Saturday Gold

417
Sat, Apr 6, 2013 - 12:06pm

I don't know if the old week has ended or if the new week has already begun.

Let start with a reprint of my CoT comments from yesterday. As expected, the report was extraordinarily bullish, particularly in silver. Does this mean that the decline is over and silver won't be going any lower? Of course not. Maybe it won't end until the LargeSpecs are actually net short? Regardless,the metals are once again poised for a major move, back toward the top of the 18-month range, at a minimum.

Submitted by Turd Ferguson on April 5, 2013 - 3:06pm.
MODERATOR
Let's start with gold as it went exactly as we assumed it would. For the week, price fell $21 and OI fell by 2,500. However, those bland numbers belie some incredible turnover.

On the drop to Tuesday's close of $1576, the Large Specs added 12,300 net new shorts. Likely almost all of this came on Tuesday when OI surged by 10,000 while price fell $25. The Small Specs also added a net 3700 new shorts. And of course this allowed The Gold Cartel to cover a net 16,000 shorts. This drops their net short ratio back to a bullish 2.04:1.

Now silver...

For the 4-day week, silver was down a whopping $1.42 while its OI rose by 4,200. On Tuesday, when silver closed at $27.25, here's how things looked. (Keeping in mind that on Wed and Thu, total OI rose by another 1500 contracts to a multi-year high of 157,212.)

The Large Specs which, just eight short weeks ago were long 42,499 and short 6,588, are now long 38,200 and short 30,055. That's a net change of 27,766 contracts or a shortage of nearly 139,000,000 ounces of silver or about 20% of total global production this year...all shorted by the Large Specs over the past eight weeks. It is important to remember here that The Large Specs don't actually have any silver to deliver, they are simply short the paper. With this week's changes, the LargeSpec net long ratio falls to a has-to-be-a-misprint level of just 1.27:1.

The SmallSpecs got in on the act, too. They added 600 longs but also added 2900 new shorts for a net reduction of their long position of 2300.

And so we turn to the silver commercials. The gross long position which, as a reminder has almost always fluctuated between 30,000 and 40,000 for as long as I can recall, grew again this week. For the reporting period, the Comm gross long position grew by another 2,300 contracts to a record 57,847. As of last night, it may have reached to near 60,000. All of the Spec selling allowed JPM et al to cover some more of their naked shorts. This week they covered another 3200, bringing their total position down to 76,350. Most importantly, the Silver Cartel net short ratio has fallen to 1.32:1. This is the lowest I've ever seen, exceeding the low of 1.34:1 on 12/27/11. That record low marked a bottom and silver proceeded to rally from $26 to $37 in nine weeks.

I SIMPLY CANNOT STRESS ENOUGH HOW EXTRAORDINARILY BULLISH THIS COT REPORT IS. We are clearly on the cusp of a major rally. Did it begin today? Maybe. Will it begin next week or the following week? Perhaps. All I know is that it will begin...and soon. Be ready.

So you're probably wondering where how the charts look after yesterday's move. They're not too shabby. We can't declare victory and a bottom just yet...but...if these rallies can extend back above the lows made right after the first of the year, these charts are going to begin to look very, very bullish. Not to get the cart too far ahead of the proverbial horse but the 50-day MA for June gold is at $1614.10 and the 50-day in May silver is $29.51. It's not going to be easy but if we can get through there, too...well, it's going to be fun.

And here's an interesting chart. I recall seeing some blatant SPIN this week that argued that the reason gold was declining was a rise in real interest rates. This is patently false...like that matters. Also when everyone from Smart Money to The O'Reilly Factor is claiming that gold is dead, you know that the short side is overcrowded and due for a religious experience.

That said, look at this chart of the 10-year note. You can plainly see why The Bernank has that goofy grin on his face this morning. The 10-year is now well above the 132 level, which is where it was when QE∞ was announced and then confirmed 90 days later.

Just a couple of other things that don't at first glance seem connected. First, while scanning the headlines over coffee this morning, I came across this on Drudge. https://thehill.com/blogs/on-the-money/domestic-taxes/292071-obama-budget-to-target-wealthy-iras And check this quote: (A) senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.” Yikes!! I can't even begin to describe how:

  1. Frightening this is that some bureaucrat can decide what is a "reasonable level of retirement savings".
  2. Frightening at how unbelievably freaking stupid, naive and foolish this is.

And then there's the continuing saga of the N-Kos and Lil Kim. As you know, yesterday the N-Kos recommended that all foreign embassies withdraw their personnel by April 10 because "after that date, they cannot guarantee their safety". Lil Kim also drove another missile over to his coastal launch site, Cape Kimchi. The U.S. then upped that bet and raised him some B-1 bombers to Guam. What in the name of Charles Cabell is going on here?

