As Harvey informed us over the weekend, the OI in Dec10 silver was still around 49,000 contracts basis last Thursday evening. 49,000 is a staggeringly large number given that the Dec10 futures and options go "off the board" tomorrow! If they intend to take delivery, these contract holders must pony up the funds by the close of business this Friday. Clearly, not all 49,000 are going to be exercised but if even a fraction of them stand their ground and give Blythe the finger, the Comex is going to have a very significant situation on their hands. I believe the action in the metals today, where they held and went higher in the face of a strong dollar, is indicative of the building pressure on the Evil Empire. Right now, the only thing you need to do tonight is read Harvey's update. Again, he usually updates around 8:00 EST.
I thought I'd post this chart. It looks like crap but it gives you an idea of what I expect to happen next.
Note the 10+% burst to a new high in mid-October. A pullback and consolidation before another burst of nearly 20% into early November. Now another pullback and consolidation is nearly complete. Silver will soon move back through 28.20 and then go tackle the closing high of 28.91 and intraday high of 29.34. Those levels will be bested leaving all the technicians scratching their heads. If the recent form holds, silver will trade to 33-35 before once again puling back and consolidating. I would expect this move very soon. Let's look for that $33-35 level to be reached by the time the current POMO schedule is finished, roughly December 9.
Again, ignore the chart-readers and the top-callers. Read Harvey tonight. Rest well because, with the expirations tomorrow, things might get a little crazy. Turd out.
Thanks Turd... I was thinking of buying some more physical silver now or do you think I should wait for that next pull-back after it reaches that 33-35 figure you mentioned above? Silver is $27.80 right now, so even a consolidation after $33 will likely be somewhere around $28+ anyway right? So is now as good a time as any to buy some more you think? Is my reasoning sound?
ReplyDeleteBlythe says hi......
ReplyDeletehttp://www.google.com/imgres?imgurl=http://www.komennyc.org/2007_Redesign/images/news_masters_265.jpg&imgrefurl=http://www.komennyc.org/site/PageServer%3Fpagename%3Dnewsroom_nh_2007_08_01a&h=357&w=265&sz=41&tbnid=scvlyZRKaTmocM:&tbnh=121&tbnw=90&prev=/images%3Fq%3Dblythe%2Bmasters&zoom=1&q=blythe+masters&hl=en&usg=__-yezpQau4vQbNTHup4kRORrX0Nw=&sa=X&ei=sefqTOSGMMemnQf15Zz2Cg&sqi=2&ved=0CCoQ9QEwAg
extra 'r' there....I think he mean "Moon Silver"...
ReplyDeleteIgnore the chart-readers? Hey wait, aren't you reading charts? ;) I know what you mean and I tend to agree. There are lots of non-technical reasons for silver to go vertical not the least of which is the open interest on the comex. Even without looking at the charts the price action just "feels" strong, if that makes any sense.
ReplyDeletehttp://kiyosaki-blog.blogspot.com/2010/11/silver-why-buy-silver-now-buying-silver.html
ReplyDeleteRobert Kiyosaki: "Silver is the best opportunity out there..."
Turd, I've seen you mention, a couple of times, that a person should NOT trade the front month in futures. Can you, or anyone else here, please explain why?
ReplyDeleteHarvey is out:
ReplyDelete""The front December month which is the front delivery month saw very little change as the OI declined by only 39 contracts from 48991 to 48952 with one day to go. Tomorrow I will have a better understanding of how this thing is shaping up but it looks closer and closer to me like a commercial failure is upon us. ""
http://harveyorgan.blogspot.com/
Jack: I was going to title it "More On Silver" but then, when I started complaining about the moron TA "experts", I changed it to "Moron Silver" as a play on words.
ReplyDeleteJohn: You get the prize tonight. After I made the post, the hypocrisy dawned on me. Pretty funny. I will say this in my defense: I only use charts to identify spots where Blythe will block and/or the BoS will roar. The "TA Morons" try to play Nostradamus based upon waves and fib numbers and assorted other nonsense. In this truly unprecedented and remarkable silver market, TA can only lead you to missed opportunities and losses.
And this absolutely MUST BE READ AND UNDERSTOOD: (copied from Harvey Organ's site)
ReplyDeleteWIDESPREAD SILVER BAR SHORTAGES
By Patrick A. Heller on November 18th, 2010
Categories: Featured Articles, Gold and Silver Commentary, Precious Metals
As of today, there are no longer any regular wholesale supplies of the 1 ounce through 100 ounce silver rounds and bars available for immediate delivery. It may be possible to locate incidental quantities of some product, but most wholesalers are now promising two to four weeks delivery to allow time for the silver to be fabricated.
As a result of the shortages, premiums have started to rise. So far, the increases have been modest, on the order of 0.5-2%. However, if the shortage grows, expect to see further and larger premium increases in the coming weeks. We could see a repeat of the late 2008 gold and silver buying frenzy, where product availability got as slow as 1-4 months after payment.
At the COMEX close yesterday, registered (dealer) silver inventories fell below 50 million ounces. Even if you include the eligible (investor) silver inventories in the COMEX bonded warehouses, which are not available to fulfill COMEX deliveries unless the investor specifically chooses to do so, there were barely 107 million ounces to fulfill around 725 million ounces of contractual obligations. COMEX silver inventories are now down more than 10% from mid-June even while the amount of silver owed has soared!
