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!)

Video unavailable

About the Author

turd [at] tfmetalsreport [dot] com ()


gold slut
Feb 24, 2013 - 9:09am

silver lining

I have only recently become a stacker after paying into a pension fund for several decades and realized that I had been screwed-over well and truly. Having looked into PMs, I decided that the only way to protect against inflation (and the evil tax man) was to play TPTB at their own game and diversify into Phyz. As my stack is puny at the moment, the longer the prices are kept low the better for me (another 5 years would be nice, but I don't see that happening - sigh). I view my stack as an alternative pension fund. If the price rockets, well that is great, but in the meantime I am more than happy to keep turning what little spare Fiat I have into cheap PMs - win win! For me, no matter what happens in the world of PMs it is good by me.

Feb 24, 2013 - 9:09am

Forecasts using TA or not

I am getting tired of seeing the forecasts by anybody.

In my opinion only a couple things matter. The debasing of dollar and the manipulation.

not sure the problems can be fixed without social upheaval.

pick your poison.

Feb 24, 2013 - 9:25am

Someone last week pointed out a extremely high volume spike down

Was met by an immediate almost equal sized buy order. Could this be jpm selling shorts to itself? After all it is not going to force itself to deliver is it? Since it was so quick it may have caused the price to be sticky and therefore it at that point only went down a bit.

Feb 24, 2013 - 9:40am

@trader Dan

He is correct for the immediate term. Yes, metals wil go down more (few weeks) because they Cartel is going long. BUt guess what? When the Cartel gets long, theyn the price flies and they begin to sell AS the hedgies begin short-covering again and then themselves going long. You must understand the sequence. Its a setup....but this time to the upside.

You must pull away from your computer and digest what I just wrote to truly understand this. Close your eyes and drift off to the land of silver rainbows to see where this is going.


Feb 24, 2013 - 9:56am


"You must understand the sequence."

This may happen. It may not. Certainty leads to the dark side.

Feb 24, 2013 - 10:07am

@ all who responded to the wedding question...

Thanks guys and gals. Some good info and suggestions were given in reference to the wedding idea and silver or gold as gifts. Some of you provided humor and others gave information which may be viable options when the time comes. With no items needed for our home, (I bought it over 3 years ago now) and that we are both in our late 20's maybe just asking for cash is the best option. This way I can get what I want as far as any PM's I would hate to see someone give an ultra high premium coin/over paid that I would have rather bought some type of bullion with. Thanks again for all your help guys.

El Gordo
Feb 24, 2013 - 10:42am

Financial analysis

In dealing with securities, money market instruments, and the like, there is always a paper trail of financial information available for research and analysis. Historically, an astute analyst could figure out how a company was doing, what it's future prospects could reasonably be expected to look like, what value its earnings stream might have, its net worth, stock value and so on and so forth. Alas, with all the government intervention and manipulation, such analysis no longer holds much meaning and the regime in power gets to pick the winners and losers. Now, assuming first of all that proper analysis requires a pretty astute understanding of what all those numbers mean, what the accounting rules are, and generally quite a bit of skill. Conversely, a PM just sits there doing nothing. It generates no revenue, produces no product, and does not even file financial disclosures. Yet there are some out there who claim the ability to determine the future direction of PM values - a few even claim "expertise." Since the PM is generally inert, there must be other information required to predict their future. I suppose that given the universe of data out there to select from and analyze, it should be fairly easy to either support someone's best guess or to dispute it - based on nothing more that utilization of different data or different interpretations of the same data and its impact on PM's. So how in the world could any reasonably competent, thinking person take anyone's prediction for the future price of PM at face value and make their investment decisions accordingly? Answer: they can't. So anyone who does that is at best a fool or has other issues which render him incapable of making good decisions. So, given all that, why do we continue to waste time on here debating what this analyst said or what that analyst said? If one analyst said the price would always go up, he would probably be right about half the time - same with the other analyst who predicted falling prices.

Now, as to our gracious host Mr. Turd, more power to him for presenting his analysis, his methodology, and his conclusions based on such and not just guessed out of thin air. That takes guts as well as some degree of skill I'm sure (although I'm not really qualified to judge the level of skill required since I know nothing about the PM or commodities markets). But to those of you who sit here and say "see, Joe Bob said the opposite of what Turd said and he was right, therefore Joe Bob is brilliant and Turd is just a turd masked as an analyst" I say "show me your work, your analysis, your methodology, and your conclusions and let's compare." There are a couple of commentators on this site who do just that, but to the rest of the nay sayers, how about a hearty KMA. Rant off for now.

Feb 24, 2013 - 10:45am

Syrian Conflict Reaches New Level

Syria Rebels Fight for Police Academy Near Aleppo

By BARBARA SURK Associated Press

BEIRUT February 23, 2013

Syrian rebels used captured tanks to launch a fresh offensive on a government complex housing a police academy near Aleppo and clashed with government troops protecting the strategic installation on Sunday.

The military responded with airstrikes to defend the complex, which also includes several smaller army outposts in charge of protecting the police academy.

