Looking Back and Looking Ahead

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.


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!


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!


About the Author

turd [at] tfmetalsreport [dot] com ()


May 3, 2013 - 10:47pm

Israel Bombs Syrian Targets

According to Debka and Jerusalem Post - Israeli Air Force struck targets in Syria this evening. Apparently going after Chemical weapons depots.

May 3, 2013 - 11:03pm

A reminder

Last friday, April 26, 2013, TF had the following prediction:

"there can be no doubt that we are on the verge of major fiat-conversion price rallies in both metals, perhaps even something more dramatic."

It has been one week. That proves nothing, but let's keep an eye on it, yeah? I do not understand how someone can express that level of certainty, and I think this will be an appropriate illustration of that sentiment.

القراع عصفور
May 3, 2013 - 11:20pm

why are you here then?

douchebagism 101
May 3, 2013 - 11:24pm

Just noticed something

Just noticed something about my last silver order which consisted of 140 (7 stacks of 20) buffalo rounds and 60 ASE. This order was placed on the tuesday before the friday smackdown started with Liberty CPM. I had thought they were all dated 2013 but after looking this was slight off, it is actually: 3 stacks of buffalo - 2012 4 stacks of buffalo - 2013 3 ASE stacks - 2013 The ASE I am not surprised on as its the more popular and with the production stoppages etc. no surprise. The interesting thing is they switched from 2012 to 2013 on the "generic" rounds right in the middle of my order and this was before the smackdown. I know on the previous price drops that LCPM was seeing tons of business for days so I was actually expecting all 2013s even on generics. Looks like Liberty was already burning through previous round stock even before the full physical rush. Of course this could just be due to the way things were organized on some shelf, but given the delays of silver announced by LCPM by the following Wednesday I suspect its an accurate inference. Unfortunately I lost them all in a tragic boating accident involving a weasel and 3 ducks.

cliff 567dropout
May 3, 2013 - 11:31pm

thanks OLI

Atta-boy for the heads up outlookingin.

The audio is low volume, the video is atrocious, but if you can concentrate on what this man is saying I fear for his life. I fear for ours.

I want to hear the Turd-miester interview this guy. This guy needs a forum. Fuck, he needs an amphitheater. Columbia Economist Dr. Jeffrey Sachs speaks candidly on monetary reform [Full version speech] https://www.youtube.com/watch?v=hCCr-uiqtAY cliff
NonoverlappingMagicCerealالقراع عصفور
May 3, 2013 - 11:34pm

Thankfully, my name is not

Steve, Jess, Jason, Mel or Ricky. Do the french actually use the word douchebag? I know the first syllable is french, but that would f'in hilarious. I'll be there in the summer, I will have to ask.

May 3, 2013 - 11:39pm

International Policy steering away from USA

Check it out my american cousins.


Mexico seeks new security, economic agenda with US

Associated Press

MEXICO CITY (AP) -- "Mexico's is ending the widespread access it gave to U.S. security agencies in the name of fighting drug trafficking and organized crime..."

"Under President Enrique Pena Nieto, who took office on Dec. 1, Mexico is ending direct sharing among law enforcement of resources and intelligence..."



Bolivian President Evo Morales orders expulsion of USAID

(CNN) -- Bolivian President Evo Morales said he is expelling the U.S. Agency for International Development from his country for allegedly meddling and conspiring against the government.

"USAID is out; I ask the foreign minister to immediately communicate with the U.S. Embassy," Morales said in a speech Wednesday, according to the state-run ABI news agency.

According to USAID's Bolivia website, the agency has operated there since 1964. It says it carries out health, sustainable development and environmental programs in the country. The agency says its 2011 budget for Bolivia was $26.7 million.



Turkey Makes It Official With SCO April 28, 2013 - 10:51am, by Joshua Kucera

Turkey has formally become a "dialogue partner" of the Shanghai Cooperation Organization, a step with unclear practical consequences but substantial symbolic import. Turkey is the first NATO member with any sort of formal relationship with the SCO, which is often represented as an Eastern "anti-NATO." All the cliches about Turkey being "caught between East and West" -- here they are, codified in agreements with political-military blocs.

During the signing ceremony in Almaty on Friday, Turkish Foreign Minister Ahmet Davutoglu used some lofty rhetoric about his country's new partners, saying that Turkey "shares the same fate" as SCO member states: Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. From Hurriyet Daily News:



China Wants to Be Pakistan's New Best Friend — But Will It Backfire?

