Saturday Gold and Silver

341
Sat, Mar 2, 2013 - 12:47pm

It looks more and more like the next two weeks or so are going to be significant.

So, where do we start on this fine Saturday? How about with something from Friday? I posted these two charts into the comments section of yesterday's post. They show a classic short/theft tactic. Someone, either an HFT or a Cartel monkey, pulled the trigger on a sell order in silver at the very thin trading hour of 4:00 a.m., New York time. Since silver was sitting right on top of the previous week's lows, the effect was predictable. A host of sell-stops were "harvested" as price quickly fell about 50¢. Note then that price quickly recovered as liquidity returned with the opening of the Comex session.

Why did I start there today, you ask?

  1. Because now $28.40 is a very important level to watch early next week in silver, and,
  2. It is becoming increasingly likely that the same trick is going to get played out on a much larger scale in both gold and silver before a final bottom is put in and price permanently reverses.

Let's next visit our three friends...Crude, DrC and Sylvia. Do they have any clues for us? Why, yes, they do as a matter of fact. All three have come down dramatically and all three give the appearance of having a bit further to go. And if "commodities in general" show additional weakness over the next 7-10 days, you can probably imagine that selling pressure compounding our problems in gold and silver.

So let's start with silver. Running the stops yesterday has fortunately provided us with a very clear level to watch at $28.40. If silver slips below there again early next week, it would be a near certainty that we are going to take at least one trip down below $28. There has consistently been a lot of support there so taking it much lower is going to be a task for The Bad Guys.

That said, I'm beginning to sense that the ultimate goal of this entire event is to harvest the stops below $26. IF this happens...and currently I'd put the odds at about 25%...a quick drop to $25ish would be your final bottom. Price would quickly recover back above $26 and this deliberate beatdown would be over. How can I say that? More on that in a few minutes. First, two more charts:

And gold could very easily suffer the same fate. If The Cartel can engender enough additional spec selling, a veritable cornucopia of sell stops lay waiting for them sub-1530. And you can just imagine the reaction in the media: "GOLD IN BEAR MARKET!!" will be screamed as loudly as possible in the hopes of inspiring even more selling. Like silver, I only give this about 1 chance in 4 of happening but we must be on the lookout and prepare mentally. IF this occurs, you must be strong and BUY, not sell. The spike low will be The Bottom.

Now lets get back to why I am so confident that the selling has already been stretched to unsustainable levels and why, IF a spike low occurs, the metals would quickly recover. It's all in the CoT.

Yes I know that Santa claimed this week that the CoT is fudged and unreliable and yes I know that Santa has forgotten more about the metals markets that I know.....but....Unlce Ted believes in this stuff and so do I. Here's what Ted said in his mid-week newsletter:

"One of the reasons I think the data in the COT are accurate is that every contract has a long and short side. Therefore, to lie in the large trader reporting system that underlies the compilation of the COT, would require two lies; one by the big commercial lying and another by the counterparty holding the opposite side of the contract. I can see JPMorgan wanting to lie on its COMEX holdings, but I can’t see why a counterparty tech fund or speculator would assist in that lie. Please remember that lying on a large trader report is illegal and will be prosecuted by the CFTC (one of the few things they do well)."

With this in mind, here's a c&p of my CoT comments from yesterday:

For the Wed-Tue reporting week, gold was up $10 but total OI fell by 13,432. Silver fell by 17¢ and OI fell by 9,728.
The only interesting thing in the gold CoT was the divergence between LargeSpecs and SmallSpecs. The LargeSpecs went net long 13,000 contracts while the small specs went net short 7,400. This, my friends, is called leading the HFTs by their collective noses. On the bounce, the LargeSpecs covered shorts and went long to the tune of 13,000 contracts. Once fleeced, the "market" rolled back over and now all of those new longs (at 1600+) are under water.
Once again, the real interesting stuff is in silver. Both the Large and Small specs were adding to their shorts. The Large Specs sold a net 4,700 contracts and the Smalls sold a net 2,300. The commercials also sold 1,700 longs, dropping their gross long position back to a still-whopping 52,509. All of this selling allowed the naked short Cartel members to cover a massive 8,769 shorts or about 9% of their total gross short position! Now at 83,395, The Silver Cartel has been able to trim their short position by over 15,500 contracts, from 98,979 just two weeks ago. That's a drop of 16% in two weeks while price fell $2 from $31 to $29. I'm sure that's just good timing and good fortune...at least that's what Cueball and Thunderlips think.

On the bright side...