I have a theory. I think the O'Bottom regime is deliberately poking at Lil Kim. The Kim family has been a thorn in the side of just about everyone for over 60 years. Lil Kim, as a third generation ruler, appears to be no more reasonable and likeable than either is Dad or his Papa. So it appears to me that O'Bottom is taking a gamble similar to his strategy with Egypt and Libya. Namely, "let's sponsor the ending of the current regime and then maybe, just maybe, the next leadership will be a little easier to deal with".

So, knowing tha Lil Kim is just 28 years old and likely reviled by all of the top military brass in N-Ko...Maybe a military disater, even a little one, will be enough to prompt a coup that replaces Kim with someone/something more "reasonable"? I've thought about this for days and that's the best I can come up with. Because otherwise it makes no sense. Why paint the little fucker into a corner and leave him with no options other than some type of manuver to "save face"?

If I'm right, then something is indeed going to happen in the next 7-10 days. The question then becomes, will it be "small" and contained? Or will the unintended/unexpected consequences of war FUBAR all of O'Bottom's plans?

And now you're asking yourself, what the devil does this have to do with the IRA story?

Incompetence. Plain and simple. Whether it's dealing with the "financial crisis", crafting a budget, managing the debt, the Arab Spring...you name it. The overriding element of five years of O'Bottom is incompetence. So now here they are, attempting to massage and manage a removal of the ruling regime of North Korea. What do you think the chances are that it doesn't go as smoothly as hoped/planned??? Not good.

On that happy note, I'm going to call it a week. Have a great weekend and enjoy some down time. Come back Monday, though, with your game face on. See you then.

TF

p.s. If it looks like "reads" are down for my posts, trust me they're not. We removed the tracking system that works with Google Analytics in the hopes of easing some of the burden on the servers. The result is what looks like about a 50% reduction in accumulated "reads". No biggie.

About the Author

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

  417 Comments

mapleleaf
Apr 6, 2013 - 12:11pm

2nd

I'll take it. Thanks TF for holding up a lantern in the storm.

Fr. Bill
Apr 6, 2013 - 12:11pm

Durty Thurd!!

La deeee dah.

A.B.
Apr 6, 2013 - 12:12pm

4 TH

Tax for all the effort Turd. Hope this week will be better than the last.

ToastPaperBuySilver
Apr 6, 2013 - 12:20pm

Fufth!

A first (for me).

Nana
Apr 6, 2013 - 12:22pm

Fasten Your Seatbelts

It's gonna be a bumpy ride...

Fasten Your Seatbelts
MrGuboci
Apr 6, 2013 - 12:24pm
Ernie Pantusso
Apr 6, 2013 - 12:25pm

net long or net short ?

turd wrote:
With this week's changes, the LargeSpec net long ratio falls to a has-to-be-a-misprint level of just 1.27:1.

Because of that extremely high Managed Money silver short position, collectively the Spec Funds showed their largest ever net short, repeat net short position for silver futures since the inception of the CFTC disaggregated commitments of traders reports (data begins in 2006).

https://www.gotgoldreport.com/2013/04/gold-and-silver-disaggregated-cot-...

?

thurd aye
Apr 6, 2013 - 12:28pm

7 boys

ok just an excuse,my relative s wife has just has their seventh boy on the trot.wow.

beats all the others in the family.hope one of them has a brain worth some p.metal.

gold doing its usual thing..................up down turn around pick a bail o cotton.

)))TAye

SilverSurfers
Apr 6, 2013 - 12:29pm

tentrud?

yeap, that's the top 10, 3 of late, should Iz be worried. Curiously, how did turd know it was Horst who sent the ugly email? Trud eyes are everywhere! YIKES? Uncle Sam wants you!!!!

dgstate, thanks again. You could post a url, though. Just saying ....

for you system 8 kids, a url is a Universal Resource Locator, for zeroing in on a particular site.

PuraVida
Apr 6, 2013 - 12:29pm

Friend with 3k to spend on PMs

He's got some silver and very little gold. Should I suggest he grab 1oz gold and spend the rest on silver? With the GSR as high at it is I'm tempted to suggest he go all silver. Is the diversification worth it? What do you guys think?

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

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 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

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

Forum Discussion

by NW VIEW, 3 hours 20 min ago
by sierra skier, 11 hours 38 min ago
by NW VIEW, 11 hours 40 min ago
by Trail Trekker, 13 hours 32 sec ago
randomness