That prices are getting hammered today should not really come as a surprise to anyone. None of this is by accident or happenstance. The Banks are getting the price reaction they desire and we are simply observers.
If you were following along last evening, you likely saw these two charts. I even tweeted them so as to alert as many folks as possible. This first chart is a one-minute chart showing a sudden drop in gold, importantly on absolutely NO NEWS.
And here is an hour's worth of the same "market" action, in 3-minute candles. Again, $6 taken out on NO NEWS and with a Chinese holiday and Mar15 silver expirations pending...this was the warning signal to anyone paying attention that the hammer was about to fall:
And fall it has. After grinding lower initially, silver fell precipitously to near $16.70 in the Comex pre-open while gold held near the always-important $1220. Well, that wasn't going to be allowed and the next wave came rushing in, driving price through $1220 and through $16.65. Mission accomplished. The massive, HUGE volume dump in both metals places the blame squarely at the feet of The Cartel Banks, intent upon smashing price through these important levels and perpetuating the bearish sentiment. No other group of market participants has this kind of volume firepower at their disposal.
They can do this today because the Chinese markets are on holiday. Without Chinese banks and wholesale demand sopping up physical metal at these prices, it's as if the physical bid has been removed. This leaves The Banks with full power to move the paper price around without consequence.
As they do, they accomplish three of their most pertinent, short-term goals:
- Continue to drive the Specs out of the long side of paper gold. As noted in Friday's podcast, though GROSS open interest has nearly fallen back to 1/2/15 levels, the NET Spec positions in both gold and silver are only about half way back. Thus, The Banks continue to lean on the Specs so that The Banks can cover and close as many of their ill gotten January naked shorts as possible.
- Open interest must be frightened out of the March15 silver contract. As of last Friday, there were still 73,641 open Mar15 contracts out of a total Comex silver OI that, at 171,015, was just 5,000 contracts from a new all-time high. By Mar15 expiration day next Thursday, total OI will likely recede back to the 155,000 level and, if The Banks can rig a bunch of the OI out all at once like today, the results can be devastating for price.
- Minimizing pain at Mar15 option expiration next Tuesday. With 1,467 Mar15 $17 calls still open, there is no way that The Banks are going to allow a $17+ close that day. However, there are also 1,577 $16.50 puts and 2,108 $16.00 puts still open so they're not going to want to drive price much lower from here, either. Though you can expect further volatility over the week, my bet is that price closes next Tuesday at or slightly above $16.50.
Putting that all together, I'm very likely to get my $16.25 silver price target that I've been wanting. I must admit that, back on Friday, I was wondering if I should chase. I'm glad I didn't. But I'm sure itching to get my hands on some more of those "stackers" from Scottsdale. As soon as I pull the trigger, I'll let you know. For anyone looking to so the same, here's the link:
Of course, I would also encourage you to visit these great companies for all of your stacking needs:
Here are updates on the daily charts we've been following. Note again why the effort was made to smash gold through $1220 this morning. And, again, what exactly was the gold negative news that cause this steep decline??
And, though silver was smashed through the neckline of $16.65, I've been preparing you for a drop toward the blue line near $16.25. Again, there's not much incentive for The Banks to crack it even lower from here so let's look for stability around this price level.
I must admit, however, that even I...The Great and Powerful Turd...end up feeling somewhat powerless, hopeless and distraught on days like this. It is so abundantly clear that these "markets" are a complete sham, driven and manipulated by The Bullion Banks to whichever outcome they'd prefer. Therefore, it's easy to despair and feel as though it will never end...that The Banks will always win and then taunt us and spike the ball in our faces as they leave the field.
Well, they won't win forever. That much is a mathematical certainty and our "job" is simply to remain grounded and patient. To that end, I found this latest column from Sovereign Man to be helpful. So, I'll leave you for now with this link, though I'll be back later today with a full podcast summary and review.