Guest Post: Bill Murphy Adds To Turd's CoT Analysis

Earlier today, Bill asked if he could share my "Speechless Turd" post with his readers. In return, he graciously offered all of us this access to his latest metals market analysis.

So, here you go. Many thanks to Bill for his insights and his kind words.

MIDAS SPECIAL – Speechless Turd, Something Is Very Wrong, What Could Be Up!

Turd Ferguson, of the TF Metals Report, does superb work and commentary on the precious metals markets. His latest analysis on Friday’s Commitment of Traders Report caught my attention for a number of reasons, in addition to it being so well done.

TF's effort and analysis is well worth highlighting for a number of reasons…

*First the backdrop. The last QE announcement by the Fed in mid-September of last year was an impetus for stock and precious metals markets to move higher. The DOW did just that, dinking up day after day after day. But what has happened to gold and silver is a completely different story.

The prices of gold and silver did bump up very briefly, into the first week into October. But since the precious metals live in a Black is White and White is Blackworld, that was to be it. The Gold Cartel’s stepped-up war on gold and silver was about to begin … with the price of gold around $1793 and silver at $35 and change.

An effort to suppress the prices of each would commence in earnest on a daily basis like I had never seen before. Rarely has a day done gone by in all this time that The Gold Cartel could not be spotted implementing at least one of their repetitive selling tactics.

An entire diatribe could be written on why it was done, but simplistically put, the Fed/US is in a NO SOLUTIONS environment for the financial/economic predicament it has evolved into. The only way out, as they saw it, was to print money, etc. The best way to defuse the longer term ramifications of this action was to SHOOT THE MESSENGER, to disfunctionalize the barometer of US/world financial market health, that being the price of gold. Sister market silver was included because of its relationship to gold … a price dichotomy between the two could not be tolerated.

The escalated war on gold and silver was underway. But this time, The Gold Cartel included other countries, other bullion banks, various hedge funds, etc. It led to the unprecedented attacks on them on April 12 and April 15, as you know all too well. Since then, gold has made some effort to get into recovery mode, while silver has languished, flopping its way into the bottom end of its trading range following the historic raid on gold.

*What Turd’s work shows is that The Gold Cartel’s constant selling has had the effect of spec longs exiting, replacing them by the commercial crowd. The entire dynamic most of the way up of spec longs taking on the commercials has been in a process of reversing, especially since the financial market terrorist attacks of mid-April.

TF on the latest COT numbers which speak for themselves:

"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 QE8 last September."

This is an extraordinary development over a period of time and is setting up historic moves higher in the prices of gold and silver, which never should have been down at these artificially low levels in the first place. However, there are some caveats which need to be dealt with in the very short term…

-As noted in Friday’s commentary, the Gold Cartel was as visible on Friday as they were 8 months ago. The price plunges on Friday were NOT due to increased speculative selling, at least IMO. We know this because of the way gold and silver played out, in a similar manner as they have done for these debilitating 8 months. Gold failed miserably after breaking out of a 9 time top. Silver, after acting horribly on Thursday, then goes into new low closing territory for the entire move. If this were specs, we wouldn’t see the same trading patterns as we have witnessed all the way down.

-The numbers presented by the CFTC can’t be totally off, but something does not seem right to me. The bottom line is my take is that The Gold Cartel is using offshore, numbered accounts to make them look like spec accounts … in order to disguise what they are still doing and to create a much more bullish picture technically than is really the case ... to suck in even more unsuspectings that a bottom is in.

We know JP Morgan uses offshore accounts. Silver is trading so terribly, it tells me they are using them to further their agenda to bury the price so much that the stubborn longs finally capitulate. As demonstrated, while the gold open interest has collapsed in stunning fashion, the silver open interest is not far from multi-year highs. This is more than highly unusual and suggests something is not right with the visible gold/silver open interest pictures, as portrayed by the COT report.

Nothing that has happened to gold and silver the past many months has been normal. They have been caught up in a scorched earth Gold Cartel devastation policy. It is for ALL THE MARBLES, which is why The Gold Cartel recruited so many allies to assist them in their mission. No ruthless price suppression tactic would be left in the lurch. That gold gave up all of its breakout gains of Thursday above $1400, and then some, is a perfect example what the sordid cartel forces are prepared to do. They made this known to their allies in advance by crushing silver below key $23 the day before.

Their efforts are as well thought out as they are sinister. We are all aware of the hundreds of tonnes of outflows from the ETFs on the way down. Tonnage accumulated all the way up is being disgorged, facilitating other supply used by The Gold Cartel to meet stellar demand for physical. Much of the accumulation in the ETFs were by big league money managers in search of profit and performance for their investors. All was hunky dory with the price of gold going up every year … with gold yielding returns far higher than fixed income investments.

But suddenly all that changed with the gold/silver price collapses, accompanied by the daily relentless move higher of the US stock market. The Gold Cartel knew that money managers would be compelled to dump gold/silver ETF holdings because of their affect on relative performance. IMO, it was one of their reasons for the financial market terrorist attacks. Those money managers who were holding on just wouldn’t be able to take it anymore … and many have not. This all goes back to how comprehensive this vast and devious market manipulation scheme really is.

*So, back to what this may be all about, and it is just a maybe. A colleague of mine and I have gone back and forth for months about what The Gold Cartel’s end game plan is. Much of that has been covered numerous times in this commentary. But, there could be one more thing, which would be the blockbuster of blockbusters if the case.

