Gold Specs Rushing The Exits

51
Tue, Feb 10, 2015 - 12:01pm

As the Specs in paper gold rapidly exit the "market" and this current rinse cycle ends, from where might gold find a turnaround and rally? Two weeks ago, we projected that the area between $1220 and $1235 would be about right. Is that still the case?

Frankly, this is quite remarkable. We had been discussing this for weeks and even dedicated full posts here:

https://www.tfmetalsreport.com/blog/6566/inherent-unfairness

and here: https://www.tfmetalsreport.com/blog/6570/playing-out-inevitable

And now, here we are.

To recap, Comex gold began 2015 at $1184 and with total open interest of 371,646 contracts. The New Year Rally began on January 2 and rolled along for three weeks, reaching an intra-day high of $1309 in January 22. Total open interest also peaked that day at 450,985. So, over just three weeks, gold rose by $125 or 10.5% while total open interest rose by 79,339 contracts or 21.3%.

And as you know, the source of all of this new paper gold was The Bullion Banks, which were eager to meet every Spec bid with the motive of blunting momentum and, eventually, capping the rally. Over the same three week period, these Banks increased their GROSS short position by nearly 85,000 contracts, from 238,952 to 323,486. That's 8.5MM ounces of paper metal, more than the entire Comex gold vaulting system and the equivalent of 265 metric tonnes. From thin air and/or whole cloth.

The Banks simply were not going to allow this to continue so it became inevitable that price would "stall and fall". First, price was capped at the psychological resistance level of $1300. It was then pushed back below the always-important $1280 level and then it was held just above the technically-important 200-day moving average until BLSBS Friday.

By managing price back down in stages, The Banks have expertly applied another classic "wash, rinse and repeat" cycle to the Specs and we can clearly see the results in the latest open interest numbers.

We just received the final open interest numbers from yesterday and the results are conclusive. Even though price rallied back a few dollars over the session, open interest on the Comex declined again, falling 6,663 contracts. This brings the total Comex gold open interest back to 394,447 contracts, now up just 22,801 contract YTD and down over 56,000 contracts from the January 22 peak.

This also means Mission Accomplished for The Banks. Not only did they once again cap and reverse a nascent rally in paper gold, they also profited quite handsomely as all of those naked shorts they applied up around $1280 and $1300 have now been covered at a handsome profit. This means fat bonus pools along with lots of vodka and hookers.

It's sad. It's sickening. And its what passes for a "free and fair" gold market here in the land of oligarchs and plutocrats.

Understanding all of this allows us clear vision as to what might happen next. Or course, The Specs could now flow into the short side but I don't think so. Global events and currency wars would seem to inspire the Specs to maintain a bullish outlook for paper gold over the intermediate term. Therefore, we should expect a turnaround soon as these very same Specs come rushing back into paper metal, unaffected by the prospect of another wash/rinse/repeat cycle to come.

Back on January 29, we wrote this:

"...we must expect a final drop toward $1235 and maybe even $1220. I know that sounds terrible but think about it...I am 100% confident in the UP trend of this year and resumption of the bull market. A drop to $1220-1235 would be a remarkably solid buying opportunity for both physical buyers and paper traders."

With price reaching a low of $1228 on Friday and $1232 this morning, we are very likely seeing the bottom of this latest cycle. The charts below confirm this thinking.

First, on the reverse H&S we've been watching on the daily chart, price appears to have indeed found a floor at the "arm pit" line of $1230. So far, so good:

As we widen out to a full, one year chart, you can see the importance of longer-term support near the 40 area, too:

Now, could I be wrong in the short-term and could The Banks look to run all the rest of the 2015 Specs back out by rigging price even lower? Of course. IF they do, I will be stunned, flabbergasted and shocked if they can get price back much below 20 and the 100-day moving average that is near there:

More likely, given ALL that's going on in the world (ZIRP, ECBQE, Ukraine, Greece), price reverses from here. This is made even more likely by the precipitous drop in open interest discussed above. The key level to watch will be the 200-day moving average at 55 and the key horizontal resistance found near there. A close or two back above that level and you can feel very confident that this current w/r/r cycle is complete and that the decks have been cleared for gold to resume its 2015 UPtrend:

So, rejoice and be glad. You are NOT just another dumb, momo-chasing Spec algo getting repeatedly taken to the cleaners by The Bullion Banks. Instead, you are alert and aware. Keen to what is really happening and using this knowledge to your advantage as you accumulate physical metal ahead of the eventual breakdown of this current system and end of The Great Keynesian Experiment.

