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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TeaDrinker
May 6, 2013 - 4:49am

Last

Woop Woop. Yeeehaaaw.

May 6, 2013 - 4:41am

Only $7 over spot!

The average price of US half dollar sales yesterday on ebay from a random sample is $7 over spot. That is a 22% premium. Provident's price for "our choice" half dollar coins is $8.10 over spot.

You know... I think my stack is a lot less underwater than I thought. Spot price is officially bogus in my book.

I just read Ron Paul's "House of Cards" essay. Nothing new there for this community. I just hope he gets a wider reading than ZH and the PM bugs. It occurred to me that our fine government is preparing for a collapse too. No power vacuums allowed in this country! They know that Ron Paul is right but will NEVER admit it. But they are prepared nonetheless--with military police force, urban tanks and hollow point bullets. I suppose Ben's money printing, commodity smashing, stock-pumping, bubble-blowing, bond buying, bank bail-out machine has surprised even TPTB in its effectiveness. Who knew Ben has such tools at his disposal? DHS has brobably become bored and Boston was a good excuse to try them out. Next thing you know, a good shooting war that creates jobs in the armament industry and reduces the population might just get them TPTB through a collapse and allow a currency reset with a brand new paper system. They may be stalling the big reset until we are in the middle of a war.

I have been saying that I'll divest half my stack and pay off my home if AG hits 100, but now I am thinking that plan would rob me. I borrowed money to buy AG in April of 2011 at $40-45. It is all paid back now and the stack has no claims. It feels good and I sleep well most nights (not tonight--concerned about my kid's future). Besides, it may be difficult or dangerous to sell until the economic upheaval starts to settle into a new normal.

johnnydow, why do you even come here? I suppose you are paid to post the crap that appears under your name. At least our last two trolls, Wolfie and Nono tried to make some sense, I think they are better educated and better paid than you are. You are trying to sucker people into a last fling with equities. Sorry! my trading platform doesn't have a fast enough stop loss mechanism to keep up with the HFTs. If the collapse comes, wealth stored in metals will be safe, wealth stored in equities will lose 50% to 100% and are at risk of theft or confiscation.

I wonder how many of these trolls are secret stackers?

Junksilver
May 6, 2013 - 3:39am

Another View on Shortage Supply

I've always kinda likes Don Harrold and while I don't agree with 100% on this, it is kinda interesting to see how the shortage is at least on the big online sites.

https://m.youtube.com/watch?feature=m-ch-fea&v=jh9Yf_Sdtow

Karankawa
May 6, 2013 - 2:58am

Turd! Thank you!

You have truly established a community here that respects the truth.

G. Edward Griffin would be very proud of your efforts. I am as well.

Karankawa

johnnydow
May 6, 2013 - 1:46am

$TNA

LOL

Latest COT report commerical hedgers in sp djia and ndx are holding a net short position of around 55billion. An increase of 12 billion over last week and is a new record. Th previous record was 49 billion net short in november 06,,,,a year before the 07 top/.

Ciscokid
May 6, 2013 - 1:41am

syria chemicals weapons.

It looks like its the rebels who used chemcal weapons.

https://rt.com/news/un-syria-rebels-chemical-weapons-854/

Ciscokid
May 6, 2013 - 1:40am

syria chemicals weapons.

It looks like its the rebels who used chemcal weapons.

https://rt.com/news/un-syria-rebels-chemical-weapons-854/

GS_PHYS
May 6, 2013 - 1:23am

Looks like, Indian Banks

Looks like, Indian Banks (about 36) being asked to reduce Gold import.

https://rbi.org.in/commonman/English/scripts/content.aspx?id=336

Related stories.

https://timesofindia.indiatimes.com/business/india-business/RBI-cautions...

https://www.deccanherald.com/content/330534/039curbing-bank-funds-spike-...

If this happens, Gold smuggling would increase and going to have large difference in spot price and Physical GOld for sure. Presently there is a premium of INR 900-1200 per 10 Grams. THis would shoot up to more than INR 2000/10 Grams.

There you have it Paper/Physical price divergence.

The Watchman
May 6, 2013 - 1:15am
Boswell
May 6, 2013 - 12:58am

CCTV Biz Asia America on Gold...

Forward to ~8:30 for the Gold part...

https://english.cntv.cn/program/bizasiaamerica/20130504/102274.shtml

They ran this Friday, clips of the Chinese buying frenzy, some guy talking (Sean Lusk - Ironbeam Precious Metals analyst), and an attractive blonde presenter! ;-)

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