Gold Specs Rushing The Exits

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:

and here:

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 $1240 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 $1220 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 $1255 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.


About the Author

turd [at] tfmetalsreport [dot] com ()


Swineflogger · Feb 10, 2015 - 12:07pm


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:

Note the special 10:00 am EST start time:

· Feb 10, 2015 - 12:15pm


More "justice" ahead:

Meanwhile, Jordan is massing troops, too:

And to think, this all started as a simple "humanitarian mission" for those poor Yazidis that were trapped on that mountaintop <sarc>:

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


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


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

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

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.

TasSTL · Feb 10, 2015 - 12:53pm

Oil, Silver and Gold

Watching these markets one thing is clear. In the oil market the producers are quick to react, although there is still substantial lead time between the stacking of rigs and a decline in supply. Still, the rig count suggests these producers are fighting back against a price below their cost of production.

Contrast that to the silver market where some headlines show producers ramping up production in the face of low prices. Yes, new mines may be put on hold, but the existing mines seem to be pulling every ounce out of the ground possible.

With current prices below reported cost of production one needs to remember that if the miners insist on flooding the market, the banks will continue to take the other side and short the hell out of the stock. Aside from PM's, we would all do the very same thing. If we knew some nasty flu bug was going to hit a Disney park we would all short the stock.

So, as long as the miners are ok selling silver at a cost of $20 to the solar guys for $16 they'll keep buying it. As long as the miners are ok selling silver at a cost of $20 to the iPhone guys for $16 they'll keep buying it.

To me anyway, it's just that simple. True, the miners probably have no choice but to flood the market to keep the lights on. Ok, I get that. But in the end, that's what is driving the price lower. The banks and other traders can certainly screw with the markets in the short term. But in the long term, it's the miners that drive price.

Joseph Warren · Feb 10, 2015 - 1:35pm

Mildly interesting . . .

reminds me of the car chair my youngest niece had when she was a baby. It had a steering wheel & dashboard and she would pretend that she was 'driving' the car. Of course, nothing on her 'speedometer' had anything to do with reality.

The only reason I pay any attention to paper metals 'prices' at all, is out of habit and to get some sense of TPTB's level of desperation and/or complete disregard for the ignorant general population.

H8Fiat · Feb 10, 2015 - 1:41pm

It's hard not to track paper price

Wish I had the luxury JW about not paying attention to paper price. I guess I put too much percentage of net worth into PM's and it hurts watching a lifetime worth of work / savings decline due to manipulations and greed. I understand that until you hit the sell button nothing is changed, but watching red day after day when time keeps moving on stings and is beyond frustrating.


wildstylechef · Feb 10, 2015 - 1:43pm

A review of Gold and Silver - recorded Feb 10th 2015

Video unavailable

For those that do charts

november4 · Feb 10, 2015 - 1:43pm

When is the END?

I'm convinced. The markets are rigged. Turd has posted sufficient evidence to sway any court in the land save those managed by the fiscal authorities in charge of maintaining "our free markets." So why do we bother even to accumulate bullion, when our only hope for appropriate PM price levels depend upon the end of the so-called "Great Keynesian Experiment". For when will that end? If it ever began? The Federal Reserve is now over a century old. The Keynesian Experiment began at least 80 years ago (if it ever began). Nixon closed the gold window more than four decades ago. And, contrary to all rumors of bullion shortages, the numbers at the Comex seldom change to any appreciable degree and replentishment is at once and always available. In the natural course of events, it looks like THE END could be a half century away (if it ever began and if only then will pm price levels rise). A half century from now, most of us will be resting below ground. I surely will. Much better in my opinion to bet on the oil market. It can be rigged too, but not for long. Not for long at all any more. Too many players. Too much market demand. A much safer medium and long term investment.

infometron · Feb 10, 2015 - 1:46pm

@ TasSTL Re: Oil, Silver and Gold

Good points. I would only add the following:

1) a lot of (most) silver is coming to market as a by-product of basic metals mining, and that activity is way down. This is good news for the silver miners, as it means less competition for their product.

2) the pure silver miners have been caught without hedges (some notable exceptions include Avino), and are now in a position of having to high-grade, produce and sell product simply in order to maintain cash flow (thereby keeping the lights on, as you noted). It is a radical step to have to place a mine on maintenance (e.g., Aurcana's Shafter mine in Texas). The equivalent of that for tight shale producers is to cap wells, which I think is less of a big deal for them.

3) a lot of tight shale producers have hedged, but remain in a similar situation to silver miners in that, in order to do the mining equivalent of 'high-grading', they have to drill more wells. Add to that production rates from existing wells are falling fast. But they require more capital in order to drill more wells, and available capital for them is drying up even more quickly than their wells are. Silver miners, on the other hand, by high-grading, to some extent can lower their capex while not lowering production.

So, in sum, I think tight shale producers are in a much worse position than silver miners. And I suspect, because tight shale production is still very high, and inventories are overflowing, that price is going to continue downward, at least for the next few months, barring unanticipated black swan interruptions in global oil production. The economic downturn has already offered silver miners some respite in that because base metal production is down, there has been a downturn in global silver production. Moreover, it may also be the case that silver inventories are down and silver supply is tight and getting tighter.

SilverX3 · Feb 10, 2015 - 1:48pm

@ tasstl

You focus a lot on industrial demand. Investment and monetary demand for G&S would jump out of the building if paper price resumes bull market mode, and the system some how some way sustains itself for awhile longer. It is unfettered and unadulterated inflation that will blow physical PM prices out of this world.

Orange · Feb 10, 2015 - 1:52pm

"We are sick of war"

​Last paragraph is powerful and unfortunately true. Time to pull the strings on Washington.