If the recent spurt in bilateral ties between China and Pakistan is anything to go by, there seems to be a storm brewing for the West Asian region that would further jeopardize any attempts by world powers to mitigate risks from Iran's nuclear buildup. China has strongly embraced Pakistan, despite knowing fully well that Pakistan and its neighbors are infested with terrorists affiliated to Al Qaeda and their cross-country brethren like Uighur and Chechen extremists. China has got its mind made up to embark on a comprehensive geopolitical expansion mode.

The severing of friendly ties between the USA and Pakistan following the mostly well-founded accusations that Musharraf's government and the Pakistani intelligence service sheltered Osama bin laden in the Abbotabad region of Pakistan prior to his death has created an alliance vaccum of sorts in Pakistan’s foreign relations. This is where China has moved in.



Japan holds new national sovereignty day

Posted Mon Apr 29, 2013 7:18am AEST

Japan's prime minister Shinzo Abe has presided over a ceremony marking a new national day he says he hopes will restore Japanese national pride

The Emperor Akihito attended the ceremony in Tokyo for "Restoration of Sovereignty Day" marking the 1952 signing of a treaty with the United States and the Allies formally ending World War II and the Allied occupation.

Emperor Akihito's father, Hirohito, was Japan's wartime leader, and made a historic broadcast announcing the terms of surrender to the Japanese people in 1945.

The establishment of "Restoration of Sovereignty Day" may be regarded warily by neighbouring China and South Korea, who are suspicious of signs of rising nationalism in Japan and have long-standing territorial disputes with Tokyo.

Mr Abe has made clear that he wants to revise Article 9 of the constitution to set down Japan's right to maintain a military for self-defence.

He also wants to change the interpretation of the constitution that has prevented Japan from exercising its right to collective self-defence or aiding an ally under attack.

Sunday's ceremony upset residents of Japan's southern island of Okinawa, which remained under US control for another two decades, until 1972.

Okinawa is still a reluctant host to the bulk of up to 50,000 US military forces in Japan.

Residents of Okinawa held a counter-rally describing the commemoration as a day of "humiliation" for Okinawa and not a true return of sovereignty to Japan.



This certainly looks like Countries are re-aligning their priorities AWAY from US Government placations.

This particular move by Japan reinforces my view that they believe future US backing may not be set in stone. Japan may see some weakness in ready deployment of US forces to maintain Japanese security.

Turkey attendant to the SCO seems like it could be a way for the US policy makers to have a foot hold in future negotiations, if not then the Turkey situation is much more concerning to the Western PTB.

As far as Pakistan goes it really never was an Ally of the Western doctrine. The only reason to be there is to keep them from using a nuke on India...maybe China can talk some sense into them...doubtful.

USAID being pushed out of Bolivia is not so surprising, deeper roots with Venezuelas government, ala "Bolivar sensibilities", although USAID has not been kicked out of Venezuela...yet. Wikileaks produced a cable recently detailing the way it uses the "Aid" portion to influence non-Bolivarian thinking in Venezuela, watch and wait for it to occur there as well.

The situation with Mexico restricting US intelligence and military operations within the confines of Mexico now seems ominous. Bureaucrats being handed the reigns to decide US involvement is NOT friendly, regardless of trade deals. Something else is going on here, is Mexico getting ready to have its GOLD sent back home too? A little tit for tat?

May 4, 2013 - 12:02am

Removed comment

Removed comment.

May 4, 2013 - 12:08am

Removed comment

Removed comment.

May 4, 2013 - 12:10am

Site Refresh Problems

Not complaining but trying to help.

I STILL have problems refreshing page views in TFMR. And ONLY TFMR. When I refresh a page I get either an "HTML Site Architecture" view or a view with a narrow (Half Screen width) view of posts. Also, the page number boxes at the foot of the page will spread out from their normal close proximity and various avatars get replaced by "XXX's picture". This NOT an isssue with cookies or cache and I have the same issue with Firefox, IE and Chrome. It's also not a Java issue because by default I have Java "Disabled in Browser".

Perhaps it is just me? Please assist and Hat Tip this post ONLY if you are experiencing similar problems. It's irritating and time-consuming unnecessarily.

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