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

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  582 Comments

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DeaconBenjamin
May 6, 2013 - 8:19am

Japanese thieves steal Y5 mil worth of jewelry after backing car

May. 06, 2013 - 06:06AM JST ( 4 )

IBARAKI —

Two men got away with 5 million yen worth of jewelry after they backed their car through the front of a jewelry store in Ushiku, Ibaraki Prefecture, on Sunday morning.

According to police, the robbery took place at 1 a.m. Footage from surveillance cameras inside the store showed a dark-colored car being backed through the front entrance, sending glass everywhere. Two men in black got out and helped themselves to about 100 rings and necklaces worth 5 million yen, TBS quoted police as saying.

The men then drove off. The car’s license plate was covered, police said.

Beastly Stack
May 6, 2013 - 8:09am
s1lverbulletopticsguy
May 6, 2013 - 7:45am

@ Dr Jerome

When I calculate the fiat value of my stack I now add a 3-4 dollar premium on silver and 100 on gold because with how things look at a retail level ( especially silver) I can only assume that I would easily be able to find someone who would buy my stack for a 20-30 percent premium. I don't plan on selling anytime soon but to think you will only get spot for your metals is bogus. Maybe spot for your comex contracts but definitely not for the real metal.

Bollocks
May 6, 2013 - 7:43am

If you speak the truth you are a terrorist.

Shocking interview about what happens when you raise the alarm.

DHS Whistleblower Censored from 60 minutes #N3
opticsguy
May 6, 2013 - 7:18am

60 Minutes - military tactics

A nice conditioning piece last night. Springfield (MA?) cops, veterans, are using counter-insurgency techniques sharpened in Iraq and Afghanistan against gangs in high-crime areas. The underlying theme is "if it worked in Fallujah, it should work here, don't be afraid of those guys kicking down doors and looking for insurgents, I mean, criminals."

Byzantium
May 6, 2013 - 7:00am

Crude oil

As WTI once again edges towards the upper end of its multi-year narrowing wedge, the Syria situation threatens a swift upside breakout.

I am no market analyst, but I suspect that the key knock-on effect to watch, is not the effect on gold, but the effect on the stock markets. High oil prices are basically a tax both on the consumer, and on corporations, where bottom lines are squeezed.

Miners of course will get severely whacked, since oil is a big component of their costs. As opposed to all the other times they gets whacked, I wonder if a clear reason for a whacking will result in a mega whack?

gold slut
May 6, 2013 - 6:53am

UK/US Au/Ag?

US stackers have a very strong relationship with Ag while in the UK things lean far more towards Au.

There are two things that put me off Ag (here in the UK) - the sheer bulk needed to store a large amount of value and worst of all, the VAT! I love silver, don't get me wrong, but I have a chronic allergy to feeding the tax man. It does terrible things to my blood pressure.

If you buy coin of the realm gold coins, the tax man has nothing to do with it AT ALL, no VAT and no CGT. This makes me intensely happy knowing that every penny I spend gets converted into Au.

My way of getting silver is via wifey. She LOVES silver, and as a fantastic, caring husband, I LOVE making her very happy at Christmas, on birthdays by pandering to her love by adding to her jewelry box (and never minding if she wants to treat herself any other time of the year). No matter what I get her, I would have to pay VAT, so it's a win win situation - happy wife and bigger stack.

PS. I also LOVE your site Turd!

Byzantium
May 6, 2013 - 5:26am

Gold:DOW ratio

Texas Sandman rightly points out that a 1:1 ratio or even better, is a time to consider switching some PMs into stocks. That is an historic strength indicator that enables us to ignore the valuation of currency; it compares the relative value of real things. (Real estate is the other thing priced in PMs that interests me).

The problem that I have with the Dow:Gold switch, is that of how would one actually safely buy the DOW, when brokers are so closely connected to the banks, that they will probably go down with them and MF-Global us? How do we know that the brokers would even buy the required stocks, instead of just producing sham statements that effectively just track them?'

Yes yes, direct registration & keep physical share certificates. I understand that this involves several problems, including that of transaction costs, difficulty of trading, and problem of secure certificate storage.

I guess if you have a foot in Singapore like Mark Faber & Jim Rogers, you can trust your local brokers & banks, but the rest of us? By the time the banking & brokerage industries become trustworthy again, we may have totally missed the boat.

This isn't an assertion that it can't be done; my question is to open the topic of how it can be safely done.

TeaDrinker
May 6, 2013 - 5:13am

Last

Oh Well, maybe not.

Actually just checking to see if my 'avatar' uploaded okay.

Nothing to add just now except thoughts that may upset the gun lovers out there, best I shut up.

Glorious spring day here in the UK. House Martins checking out last years nests and assessing repairs.

Oh, it is a public holiday as well, commonly known here as a Bank Holiday.

Cheers.

thurd aye
May 6, 2013 - 4:59am

ALL phone calls in the US are

ALL phone calls in the US are recorded and accessible to the government, claims former FBI agent By DAILY MAIL REPORTER PUBLISHED: 14:32 GMT, 5 May 2013 |

A former FBI counter-terrorism agent has hinted at a vast and intrusive surveillance network used by the U.S. government to monitor its own citizens. Tim Clemente admitted as much when he appeared on CNN Wednesday night.

LINK WONT PASTE.T-Aye.(****(

,)))

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