Looking Back and Looking Ahead

582
Fri, May 3, 2013 - 4:38pm

As we wrap this week and prepare for the next, let's review the charts and the CoT.

First, the Commitment of Traders report. It just came out ten minutes ago and here are my initial thoughts. Keep in mind a couple of things:

  1. For the reporting week, gold was UP $62 and its OI was also higher by 6,000 contracts
  2. Silver was also UP. It rose $1.36 but its OI fell by 15,500 or nearly 10%
  3. The silver OI drop was almost entirely due to May contract expiration and First Notice Day, which happened at the exact same time as the CoT survey, at the Comex close back on Tuesday
  4. After the survey, open interest rebounded on Wednesday and Thursday. Gold was down a 2-day total of $4.50 yet its OI rose by 8,000 contracts and silver 35¢ on an OI rise of 1,400.

GOLD

Continuing the trend, The Specs sold and The Cartel bought. For the week, the Large Specs dumped 3,900 longs and added 3,300 new shorts and the Small Specs are now NET SHORT by nearly 1,500 contracts after they dumped 2,400 longs while covering 800 shorts. Think about that for a moment....the most out-of-touch, ultimate-outsider group the Small Specs, are now NET SHORT. At $1450. For perspective, near the price peak on 8/16/11 the Small Specs were long 70,510 and short 21,749 for a net long ratio of 3.24:1. As of three days ago, they were long just 37,451 and short 38,940 for a net long ratio of 0.96:1. (As an aside, you should really go back and look at that entire CoT report from Harvey's archives. Marvel at the difference in positioning between then and now. https://harveyorgan.blogspot.com/2011_08_14_archive.html

To no surprise, The Gold Cartel utilized all of this Spec selling to reduce their net short position by 8,800 contracts. Last week, though they added 5,255 new shorts, they also added 14,080 longs. This brings their net short ratio all the way down to just 1.56:1. Again, for the sake of comparison, look at that CoT from 8/16/11. At $1900 gold, The Cartel was long just 160,562 and short 409,409 for a net short ratio of 2.55:1.

Digging deeper, what's the big difference between then and now? On 8/16/11, The Gold Cartel was long 160,562. Back on Tuesday, they were long 170,211. However, back in August of 2011 they were short 409,409 and as of last Tuesday they were short just 265,774. Instead of letting gold get away from them when it suddenly became the only currency alternative to fiat, The Cartel moved to aggressively smash price, an operation that continues to this day. In doing so, they've been able to reduce their net short position by 153,284 contracts or 61.6%! Or looked at another way, they've been able to reduce their paper-physical liability by 15,328,400 ounces or 477 metric tonnes!

SILVER

Again, May13 contract expiration has distorted this report, regardless it's still quite interesting. Last week, the Large Specs dumped another 3,100 longs while covering just 300 shorts. This brings their net long ratio back down to just 1.52:1. The silver Small Specs were net neutral for the week are are still just barely net long.

The commercials in silver who have been taking on JPM in The Civil War actually dumped some longs last week into expiration. Their gross long position fell by 2,573 to 65,685. JPM et al seized upon the Large Spec and Comm selling and covered 5,507 shorts, down to 79,915. This lowers The Silver Cartel net short ratio all the way down to an incredible 1.22:1.

For perspective, let's once again review the CoT from 8/16/11, when silver was trading near $41.

  • Large Spec longs 8/16/11 = 32,697. Last Tuesday = 35,720
  • Large Spec shorts 8/16/11 = 10,769. Last Tuesday = 23,530
  • Large Spec net long ratio 8/16/11 = 3.06:1. Last Tuesday 1.52.1.
  • Comm Longs 8/16/11 = 34,555. Last Tuesday = 65,685
  • Comm Shorts 8/16/11 = 75,236. Last Tuesday = 79,915
  • Cartel net short ratio 8/16/11 = 2.18:1. Last Tuesday = 1.22:1.

