On Guard Against The Banks

Following the events of yesterday, it seems wise this morning to take an in-depth look at the charts in order to discern what moves The Banks may take next in the hope of stemming this rally and reversing the trends.

Let's start with Comex Digital Gold. It has been in an UPtrend since July 10 and this rally has carried it $150 or about 12.5%. In doing so, The Commercials on the CoT have increased their NET short position by 182,000 contracts and, specifically, the 24 Banks of the Bank Participation Report have doubled their NET short position, going from 104,748 contracts NET short in July to 213,746 NET short last week.

This places the CoT in its "worst" position since last September and this BPR reveals the largest NET short position on record. Therefore, you KNOW that The Banks will do just about anything at this point to reverse the trend and begin flushing The Specs back out of paper gold. Though they are clearly capable of pulling this off, it may take them a while to do it. Why, you ask?

For CDG, it's all about the moving averages. We noted early last week that CDG's 50-day had bullishly crossed UP and through both its 10-day and 200-day MAs. This is a very bullish trend indicator and, most importantly, it sets the Spec HFTs into a "buy the dip mode". You can see this playing out already when you look at the daily chart.

Also last week, we began to discuss the significance of the $1331 level as support in any pullback. This was the level of resistance and then support in late August so we hoped/expected that same action on any pullback. And look what has happened thus far this week! Even though the all-important USDJPY is up another 50 pips today and pressing against 110, Comex gold is hanging firm at....$1332! For us, this is clear evidence of the HFTs buying the dip.

And here's the big challenge for The Banks. Check where you can find those MAs. The closest is the 50-day but it's all the way down near $1280. The Banks are not going to be able to flip the Spec HFTs until, at a minimum, the 50-day is violated to the downside. So, this is why we can say "it may take a while" for The Banks to really generate the downside momentum that will flush The Specs in the same old, wash-and-rinse pattern.

This doesn't mean that a massive raid can't happen. What it DOES mean, though, is that aggressive traders should have plenty of warning and can use this time to hedge and prepare. Again, use the chart below as a guide and watch that rising 50-day closely.

Now let's look at Comex Digital Silver. It, too, is holding the support area that we identified last week. This support is quite clearly the most recent highs near $17.90 last June.

Like CDG, Comex Silver has seen its own rally over the past two months, moving up a full $2 or about 13%. Also like CDG, the silver "Commercials" have fought this rally by increasing their NET short position from 21,900 contracts on July 18 to 79,700 contracts last Tuesday. Therefore, you know that JPM et al would just LOVE to smash price and force a Spec exit but they, too, are going to need some downward momentum to get the ball rolling.

As you can see below, the MAs for Comex silver are not in the same bullish configuration as Comex gold. Therefore, the very clear target for The Banks is the 200-day moving average found today near $17.28. They'll hope to break this level on a closing basis sometime soon.

And the reason for trying to break the 200-day is clear. On the chart below, you can see four instances in just the past twelve months where price was broken at the 200-day and a steep, Spec-rinsing decline followed. This is easy money for the colluding Bank trading desks so you can be certain that they are salivating at the opportunity to pull this same trick again!

OK, as I close, I've still got $1331 and $17.92 so our initial support levels are holding. Let's hope this continues and a rebound follows. However, you must be aware that The Banks are still in charge and nothing in their behavior suggests that they are "on the run" or "losing control". Therefore, plan and trade accordingly.

TF

www.tfmetalsreport.com/subscribe

37 Comments

Outback's picture

And NEVER END

my opinion. 

Turd Ferguson's picture

A full 15 basis points

MODERATOR

This is a HUGE move in the 10-year treasury yield over just the past three trading days.

Dr Jerome's picture

Amazing run

... for the $/Y as gold is kicked down the staircase. But she is hanging on to the handrail, trying to gain her balance and climb back.

I agree with Turd that nothing has really changed, but it seems that gold is getting more stubborn. Of course I thought that last summer also, before they slammed it down $210 in 6 weeks, starting election night.

ArtL's picture

Silver futures even for the day.

gold down.

Is this the beginning of the reset?  Or is the algo being lazy and silver will soon be whacked?

billhilly's picture

The walk-away strategy...

The questions have been asked...why so few comments ?  Why dwindling subscriptions ? 

I believe it has to do with the wisdom to simply step away from the computer screen and find better/more positive sources of stimulation. 