  • The total "commercial" long position in silver is actually up over the past two weeks while JPM et al have been covering. On 2/12/13, the gross comm long position was 52,182. As stated above, as of 2/26, it was still 52,509.
  • The Large Specs are racing to get short. On 2/5/13, the Large Specs were only short a record low 6,588 contracts. Three short weeks later, they're short a total 16,016, an increase of 143%!
  • The Large Specs are also feverishly dumping longs. Three weeks ago they were gross long 42,449. As f last Tuesday, that position had been whittled down to 37,753. That's a drop of 11%.
  • And the Large Spec net long ratio, which just 3 weeks ago was totally out of whack at 6.44:1, has fallen all the way back to 2.38:1. Remember, as a general rule, anything under 3 is somewhat bullish and anything over 4 is somewhat bearish. Anything under 2:1 is extremely bullish. For examples, see here: https://www.tfmetalsreport.com/blog/4492/strange-days-indeed
  • Also, all that Cartel short covering has further dropped the Cartel net short ratio. Last week it was 1.70:1 and this week it is 1.59:1. Again, historically, anything approaching 3:1 is very bad. Anything near 1.5:1 is very good.

I don't know if I can pound the table much harder. Could price be forced even lower, taking out $28 and heading toward $26? Yes, of course it can. But, if it does, the silver market will reach and surpass the exact same extremes that indicated bottoms in October of 2011, December of 2011 and August of 2012.

Again, please go back and looks at the "Strange Days Indeed" post from three weeks ago. ( https://www.tfmetalsreport.com/blog/4492/strange-days-indeed) The data is compelling and telling. Both metals, when measured by The Cartel net short ratio, have reached very bullish levels and stop-running spike lows would make them more extremely bullish than any other time that I can recall. Simply put, with CoT history as a guide, there is NO WAY that gold is going to $1200 and silver to $18 or even $22. Not from this CoT structure!

Moving on...Speaking of the CoT, one of your fellow Turdites has constructed a site to help everyone read and interpret the data. It can be found here: https://goldsilvercot.com/charts/cot/index.php

As you know, Santa's company TRX is an advertiser on this site. Someday soon, the miners will turn and I have great faith in Santa and his company for the long term. Last week, they held their annual shareholder meeting and the entire thing was recorded and posted. Here's a link. I think you'll enjoy watching it: https://standrewsclubav.ca/webcast/client_tanzanian/20130228/

And you've probably noticed that we've had to add a captcha to the registration and login process here. Sorry but it was necessary. If you've never run a site before, you simply wouldn't believe the amount and intensity of the spamming effort out there. They really slow site performance so it is hoped that the captcha will help us all in enjoying and learning from the site.

OK, that's it for now. Enjoy your weekend but please be aware of continued volatility next week and do not allow yourself to get all freaked out by the temporary price action. Keep your wits about you and remember the fundamentals. Stay strong and keep the faith. Continue to prepare accordingly.

TF

p.s. Adding these ZH links which were posted Saturday afternoon. Don't want you to miss this: https://www.zerohedge.com/news/2013-03-02/hedging-funds-and-physical-vs-paper-gold. AND YOU MUST READ THIS: https://www.zerohedge.com/news/2013-03-02/why-jpmorgans-gold-vault-largest-world-located-next-new-york-fed

About the Author

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turd [at] tfmetalsreport [dot] com ()

  341 Comments


Mar 5, 2013 - 1:50pm

Nope

let's not assume a functional equilibrium is reached. All fiat currencies crash and burn. We disagree fundamentally partly because you see a top down system as essential - "velocity ... deemed too low ... can be altered" - by playing with the amount of currency and the gold base. This is the system we already have. And it is not functioning very well. I believe we need competing banks and currencies and that governments and central banks cannot be trusted.

Motley Fool
Mar 5, 2013 - 1:51pm

double

reply on next page.

Ps. You were never nice to me Xty. You could reference your first comment directed at me here if you like....and it went downhill from there. Haha

Also. Challenging 'beliefs' Always brings emotional response. Consider any discussion between an atheist and a religious fundamentalist. To expect that Some here are more driven by belief than logic is not a leap, nor is stating the likely consequences from those painting everyone with that brush.

I didn't assume anything. My current position was hard won in fighting what I would have liked to believe with what is.

I have always been an arrogant bastard. I won't deny this. (though I wonder at times if it is arrogance or certitude but serah) I try and tone it down, though you might not believe that, haha. If you like I can link you both a display of my hubris and my steadfast belief in silver for your amusement.

Motley Fool
Mar 5, 2013 - 2:00pm

hmm

Sure, I get that. Ive been there too. Hmm.

The thing is, I was taught that in only focussing on what I want to be true, instead of reality, I was missing the point.

No, it is not functioning very well. No, I do not condone inflation theft. I probably hate this current system just as much as you and am sick to death of it. However...in the real world one must take reality into thought and be practical.

Practically it will take a long time to reshape society to want to be productive and not a bunch on bloodsucking leaches ( more than 50% at present), freegold is the shortest and only practical way I can see that we can progress towards the leaches can be reduced and kept to a minimum. I don't think that mentaility could ever be killed in all, sadly. The nice part about freegold is it has happening anyways, whether we advocate for it or not.

