Gold and Silver Rebound

Tue, Apr 16, 2013 - 11:33am

Well, we appear to reached halftime in this event. Will the home team mount a second half rally and send the game into overtime or will the rout continue? The action right after halftime usually tells the tale.

Well, ole Turd's sure got his neck on the line this time. So far, I've avoided the pitfalls of ingesting Chinese-made yellow plastic foam. For now. Will my luck hold?

But a little hat-eating is nothing compared to the potential ramifications of being wrong on this one. Yesterday, I laid out two possible scenarios for the why and how of the past two trading days. If either one is accurate, I will feel as though I've served my purpose. If neither is accurate, I'm going to need to go back to my old job of guessing weights at carnivals and amusement parks. (Luckily for me, it's almost summer and most of the traveling carnivals are still looking for workers!)

So here we are...a sort of "moment of truth". After being dead wrong about a rally post-QE∞, I've hung my hat on the notion that the rally is still coming and that it has simply been postponed until The Cartels can reduce or eliminate their naked short positions. Once price had come all the way back down to the bottom of the 19-month ranges, it seemed logical that the final step would be to harvest all of the sell-stops that undoubtedly resided immediately below. Lo and behold, this is exactly what happened. And now I'm actually hoping that today's rally remains contained because today is CoT survey day and I really want to see how these "markets" look after all the carnage.

The open interest numbers for Friday were telling. Gold OI surged by 14,000 as every Fool crowded into the short side as gold broke down through $1525. What irritates me is that so many of these jerks have made money on this far. Silver OI actually fell on Friday but keep in mind that silver didn't break down through $26 until Sunday night. It then fell almost $1.50 in an hour as stops were tripped. Therefore, expect the big OI jump in silver today. Maybe.

Notice I wrote "maybe". This will be a very interesting point of order. If silver OI fell yesterday as price dropped $3, then we have primarily long capitulation. If OI rose...and rose dramatically like gold did on Friday...then we've got the true "Greatest Fools" rushing in and establishing brand new short positions while the longs remain resolute. Usually, the numbers are released by about 2:00 EDT so look for some comments then.

And back to that CoT report. What will it show? Provided we don't get a $200 rally in gold and a $3 rally in silver today, the changes are going to be very, very interesting. To what degree has JPM covered their shorts? Have the other commercials added again to their record-breaking gross long position? Are the Large Specs completely net short? Too bad we have to wait until Friday to find out. What are the odds that JPM and their pals will also be waiting breathlessly for 3:30 Friday? Freaking zero! No doubt in my mind that Cueball and Thunderlips pass along this info as soon as they have it. No doubt at all.

OK, so here we go. As I type, I've got $1387 and $23.70. If I'm going to be right about Scenario #1...which is what I've been concerned about for weeks...then price needs to begin to recover here. A double-bottom is possible but, in this case, I'd actually look for a V-bottom, instead. Why? Because of the reasons laid out above. Now that the final remaining sellers have been harvested, the music stops. The metals are allowed to regain their natural momentum to the UPside and a new trend emerges. Slowly at first and then accelerating. A glance at the marginally-useful charts gives us some levels to watch. Why would these levels be important? Because if I were a money manager who was short and looking to take profits (buy and cover), I would become increasingly wary as price moved back UP and through them.

From a fundamental standpoint, just a couple of anecdotal items. First, there are reports everywhere of retail silver being sold out. Of course, some of this is due to coin shop owners being unwilling to unload their inventory at a loss and at such temporarily-depressed prices. But the reports of shortages at the wholesale level appear real. I know The Doc and he's not lying or making up the shortage stories on his site. See for yourself. Click the Provident or JMB banners on the side of this page and check their silver inventories. Mr Hyde even reported yesterday that his local dealer is not only picked dry, the owner informed him that his next allocation of 45,000 ASEs is already entirely sold out. This is all very good news! People are awake and unafraid. We stand collectively on our watchtower, taunting The Cartel and farting in their general direction. Have no doubt, this pure physical fundamental will eventually translate into paper price.

Second, this site enjoyed record-breaking traffic and attention yesterday. I point this out for several reasons:

  • As further evidence that, despite the short-term paper price declines, the interest in precious metals investing continues to grow.
  • To draw attention to the successful implementation of all the new "technical improvements" and issue a big "Atta-boy" and "Thank You" to Ron and Stephanie.
  • And to assure you that, even though "Turd is wrong 99% of the time", your site remains relevant and vital. Thank you all for your support.

Here are the specifics, in case you're interested:

Old Record: 42,331 on 9/26/11
New Record: 44,521 on 4/15/13

Unique Visitors
Old Record: 18,153 on 9/26/11
New Record: 21,623 on 4/15/13

Old Record: 151,919 on 6/15/11
New Record: 172,606 on 4/15/13

Finally, I'm been so overwhelmingly busy that I frankly have not had the time to surf the interwebs and find great, new analysis for you from our usual cast of analysts. If you, my dear reader, have recently read something pertinent and helpful, please be sure to post a link in the comments of this thread. Be careful not to cause copyright issues, though. Links only, please. Moochas Grassyass.

OK, go have a great day. Relax and be happy. You are doing the right thing.