The main danger to liberty and peace in the world isn’t in the Kremlin, or Peking, or North Korea – it’s right here in these United States of America, in the global epicenter of evil otherwise known as Washington, D.C. This, our "libertarian internationalists" claim, is vulgar "anti-Americanism," but these foreigners have little conception of what true Americanism is all about. The Founding Fathers of this country are rolling in their graves as the usurpers in Washington sully the good name of America with the blood of innocents worldwide and defile the Constitution in the process. True Americanism means opposing these monsters as they rampage over the earth and destroy our civil liberties at home – not dutifully echoing their rationalizations for endless wars of aggression.

CPE · Feb 10, 2015 - 2:00pm


Much better in my opinion to bet on the oil market. It can be rigged too, but not for long. Not for long at all any more. Too many players. Too much market demand. A much safer medium and long term investment.

That's the way it looks, but I don't believe that that is true. Oil has been priced VERY high in the last few decades priced in Au. I believe when change comes that Oil will be VERY cheap priced in Au.

So the question is what happens in dollar prices then? Well, as another Turdite made reference to, exponential growth functions don't end well, and they end quickly when they end.

Timing is troublesome, as you note, but we are fitting perfectly with exponential growth curves in debt and most everything. In the case of Fed money printing we are ahead of the curve. So it mathematically cannot last as long as you fear. A few years, sure, a few decades, NO F'ing WAY!

CPE · Feb 10, 2015 - 2:30pm

@silver sooner

I've read your posts and updates with great interest. I appreciate very much your keeping Turdville up to date. I've been very sympathetic and concerned with the plight of your family and the foolishness with which my government is conducting itself in stirring all of this up.

I must confess that what this woman says in this video is creating a much larger emotional response in me. I am truly sorry for what Victoria Nuland has done. Please let your family know that she doesn't speak for me or mine.

Given that the woman in the video seems representative of Ukrainians at large, I have renewed hope that they won't stand for much more bullshit. 

Town of Velikaya Znamenka speaking against the war - Zaporozhie, Ukraine

Closed captions work in English if you click it, and what she has to say in just over 5 minutes is surely worth more than an hour of anyone's time.

Taken from here:

Kuchek · Feb 10, 2015 - 2:55pm

Feb. 9, 2015: Rob Kirby on Grexit, Euro breakup, US isolation, G

The latest Rob Kirby. To most of us this info is redundant but might be a good vid to pass on to newbies for its summation and History of the current Global Economic State. I'd love to be a fly on the wall for his conversations with Jim Willie.

Video unavailable
CPE · Feb 10, 2015 - 3:08pm

Andy Maguire

Andrew Maguire @andrewmaguire1

#Silver looking strong, up slope confluence with the median Shiff.but 1 more day and daily's are reset in #Gold too.

9:50 AM - 10 Feb 2015

infometron · Feb 10, 2015 - 3:19pm

Elizabeth Warren for president?

Just another shill... the only open question is if she is already bought and paid for (how did she come into so much money?), or just willing to play along with tptb.

Apologies in advance to all Warren supporters for my cynicism.

Orange · Feb 10, 2015 - 3:20pm


I agree with your post to ss however have to think of the choice of the word. "Foolishness" 

Absolutely no disrespect intended, just thinking if I was that woman, would I choose a different word describing Washington's evil acts (if she even understands where the evil originates). Evil is not even right if they instigated and carried out the shooting of Ukrainians a year ago or organized the burning and killing of so many people in the building a while back.

I am not sure how we can change things, however we do need to find a leader who handles the truth, perhaps as the Greeks seem to be doing.

Very sad.

CPE · Feb 10, 2015 - 3:20pm

For Elizabeth Warren Lovers

For all those that have believed the hype on Elizabeth Warren, you should read the article below from Zerohedge. She's as corrupt as the rest, you just fell for the good cop / bad cop line. This should serve note of anyone thinking reforms are coming through our current oligarchy, you don't get into the party unless you are corrupt, and I'm not talking donkey or elephant.

CPE Orange · Feb 10, 2015 - 3:22pm


You are correct, it was a poor choice of the word.

Please insert "soul sucking evil scourge" in place of "foolishness"

No offense taken.

CPE · Feb 10, 2015 - 3:24pm


lol, I see we think a lot alike! Just saw the similar posts.

And if anyone thinks I'm for Jeb, Hitlery, or the other rabble then you don't know me.

AIJ · Feb 10, 2015 - 3:28pm

Prepare for the "Crash"

Good Advice from Bix Weir:

Don't just stack AU and AG.

  1. Gold and Silver
  2. Cash Fiat
  3. Junk Clad coins 

"Gold, Silver & Cash - If there is a total breakdown of our electronic monetary system (as in wiped clean from the earth) you are going to want a nice pile of physical cash as well as gold and silver coins. The cash will be very valuable in the early stage of the crash because very few will have access to any and people are still conditioned to deal in fiat money. I suggest $1's, $5's, $10's and $20's. Also keep piling up that change that you currently toss into your change jar. It should go a long way right after the crash."

Orange · Feb 10, 2015 - 3:29pm


I just read "soul sucking evil scourge" and could not stop laughing.

Thank you, as I have not laughed in way too long.

infometron · Feb 10, 2015 - 3:30pm


Yes, definitely on the same page there. Unfortunately, one thing we can 'take to the bank' is that one way or another, the dynasty will continue and executive orders, er, imperial decrees, will continue to be the law of the land, constitution be damned.

Notice: If you do not see your new comment immediately, do not be alarmed. We are currently refreshing new comments approximately every 2 minutes to better manage performance while working on other issues. Thank you for your patience.

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