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

  Refresh
Urban Roman
May 6, 2013 - 12:37am

Another view

Since it's late in the thread and all ...

https://guymcpherson.com/2013/05/show-time/

See you tomorrow, nite nite.

ReachWest
May 6, 2013 - 12:33am

OMG

My sincere apologies - I believe I hat tipped Johnny Dow by mistake.. My wife called my name and I thought that she wanted me to attend to her and my right click finger let loose and OMG I Hat tipped the dow fellow by mistake. My wonderful wife is still awaiting my arrival in the RW boudoir, and my interests are there. Good nite Turdville.

AlexCojones
May 6, 2013 - 12:28am

Very Powerful Video - I'd Love To Change The World -

Perfect Video and Song for this weekend, with the Middle East on the cusp of war.

I'd love to change the world Ten Years After
Occasnltrvlr
May 6, 2013 - 12:27am

Just Stirring a Little

"First Time we saw Israel choose a Mexican holiday for her surprise strike on a neighbor."

Well, there are only 365 days in a year.

Texas Sandman
May 6, 2013 - 12:26am

johnnydow the troll is back with us

You know the PMs are looking up.

Sorry, johnny. But you have it reversed. Turn your charts so they're right side up, please.

EE screwed the pooch in much the same as the Japanese did attacking Pearl Harbor. They awakened the sleeping tiger also. Now, we drop "the big one".

Stocks won't be interesting until the dow is roughly 0.8 times the price of gold. We'll see that so quickly now, it'll make your head spin. A year or two max. Gold/silver are now rising EXPONENTIALLY, not linearly.

The bottom in precious metals is now behind us.

johnnydow
May 6, 2013 - 12:15am

Crude Oil Headed to $30-50

Possible top in oil. Gold headed to 750 and Silver 10.

End of the commodity bull. Its time to throw some more bums off the train.

Dow 20,000.00

AlexCojones
May 6, 2013 - 12:10am

Lot of Firsts This Cinco de Mayo-Strike Syria & Gold Weekend

First time we saw Full Frontal & Backal Nudity on TFMR (Literally No Bikini Atoll).

First Time we saw a full frontal Assault by various trolls on a valued member.

First time we saw that same assault thrown back by a concerted Thin Red Line O Heroes and Hat Tippers.

First Time we saw Israel choose a Mexican holiday for her surprise strike on a neighbor.

Just a few "Firsts" I recall this weekend.

AC

Karankawa
May 6, 2013 - 12:05am

Katie Rose has new goat kids, but is so busy she is absent ...

In the meantime, we have this, to keep us busy.

https://libertycalling.net/home/categories/foreign-policy/item/281-tsarn...

I'm not saying this isn't important at all. I'm just pointing out how globalization works.

God Bless you Katie, and best wishes for the 5 you have been blessed with. Having had goats that berthed, I understand what you are going through, and understand that you live in reality.

I hope that what you have gone through is the very basic of the foundation of this Board. Or at least the people that frequent it.

Karankawa

Texas SandmanAdolf_Hitler
May 5, 2013 - 11:56pm

@hitler

I've looked far & wide for those comex deliverable bars. I think Tulving has some NWT 1K oz ones. I can't remember the premium. Haven't been able to spot them anywhere else on the web. Maybe if you actually call a dealer & talk to him/her... They sure aren't advertised.

But it seems to me standing for delivery at the paper price, taking each of those 1K oz bars & smelting it down into 10 of the 100 oz bars with the premiums approaching $2/oz is a pretty easy way to make money. Granted, some will be siphoned off by the wholesaler & the dealer, but if you could keep $1/oz for your troubles, seems like a pretty risk free way to make a buck with demand as it is. Why wouldn't JM, RCM,NW, et all be lining up to do that???

What am I missing? Or maybe they're doing just that...

kingboo
May 5, 2013 - 11:51pm

Thanks Mr Fix...

it seems the financial centers of the world is where the message was driven home.......

i'll keep peeking...

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