Fwiw I don't think all fiat currencies will crash and burn, due to gold. This also is the reason why a equilibrium will be reached.

Ps. take note I edited my previous.


Mar 5, 2013 - 2:30pm

so nice that you never insult anyone

The thing is, I was taught that in only focussing on what I want to be true, instead of reality, I was missing the point.

Heal thyself.
Motley Fool
Mar 5, 2013 - 2:42pm

xty

What?

-sigh- If you go seeking slights in my words you are bound to find some.

I was talking about myself and the path I walked. I used to focus on what I think would be the ideal monetary system, and how the world should work...I never paid attention to how it actually does work, and why such ideallism might not work in reality.

Is this applicable to you? Probably, yes. Was it meant as an insult? No.

You talk about what you Believe we need...honestly, lots of ideallism shining through there, and it is a good thing I think. Without idealists making an impact I can't imagine what a horrible place the world would be today.

Hope, the quintisential human emotion eh.

What is the purpose of this conversation? To see if you can find fault with the way I say things and then brag about what an insulting bastard I am and in doing so confirm your (probable) suspicions and confirmation bias?

Okay, but then it is not really a worhtwhile endeavour.

Is it trying to understand a pov, through disagreement? Then, one could get somewhere.

Think about what it is you want....and stop getting your panties in a twist all the time at the slightest whiff of a comment that your worldview might not be bloody perfect. I know mine isn't.

Motley Fool
Mar 5, 2013 - 2:57pm

xty

oh, and for the record, while thanking tmosley in main forum, I admitted that I probably had dealt out some insults in my time here. I never claimed to be a saint.

¤
Mar 5, 2013 - 3:10pm

freegold...again.

Geez.....enough already. And people wonder why it quickly gets tiresome.

When gold is free I'm all ears with open hands but until that smokey utopian concept happens lets be realistic for the short term. This method of over-extolling/hyping freegold and quite possibly purposefully stirring the pot on a pro gold/silver site hopes to accomplish what?

To dislike the message or messenger thereby facilitating the thread to probably get sick of it to a certain extent and verbally say so and derail it if its willing to let itself do so?

I'll end this with no negative sentiment overall but flatly say this...if you want to fit into the community more smoothly it can be accomplished imho by dropping the subject when you say your done (its been 2 days+) and not resurrecting it in old threads to have the last say after repeatedly announcing your departure from it.

What gives with the repeated..."I'm done now and going away?" and then starting it all over?

If you want attention drawn to that aspect of it consider it just accomplished as I'm following it and probably not the only one doing so.

The sites a public one and your free to express your views at will but if you want some understanding or tolerance from a pro-silver/gold site you'd be approaching this differently if you really wanted to fit in I think. You've done nothing wrong and none of this makes you a villian imho but the manner of the messenger speaks of a different message or task at hand.

The balls in your court and we'll see what this is really all about shortly.

Video unavailable
Motley Fool
Mar 5, 2013 - 3:25pm

DPH

I said to tmosely that I would be willing to continue our concurrent discussion here, but with the hope of wrapping up soon, due to my post made in the active thread.

In the meanwhile Xty came back here to direct comments at me. As I stated earlier in this thread I do not tend to ignore comments directed at me. The ball is constantly placed in my court by a number of posters here, and out of habit I return such serves.

I hope that answers. Though perhaps you had hoped I would ignore your comment so as not to post again? Lol.

القراع عصفور
Mar 5, 2013 - 3:27pm

can i have the last word?

i think you all are being way to kind to MF.

(these are my sentiments only, and do not necessarily reflect the opinions of the TFMR community)

that said, Motley Fool, would you kindly

Bill Connolly Fuck Off
¤
Mar 5, 2013 - 3:51pm

nope...not with that blatant punk off

Nope...not with a blatant punk off for no real reason. Its part of the problem.

I'm only a small part of this very large community and I'm tired of the distraction or noise from all of it. This tit for tat angry BS needs to stop unless its a game with no rules or end in site until exhaustion sets in or someone passes out.

I could put everyone involved on IU and make it easy on myself and ignore it but at this point in my last post on it I'll draw attention to it instead.

We'll see who keeps the drama alive because the freegold subject itself wasn't the main focus all along I believe.

Have a nice day.

القراع عصفور
Mar 5, 2013 - 4:14pm

forgot the smiley face

my fault for being sarcastic.

but i do not understand this at all, "We'll see who keeps the drama alive because the freegold subject itself wasn't the main focus all along I believe."

in my case, and as i have stated, i wanted this topic taken to the forum created for it. i finally bit, and posted my comment above because i kept seeing that damn clown face in the recent comments.

i have no hidden agenda here at all. i want to learn from the other posters here, and contribute what i can. i am tired of the main thread getting hijacked all the time - again as i have stated maybe too often. i believe the main thread at times is being purposefully jacked to render the site useless as a source of information. and if i'm misreading intent, it doesn't matter because the result is the same anyway.

peace all

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