Well, what stands out at you? Note that the Large Spec long and Cartel short positions are nearly unchanged over 20 months and a $17 drop in price. Then note the HUGE change in the Large Spec short and Commercial long positions. Also notice the difference between the commercial silver activity and the commercial gold activity. In gold over the exact same time period, the Comm long position is nearly unchanged. However, the silver Comm long position has nearly doubled!

Now I suppose we could really drill down into this and try to discern, by firm, how positions have changed. That's a topic for another day. For today, just think of this:

I laid out for you yesterday all of the many events that have occurred while gold has declined by $500. In summary, I concluded that late August of 2011 was a seminal period of time for the Forces of Darkness. They saw the collapse of confidence in every single fiat currency and the decision was made to attack gold and silver as they had become the only, true alternative to paper. This plan of action continues to this day. By containing gold and silver for the past 20 months, The Cartels have:

  • Reduced their net short position in gold by 153,284 contracts. This equates to 15,328,400 troy ounces of gold or roughly 477 metric tonnes.
  • Reduced their net short exposure in silver by 26,449 contracts or 132,245,000 ounces of silver or 4,113 metric tonnes.

As we head into next week, we should all feel pretty good about surviving this past one. Things looked pretty lousy back on Wednesday but we've since recovered and the charts don't look too bad. Now if we can just get a shove...and burst through resistance at $1485 and $24.80, we could quickly move right back to $1525 and $26 and be poised for an epic battle, fighting to move back into the 1525-1800 and 26-36 price ranges that had contained the metals since the August 2011 attack plan began.

OK, time to call it a week. Ole Turd's got a frosty beer waiting for him and I'm not sure if I can wait much longer. If I wrap up now, I might also be able to catch the Kentucky Oaks. By the way, I haven't studied the form yet but, from what I've seen, I like Normandy Invasion in The Derby tomorrow.

Have a great weekend!

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  582 Comments

Gold Dog
May 4, 2013 - 1:03pm

Next one is the one rounder...

....that's just for Yanks.

question in 5.

57Goldtop
May 4, 2013 - 1:04pm

The Who, today

Gold Dog, thanks for much for the contest fun!

RE: The Who, I've seen the current lineup multiple times and Zac is doing a fine job. This last time (Hamilton, ON in February) I was commenting on how he's perfecting Keith's sloppy tightness. It just feels right.

Simon Townshend deserves much credit for carrying this band instrumentally and vocally.

And, Pino Palladino has one the hardest jobs in music and he's doing it quite well.

Gold Dog
May 4, 2013 - 1:07pm

Question 6 of 6 for today

What anti-government, anti-media song contains the most famous five seconds in rock and roll?

Stand by after for details surrounding the next contest.

Zoltan
May 4, 2013 - 1:07pm

Site Crash?

Wonky internet knocked me out of the last two rounds but I am back!!

I was going to blame the cat lovers of the world for going after the site (after the donation to Guide Dogs) but looks like it was just me. You are off the hook Capt. Scarlett.

Z

Edit: Ooops forgot about the "just for yanks" questions. Thanks again Gold Dog.
Gold Dog
May 4, 2013 - 1:14pm

No problem Z

I simply cannot believe that the last question was not answered in 10 seconds...it was supposed to be a lay-up!

ballyaleancientmoney
May 4, 2013 - 1:15pm

...using depositor funds to guarantee their own salaries

This has really gone "beyond the Pale" or:

"Describing behaviour that is considered to be outside the bounds of morality, good behaviour or judgement in civilised company."

So now do savers not only get a negative rate of interest, they are soon going to have to sustain the Bankers obscene income for bad investments etc. Well, they can't make money anymore with subprime mortgage interest rates. The spread between the free money that the banks give them and Fed Notes is too low. Even all the toxic mortgage securities that the Fed has bought at 100% mark to bought must be drying up, if they are getting this desperate. All that money went to buy the S$P and DOW and short gold and silver and PM miners.

They've had two years to play that position and, of course, it worked. How much longer do they want to play that way? When will they reverse course and reverse the play, by selling the general market and go long the PM's and Miners? This, of course, could break the deal between the Big Banks and the Fed as regards to keeping the price of the PMs low to defend the dollar for massive buy backs of toxic mortgage and huge printed money to buy the Treas.

