Banks Playing Same Old Game

In what should come as no surprise to anyone around here, The Banks are once again creating as much paper metal as necessary to stall an advance in price. Already twice this year we've seen this happen in Comex Digital Silver and now The Banks are working their alchemic magic in Comex Digital Gold, too.

Frankly, I'm not even sure why I'm taking the time to write about this. You know the drill. You know how this works. And you know how this always ends:

  • The Banks issue paper shorts on metal they don't have nor do they intend to deliver.
  • The Specs buy the contracts for metal they have no intention of ever acquiring.
  • The Banks simply issue enough paper contracts to meet Spec demand. 
  • Eventually, Spec demand is sated and price begins to fall.
  • As price falls, Specs sell and Banks cover...thereby closing back out all of the ill-gotten contracts.
  • And The Banks always win because they have infinitely deeper pockets than the Specs. The Banks can simply issue as many contracts as necessary to outlast the Specs.

So here are the dirty details...

At the conclusion of Comex trading last Tuesday, May 30, total Comex gold open interest stood at 434,246 contracts. This was down from 474,848 two days earlier as Specs rushed to close out Jun17 positions before that contract went "off the board" and into "delivery".

In the week since, price has rallied 2.5% from the May 30 close of $1266 to yesterday's $1297. Also over this past five days, total open interest in Comex gold has risen from that 434,246 to yesterday's total of 494,041. Yes, that's an increase of nearly 60,000 contracts or about 14%.

These 60,000 new contracts represent 6,000,000 ounces of "gold" but, of course, no metal ever moves or is put on deposit as "collateral". Instead, it's just the same old game. The Banks issue the paper and the Specs buy it. The Banks know they can simply wait out the Spec demand and their hands are never forced through true physical delivery. In 2016, The Banks waited and waited, issued and issued, until they had run total OI all the way up to a RECORD of 657,776 contracts on July 11. The subsequent late year price collapse then drove total OI all the way back down to 392,000 by early December as the Specs rushed to liquidate their longs. Do you have any doubt that The Banks will simply pull this same stunt in 2017 if they need to?

So...anyway...I guess the point of this is two-pronged:

  1. To alert you that The Banks are gladly playing their same old games in 2017. We've already seen two, full wash-and-rinse cycles in Comex Digital Silver. One will eventually be attempted in Comex Digital Gold, too.
  2. However, with total OI still over 160,000 contracts shy of the alltime high of 2016, there's no need to panic at this point and assume that some sort of "raid" is imminent. There's clearly A LOT of potential Spec buying that is still on the sidelines.

Today so far is playing out about as we projected in last evening's podcast...sort of a non-deal ahead of all the action tomorrow. We'll probably see some small moves up and down but prices will likely stay in this $1290-1295 and $17.55-17.65 range most of the day.

Again, tomorrow brings Draghi, the UK elections and Comey on Capitol Hill so it's going to be a volatile and interesting day. The primary focus of your attention should be on the all-important USDJPY. If it stays down and finishes the week substantially below its 200-day moving average, it should be set for more downside in the days ahead. As you know, this in turn spills over into HFT Spec buying of CDG which, in turn, leads to Spec buying of CDS. So, watch that USDJPY very closely the rest of this week.

One bit of news overnight that you need to see. We mentioned the Banco Popular story in yesterday's podcast and the actual "bail-in" and takeover stuff happened earlier today. The details have been written up and summarized by ZH so be sure to check these two links:

Have a great day and be sure to check back later for a full podcast summary.

TF

www.tfmetalsreport.com/subscribe

77 Comments

mavens's picture

Hi Monkey!

First

2c piece's picture

Where

Where is everybody?

WARNING

What follows is a quick cybercurrency comment.  I am a very small holder.

As I see it the value of cybercurrency:

1. The ability to take wealth from one country to another without worrying about customs.

2. To be able to protect oneself from hyperinflation in your country.  There is a storey making the rounds of a Venezuelan who was able to feed her family using bitcoin.

3. Use of cybercurrency for contracts without a middle man such as purchases without credit card fees and real estate purchases.

4 There are other potentials that I also don't fully understand such as robotics. (see Cliff High's recent round table on Silver Doctors).

5. The freedom from complete control by TPTB.

Now back to your regularly scheduled metals analysys.

P.S. Being the second poster shows that I am still very interested in silver.

Turd Ferguson's picture

First time this week

MODERATOR

No surprise we got one of these today after yesterday...

Ye Olde NYSE Pre-Open USDJPY Ramp:

Orange's picture

Turd

You are right, we all know this. Rather than letting your excellent post go to waste, perhaps consider making it public.

Even better, send it to the CFTC. 

