The slow bleed of Spec money continues today as prices drift slightly lower ahead of Friday's BLSBS. We still expect relative stability here as everything points toward Friday being an important day.
First of all, thanks to everyone for your patience and understanding yesterday. MrsF, the LTs and I all were part of an 800,000+ crowd celebrating a baseball championship. Below is an image I found on Twitter. Pretty impressive but, trust me, this doesn't do it justice. I've been a part of BIG crowds before at ballgames etc. I've never seen anything like this:
Though I expected relative stability while I was out, we still got a little downdraft yesterday afternoon. In doing so, gold fell down and back BELOW it's 2015 trendline. This is very disappointing but certainly not unexpected. I simply can't stress strongly enough the importance of recognizing and understanding the CoT structure. When The Gold Banks to increase their GROSS NAKED short position by 255 metric tonnes in just four weeks, you KNOW that they're going to raid price soon in order to cover those shorts back up. That they're doing so now and this should surprise no one!
With price $62 higher, total Comex open interest peaked at 470,525 last Wednesday. As of yesterday, total OI is already back to 443,900. This means that this week's CoT will show a dramatic "improvement" over where we've been BUT we're still only about halfway back to being neutral/bullish. This definitely implies more downside ahead and you almost have to believe that the next wave of selling will come after the BLSBS on Friday.
For now, here's where we are on the charts. Again, I expect some sideways to upward action into 8:30 Friday. After that...I'd say $1095 to $1100 should be our base for the next few weeks while some intraday stuff back below $1090 is possible.
The Silver Specs are in the midst of their own rinse cycle right now and it's only about halfway over, too. Total Comex silver OI also peaked on October 28 at 176,038. (Recall how many times we mentioned one last surge to draw as many into the trap as possible?) In just the four trading days since, price has fallen by $1.05 and total OI has dropped to 166,942. This 9,000 contract contraction is a start but it needs to fall another 10,000 or so for a full washout back to where it was in late September.
In doing so, price fill undoubtedly fall further, too. As of today, silver remains above its trendline from the August lows but you can bet your booty that The Forces of Darkness will be gunning for it on Friday. Ultimately, I'm looking for something near $14.80 as soon as Friday and likely even something near $14.50 once or twice before the CoT is fully "washed" and back to neutral/positive.
Again, NONE OF THIS should come as any surprise to anyone here as we've discussed this at length recently. I expect price to remain pressured all month. HOWEVER, my plan is to look for some opportunity AFTER Dec15 contract expiration on the 27th of this month. That's three weeks from now! So, be patient. Understand why and how this is happening and then take advantage of this knowledge.
And another item of note...The disgustingly-leveraged JOKE that is Comex reached another dubious milestone yesterday as The Scoshe reclassified over 79,000 ounces (2.5 mts) of "gold" from their registered category. By journaling this "gold" into the eligible category, The Scoshe dropped the TOTAL registered stock of the Comex vaults down to a new record low of just 151,384 troy ounces or just under five metric tonnes. That's all!
More significantly, the unlimited and seemingly infinite ability of The Bullion Banks to lever this "gold" reached a new alltime high yesterday. Monday's total open interest was 450,584 contracts. At 100 ounces of paper gold per contract, this total OI represents an obligation of 45,058,400 ounces of gold. However, as noted above, on Monday the total registered and readily-deliverable "gold" held in Comex vaults was just 151,384 ounces. Dividing the registered stock into the paper obligations yields a total leverage ratio of 298:1. Again, I ask: How is this legal? How is this NOT fraud?
And, from ZH, here's a summary of Mother Fellen's statements on Capitol Hill this morning. More jawboning and this "hawkishness" will continue to be the theme all month. Again, IF the BLSBS comes in even slightly above consensus on Friday...
Janet Yellen, testifying on The Hill, just dropped the largest hint that December is "on like Donkey Kong" no matter what. When asked if missed inflation mandates would hold her back from liftoff, she explained...
- *YELLEN SAYS SHE SEES U.S. ECONOMY AS PERFORMING WELL
- *YELLEN SAYS SHE SEES LABOR SLACK DIMINISHED SIGNIFICANTLY
- *YELLEN SAYS FOMC THOUGHT IT COULD BE APPROPRIATE TO MOVE IN DEC
- *YELLEN SAYS NO DECISION MADE ON DEC. MOVE, DATA TO BE MONITORED
- *YELLEN SAYS DEC. WOULD BE `LIVE' MEETING IF DATA SUPPORTS MOVE
- *YELLEN: FED EXPECTS ECONOMY TO JUSTIFY GRADUAL TIGHTENING PACE
So, take it for what it's worth and act/prepare accordingly. Another great sale is upon us...just in time for all your holiday shopping needs! December will be better and the reality of the Fed's impotence will be on display for all to see in 2016.