However, the Fed. has made them so large, that even, if they, the Bankers, go back on their word of honor (now that's an oxymoron, if ever I heard of one), they don't really have to care anymore. They've got a financial gun to the head of the US Gov't. Maybe, this is why Bernanke isn't going to Jackson Hole (appropriately named, esp. when referenced to Pres. Jackson's actions to the Fed of his time).

Perhaps, this is why Bernanke made a tipping point statement of ambiguity of maybe we will raise or simply continue QE or maybe we will lower QE.

Certainly, Bernanke could reduce by half or more, the amount of toxic mortgage assets they buy from the fraudulent banks. This would lower the amount of money flowing into the general market bubble. The rational exuberance of excessive free money flowing into the market would quickly turn into a panic of selling and shorting, that might make the Dot Com sell off look similar or worse.

It certainly wouldn't take much for a 20 Billion reduction in mortgage toxic asset buying from the Fed. to start the snow ball rolling down hill.

Think about it. The Fed. has bought well over a 1 Trillion dollars of toxic mortgages. The Fed. was never structured to do this, certainly not on this immense of a scale. Disregarding, that they have gone rogue as regards to their Charter of Purpose, how many people do they employ to oversee that these mortgages are being paid? How many people have they hired to do this? Aren't they assets on their balance sheets?

The answer is, if the SEC and CFTC are incredibly understaffed, it's nothing like one of or the largest landowner and mortgage owners in the world!!!

Who the hell collects the mortgage payments on behalf of the FED MBS (Mortgage Backed Securites)? I don't know. Do you, anyone here? It's probably so complex, that additional fraud is so rampant as to be unimaginable.

About 16 years ago, I was divorced, paying child care, unemployed and was piling up debt to the tune of about $1,400 in credit card bills. I was freaking out. I had never been in debt before, even during my NYC student poverty days.

I had lived in NYC, in 1976 going to school on an exchange program from Mass. College of Art which had no tuition for MA Vets. The first school was the Cooper Union. I received $311/month. I rented a so called apartment for, believe it or not, $100/mo. at 13th and Ave. A. which included "heat" (but that's another story). The Second was the Art's Student's League, where I had to pay $100 tuition per month. That second semester was a financial strain to say the least. $311 minus $100 for rent, minus $100 tuition, left $111 for food, electricity and Art supplies. I did have a small amount from a summer work that I drew down upon.

Conclusion. #1: $311 per month!!! This in 1976. Only 200 year after the Declaration of Independence.

Now in 2013, a mere 37 years later, how much can $311 per month get you in NYC?

It wouldn't cover an average lunch for a few Bankers getting together to talk about how they were going to manipulate the market today.

The Fed has gone rogue. It has totally abrogated it's charter duties to sustain the value of the dollar. It has become an illegal entity using tax payer money, and the US Gov't's so called good faith and credit to back up the Big Banks. In doing so, it has wrecked the good faith and credit of the US, needlessly, at the expense of the US tax payer, and only to the gains of the upper echelons of the Bankster Board Room members.

I guess the defense of the Bankers will be, when asked: Why did you rob you own banks? Answer: "Because, it wasn't our money and that was where the money was most easily stolen without any gun fire or legal interference".

I AM TURD

And I'm not going to take it very much longer.

Bally.

Gold Dog
May 4, 2013 - 1:18pm

While we wait...

There has been some comments regarding the exclusion of some of our more senior Turdites.

The next contest will be held Wednesday night, so that other time zones can play, and will encompass the entire work of the Beatles.

So Start Looking Through your Glass Onion.

Dog

Bongo Jim
May 4, 2013 - 1:19pm
That_1_Guy
May 4, 2013 - 1:20pm

WAG Imagine Lennon?

Who knows..im just guessing now.

Fun.

GUY

Bollocks
May 4, 2013 - 1:20pm

Hey Dog

Just got here. Bugger, I'm late .

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