Saturday Gold

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.
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 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. 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 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.


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

turd [at] tfmetalsreport [dot] com ()


Apr 6, 2013 - 12:57pm


buying 900,000+ AgEagles for a fat cat, Tulving was slow. Not for me, Im trust him through years of dealing. but back then 2012-early 2013 always, we getting slow in shipping, but not for me, I knew he would always come through. Well, out of the fat-cat market, just me and my small stack, these days, like most, but the fat-cats would scream each day delay, being unsure and impatience. But, if he is truly shut down on Ag Eagles with no supply, meaning the MINT is out, and taking Bangkok news from dgstate, supply has to be getting short.

yeap, could be a good run now, in the graceful retreat, but you know, its only a graceful retreat, and Im sure most will Sit Tight and be Right.

Remember, the FED wants gold to rise, but in an orderly way, which fits the MO of JPM. Maybe 2400$ this run, donno. But no worries here, Im sure Horst will add in supply on the way up.

Prediction is 60:1 on the GSR before Ag takes off. Hit 59+ two days back, close but not enough, so linger here awhile, till about 37$ Ag and GSR hitting 60ish, Ag on its way to $70ish as gold hits 2400ish on the next "graceful retreat", with GSR going back to low 30ish. but really, who knows.....

Ernie Pantusso
Apr 6, 2013 - 1:02pm

Is it really true that you don't understand this?

Or are you trying to be a pain?

The report you cite breaks down the CoT even farther. Gene doesn't just look at the broad "Large Spec" category. He breaks it all the way down to Hedge Funds.

So, the large category is still net long but the more specific Hedge Fund category has moved net short. VERY VERY BULLISH.

So It Goes
Apr 6, 2013 - 1:06pm

Excellent observation

And notice that The Mint still hasn't updated. This last total was from Tuesday.

Also, GLD shrunk again. Down another .91 tonnes to 1205.31.

Apr 6, 2013 - 1:08pm


If possible...maybe they can purchase from one of TFMR's affiliate on this site? Just something to consider.

Apr 6, 2013 - 1:10pm
Apr 6, 2013 - 1:10pm

We won by losing the Vietnam war. Can we win in Korea?

Oh! We didn't win really by the death count on all sides. No one did.

But just think, if the NV simply decided it wasn't worth the effort and

The US would then have been in the position to financially support whatever
corrupt puppet regime we installed for Billions of Dollars per year for the last 45 years or so.

By "losing", the US saved Billions upon Billions of taxpayer money and created
a "buffer" state against any Chinese expansion. The only one who really lost Vietnam was the US Military and their expansionist policy and ever greater need to
expand and create unnecessary Imperial military bases across the world.

Our "security" against the "Domino effect" "World Communism" would have been no
more real if we had won, than what has indeed happened. Conversely, our security against China has increased with a fully functional
united Vietnam, a traditional enemy of China, something our MSM never ever mentioned during all of the War years, not once.

It had nothing to do with "Communism" or Dominos or other such nonsense. It was all
about saving face for LBJ and Nixon. Well, both of them finally found out that their
political faces were mired in Pig Feces, and will ever be.

Conclusion: Once again, the only real solution to NK is if the US, China, and Russia, and Japan, conspire to topple the head of the NK snake. Secondly, they
all agree to a reunification of the two Koreas and an exit of all US forces from
SK as part of the bargain.

What would a united Korea look like? Well, it would have something that looked like
a freely elected gov't. for one. The rush to take advantage of the poverty wages in NK would certainly hurt SK wage earners and businesses. It would also spur a boom in
the building of new manufacturing facilities that both the Chinese, Russians and SK businesses would be part of. This would, of course, help out even American financial

Conclusion #2: This is now becoming a laughable contest between the US Military/Industrial complex which want tensions to continue, the Global Financial interests who see a huge new marketing sector opening up, and the political interests that can't quite make up their collective minds as to which solution is
in their best financial and security interests.

Conclusion #3: There will be no conclusion for the foreseeable future. Kim simply consolidates power and the mess continues. This is the most likely outcome as a reunited Korea would as stated above set in motion a new unexpected set of outcomes that would no longer be in the hands of the entrenched powers. These people, of whatever, nationality do not like to lose control.

So like the PM manipulation, it will drag on and on until it can't.


Apr 6, 2013 - 1:11pm


I knew I could get some great feedback from the turdites! I don't post often but read every post every day. Keep up the great work and fighting the good fight!

Off to spend some quality time in the garden with the family!

Have I mentioned I love this place?



And yes DPH, GREAT suggestion! Thanks again.

Apr 6, 2013 - 1:12pm


We are hearing lots about N Korea recently.

It is very possible that the little f****r there is nothing more than a stooge for the EE and and is saber rattling to distract us from something bigger being done behind our backs which is mostly going unreported by MSM.

We will know if this true when the situation dies down.

Apr 6, 2013 - 1:12pm


Point taken. Didn't mean to direct for purchase, just information. I always go back to basics...

Modern Alchemy
Apr 6, 2013 - 1:12pm


I think it would depend on the time frame he is looking to invest and how much total investment he has.

Just doing a little math he could (1) purchase over 6 Troy pounds of silver or (2) 1 oz gold and a little under 3 Troy pounds of silver.

That being said, I feel like the GSR wont hold out at 58:1 for much longer and for sure if there is a revaluation then it should get a lot closer to the historical mean.

So I would say if he doesn't have much of a stack, stack em high all in silver and convert a pound of silver for an oz of gold later. In this senario (3) he would end up with 1 oz of gold and 5+ pounds of silver.

Either way, convert the paper into real money while you can!

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