Mental Preparation

For everyone's sake, since ole Turd is "wrong 99% of the time", hopefully we'll be wrong again about what's likely coming later this week. If, however, this is one of those 1% deals, you should be sure to prepare yourself now while everything is nice and quiet.

Again, the primary issue is the degree to which The Cartel Banks have gone to cap and stall this latest rally. This morning, consider just this data for gold:

DATE PRICE LARGE SPEC NET SMALL SPEC NET COMMERCIAL (CARTEL) NET

8/4/15 $1091 +29,000 -15,080 -14,820

10/20/15 $1177 +151,301 +11,999 -163,300

At the previous two price peaks for 2015, the Gold Cartel net short position peaked at 132,334 contracts on May 19 and 206,160 on January 27.

And now here's the data for silver:

DATE PRICE LARGE SPEC NET LARGE SPEC NET LONG RATIO COMMERCIAL (CARTEL) NET

8/4/15 $14.60 +8,405 1.14:1 -13,756

10/20/15 $15.92 +57,298 3.59:1 -66,800

At the previous two price peaks for 2015, the Silver Cartel net short position peaked at 62,485 contracts on May 19 and 61,593 on January 27.

So, anyway, it doesn't take a MENSA member to decipher the pattern here.

  1. When prices are low, the upside risk is borne by The Specs. As prices rally, the risk is transferred to The Banks.
  2. The Banks cap and stall price while they wait for the buying momentum to exhaust itself.
  3. As price falls, The Banks buy/cover their positions at a profit while transferring the risk of being short back to the Specs.

The previous two occurrences in 2015 where Cartel net positions reached these extremes saw huge selloffs magically materialize in the days that followed.

The January rally in gold peaked at $1308 on January 22 and price then fell to a low of $1141 on March 17. The rally that followed peaked at $1232 on May 18 and then price fell to a low of $1072 on July 24.

The January rally in silver peaked at $18.49 on January 26 and price then fell to a low of $15.27 on March 11. The rally that followed peaked at $17.85 on May 18 and then price fell to a low of $13.95 on August 26.

So, does this mean that another paper price collapse is imminent. Yes, of course it does. All the "market" needs is a little shove in order to start the mass exodus of all the Spec longs. There are two events later this week that are likely to provide the necessary impetus for the next Spec long rout:

  1. The FOMC "fedlines" of Wednesday. These will be released at 2:00 pm EDT. Could there be a slight change of jawboning language? Enough to send LIESman over the edge with the signal that "a rate hike is imminent for December"?
  2. The first estimate of US Q3 GDP. This will be released at 8:30 EDT on Thursday. Though the Atlanta Fed GDPnow is still showing just +0.9% for Q3, could an upside "surprise" send LIESman over the edge with the signal that "a rate hike is imminent for December"?

Either way, I think you get the point. About the only way I can see this selloff NOT materializing is if ole Turd buys a put or two in anticipation. If he does, you can be assured that the precious metals will plow higher, instead. Perhaps he should "take one for the team" and buy some puts simply for the benefit and sanity of everyone else? I'll keep you posted.

TF

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Key Economic Events Week of 4/8

4/8 1:00 ET Goon Ghoulsbee
4/10 8:30 ET CPI and Core CPI
4/10 8:45 ET Goon Bowman
4/10 12:45 ET Goon Ghoulsbee again
4/10 2:00 ET March FOMC minutes
4/11 8:30 ET PPI and Core PPI
4/11 8:45 ET Goon Bowman again
4/11 12:00 ET Goon Collins
4/11 12:45 ET Goon Ghoulsbee again
4/11 1:30 ET Goon Bostic
4/12 8:30 ET Import Prices
4/12 10:00 ET Prelim UMich
4/12 2:30 ET Goon Bostic again
4/12 3:30 ET Goon Daly

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