Speechless Turd

284
Fri, May 31, 2013 - 5:28pm

We knew that this week's CoT was going to be interesting but I didn't expect it to leave me speechless.

Look, I know I've been banging this drum for months and all the metals have done is go down. Got it. I read you loud and clear. But we're talking big picture, positioning stuff here. I am 100% firm in my belief that QE∞ caught the bullion banks with their pants down. All of the price action since 9/13/12 has been designed to alleviate the gigantic financial risk and potential liability of being short paper metal. By smashing price, against the fundamentals, from $1800 to $1350 and from $35 to $22, The Cartel Banks have accomplished two things:

  • They've been able to transfer the vast majority of their potential liability from themselves to the speculator sector (hedge funds, managed money, small investors).
  • And now, instead of being trapped short, they are a in position to profit from the inevitable explosion in price.
  • Even though it's blatantly criminal, you almost have to give them credit. That they've been able to pull this off in broad daylight is simply astounding. On the level of Oceans 11.

    Once again and with meaning: On 9/11/12, two days before the announcement of QE∞ and with gold already at $1800, The Gold Cartel was net short 237,091 Comex contracts. That's 23,709,100 paper troy ounces or about 737 metric tonnes of gold. As of last Tuesday, they are now net short just 59,221 contracts or about 184 metric tonnes. A reduction of just over 75%! Oh, and did I mention that, over the same time period, the GLD has been raided for 277 metric tonnes? Just thought I'd throw that in, too. Simply magnificent! The Crime of The Century! Ah, screw that. That's The Crime of The 20th Century, too!! Amazing.

    So, here are your numbers. Keep in mind that, for the reporting week, gold was up $1.30 while total open interest fell ahead of June13 expiration by 35,086 contracts. Also keep on mind that for Wednesday and Thursday of this week, total OI fell another 25,110 contracts. One can only imagine how much more long-term bullish these levels are as of this weekend.

    GOLD

    For the week, the Large Specs dumped 16,836 longs and added 6,544 new shorts (quite a few of which got squeezed yesterday and put back on today). This brings the Large Spec net long total down to just 56,879 contracts. Do you think that's a lot? Hmmm. What if I told you that, back on 9/11/12, the Large Specs were net long 182,016? From a different perspective, back on 9/11/12, the Large Spec net long ratio was 6.62:1. As of last Tuesday, it was down to1.49:1. And here's a little more perspective for you: At the price lows on 12/27/2011, the Large Specs were net long 130,788 with a ratio of 4.57:1 and at the price lows of last August they were net long 114,304 with a ratio of 3.43:1. Again, as of last Tuesday, the Large Specs were net long just 56,879 contracts and had a net long ratio of 1.49:1.

    The Small Specs also reduced their net long position by a little over 1500 contracts and they are now net long just 2,342 total contracts. Again, by contrast, back on 9/11/12 the Small Specs were net long 55,075. That's a reduction of nearly 96%!

    And The Gold Cartel. What did they accomplish this week? Not much...No, they just reduced their net short exposure by nearly 25,000 contracts! Again and as stated above, The Gold Cartel is now net short just 59,221 contracts or 184 metric tonnes of paper gold. Back on 9/11/12, they were net short 237,091 contracts or 737 metric tonnes of paper gold. The new Cartel net short ratio is just 1.34:1. This means that they are now long 3 contracts for every four that they are short. Incredible!

    Once again for perspective, at the most recent price bottoms near $1525 in Dec of 2011 and August of 2012, The Gold Cartel was still net short 163,932 and 143,940, respectively. Their net short ratios on those occasions were 2.01:1 and 1.98:1. Again, as of last Tuesday, the numbers are 59,221 and 1.34:1.

    SILVER

    While interesting, the silver CoT isn't nearly as wild as gold. It's still crazy, though, as you'll see. For the reporting week, silver was down about 25¢ and its OI fell by about 3,300.

    The Silver Large Specs dumped another 1,474 contracts this week while adding another 2,750 longs. That net long reduction leaves them net long just a little over 4,500 contracts and drops their net long ratio down to an almost inconceivable 1.16:1. Again, consider these levels and dates for perspective:

    • On 9/11/12, they were net long 31,482 contracts and had a net long ratio of 4.18:1.
    • At the 12/27/11 price bottom, they were net long 6,855 with a ratio of 1.40:1
    • At the 8/14/12 price bottom, they were net long 15,407 with a ratio of 1.93:1.