Rebels have logged a string of strategic victories over the past few weeks, especially in the northeast where Aleppo is located.

Capturing the complex near Aleppo would be another blow to the regime that has in recent weeks lost control key infrastructure in the northeast including a hydroelectric dam, a major oil field and two army bases along the road linking Aleppo with the airport to its east.

Rebels have also been attacking deeper into the heart of Damascus, posing a stiff challenge to President Bashar Assad regime in its seat of power.

Rami Abdul-Rahman, the director of the Britain-based Syrian Observatory for Human Rights, said rebels have been trying for months to storm the complex west of Aleppo in the suburb of Khan al-Asal.

Rebels have also been trying for weeks to capture Aleppo's International Airport.

There were no reports of fighting for the facility on Sunday. But there have been battles around a section of the highway the army has been using to transport troops and supplies to a military base within the airport complex.

Assad's forces have been locked in a stalemate with rebels in Aleppo since July, when the city became a major front in the civil war.

Months of heavy street fighting have left whole neighborhoods in the city in ruins, carving it up into areas controlled by the regime and others held by rebels with both sides shelling each other's positions.

On Friday, regime forces fired three missiles into a rebel-held area in eastern Aleppo, hitting several buildings and killing 37 people, according to the Observatory. It said the strike apparently involved ground-to-ground missiles.

A similar attack on Tuesday in another impoverished Aleppo neighborhood killed at least 33 people, almost half of them children.

A senior Syrian opposition leader said Sunday that his umbrella group has suspended participation in meetings with its Western backers and their Arab allies because of their indifference over the regime's attacks on the Syrian people in Aleppo and in other cities.

"Assad has reached the stage of real genocide amid Arab silence and we renounce that," said George Sabra, vice president of the Syrian National Coalition. He spoke to reporters in Cairo after meeting the Arab League chief Nabil Elaraby.

The United Nations says at least 70,000 people have been killed since Syria's uprising against Assad's authoritarian rule began nearly two years ago.

On Friday, a statement posted on the Facebook page of Sabra's opposition group said its leaders would not travel to Washington or Moscow for any talks to protest the international community's "silence over crimes committed by the regime."

The statement also said that the opposition leaders would...

DPH: Awhile ago I spoke of the probability that at some point we'll see the vulnerable Syrian hilltop presidential palace under fire with smoke coming from it. Nothing at this point has changed my mind and I see it as inevitable now that the rebels recently captured and now have access to many types of heavy weapons from those other two base seizures mentioned. The airport in rebel hands would be a very big deal and appears likely.

Assad's palace sticks out like a sore thumb and has 'bullseye' written all over it. Stay tuned.

Feb 24, 2013 - 10:46am

@ Joe

My son is getting married this year and is in your same boat. They would like nothing better than cash, to put towards a down payment on a home. They have been together for three years and don't need much in the way of home stuff. Because of this they think that if they don't register at different stores everyone will give cash. But according to one who knows everything (my wife), that would only result in getting more duplication and other unwanted and unneeded stuff. According to the Dear Abby and Emily Posts of the world, it is gosh to ask for cash, while perfectly fine to give it as a gift.

But according to Peggy Post, author of “Emily Post’s Wedding Etiquette,” that’s the tacky part. “It’s certainly O.K. to give cash and even to register for cash gifts,” said Ms. Post, who is the granddaughter-in-law of Emily Post. “What’s not all right is to dictate to guests what their gift should be.”

Ms. Post has heard of this elaborate tango of registering for gifts and then exchanging them, “but it’s wasteful and potentially hurtful,” she said. Instead, she advises, let the word out among close friends and family that cash is the preferred gift, “and then say why: ‘We’re saving up for a down payment.’

Feb 24, 2013 - 11:07am


On the other hand I just came across this one

Dear Abby: I am getting married this year and I’d like to challenge the notion that it’s rude to ask for gifts toward a honeymoon or other big-ticket items such as home improvements or a car. My fiancee and I own our home and we don’t need a lot of the traditional items couples receive at their wedding.

Our families have been very understanding, but I’m sick to death of hearing or reading that it’s rude to ask for money. Shouldn’t wedding guests be happy to celebrate the couple in a way that they need and not force them to register for a bunch of material things they won’t use? — Already Has a Blender

Dear Already Has a …: Your question is very common. I receive variations on this theme in every batch of mail that arrives.

It is considered rude to ask for money on a wedding INVITATION, just as it is considered rude for brides and grooms to raise the subject themselves. When a wedding invitation is accepted, the guests usually contact whoever issued the invitation to inquire where the couple is registered. Once asked, it is then appropriate to reply, “They’re not registered for gifts because they already have everything they need, but monetary gifts would be appreciated.”

Some couples set up financial registries for this purpose with their bank or other financial institution, and there are also honeymoon registries and charitable gift registries if guests would prefer to donate to a worthy cause chosen by the happy couple.

Sounds reasonable to set up a financial registry with Provident or another precious metal charitable retailer of your liking.

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