There is a great deal of talk, as per Turd’s efforts, among others, about the commercials getting longer and longer relative to their normal short positions. There is also talk of The Gold Cartel actually getting long, or at least exiting their positions, before the historic move up in the precious metals begins in earnest. This is what the COT numbers have appeared to tell us over the past many weeks.

But, as already covered, the gold/silver price action doesn’t correlate to the supposed makeup of the open interest numbers. The Gold Cartel appears to be as aggressive as ever. Gold and silver would not be trading in a similar manner as they have since the beginning of October if their modus operandi had changed yet. There is one possibility of what could be going on which would shake the financial world. A thought…

Many in the GATA camp have long talked about an overnight revaluation of the price of gold. Pick a number: $3,000, $5,000+, etc. The reasons for such are for another commentary, but it is a constant theme in our camp. One day we will wake up on a Monday morning to find out the US and other western countries have reset the price.

We know the central banks have nowhere near the central gold they say they have, much of it being leased out. Over the last decade GATA has claimed, based on the input we have received over the years, they have less than half the gold they say they say, and that would be the best case. This is one reason central banks are so secretive about their real gold dealings … the US being a perfect example.

We know how the bullion banks/Gold Cartel have been so short over the years. If a decision was made to revalue the price of gold to that degree, a plan would first need to be implemented so they could cover as many shorts as possible on the Comex and in other venues. It would have to be one like never seen before … both vicious and long-lasting. It would also involve disgorging physical gold and silver positions from the ETFs, badly needed to cover physical precious metals short positions.

Perhaps one of the most misunderstood notions among uninformed precious metals reporters, and the likes of a clueless Doug Casey, is their claim The Gold Cartel has done a lousy job of suppressing the price of gold all these years as per the 12 year price advances. When I explain to reporters how much money they have made by fleecing spec longs over the years with raids like the last one, they go blank. Think how much money JP Morgan has made with their raids on silver in 2008 and in the past year alone, much less mini spank jobs in between and all the way up.

There is only ONE way the price of gold can be revalued without the bullion banks/Gold Cartel getting destroyed, and that is to do it with the price devastated and many of the bullion bank’s shorts covered on the way down, replaced by unsuspecting spec shorts. As it is now, the specs will cover their shorts and go long, as they always do, once the technicals turn positive, moving averages turn, etc. Those longs will need to have corresponding shorts in the futures market. This means the same drill on the way up again as The Gold Cartel does what they do and slows price advances down. To stop a price explosion down the road they will be forced to go back as short as they ever were.

And that will be the case, UNLESS, there is an overnight price reevaluation. In that case, instead of shorting gold all the way up, they would suddenly only need to sell gold at those $3,000 to $5,000 numbers, or not at all. It would be the perfect exit plan to end their nefarious activities over the last number of decades. Mission accomplished.

It would also accomplish something else. An overnight price of that magnitude would bring owners of gold (silver too, as who knows what that price would soar to) out of the woodwork, including me. Gold and silver would flood the marketplace at those dramatically higher prices. This would allow the physical gold and silver shorts to replenish/reconcile the positions on their books. Yes, those losses from selling low and buying high would be considerable, but only a drop in the bucket compared to money made/saved in other financial market arenas … even compared to the costs of saving the western financial market system as a whole.

Their physical market lease losses could also be minimized by buying way out of the money calls on the Comex or on the Over the Counter Market. They could be purchased with very little impact on the futures price because of their distance … i.e., there would be very little delta hedge buying of futures by the writers of the calls.

Should this occur, the effect on the Comex would be devastating. The number of unsecured deficits would blow the exchange out of the water. How ironic it would be that such a dramatic move would cause a never expected Force Majeure … the failure of spec shorts to send sudden losses to the Comex to meet their unsecured, massive overnight money losses. It is doubtful the Comex could survive such an event. Maybe that would be just fine with The Gold Cartel, as they move on.

Whether this sort of clandestine operation is in play or not, we are in the process of moving to one of three monumental money making opportunities of all time. They are all WIN WIN…

  1. We are close to the time of a short covering squeeze, and the end of the unending Gold Cartel bombings initiated in early October.
  2. As is my thinking, we have more to endure before the price moves of gold and silver really kicks in.
  3. This blatant, never-ending assault on gold and silver actually is leading to an overnight night reevaluation in the months ahead.

They are the three in play, IMO. All of them dictate staying with physical market gold and silver positions … and building gold/silver share positions in your firms of choice.

Yes, investing in them, in many cases, has been a disaster for years now. But, what goes around, comes around. In all of the above cases the odds, at this point, of them taking off as per what occurred in the internet mania at the end of the 1990’s, is on the increase, with the risk/reward situation way more than favorable.

To conclude, watching how the gold/silver shares trade in the weeks and months ahead is likely to take on increasing importance. They led the way down and are likely to give us an indication of the major turn in the gold and silver markets. In any of the above scenarios, we need more action in the PM Shares like we saw on Friday, in which they held up very well considering what the US stock market and gold/silver markets did … and that is after a couple of solid up days.

In all of these scenarios The Gold Cartel, and allies, will want to cover their shorts in the share market ahead of any of the above retreat scenarios. Can you imagine what the shares would do on an overnight basis on a revaluation? Sweet dreams on that thought!

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Key Economic Events Week of 12/11

12/12 8:30 ET CPI and Core CPI
12/12 2:00 ET US federal budget
12/13 8:30 ET PPI and Core PPI
12/13 2:00 ET FOMC Fedlines
12/13 2:30 ET Jerry's presser
12/14 8:30 ET Retail Sales
12/14 10:00 ET Business Inventories
12/15 8:30 ET Empire Fed
12/15 9:15 ET Cap Ute and Ind Prod

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