    The Small Specs in silver had little change and are of little consequence right now.

    The silver commercials continue to astound. Though the everybody-but-JPM crowd sold 1,326 longs last week, they're still gross long an amazing 66,428 contracts. All of this commercial and spec selling allowed JPM and The Forces of Darkness to cover 4,918 shorts, leaving them gross short just 74,762. This commercial net short reduction of nearly 3,600 contracts leaves them net short just 8,334 contracts and an incredibly, nearly-impossibly low net short ratio of just 1.13:1. Again, for perspective:

    • Caught with their pants down on 9/11/12, The Forces of Evil were net short 47,272 contracts or 236,360,00 troy ounces of paper silver or about 7,350 metric tonnes. They also had a net short ratio of 2.47:1.
    • As of last Tuesday, The Evil Ones were net short 8,334 contracts or 41,670,000 ounces. That's 1,297 metric tonnes or a reduction of over 83%!
    • At the $26 price low of 12/27/11, they were net short 14,312 contracts with a net short ratio of 1.34:1
    • And at the price low of 8/14/12, they were net short 23,402 with a ratio of 1.49:1
    • Again, as of last Tuesday, they are net short just 8,334 contracts with a ratio of 1.13:1

    Look, I could probably keep typing for hours about the significance of all of this but I think I'll stop here. All you need to know is this: The Bullion Banks have now reduced their net liability in gold by over 75% and, in silver, by over 83%...all since the game-changing announcement of QE∞ last September. Rather than once again trying to cover into rising prices with disastrous results (see April of 2011 in silver and August of 2011 in gold), an evil, insidious and outright criminal plan was made and executed to crush the paper price of both metals. By flawlessly executing this plan, The Bullion Banks have so reduced their potential liability that there can be no doubt that prices will soon be allowed to rise again. When? That's impossible to say, of course. Maybe not until The BBs are net long both gold and silver. Who's to say for certain? But I do know that we are very, very close to a price bottom here when you take this CoT situation and the physical market demand into consideration. Plain and simple.

    Finally, we'll have to see how things go once trading resumes Sunday evening. The action today certainly brings my Wednesday post back into play...the one where I speculated that one more washout could come before "a surprisingly disappointing NFP number" on Friday. I guessed that another test of $1350 was possible with a stop-running drop in silver to $21.50 or even a double bottom at $21. Again, given today's action and the $10 or so taken out of gold on the Globex this afternoon, that scenario certainly seems possible, if not likely. Here are two charts that I printed this morning, before this afternoon's decline.

    So, anyway, keep the faith. Next week promises to be volatile but fun nonetheless. Enjoy your weekend and try to relax a little. Then come back on Monday with your game face on.

    TF

    About the Author

    Founder
    turd [at] tfmetalsreport [dot] com ()

      284 Comments

    ¤
    May 31, 2013 - 9:58pm

    Mr Fix

    I like the canary/coal mine analogy.

    I guess they don't want to "zig" too hard, too fast while most people are busy "zagging" the other way.

    ¤
    May 31, 2013 - 10:00pm

    A question...

    I've been wondering this for awhile....

    If CB's or large entities are steering the market ( I believe they are) and supposedly buying when prices are lower why would they care about $20-50 differentials in price when they have easy access (and printing presses and the ability to create digital capital at will) and they can buy PM's at will no matter what the price is?

    Think about it.....China has trillions in surplus foreign reserves and could buy loads of metal at any given time all the time. It doesn't seem like they really need or depend on these drops.....especially so in silver where we are only talking about $1-3 dollars up and down here and there.

    My guess would be that the futures market only serves the real purpose of skimming and scamming those who play them and the btfd are incidental to any CB gold/silver buying overall.

    While true those markets effect and dictate physical price for the most part it seems the discount in price wouldn't be that big of a deal for the CB money printers as they have money to burn.

    I guess everyone likes lower prices but if you were a trillionaire economy with the eventual intention of wildly (and arbitrarily) raising the price of gold five, ten or twenty-fold then why would you care about these relatively small (to them) discounts in the present when you stand to reap a profit ten-fold, at least, in your future

    Is it all about MOPE and maintaining the USD's strength or is the futures market just a skimming casino operation and the lower phyz prices just a separate by-product that isn't really necessary for the CB's to wait on? They seem like separate issues of each other.

