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

Founder
turd [at] tfmetalsreport [dot] com ()

  341 Comments

¤
Mar 2, 2013 - 6:03pm

Significant: One Eyed Al-Qaeda Commander Killed In Mali

Al-Qaeda commander behind Algeria gas plant attack 'killed in Mali'

The al-Qaeda commander who masterminded an attack on a gas plant in Algeria has been killed, it was claimed on Saturday night.

Mokhtar Belmokhtar Photo: AFP

8:44PM GMT 02 Mar 2013

Chad’s military said Mokhtar Belmokhtar, one of the world's most wanted men, died on Saturday in an assault on an Islamist rebel base in northern Mali.

Belmokhtar was at the centre of an international manhunt after at least 37 foreign hostages, including six Britons, were killed after militants seized the In Amenas gas complex in eastern Algeria in January.

In a statement read out on Chadian national television, General Zacharia Gobongue, the armed forces spokesman, said: "On Saturday, March 2, at noon, Chadian armed forces operating in northern Mali completely destroyed a terrorist base (...) The toll included several dead terrorists, including their leader Mokhtar Belmokhtar."

The French military, which is leading the offensive in northern Mali assisted by several African nations, said it could not confirm the information.

Belmokhtar, 40, who headed a militant brigade called 'Witnesses in Blood', became one of the world’s most wanted men after the gas complex, which is operated by BP together with Norway's Statoil and Sonatrach, Algeria’s state energy company, was attacked by gunmen on January 16.

The militants seized hundreds of hostages, leading to a four-day siege in the desert. The Algerian army launched an assault on the complex, ending in a bloodbath on January 19.

In a video posted online Belmokhtar later confirmed his involvement in the attack, describing the siege as a "blessed operation", and demanding that France withdraw its troops from Mali.

In the message, which was recorded before the final stand-off with the Algerian army, Belmokhtar said the operation was carried out by 40 "jihadists", including several Westerners. The raid itself is thought to have been led by Abdul Rahman al-Nigeri, a field commander close to Belmokhtar.

Belmokhtar's death, if confirmed, would be a major blow to Islamist rebels in northern Mali who have been pushed into their mountain strongholds by French and African forces.

Linked to a string of kidnappings of foreigners in North Africa in the last decade, the Algerian-born Belmokhtar had been dubbed “the uncatchable” by the French intelligence services.

Born in Ghardaia in eastern Algeria, he is said to have become attracted to Islamism as a teenage schoolboy, travelling to Afghanistan at the end of the war against the Soviets in the early 1990s.

This launched him on a two-decade career of Islamic militancy, initially as a member of Algeria's Islamic Armed Group (GIA) in the country's civil war. He then became a joint founder of the Salafist Group for Preaching and Combat (GSPC), which extended its attacks against security forces into countries along the southern fringe of the Sahara.

He lost his left eye while handling explosives in the 1990s fighting Algerian government troops as head of the Shahada Katibat [Martyrs Battallion] in the Sahara Desert.....

https://www.telegraph.co.uk/news/worldnews/africaandindianocean/algeria/...

¤
Mar 2, 2013 - 6:07pm

Italy may soon have to pull out of euro: Beppe Grillo

Beppe Grillo says Italy may soon have to pull out of euro

Beppe Grillo, the comedian who was the big winner in Italy's election, suggests Italy may have to abandon the euro and go back to the lira, and renegotiate its gigantic debt.

Five Star Movement leader and comedian Beppe Grillo (R) speaks during a rally in Rome Photo: REUTERS

11:16AM GMT 02 Mar 2013

Beppe Grillo, the former comedian who holds the balance of power in Italy, has suggested the country may have to abandon the euro and return to the lire.

In an interview with a German magazine published on Saturday, Mr Grillo said that “if conditions do not change” Italy “will want” to leave the euro and return to its former national currency.

The 64-year-old comic-turned-political activist also said Italy needs to renegotiate its €2 trillion debt.

At 127 per cent of gross domestic product (GDP), it is the highest in the euro zone after Greece.

“Right now we are being crushed, not by the euro, but by our debt. When the interest payments reach €100 billion a year, we’re dead. There’s no alternative,” he told Focus, a weekly news magazine.

He said Italy was in such dire economic straits that “in six months, we will no longer be able to pay pensions and the wages of public employees.”

The incendiary comments are likely to intensify the acute paralysis within Italian politics.

Mr Grillo’s web-based, anti-establishment Five Star Movement won more than a quarter of the vote in Italy’s general election last week.

But he refuses to do any sort of power-sharing deal with the centre-Left Democratic Party, which has shaky control of the upper and lower houses of parliament but without a big enough majority to form a government.

Mr Grillo, renowned for his blistering attacks on Italy’s established political caste, has called Pier Luigi Bersani, the leader of the Democratic Party “a dead man talking” and has predicted the annihilation of both the centre-Left and the centre-Right coalition led by Silvio Berlusconi within months.

The three-way deadlock has created the first hung parliament in modern Italian history and raised fears in the rest of the world about Italy’s ability to maintain desperately needed economic reforms initiated by Mario Monti, the former technocrat prime minister.

Italy’s new parliament has to meet by March 15 at the latest, after which formal talks with Giorgio Napolitano, the octogenarian Italian president, are scheduled to begin on the formation of a new government.

