Saturday Stuff

300
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. https://www.telegraph.co.uk/finance/economics/9889485/Downgrade-to-pile-pressure-on-pound.html

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:

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/22_Maguire_-_Stunning_225_Tons_of_Physical_Gold_Bought_By_CBs.html

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/22_Whistleblower_-_Gold_%26_Silver_Smash_Orchestrated_By_The_BIS.html

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/23_Maguire_-_Stunning_%2424_Premiums_For_Gold_In_Shanghai.html

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: https://wealthcycles.com/features/15-ton-gold-repatriation-hits-jp-morga...

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: https://www.sovereignman.com/important-information/red-alert-worlds-biggest-gold-storage-company-dumps-us-citizens-10958/

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: https://www.zerohedge.com/news/2013-02-22/gold-and-potential-dollar-endgame-part-3-backwardation-and-gold

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.

TF

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

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  300 Comments

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HappyNowag1969
Feb 25, 2013 - 10:26am

Yes no sense flogging a dead

Yes no sense flogging a dead horse.

Carry on.

Texas Sandman
Feb 25, 2013 - 10:25am

urban roman

>In a small way, each time a stacker adds a coin to her stash, that is standing for delivery.<

Particularly true since the paper is 100:1 stacked over the physical.

So every time you buy a 100 oz bar, look at it as taking 2 paper contracts off the market.

murphyHappyNow
Feb 25, 2013 - 10:23am

happy

You misinterpreted, when I said 90% I was referring to the coins. I also am agreeing with you that they haven't made 90% coins for 50 years. My 50 to 100 year statement was in regards to the age of the coins that are being sold into the market presently.

My question to you is where to you get your information that most of the 90% coins are melted down?

Texas Sandman
Feb 25, 2013 - 10:19am

As I think I said...

Repairing the damage done will take more than a day.

Either we just hang around here for a good while with a bunch of dojis or we take off close to 30 again, get everybody lathered up & then crash it back down to 28.30 (or even lower).

Can't have the unwashed masses on board for da big move. Either gotta scare them out or bore them out.

Me, I'm waiting for my long term model to say it's safe to go back in the water again. Until then I'm short term.

I did buy a utility sector etf this morning, though

ag1969
Feb 25, 2013 - 10:16am

tmosley

a good question might be why it takes Sprott months to get his silver, yet the SLV can seemingly get whatever it deems necessary at the drop of a hat. Maybe SLV is adding different silver than PSLV, you know, the kind that is in abundant supply? Hmmmm

ag1969
Feb 25, 2013 - 10:13am

Happy Now

I think everyone understands your point, we get it. Maybe everyone just does not agree with you. You are at a blog that has a certain following that has come together because they share some beliefs. One of those beliefs is that artificial price suppression will lead to a shortage. When we see smoke signals like the mint suspending Eagle sales twice in a month, US and RCM rationing their coins, lots of dealers out of lots of stock they normally have, The big boys running out of junk silver, we bring them up because that is one of the things we are watching for, a silver shortage. We can argue whether or not their is a shortage all day, none of us know. One thing we are perfectly, crystal, 100% sure about now is that you do not believe there is one. Thank you for your input.

murphyPining 4 the fjords
Feb 25, 2013 - 10:11am

P4

I see you have done some background research on some other products that tptb have taken off the market. As Chris Rock says, brown people are not allowed to make money selling drugs, only white people's corporations.

Warning language

Chris Rock - Drugs
ag1969
Feb 25, 2013 - 10:05am

It makes no sense.....

......that 90% silver is being smelted. Why? People have been buying it because it is easily recognizable for barter post dollar collapse. It is in high demand with a premium now. Why would someone melt something that they can sell above melt? Nonsense. Junk silver is in very strong hands, I believe, because the people holding it are looking to buy food with it when a dollars are worthless. I will sell my Lunar 1 year of the horse for 129.99 if someone wants to buy it, but I am not selling my junk silver for junkier dollars, and I am certainly not selling for melt value.

HappyNow
Feb 25, 2013 - 10:04am

tmosley, in what business

tmosley, in what business would they keep that much refined silver sitting around with no market? That's inefficient.

As you say "once all the mining capacity is spoken for"

exactly. You are admitting that all the capacity isn't spoken for. That means that there is enough supply. Sheesh.

dudestacker
Feb 25, 2013 - 10:01am

question for delacroix

Why would they mine it at a loss?

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