As the price of silver almost continuously rose from $17.98 on August 23 to $29.36 mid-day on November 9 (a 63% increase), the COMEX had not changed its minimum requirements for leveraged accounts. It would be a normal process to periodically bump us the minimum amounts for margin accounts as prices rise, but this was not done until November 9, when the margin requirement was increased from $5,000 per contract to $6,500.
On September 16, the COMEX further raised the silver contract margin requirement to $7,250—even though the price of silver had been dropping since November 9! What is suspicious is that a lot of "insiders" were liquidating their silver positions starting the afternoon of November 15. Is it possible that they may have received advance notice of the coming change in the minimum margin account requirement and sold in anticipation of lower prices the next day?
The next round of gold and silver options expiration occurs on Tuesday, November 23. The attempt to suppress gold and silver prices upon the release of the US jobs and unemployment report on November 5 was almost a complete failure. Unless something is done to knock down gold and silver prices before November 23, a lot of call options will be exercised, which would further increase the demand for physical precious metals.
I suspect, as do many others, that the two rounds of increasing gold and silver margin requirements were timed for no other reason other than to try to help hold down prices through November 23.
Don’t be surprised if supplies of other low premium physical silver products, especially US 90% Silver Coin, dry up, with those premiums also starting to rise. If you are looking to acquire some physical silver, I suggest you act sooner rather than later.
Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes "Liberty’s Outlook," a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under "News & Articles". His radio show "Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know" can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.
TF, I am long on Comex Silver. Is that silly given that Comex itself may collapse/go bust? Apologies if it's a silly question.
ReplyDeleteI also sense decoupling emerging in silvers relation to the dollar index over the last 48 hours or so. Perhaps I'm just seeing things.
ReplyDeleteBTW, two points.
ReplyDeleteFirst, the 30min chart shows a rising wedge, bearish pattern over the past few days/week. However, this is the second time this pattern has occurred in the space of the past few weeks. The previous occurrence was a complete "failure" of this bearish pattern with the gap up and run to the most recent top. If you were short you got crushed. That is the TA suggesting no obvious advantage based upon the most recent history.
Second, the last breakdown had nothing to do with TA but was triggered by the increased margin requirements, first in silver, then in other commodities. Just bombed all of the commodities.
Sooooo, in the final analysis.... the only thing that appears to matter to the serious down side right now TF is when the margin requirements will be bumped again. Let them bomb it again, shake out the weak hands and let the rest of us pick up the (silver) shrapnel.
Really enjoy the insights TF. It's a shame that the silver "fundamentals" are the way they are.
Marcus & Jackal: Let me try to answer you both. Being long Comex silver is OK for speculation, just don't try to get in line for delivery.
ReplyDeleteWhen it comes to front-month trading, try to avoid it, particularly in options. The sand passes through the hourglass pretty quickly toward the end and an adverse price move can really wipe you out fast. For example, I held Dec10 calls in gold and silver from August until two weeks ago today when I sold them and rolled into Feb and March. Never, ever wait until the final days of a contract month to roll and never, ever get greedy by buying options with only a few days of life left in them. You will lose far more frequently than you will win and then you will find yourself helplessly watching as prices move higher but you're not "in" because your account has been wiped out. Trust me, I've been there and it sucks.
Many thanks TF. I am long March Comex Silver and was afraid of a situation that the price skyrocketed, Comex went bust and I find that they're not honouring anything. I'm not sure how things work over there as I am not American.
ReplyDeleteAnd, just for fun, watch the gold trade overnight.
ReplyDeleteWith expiry tomorrow, you can bet your arse that Blythe will try to take advantage of any weakness or moments of light volume. She has to try to get gold down as far as she can as there is almost a 3:1 ratio of calls to puts at this price level. The more calls she can drive out of the money, the less potential for delivery she has to face. Every penny and every contract matters at this point.
Now, our buyer(s) of size know this, too, so I'd be very surprised if The Monkeys on the Night Desk are able to jam it down much below 1352-54. They may surprise us. Maybe they'll catch a break and The Second Coming will be tonight but, absent that, Blythe's in for another frustrating night/day in the gold market.
Jackal: Total failure at The Comex would be something new for all of us so its impossible to anticipate and plan for all eventualities. However, as long as you don't get greedy and try to stick around for every last penny, you'll be fine. You'll likely get out before the entire thing freezes.
ReplyDeleteTurd, I have followed you on Zero Hedge since last summer and I've been amazed at the accuracy of your gold predictions. Not sure how you do it but you really do seem to be on top of things.
ReplyDeleteThank you so much for starting this blog. I am learning a lot and your insights are very helpful. Keep up the good work.
Ref. the WIDESPREAD SILVER BAR SHORTAGES
ReplyDeletepost.
Contacted my mint today. Have several hundred 1 oz Ag rounds scheduled for delivery this week that the mint has pushed back another two weeks due to "unprecedented demand". We're looking at a 6-8 week wait time on deliveries -- up from 4-6 weeks just two months ago. Supply of physical definitely getting tighter.
i dont trade but love your way of telling the story as i am watching the demise of our country with your eyes as well as others , like ZH. Nought else to do, my business is wiped out(construction). I am treating this like i am in a bad movie.
ReplyDeletemerehuman
Crimex-You can almost set your watch to it.
ReplyDeleteSilver! What a performance this morning...we are inching closer and closer to some historic price action.
ReplyDeleteTF,
ReplyDeleteAwesome Blog. This is ORI by way of ZH.
Adding you to my daily reading list.
May your "following" grow!