Markets were jittery in trading on Friday, with the Milan index plunging 1.54 percent - the worst performer among major European stock markets.

https://www.telegraph.co.uk/news/worldnews/europe/italy/9904270/Beppe-Gr...

ag1969
Mar 2, 2013 - 6:08pm

That Zerohedge article was great

So they get to put all the gold in which ever vault they need to for their shell game. The oldest scam in the book. I guess the question is whether or not there is any gold there at all.

Did any of you see this link in the comments section? Very interesting:

https://en.wikipedia.org/wiki/Brink%27s-MAT_robbery

Southern Cross Sheetrocker
Mar 2, 2013 - 6:21pm

@ Sheetrocker - Thanks For The Comment

He's is a stacker. Stays away from the fiat and banks. Plans again to head to the LCS this coming week.

Next project is starting a family cattle herd. Each of my three children is going to buy 5-6 calves, and the wife and I are going to buy about a 100 calves and cows in the next 12 months. Were plan to lease free range land. This should occupy a piece of my mind when JPMorgue beats down stackers. Hopefully the herd can grow to a sizable number before the dollar is destroyed.

Thanks again for the comment.

Robespierre
Mar 2, 2013 - 6:23pm
Swineflogger
Mar 2, 2013 - 6:26pm

@DPH

For the record, lest I seem a total douche bag, that cat was a beautiful thing. That isn't lost on me (as much else is). It is just that they are no longer controlled the way they were years ago and the result is wanton destruction. Thanks for all you do for us on this site. Hopefully next week will be "inconceivable"!

Robespierre
Mar 2, 2013 - 6:32pm

Hunting...

Hunting happens to be a form of secondary psychopathy.

Urban Roman
Mar 2, 2013 - 6:39pm

Psychopathy

Secondary ... like the the second wave in the "Reign of Terror".

cpnscarlet
Mar 2, 2013 - 6:42pm

Had to come in for a second

Had to come in for a second for a comment -

Things are pretty sad when some of our greatest sages cannot agree on the reliability of the COT report. Sick, sad, but true. I'm with Santa because I'm pretty sure that Gensler et al are all corrupt...extremely corrupt. Any official data is suspect because it is "OFFICIAL". The SEC, CFTC are corrupt on the enforcement side and the CME is corrupt on the commercial side.

And to make it worse, Turd comments that we should stay strong in the face of "short term" price action. Take that "short term" crap and shove it. It is 3/2013 now. This price action has been in force for almost two years. Nothing short about it at this point. Putting up with this price action has taken a lot of blood sweat and tears. We all deserve a break from this insanity and many metals for bravery.

ClinkinKY
Mar 2, 2013 - 6:50pm

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

Key Economic Events Week of 8/5

8/5 9:45 ET Markit services PMI
8/5 10:00 ET ISM services PMI
8/6 10:00 ET Job Openings
8/8 10:00 ET Wholesale Inventories
8/9 8:30 ET Producer Price Index

Key Economic Events Week of 7/29

7/30 8:30 ET Personal Inc/Spending & Core Inflation
7/30 10:00 ET Consumer Confidence
7/31 8:15 ET ADP employment
7/31 2:00 pm ET FOMC Fedlines
7/31 2:30 pm ET CGP presser
8/1 9:45 ET Markit Manu PMI
8/1 10:00 ET ISM Manu PMI
8/2 8:30 ET BLSBS
8/2 10:00 ET Factory Orders

Key Economic Events Week of 7/22

7/23 10:00 ET Existing home sales
7/23 10:00 ET Richmond Fed Manu Idx
7/24 9:45 ET flash Markit PMIs
7/25 8:00 ET Count Draghi/ECB policy meeting
7/25 8:30 ET Durable Goods
7/25 8:30 ET Wholesale Inventories
7/26 8:30 ET Q2 GDP first guess

Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
7/16 8:30 ET Retail Sales and Import Price Index
7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
7/18 8:30 ET Philly Fed
7/19 10:00 ET Consumer Sentiment

Key Economic Events Week of 7/8

7/9 8:45 ET Fed Stress Conference, three Goon speeches
7/10 8:30 ET CGP Hump-Hawk prepared remarks
7/10 10:00 ET CGP Hump-Hawk House
7/10 10:00 ET Wholesale Inventories
7/10 2:00 ET June FOMC minutes
7/11 8:30 ET CPI
7/11 10:00 ET CGP Hump-Hawk Senate
7/11 12:30 ET Goon Williams
7/12 8:30 ET PPI

Key Economic Events Week of 7/1

7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 10:00 ET Construction Spending
7/2 6:35 ET Goon Williams
7/3 8:15 ET ADP June employment
7/3 8:30 ET Trade Deficit
7/3 9:45 ET Markit Services PMI
7/3 10:00 ET ISM Services PMI
7/3 10:00 ET Factory Orders
7/4 US Market Holiday
7/5 8:30 ET BLSBS

Key Economic Events Week of 6/24

6/25 10:00 ET New Home Sales
6/25 1:00 pm ET Chief Goon Powell
6/25 5:30 pm ET Goon Bullard
6/26 8:30 ET Durable Goods
6/27 8:30 ET Q1 GDP final guess
6/28 8:30 ET Personal Income and Consumer Spending
6/28 8:30 ET Core Inflation
6/28 9:45 ET Chicago PMI

Key Economic Events Week of 6/17

6/18 8:30 ET Housing Starts and Building Permits
6/19 2:00 ET FOMC Fedlines
6/19 2:30 ET CGP presser
6/20 8:30 ET Philly Fed
6/21 9:45 ET Markit flash June PMIs

Forum Discussion