Turd Ferguson's picture

I was thinking the same thing

MODERATOR

I'll make it public later this morning...after A2A.

Re the CFTC...<laughs hysterically>

Response to: Turd
Turd Ferguson's picture

Also as discussed in yesterday's podcast

MODERATOR

That big, red, nasty candle rejection away from the 200-day in the HUI is underway today. In early trading, the HUI is already down nearly 4 points and back to near 200. Let's hope we see a recovery.

Angry Chef's picture

BLOCKBUSTER: HANNITY CONFIRMED THE MAIN CORE IS...

...REAL TONIGHT

Tonight, Sean Hannity had two investigators on who revealed that 47 hard drives were stolen from the FBI, and on those hard drives were 600 million documents on Americans who had been "unmasked" revealing all details of their lives so they could be rounded up and put in internment camps and/or killed. Hillary and Obama spearheaded the effort. If Hillary had scammed her way in, we'd be toast, Trump saved our lives.

Now there is going to be a lawsuit on behalf of the 20 million (plus) people who had been unmasked, Comey is going down, the NSA might get it's ass kicked and Hillary and Obama had better worry. NOW FOR A REPOST of what I said about this years ago! Call this site FOUR YEARS AHEAD!

http://82.221.129.208/baaasepagev3.html

Going to be an interesting day for Mr. Comey I'd say....

RickshawETF's picture

Fifth

Not much happening in the markets today . . .

A good day to stack!

matt_'s picture

I'm long NUGT again

I probably should stop while I am ahead.  If I keep posting my trades here, I'm going to end up looking like the fool that I am. 

For what it is worth: I bought back the shares of NUGT that I sold yesterday afternoon.  I purchased them for less than I sold them yesterday, and things still look somewhat bullish for NUGT.  Fingers crossed.  Not nearly as confident as I was 2 days ago, but most of the majors look bullish (except maybe for GG that looks like a good short candidate today).

lakedweller2's picture

Recent Investigations

Evidently recently mentioned investigations of the silver market supposedly by tbe CFTC and FBI mean nothing to JPM.

JQuest's picture

Senate Intelligence Committee hears testimonies

Live Now..

Senate Intelligence Committee hears testimonies from Director of National Intelligence Daniel R. Coats, acting FBI Director Andrew McCabe, NSA Director Admiral Michael Rogers and Deputy Attorney General Rod Rosenstein.

Dr. P. Metals's picture

LOL

stopped out of NUGT already. I set tight stops anymore. tired of the thieves taking ANY money... so be it. back to cryptos.

canary's picture

OI (final)

Gold Future +26,323    (total 494,041)

Silver Future +3,472   (total 208,967).

Dr Jerome's picture

Popcorn

So what you are saying above, Turd, if I read it correctly is that there is a bit of room for a move higher, but the banksters have already started issuing paper to cap price.   

They will NOT be caught in a short squeeze, and will issue as much paper as needed.But I see the 100 day MA crossing over the 200 day before the end of the week.

I should make some popcorn. 

Turd Ferguson's picture

worser

MODERATOR
DPMS308's picture

@Angry Chef Ummm ... NO

No politician is going to save my life ... My friends and family ... YES.

Being rounded up for FEMA camps and scary riots this summer in the blue areas?  It is pure fantasy of the insane left. It will never happen because they are surrounded and even in the communist state of NY I will be unaffected because I live in a red area.

Image result for 2016 map election

As far as dealing with rioters?  I am at a slight disadvantage because I like simple and old school.  I will have to stop short about 100 yards when encountering protestors and rioters and get out and lock in the hubs on my 4x4 so I can make it to work on time.  Some times it aint easy being cheap but I like the extra gas mileage lockouts provide.

Turd Ferguson's picture

Yes, Doc, it does NOT mean

MODERATOR

Yes, Doc, it does NOT mean that the price of CDG can't or won't do higher. If another 100,000 Spec longs come into the "market" price will definitely move up.

However, it's still just the same old, same old. Eventually, Spec buying will be exhausted. Price will roll over and the rinse cycle will begin.

How far down is the only question and this is exactly why you've heard me on countless occasions this year describe the 2017 price action as "3 steps forward and 2 steps back".

Response to: Popcorn
canary's picture

3 steps forward and 2 steps back...

By observing the buying and then selling exhaustion (COT and price) one can profit from this crime.

fluxplus's picture

Asullt on gold and bonds

And Vxx red low but market not moving to ATH. Something is brewing.

murphy's picture

Another banker "game"

Zcash is a relatively new cryptocurrency launched in October 2016. Purportedly more secure than Bitcoin, the Shadow Brokers' use of Zcash seems to be less about using a safer cryptocurrency and more about revealing to the public the US government's connection to its development.

