipulation Explained

This fun article discusses the effects of the gold repatriation movement:

If you haven't read up on this subject yet, I strongly urge you to do so. Just like the German gold repatriation, we may look back on these events and recall them as clear warning signs of imminent events:

And our friends at Gold Bullion International do some excellent analytical work. Their latest was posted to ZH and you should definitely take the time to read it:

Speaking of GBI, for now they are still the only bullion and storage affiliation that this site has. Many of you have purchased from them and I am very grateful for their support. If you are buying coins and bullion, please be sure to check them out. You can link to them trough the ad on the right side of the page. I'll soon be adding affiliations with GoldMoney, SilverDoctors, Provident and JMBullion, too, so please be sure to always consider them when looking the BTFD. (Which I would strongly encourage you to consider doing this weekend.)

OK, I think I'll stop there. I hope that you have a safe and relaxing weekend. You certainly deserve some serenity after the madness of the past two weeks. But keep the faith as this, too, shall pass. The metals have simply been forced back to the bottom of their 18-month price ranges and will soon begin to rebound as physical demand and the glaringly obvious fundamentals begin to take over.


p.s. You've got to check this out. The trollololo song is going mainstream!! I sure hope that the dead Russian guy's estate is getting a little skin out of it...(Thanks to my pal, DocD, for passing it along!)

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About the Author

turd [at] tfmetalsreport [dot] com ()


Feb 25, 2013 - 12:32pm

@Ten_of_swords . . . a little light . . .

Sorry, I think you are getting close, and not much light at the end of the tunnel . . .

The debt-saturated world is closing in on the financiers. The government has been preparing for this for quite awhile, as we know too well. The government and the financiers work together.

I suspect bank closings, nationalization of them and strategic industries, a new financial system are all in the works, and military law to enforce it all is coming.

That is why the Dodd-Frank required position limits in metals, energy were ignored and the CFTC's almost 5 year silver investigation results were never announced.

The laws have been changed, the repression has worked, the people have no idea what is coming.

They may decide to default the entire system. Nationalizing the banks will mean that they can keep their cronies in positions of power and wealth after the reset.

Fred Hayek
Feb 25, 2013 - 12:23pm

@DPH . . I don't think the Italians are quite as crazy

I don't think the Italians are quite as crazy as you made them seem with that brief post above.

Yes, Berlusconi is a creep, but mostly in low level ways. However, he had exquisite timing. He got pushed out of office just before the economy in Italy really started tanking hard. So, to the average Italian there's a bit of a perception that things went bad after getting rid of Silvio.

As to the *former* comedian, Grillo, I only know a little bit about him but he's not just the equivalent of writing "Mickey Mouse" in on your ballot. He's apparently a reasonably sharp guy and he explicitly wants to put the issue of staying in the eurozone to the voters in the form of a binding referendum.

Feb 25, 2013 - 12:18pm

two points

1. The silver shortage is about perspective to me. With a billion or so above ground ounces(That is a common theory of current above ground supply), and seven billion or so people, that is 1/7 of an ounce of Ag per person.


For the conspiracy minded to ponder: It is 2 whole ounces per person when there are only 500 million of us left after the purge! In either scenario, that is a shortage if you ask me.

2. The talk about QE ending has got me to thinking. If I understand correctly, were QE to end, interest rates would skyrocket. The result of that being the collapse of the economy and the end of the US dollar. The debasement of the world's currencies has transitioned from a marathon to a sprint.

Here is my question: What if this is the plan? Stay with me, please.

There are an unprecedented number of longs that have been building, rumors of QE ending from the FMOC, every country in the world trying to kill their currency without panicking the population, and domestic infringement of liberty, the likes of which have not been seen in centuries. All of which are happening with the consent of our government. What if all of the pieces are now set?

Please feel free to punch this full of holes. It is looking dark, and I would love to have a little light shine in.

Feb 25, 2013 - 12:16pm

Thank you and welcome

It's not easy but I try very hard to make this place different. Thanks for noticing.

Feb 25, 2013 - 12:14pm

Inga Binga

supposedly a german spy who jfk had an affair. inga arvad

Feb 25, 2013 - 12:13pm

more bunga

I just checked ZH for the first time this a.m. and they're all over it as might be expected.

The whole bunga /mockery thing at this point is surreal (and funny) only because the guy is still politically alive. A lengthy revote or gridlock like ZH suggests would be par for their course and normal in these times.

It's pretty sickening to me as a human citizen and one of billions who only want to see mature and honest political humans represent us so that all of us can have better lives if possible without the irresponsible greedy drama that seems attached to politics. Sadly, that doesn't seem possible nor does it seem possible that the modern political condition is compatible with the basic human ideals most of us simply hope for when we have our elections.

Most politicians suck and are almost sub-human the further they climb their own career ladder for themselves, not us.

Cue the clown cars in Italy to start revving their engines.

Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Feb 25, 2013 - 12:11pm

A Little Econ 101

I think a lot of the confusion over the term shortage stems from what someone means when they say they word. Most people seem to think that shortage means there is a limited physical supply. In economic terms that is not the case. A shortage occurs when sellers will not sell at a given price. This applies to other things beside silver. Our current level of unemployment might be thought of as a shortage of jobs. That is not the case. There are plenty of jobs, just not at the current wage structure. Eliminate the minimum wage and unemployment benefits--a government price fix and a subsidy--an the only people who will be out of a job will be those who do not want to work.

During the 1970s there was never a physical shortage of gasoline. There was shortage of sellers at the going price. Once prices were allowed to float the gas started to flow.

There is no physical shortage of silver, there is a shortage of sellers at the current price. Once the price is allowed to find its real level--not the one set by the EE--there will be plenty of silver for those who are willing to pay for it.

Until then I'm going to keep stacking on a regular basis and be grateful that I can.

Feb 25, 2013 - 12:10pm


It's the Aboriginee wildman 'toon! Kudos to both of you and thanks for posting it :-) A little levity is vital and will keep us all a little loose during these uncertain and trying times.

Feb 25, 2013 - 12:07pm

Interesting action today

The dollar is strengthening:

And just as expected, stocks are off mildly:

And typically, crude is selling off:

And yet...

Metals are holding steady against this. AND the miners are moving up strongly:

Market Vectors Gold Miners ETF (GDX) 38.74 0.81(2.14%)

Hmmmm..... Got Shiny?

Feb 25, 2013 - 12:06pm

Didn't even look that one up

Kinda scary what's floating around up there in the old database!

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Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Key Economic Events Week of 8/3

8/3 9:45 ET Markit Manu PMI July
8/3 10:00 ET ISM Manu PMI July
8/3 10:00 ET Construction Spending
8/4 10:00 ET Factory Orders
8/5 8:15 ET ADP employment July
8/5 9:45 ET Markit Service PMI
8/5 10:00 ET ISM Service PMI
8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
8/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 7/27

7/27 8:30 ET Durable Goods
7/28 9:00 ET Case-Shiller home prices
7/29 8:30 ET Advance trade in goods
7/29 2:00 ET FOMC Fedlines
7/29 2:30 ET CGP presser
7/30 8:30 ET Q2 GDP first guess
7/31 8:30 ET Personal Income and Spending
7/31 8:30 ET Core inflation
7/31 9:45 ET Chicago PMI

Key Economic Events Week of 7/20

7/21 8:30 ET Chicago Fed
7/21 2:00 ET Senate vote on Judy Shelton
7/22 10:00 ET Existing home sales
7/23 8:30 ET Jobless claims
7/23 10:00 ET Leading Economic Indicators
7/24 9:45 ET Markit flash PMIs for July

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

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