TF

About the Author

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

  51 Comments

Swineflogger
Feb 10, 2015 - 12:07pm

Wow

First in the service of our Turd.

Feb 10, 2015 - 12:08pm

This week's A2A

The guest will be our pal, Ned Naylor-Leyland. You can register to join us by clicking here:

https://attendee.gotowebinar.com/register/8327470535770288130

Note the special 10:00 am EST start time:

Feb 10, 2015 - 12:15pm

Worser

More "justice" ahead: https://news.yahoo.com/parents-american-woman-held-notified-her-death-15...

Meanwhile, Jordan is massing troops, too: https://www.nbcnews.com/storyline/isis-terror/jordan-moves-thousands-tro...

And to think, this all started as a simple "humanitarian mission" for those poor Yazidis that were trapped on that mountaintop <sarc>: https://www.cnn.com/2014/08/08/world/meast/iraq-yazidi-people/

H8Fiat
Feb 10, 2015 - 12:19pm

True benefits?

If the true benefits to the BB is vodka and hookers, can't we just take up a collection? Maybe DSK can provide pointers

H8

twippers
Feb 10, 2015 - 12:30pm

So disappointed

turd, how can you forget the blow? That's hiw the dirtbags keep their limp dicks up.

lakedweller2
Feb 10, 2015 - 12:34pm

Fed Goons

The Fed has been throwing around interest rate hike in near term ....again. This BS could help them with pushing near term PMs down as Turd has been discussing. Obviously interest rate increases are drstructive to the debt issue...., but helpful in suppressing PMs and transferring wealth.

Lurker
Feb 10, 2015 - 12:36pm

Turd

I would be very interested to see retrospective data and possibly charts that document the open interest, net short positions of the cartel etc. plotted against the gold price. It would be interesting to look at the average duration of these cycles, and may be predictive of when we are about to get slammed again. Is this available in a neat package anywhere you know of? Thanks for all you do.

matt_
Feb 10, 2015 - 12:42pm

RE: Worser

There are true atrocities still going on with Christians on a much larger scale, and our media chose to focus on Yazidis. Even our churches don't talk about atrocities committed by Muslims against Christians. It seems like we live in the Babylon described in the book of Revelations in the Bible. If so, this will all end very badly and very quickly when it does.

The merchants of these wares, who gained wealth from her, will stand far off, in fear of her torment, weeping and mourning aloud,

“Alas, alas, for the great city

that was clothed in fine linen,

in purple and scarlet,

adorned with gold,

with jewels, and with pearls!

For in a single hour all this wealth has been laid waste.”

Revelations 18:15-17

Feb 10, 2015 - 12:42pm
silverflower
Feb 10, 2015 - 12:44pm

End of the Keynesian experiment

Yes, seems so that we still need to wait a little longer. But remember, its always good to know that the exponential function

https://en.wikipedia.org/wiki/Exponential_function

will put an end to that debt tragedy. And never forget, in the end things will unravel very very quickly. That is the nature of the e-fct.

​And a last one: We human beings naturally are quite poor, not to say incapable, in predicting exponential processes. So better one ....year too early than one day too late.

Have a nice evening, Turdites

PS: In German financial news they say today that they may have found a Greek fix. What number is that meanwhile? It is unbelievable how they've fooled people for so long. Who actually still believes in one word coming out of the mouth of these liars/swindlers ? Less and less people, I think.

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Recent Comments

Forum Discussion

by NW VIEW, 9 min 20 sec ago
by sierra skier, 8 hours 27 min ago
by NW VIEW, 8 hours 30 min ago
by Trail Trekker, 9 hours 49 min ago