About the Author

turd [at] tfmetalsreport [dot] com ()


Apr 16, 2013 - 11:36am



Apr 16, 2013 - 11:36am

double duece?

double duece

Nick Elway
Apr 16, 2013 - 11:36am
Apr 16, 2013 - 11:39am

YAA number 2 is gold

CBC doc is on this thursday

The CBC special on Gold is going to be awesome

Woke up this morning listening to CBC after a crap night unable to get a decent sleep and lo and behold they have the writer on talking about topics covered

1. Gold is possibly not in fort Knox and how they refuse to allow it to be counted and how Germany asked for their gold back and all of a sudden it’s going to take 7 years

2. China and Russian buying up all the gold they can get their hands on

3. The war years of moving the gold from Europe to NA

4. The amount of gold in the world and how gold you think the bank is holding for you and how when you go to get it they will give you a piece of paper not real gold even though you gave them real gold.

5. Paper gold to real gold is 100 to 1

6. The manipulation of gold, but best of all is the power of real wealth behind gold and why people and governments manipulate it so they hold the real gold giving actual logic as to why it is manipulated

It’s going to be awesome whether people believe it or not that is something else but it has our stock TV show BNN talking about the possibility that these thing are going on and they give the Sprott personnel a fair amount of time and you know what they believe

Thursday @ 9pm

Apr 16, 2013 - 11:43am

Top 10


Apr 16, 2013 - 11:44am

Andrew Maguire

Yesterday, Andrew Maguire said, “all they (central planners) are doing is delaying an extremely disorderly rebound (in the price of gold). Give it a few days because at least 90 tons of central bank buying today was seen below $1,550, into the afternoon fix (in London). As we cascade down here you can guarantee that what they (Eastern buyers) are doing is ‘spot indexing,’ which is basically locking in the price in the paper market and will allocate that at an upcoming fix (in London).

So I give it (at the most) two to three days before this has a massive rebound effect, and the short fuel above the market now is at absolutely unprecedented levels.”

Apr 16, 2013 - 11:45am

EE Short covering?

I would think that the momentum chasers are still in sell mode after counting up their pain and seeing calls in the MSM for metals to head even lower. Volume seems very high today--higher than any days last week except for the past two days of selling. I wonder if the EE has been buying back shorts while other investors have been getting margin calls to sell off their long positions. The COT may have much to say indeed this week (inasmuch as we can trust it).

Mr. Fix
Apr 16, 2013 - 11:45am


That was close!

Apr 16, 2013 - 11:46am

my post from end of last thread (just want the kudos seen)

Actually kudos to JS and Turd: they, probably others too called for a sudden big run down--the only problem was timing and since we here Turd and JS operate out in the open , giving a date or time frame or saying it looks like we are out of the woods is lethal.

I know others do this an I do too--play puts on down action--mostly GLD puts but they were good the past few days. Cushioned a lot of grief. But you have to understand what they are and the risks involved. Last night when I saw gold run up I know my puts would crap. But I had already rolled down a few times over the past few days so net net I am ahead.

I have no clue of the timing on the rebound (there will be one because there is no available fix for the US monetary policy problem other than throwing in the towel) so I bought giggle call spreads expiring this Friday in case we see a big move up, and more serious calls for May and Jun.

There are a lot of tools available out there.

A note on the real value of gold. Whats the real value when you think back 50 years ago when paper money was silver certificates and before that gold certificates. With all the money out ther-paper in pockets , in accounts and digital all over the place, the true price of gold, and I seem to remember calculations, is prob into 5 digits. I think I saw 58k as a calculated prce a few years ago.

Its all a matter of how much faith based currency is out there-and of course if banking system collapses its what you really have in hand including paper currency even if FRN, If banking system shuts down, not out of the possibility, we have no credit cards to use, no checks to write, etc. and we already know that actual paper cash held in banks is far less than whats on the books which is why they are so terrified of bank runs. Rememebr the only reason bank balance sheets look good is a) mark to fantasy and b) low interest rates keeping a writedown of many of banks interest rate sensitive marketable investments from being written down.

Take a look at "Gibsons Paradox" written by Larry Summers .

btw: I had to have long puts in portfolio at nyse close yesterday fpr obvious reasons. After dinner last night they were looking pretty good. Bu tthen gold got back to break even and started running up o/n.

The futures market should be closed down--too bad its not going to be an orderly close down. I took a look at OI and inventories there and its absurd. Its a casino environment. Thats not how or why the futures market was originally set up. And speculation is from both sides.Futures market was good way back when farmers wanted to secure a good price in advance for their crops and users of crops were happy to lock in a reasonable price. Now its become a playfield for speculation and games not just in PM (although for PM its a major league playfield) but other areas too like oil.

Apr 16, 2013 - 11:46am

LCS Report

LCS Report:
Yesterday I stopped by my local coin shop. After going in there for a year now, the proprietor knows me and we are on friendly terms. Up until two weeks ago he has always sold his pre-1965 Silver coins at spot, but was recently selling at 5% above spot.

Anyway, yesterday afternoon he stood behind the counter with his arms crossed and told me that he had packed up all of his Silver coins, brought them home and locked them inside his safe. "Those coins are NOT coming out of there until the price of Silver comes back up," he told me.

Although this is only anecdotal evidence, this speaks volumes about the shortage of 90% which a number of people have observed.

As a side-note, this LCS has also been sold out of Silver Dollars for the past two months; in the past he'd always had these on-hand.

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