Here We Go Again -- Another Silver Short Squeeze Looms

20
Fri, Jun 12, 2015 - 1:54pm

Back on April 15, we accurately projected that a major Spec short squeeze was brewing in the coming days. Nine days later, silver shot higher in a move of +14% in just over three weeks. Well, guess what. The conditions that created that move have returned and another significant short squeeze is right around the corner.

Before you read further, it's likely best if you go back and review our post from April 15. Back then, price was being beaten lower by the momo-chasing, HFT-algo Specs and most "analysts" thought that new lows for silver were right around the corner. Not here at TFMR, however. Here are the links: https://www.tfmetalsreport.com/blog/6767/another-silver-short-squeeze-looms & https://www.marketwatch.com/story/financial-analyst-forecasts-imminent-r...

As you've now just read, the key to forecasting the impending squeeze was in watching the silver Comex open interest numbers. Total silver OI spiked to a new all-time high on March 18 and the very next day a Spec short squeeze developed that rallied price nearly 13% in two weeks. After being squeezed out to an OI low, the Spec shorts gradually returned and total OI made a new all-time high on April 24. The very next day the squeeze mentioned above began and price rose 14% in three weeks.

Below is a chart I provided "Vault" subscribers back on Monday. Not the ebb and flow of Spec short money as evidenced by the increasing and declining Comex open interest levels:

And so now, here we are again...

Despite silver price being flat for the week, total Comex silver OI has risen by another 4% just this week, reaching another new all-time high on Thursday of 191,663 contracts. As an aside, I mentioned this to Dave Kranzler yesterday and this led him to write this terrific commentary last evening: https://investmentresearchdynamics.com/silver-manipulation-may-be-the-mo...

Though Dave is certainly correct about the corrupt nature of the Comex and the disgusting amount of naked shorting, I want to focus instead here about the nature of this next short squeeze...and here's the important point:

Just as in mid-March and late April, the speculative trading funds have once again been led into a disastrously concentrated short position in Comex silver. The extreme size of this position is clearly noted again by the new all-time high open interest numbers. Additionally, just as in March and April, we are again approaching an FOMC meeting where the idea of "raising the Fed Funds rate" will be addressed but not acted upon. Combining these two factors allows us to conclude that another Spec short squeeze is right around the corner.

The chart looks to confirm this, too. If we connect the dates the most recent squeezes began and extend the line forward, look what we get:

Finally, just to show you how the current cycle is simply repeating, check this paragraph from the April 15 post linked above:

"To me the conclusion is quite clear. The risk in silver is NOT to the downside with a drop through .50. Instead, the risk is being taken by the Spec shorts. They are being set up once again for an epic squeeze. This move is not yet imminent and it may be timed instead for the next FOMC meeting in two weeks. This would coincide with May silver contract expiration and the mandatory Spec short-covering that would naturally occur anyway."

Now, let's take that paragraph and substitute some words to adjust for the calendar:

"To me the conclusion is quite clear. The risk in silver is NOT to the downside with a drop through .50. Instead, the risk is being taken by the Spec shorts. They are being set up once again for an epic squeeze. This move is not yet imminent and it may be timed instead for the next FOMC meeting in two weeks next week. This would coincide with May July silver contract expiration and the mandatory Spec short-covering that would naturally occur anyway."

Cool, huh?

Based upon the experience of the last two squeezes, what should we expect this time? Most likely a surge in paper silver that begins sometime in the next week or so, leading to a rally that extends to and through the 200-day moving average for the July contract, currently near .87. I'd say the area around .30 is a pretty good target again. As price nears there, JPM et al will slam the brakes, open interest will be back down after all of the Spec short-covering and the entire wash/rinse cycle will begin again as price falls back down and through the moving averages and the Specs shorts come charging back in.

So there you have it. I think I'll wrap this up with the same concluding paragraph we used back in April:

"Therefore, could another squeeze and panic develop, similar in size and scope to March (and April)? Certainly. And could you profit from this move? Absolutely! Those willing to gamble in The Casino and confident enough to take a contrarian stand against the momo-and-headline chasing Specs, will very likely be richly rewarded. These profits can then be used to acquire additional physical metal to add to your stack in preparation for the eventual end of The Great Keynesian Experiment."

TF

www.tfmetalsreport.com/freetrial

About the Author

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turd [at] tfmetalsreport [dot] com ()

  20 Comments

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  Refresh
Jun 12, 2015 - 4:48pm

Stu

If you are looking to get some leverage in your trading account but do not do futures/options, you can always try USLV, a 3x leveraged silver ETF. All normal caveats apply, especially using tight stops since it will go down 3x faster too, and do not hold this ETF longer term because the decay will kill you. For a two week rip, however, it should serve well.

Marchas45
Jun 12, 2015 - 4:33pm

Talk About Squeezes

As a Physical Stacker I like a Physical Squeeze. Lol Keep Stacking

Jun 12, 2015 - 4:21pm

trading advice

Not specifically what I do. However, there are options traded on vehicles such as the AGQ. (https://finance.yahoo.com/q?s=agq&fr=uh3_finance_web&uhb=uhb2) I believe the next batch expires next Friday so the July expiration gives more time to the holder.

DISCLAIMER: The charts and analysis provided here are not recommended for trading purposes. Trade at your own risk. The Turd provides knowledge not direction. Turd holds no liability for your trades and decisions but he's happy to take credit when credit is due, particularly through the "donate" button.

Scooter
Jun 12, 2015 - 4:16pm

Squeeze Box

This ought to give my age away......

The Who - Squeeze Box + lyrics
StuTF
Jun 12, 2015 - 3:58pm

Please comment on Choice of Vehicles to Profit

You mentioned at one point you were considering a trading service.

Without advocating any one vehicle, would you list a few ideas such as an AGQ option or some such thing. Would you go out 2 weeks, 3 weeks.

I personally stay away from futures but would be interested in your ideas.

Thank you!

Jun 12, 2015 - 3:51pm

New CoT confirmation

March 17 CoT Silver Large Spec gross shorts: 37,238

April 28 CoT Silver Large Spec gross shorts: 41,410

Last Tuesday CoT Silver Large Spec gross shorts: 43,335

And with total OI up another 2,100 since Tuesday, the current Large Spec gross short is likely close to 45,000. Definitely all systems GO for another squeeze.

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

vonburpenstein
Jun 12, 2015 - 3:29pm

sooooooo.....

.....what does a mindless, never done this before but have a spare $5,ooo to risk here guy do?....you know, to make some jack on these mofos...what is the best thing to buy to make the most?

Marchas45
Jun 12, 2015 - 2:54pm

Short Squeeze

Is that two small people giving a hug. LMAO Keep Stacking

lakedweller2
Jun 12, 2015 - 2:06pm
Orange
Jun 12, 2015 - 2:01pm

Another first

and I am painting

edit: a short squeeze, I want to see a serious commercial signal failure

8 days of shear hell for the bankster ending in a price above $100

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Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

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