The endless propaganda.  The endless melt-ups and beat-downs.  The nauseating rejection of any type of fairness or justice by those who are supposed to watch over the markets.  These are the things which exact a toll on our mental soundness. 
We who are awakened witness these occurrences daily and subject ourselves to their constant wear-and-tear.  The abrasions created in our psyche are small yet cumulative.  We accept and bear them until we no longer can.  Death by a thousand cuts.

Finally we've had enough and decide to walk-away...at least the smart ones. 

I ask myself daily, "why do I continue to follow this ridiculous rigged market so closely ?"  "Why do I allow myself to be exposed to this type of toxic atmosphere?"  "Why am I wasting my life away engaging in this dream-land?"

My answer...I am captured.  I watch because I know that at some point things will change, things MUST change.  I KNOW this day will come and I hold hope each and every morning that THIS IS THE DAY !  Sad isn't it. 

I have slowly begun to pull myself away from the screen for periods of forced reality.  I now count my day as "positive" when I actually shut down the computer and do some productive work. 

I have slowly come to realize the "real" world is not on a screen.  It is not based on conspired numbers and data, nor engagement with a system that has already failed yet not realized it even itself.  The real world exists within oneself.  It is different for each of us but has the common feature that revolves around the desire to feel and experience self-worth.  This cannot come from staring at a computer screen all the day.

So what do the wise ones do ?  They walk away, they shut-down, even if only briefly at first.  The long journey starts with a single step and today I choose to walk a wakeful path.

Shutting down now.

4 oz's picture

Silver is my Friend.

Same Silver, different day; My Silver has never been more valuable.

fluxplus's picture

USD/JPY on the way to 110.65?

Looks like realistic target - 50 DMA and double top. Question what happens next.

Turd Ferguson's picture

Art

MODERATOR

Again, it is very important to understand that the yen-gold correlation is not all powerful. We try to keep reminding everyone of this. Below is from Friday's morning post:

  1. The yen-gold link is clearly automated through HFT algos. However, as we often discuss, there is still human involvement in these "markets". Last week, price was rising while USDJPY was flat and we ascribed this to increased Spec demand for Comex gold exposure. You could see this in the growing open interest numbers. Well there are also periods where outright selling and manipulation drive prices lower when USDJPY is flat. Think of the "flash crashes" etc. So, don't ever think that this HFT algo correlation is all-controlling. Humans can still influence price.

Price holding firm today above $1331 seems to be a clear case of the Spec HFTs (not the yen-linked Bank HFTs) buying the dip for the reasons laid out in this post.

indiana rod's picture

Goodnight Irene

You remember this golden oldie. Here's the updated version.

Irene goodnight, Irene goodnight

Goodnight Irene, goodnight Irene

     I'll see you in my dreams

Sometimes I hit the country

     Sometimes I hit the town

Sometimes I have a great notion

To jump in the river and drown

You cause me to weep, you cause me to mourn

     You cause me to leave my home

But the very last words I heard her say

Was "I wasn't here very long"

     Irene goodnight, Irene goodnight

Goodnight Irene, goodnight Irene

     I'll see you in my dreams

kryton619's picture

Sister Christian

Turd Ferguson's picture

my goodness gracious

MODERATOR

In relation to mickey's epic posts from last evening, please be sure you give this your full consideration. 

And for anyone wondering why I refer to the "Criminal Fed" and "Criminal Banks", this is why. It is their evil policies of endless currency debasement that have wrought this level of financial devastation for so many.

 

Joseph Warren's picture

Re: paying for $400 emergency

wonder if the 'other' category includes breaking into stores during a hurricane ?

Basil's picture

@kryton619

You said  "Sister has turned bullish on gold."

This is the most bullish news I've heard in a while. I know Jeff Christian is not universally liked much in Turdville, but love him or hate his longer term calls have been reliable - particularly the big move down from the 2011 highs, during which time he was particularly ridiculed by the perma-bulls

He reckons that prices will be significantly higher in a couple of years time, averaging over $1700  around 2020-2022.  

AGXIIK's picture

Every time I see and hear about the short positions

Those traders effect a major smash down in prices to rinse out their shorts.  Over the last 8 years of buying and selling paper silver and gold while buying lots of physical, I never paid much attention to the shorts, COT or BPR.  Much to my chagrin and loss in portfolio value

At this point in time it might be a conservative and safe bet to step back from trading paper or going with the trend that appears to be brewing like a hurricane over the horizon   We might not knwo exactly what's coming but we can feel the drop in barometric pressure.  The incipient drop in pressure and my FUBAR knee tells me the traders are going to unload every resourse to kick the crap out of physical prices.  