    Hagarth
    May 31, 2013 - 10:19pm

    In 2011 Silver was...

    going to go ballistic due to JPM unable to unwind its grandfathered SHORTS.

    Now they have managed to do it. I thought it was impossible for JPM to dislocate themselves from the impending doom of holding so many shorts, this is what the GURUs were spouting off.

    Am I the only one that remembers this? Feel free to sit me down and school me on this matter.

    gearhead_24 DirkDirkler
    May 31, 2013 - 10:19pm

    You may ask my age.....

    and it is not 24. I am actually 47. At the risk of giving too much info., I like NASCAR racing so the 24 should be obvious.

    Yea, I exited in the green from the digital world, even after the 10% early withdrawal penalty. But to me that is still a bargain. I am in the RED since I have been buying phyzz but am much more satisfied. My wife does not get it and that leads to some interesting conversations. The other cool thing is if we get a divorce, (not that I want one) no one knows what I own, or where it is. :-)

    GH

    SRSrocco
    May 31, 2013 - 10:20pm

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    I found it quite interesting that 75% of U.S. PENSION FUNDS are invested in Equities, Bonds & Bills. This is part of the motivation in pumping up the broader stock markets.

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    https://srsroccoreport.com/the-greatest-fundamental-reason-to-own-precio...

    ¤
    May 31, 2013 - 10:28pm

    Shifting into overdrive...

    Saudi edges Qatar to control Syrian rebel support (Reuters) - Saudi Arabia has prevailed over its small but ambitious Gulf neighbor Qatar to impose itself as the main outside force supporting the Syrian rebels, a move that may curb the influence of Qatari-backed Islamist militants. By Mariam Karouny

    BEIRUT | Fri May 31, 2013 3:19pm EDT

    Though governments in neither Riyadh nor Doha would provide official comment, several senior sources in the region told Reuters that the past week's wrangling among Syria's opposition factions in Istanbul was largely a struggle for control between the two Gulf monarchies, in which Saudi power finally won out.

    "Saudi Arabia is now formally in charge of the Syria issue," said a senior rebel military commander in one of northern Syria's border provinces where Qatar has until now been the main supplier of arms to those fighting President Bashar al-Assad.

    The outcome, many Syrian opposition leaders hope, could strengthen them in both negotiations and on the battlefield - while hampering some of the anti-Western Islamist hardliners in their ranks whom they say Qatar has been helping with weaponry.

    Anger at a failure by one such Qatari-backed Islamist unit in a battle in April that gave Syrian government forces control of a key highway helped galvanize the Saudis, sources said, while Qatari and Islamist efforts to control the opposition political body backfired by angering Riyadh and Western powers.

    The northern rebel commander said Saudi leaders would no longer let Qatar take the lead but would themselves take over the dominant role in channeling support into Syria.

    "The Saudis met leaders of the Free Syrian Army, including officers from the Military Council in Jordan and Turkey, and have agreed that they will be supporting the rebels," he said after attending one of those meetings himself.

    Prince Salman bin Sultan, a senior Saudi security official, was now running relations with the Syrian rebels, backed by his elder brother, intelligence chief Prince Bandar bin Sultan.

    Qatar also gave ground in the political field, accepting finally, late on Thursday, that the National Coalition should add a non-Islamist bloc backed by Saudi Arabia.

    "In the end Qatar did not want a confrontation with Saudi Arabia and accepted the expansion," said a source close to the liberals who were allowed to join a body which the United States and European Union want to become a transitional government.

    The rebels, whose disunity has been a hindrance both in the field and in maneuvering for a possible international peace conference in the coming weeks, still face a huge task to topple Assad, who has long labeled his enemies Islamist "terrorists" and has his own powerful allies abroad, notably Iran and Russia.

    Washington and EU powers have been reluctant to send arms, partly for fear of them reaching anti-Western rebels, including some aligned with al Qaeda. But Britain and France this week ended an EU arms embargo and tighter, Saudi supervision of supply channels could make it easier for London and Paris to start sending weapons if planned peace talks fail.

    SAUDI CONTROL

    Describing the shift in military supervision, several sources from the political and military leadership of the Syrian opposition and a Saudi source said that anyone, whether a state or among wealthy Arabs who have been making private donations to the rebel cause, would now need the Saudi princes' approval over what is supplied to whom if they wish to send arms into Syria.