The Shadow Brokers' blog post explicitly points out that the development of Zcash is allegedly linked to the Department of Defense, DARPA and Israel. It also claims the new cryptocurrency, which was recently accepted as a legitimate currency on iOS and Android platforms, could be a trojan horse with a cryptographic flaw monitored by the NSA or used by the government to send money to deep cover assets outside of banking systems. (Italicized emphasis added)......

Now, before we get to my high octane speculation de jour, note the following things:

(1) The hacking group "Anonymous" seems to have dropped off the radar, to be replaced now with "The Shadow Brokers" which raises the interesting questions: (a) has the former group simply rebranded itself and reemerged under a new name? Or did the former simply cease operations? Or are they two discrete groups? One may never know, but as we'll see in a moment, the question of who and what this new group - the Shadow Brokers - is, is an important component of any speculation regarding what it going on

(2) The new group is exposing the alleged links of the new cyber-currency to the US Department of Defense, DARPA, and Israel; and,

(3) that said cyber-currency has a "back door" built in, which, of course, raises the entire philosophical objection I have to the whole idea: what is to prevent any cyber-currency, state-sponsored or otherwise, from having a similar "flaw"? Answer: nothing.

Given that flaw, however, note that The Shadow Brokers have tapped into it, which raises the question of just who they are. Here Mr. Haridy explores the options at opposite ends of the spectrum:

<more inside the link>

https://gizadeathstar.com/2017/06/crypto-currency-financial-clearing-rogue-hacking-groups/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+GizaDeathStar+%28Giza+Death+Star%29&utm_content=FeedBurner

Docdhj's picture

Blockbuster

This is what was presented on Operation Freedom with General Tom McInerney on March 19th..... http://www.davejanda.com/guests/general-tom-mcinerney/sunday-march-19-2017

and Dennis Montgomery's attorney, Larry Klayman...... on April 2nd...... http://www.davejanda.com/guests/larry-klayman/sunday-april-2-2017

​​​​​​​It's all about The Hammer

​​​​​​​Dave

BarnacleBill's picture

@Angry

You have no idea how much I wish that a real investigation and prosecution to the full extent of the law would result.  I'm always hopeful, but so many times before similar blockbusters have been shoved under the rug and ignored by MSM.  

Maybe it'll be different this time?

Angry Chef's picture

Turd...You Forgot One Thing

Turd wrote:

This is quickly becoming a VERY serious situation. 
One one side: Qatar, Iran, Turkey
The other side: Saudi, UAE, Egypt

Part of being in the SCO ( I believe Iran is ). Is that just like Article 5 of the NATO accord that says if one member Country is attacked all other member countries are obligated to join. The SCO Agreement has a similar clause. Which means that China and Russia could easily get further involved.

http://www.plenglish.com/index.php?o=rn&id=13877&SEO=russia-to-summon-extraordinary-security-council-meeting-on-syria

http://thehill.com/policy/defense/336575-pentagon-hundreds-of-us-troops-in-fight-for-raqqa

http://www.politico.com/story/2017/06/06/congress-russia-sanctions-239210

http://thehill.com/blogs/floor-action/senate/336453-senate-to-vote-on-new-iran-sanctions

http://www.businessinsider.com/ap-envoy-haley-says-us-wont-let-the-un-bully-israel-anymore-2017-6

The Zio-Tards are going to take us to War. We can't afford it. Not only monetarily but for humanity. 

Here's the call. They raise rates. But who really cares because the yield curve is flattening. So does it really matter if they raise rates ?

QE27 and then to infinity.

Hyperinflation and WWIII to provide cover.

JMHO.

Turd Ferguson's picture

The Big Red Candle Rejection

MODERATOR

And, in an absolutely stunning development...

Dr. P. Metals's picture

Well Worth Reading

104365's picture

News - Andy M.......

Do you think the news Andy was excited to share with us is the CFTC investigation?  Or do you think it's biggggggeeeerrr?

104365's picture

Duplicate

EOM....

Turd Ferguson's picture

I'm quite certain that his

MODERATOR

I'm quite certain that his "news" doesn't have anything to do with the CFTC. We know by now that that avenue of attack is completely worthless.

Instead, Andy is working on a way to bring about fundamental change to how the metals are priced...and possibly collapse the entire scheme in the process. He'll share the details with us when he's ready.

Turd Ferguson's picture

USDJPY sinking again

MODERATOR

This on reports that the Norks have just tested another "projectile".

2c piece's picture

Dr P

Good article, however.

Unlike tulips it is not petaled.

Unlike beanie babies they don't "stuff it".

Unlike hula hoops it is not limited.

Of course we will have to see what happens with time.

Someone once said "bet with your head - not over it.wink

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