Keep stackin'

brolgaboy's picture

OMG

Barrons reporting that Jamie Dimon is calling Bitcoin an absolute fraud, he went on to say what he would

do to any of his traders that were trading it......

brolgaboy's picture

Coeur Mining

why isn't anyone anywhere talking about the acquisition of the Silvertip Mine in BC. Looks

like afantastic deal for Coeur yet no mentiona AT ALL in the financial press. It's all Alamos and

Richmont. People are missing out IMO

brolgaboy's picture

Trump is hilarious

Fire and Fury has become Feeble and Flaccid.

Who is this guy, really?

brolgaboy's picture

CNBS

apple blah blah blah blah omg, we are all screwed! only $999 - but hey, lets call it $1000.

I think Stevo must be rolling over in his grave

tvend's picture

Jamie dimon has in common

Jamie dimon has that in common with the owners of Miles Franklin. 

brolgaboy's picture

some really historic quotes on CNBS

Julian Robertson is an old washed up fart. WTF does he know anyway?

The market isn't nearly extended as it was in 2000, (what? did that guy just say that?)

oh and "it's a new paradigm"

okay I've heard it all now....back to sleep

Maestro's picture

Jamie Dime Bag

....or should I say douche bag?

what an incredibly stupid comment for him to make.  I'm sure he is absolutely terrified of the prospect of the common person giving the one finger salute to their bank, and bypassing their bullshit system all together!

Converting to Gold, Bitcoin, Cows......I don't care.  Any attempt to opt out of the system and screw the Fed and the Banks is good.  We are all together.

How are those trading volumes going Jamie?  

Talking your book .Jamie?  

Afraid Jamie?...you will be.

happycamper515's picture

$/Y up PMs up

How do we explain that?  Is the correlation losing its grip?  A rising tide lifts all boats?

RickshawETF's picture

Soldiering On . . .

billhilly raises some good points.  Speaking only for myself, yes, I've withdrawn [from the markets, including PMs] a bit -- preferring to try and stay out of the relentless beatdown.  I tried shorting the obviously overbought companies like Facebook and Amazon, using puts, but they kept expiring worthless as the dog-and-pony show continued.  I realized that was a game I couldn't win (time correctly).

But that doesn't mean I've been idle.  I spend more time analyzing mining stocks -- looking for value, and trying to position myself into the best possible miners for when the metals move higher.  Yes, most miners will benefit from a rising metals price, but that's just the start. 

Most mining companies are poorly run.  I want the best ones -- most likely to take full advantage of future prices.  That means avoiding inept management, poor mining sites (low grades, small resource, local issues, etc.), and the scammers out there (can you say "pump-and-dump"?).

Not surprisingly, that leaves a small pool of companies.  I look for solid management, financial stability, safe jurisdictions, a good resource, and, most importantly, leverage to the price of the metals.  Finding companies meeting these criteria is not easy -- the proverbial "looking for the pony in the pile of shit".  But, it keeps me occupied, distracted from all the noise and nonsense out there, and, above all, gives me hope.  These days, that's enough . . .

tvend's picture

FNV

Franco Nevada refuses to go down. I like that stock and WPM.

happycamper515's picture

Goldbugs need to recruit Steve Bannon

He'd be the perfect guy to take the PM manipulation mainstream.

Sound Money Minnow's picture

Rickshaw ETF I agree

My favorites right now are Kirkland, OSISKO Mining, Auryn Resources, Marathon Gold, Novo Resources, Ivanhoe Mines. All of these have outstanding management, good resources, and a lack of the hype many others have. I have been wrong before, and will likely be wrong again. Losing money and gaining an education isn't all bad. Always beware of those that incessantly talk their book. I look at management, fundamentals, and long term debt.

SMM

Libero's picture

Gold up 20 bucks tomorrow

because too many people here dour on the metals and looking for too many correlations.

RickshawETF's picture

@SMM

As they say: "Losses are the 'tuition' you pay for your market education".

I'm still leery if Novo is the real deal -- it looks promising, but it's not a proven resource yet.  I did buy some Kirkland Lake, as it now has an interest in Novo, and has a decent mine in it's own right.  Besides, I'd never bet against Eric Sprott!

AIJ's picture

Jamie Dymon

Andy Hoffman (#NO2X)‏ @Andy_Hoffman_CG

2) Bitcoin is the bigger monetary threat. This was proven today by Jamie Dimon's comical rant - and look at that, gold went up.

AGXIIK's picture

Just reported on WSJ

Dimon said trading revenues would be down 20% compared to 2016 third quarter.

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