    Qatari help was still expected. But a division between a Qatari sphere of influence on the northern border with Turkey and a Saudi sphere on the southern, Jordanian border was over.

    "The goal is to be effective and avoid arms getting into the wrong hands like before," said a senior Saudi source. "Saudi and Qatar share the same goal. We want to see an end to Bashar's rule and stop the bloodshed of the innocent Syrian people."

    Qatar and Saudi Arabia are close allies in many respects: both armed by the United States, as Sunni Muslims they share an interest in thwarting Shi'ite, non-Arab Iran and its Arab allies - Shi'ites in Iraq and Lebanon and Assad's Syrian Alawites......(cont.)

    https://www.reuters.com/article/2013/05/31/us-syria-crisis-saudi-insight...

    DirkDirkler
    May 31, 2013 - 10:28pm

    Good choice Gearhead. I made

    Good choice Gearhead. I made the same one, in telling noone, not even my closest friends and family exactly how much I own and where it is. Why? Not because I am paranoid, but what is the potential benefit? Right, there is none. They have the right to know that I invest my money, and I also tell them it's in PMs, but that's it. "Where" and "how much" are no-go topics. Honestly, if someone insisted on knowing, I'd reevaluate my relationship with them.

    31 here, and somehow of a gearhead myself ;)

    Kcap
    May 31, 2013 - 10:32pm

    @hagarth

    They "allowed" silver and gold to rise.

    This sets up a long term macro view chart.

    It also released "some" energy to fizzle the momo in the inflation crowd....

    Then....

    With the "newer" advent of QE and the ability to use Fed funds to short paper, the shenanigans began. The loosening of every physical piece of metal...to be set into motion....right into the nets of the EE. And it continues today.

    When they have caught all of the physical, it will change. Not a moment before.

    So, the question becomes one of timing. And since they are about as evil and crooked as anything we've ever seen in the history of this great nation, they will use any level of MOPE and propaganda to confuse and distract the masses from ever knowing when that moment is.

    But when it comes...the LS's and the SS's, will be so damn short...the price will have risen so damn fast....that they will barely be able to cover into the buying frenzy.

    You won't know when it is...nor will I. But....many here believe its soon.

    As do I.

    Kcap

    Quisp
    May 31, 2013 - 10:49pm

    Mr Fix

    In your reply to DPH, you said: "These guys don't just want to be rich, they are. They want to own it all, for the power, not the wealth." Which instantly reminded me of this:

    Poor men wanna be rich, rich men wanna be kings,
    And a king aint satisfied till he rules everything.

    Bruce Springsteen - Badlands [HQ]
    ForWhomTheTollBuilds
    May 31, 2013 - 10:57pm

    Turd's attitude

    "Even though it's blatantly criminal, you almost have to give them credit. That they've been able to pull this off in broad daylight is simply astounding. On the level of Oceans 11."

    Now this is something I love to see.

    I was pretty ideological about PMs when I first got into them. "The money printers are *evil*" went my thinking. "What they are doing cannot go on forever so it won't". And so on.

    But over time, I've come to grudgingly admire the PTB for their ability to profit by exploiting an understanding of many aspects of human nature that I simply did not get. I was running the numbers on the macro economy. They were counting on the finer points of the herd mentality and group think. And really, once you have come to realize that nearly all of your neighbors support the policies that are hollowing out of the real economy (if they give two sh*ts about the issue at all) can you really blame the leeches for doing what they do?

    Like the alpha male who gets the girl you wanted by acting like a brazen asshole when you were trying to be nice to her, there comes a point where you gotta lose your anger over the situation, shake the winner's hand and thank him for teaching you something about the world.

    Of course what you do with your newfound knowledge and what that says about you is another matter. I'm going to continue fondling my yellow and silver trinkets as I think they have a long way to go in dollar terms and I will be sure to enjoy watching Blythe Masters getting thrown under a bus when the time comes. But I no longer beleive in a day of reckoning where these bastards are all hung by a rational mob of common folk who then proceed to rebuild society on a foundation of sound money and personal accountability.

    These days Im just hoping that Jim Sinclair is right in his view that when gold gets where its going, the psychopaths won't bother persecuting us because they really don't think about us at all.

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