Saturday, December 18, 2010

Harvey Blurbs and Long-Term Charts

Happy weekend, everyone!
Wow, what a great close yesterday! In spite of a massive, three straight days of EE raids, our metals held tough and even staged a powerful rally into the close. Support held beautifully on both of the PMs we follow and we are set for a great week next week. Monday brings a huge, $17B POMO. This is twice as big as any single POMO day we've had before. No wonder there was such strength and short-covering into the close yesterday! With the great support of last week, we could really strike some fear into the hearts of the shorts with a powerful rally early next week. Let's hope it develops!  As mentioned yesterday, keep an eye on the USDX and crude. If they open Monday in our favor, we are going to have a big, big day.

Harvey just posted his usual Saturday comments. To save you having to sort through the entire thing (, here are three, main highlights:

1) "The entire silver comex open interest shockingly did not fall at all, it rose by 533 contracts.  This totally annoyed JPMorgan and friends.  With two consecutive raids they failed to shake any silver leaves.  They probably failed again on Friday." 
This is absolute proof of direct EE price suppression. To hammer silver in the fashion they did on Thursday yet see OI increase? Amazing!! Surely some weak-handed longs closed out their positions but OI went up. Where did these new contracts come from?? Brand spanking new paper shorts supplied by the EE, that's where!! Additionally, this indicates how few longs were actually spooked enough to be sold out. Our side is finally wising up to Blythe's games and refusing to be intimidated!!!!

2) "Herein is the ETF story for today:

Cannot quite figure this one out.  Today the GLD added 15.18 tonnes of gold or 588,200 oz of gold!!!
A) where did they get the gold'
B) with this demand how in earth did the clowns raid over at the comex?"
It kills me that there are still reasonably intelligent people out there that think GLD and SLV are legitimate investment vehicles that do, as they claim, own physical metal.
What a joke!! 

3) "The trading of silver this past week has been breathtaking. Silver is now the least leveraged on any commodity on the comex.  An investor needs a minimum of 20,000 usa dollars per contract. At 5000 oz at 29.00 per contract, if one were to take delivery, the total value of the contract is 140,000 USA dollars.  The leverage is 13:1.  For comparison gold is 22 to one; platinum is 17. to one;copper is 16 to one.  JPMorgan had to be in serious trouble asking the CME to initiate another hike in margins with silver already below the others in leverage.  They also initiated the margin requirements when silver was already hit instead of a few days ago when it surpassed 29.20.  I strongly believe that JPMorgan and friends are in serious trouble over at the silver comex."
And just in case you're a CNBS lemming who thinks that margin increases in silver are warranted because of leverage and volatility, Harvey gives you this to chew on over the weekend. Clearly, the EE is begging the CME to increase margins because they know they are being routed! Does anyone have a better answer? Anyone? Anyone? Beuhler? Beuhler? I didn't think so. What a sham!

OK, lastly, a couple of long-term charts for you to ponder. Lots and lots of BS on CNBS yesterday about tops and bubbles in PMs. What disingenuous pricks these people are! Segments and topics on CNBS are set up by the producers anywhere from 2-7 days in advance. (Trust me on this. I've been a "guest" on that network four times in the past.) To have several segments within a couple of hours, where each of interviews discuss the idea that gold and silver are in a bubble, wreaks of spin, distortion and manipulation. Utter nonsense that should be ignored! For a better perspective I give you these three charts. No lines. No angles. Purposefully left blank for your own interpretation. 
Have a great weekend. I'll update again tomorrow. Turd out.


  1. Thanks Mr T,

    Every time you think about selling PM or PM stock go back and watch this.

    Remember that I was a warrior for 23 years for the EE. I made my living as a Federal Agent and an officer of the US Army.
    I am an Eagle Scout.

    I swore an oath to the U.S. Constitution not to any politician.

    I lived in a war zone for six years.
    Bogota I helped kill Pablo Escobar.

    I speak fluent Spanish. I hear what you do not hear. I listen to the EE spinning this time bomb on Spanish TV. They will use race to divide us.

    I'm in my mid fifties. I've seen this movie before my brothers and sister. But this time is VERY different.

    What you seen in the video is coming to America in Spades! Fight for the Constitution. Do it with peace in your heart.

    Let Justice be done may the heavens fall.

  2. The COT silver report Harvey posted is the futures & options combined - NOT just futures. He usually uses the futures only. Im assuming this invalidates his analysis. Turd could you explain the difference between these two data?


  3. Turd, don't knock CNBS too hard. The fact that they have lulled the public to sleep allows us to accumulate at much lower prices (it's when they turn bullish that I'll consider lightening my holdings).

    Here's something amusing. I dropped into one of those cash-for-gold places just to see if they buy silver. Yes, they did. I asked them how much they would give me for a 1963 Franklin 1/2 dollar (I always carry one around with me). I was amused when they said they would give me $4 for it (never mind that it's worth more than $10 based on silver content). Still, it was a better offer than another clown who said he'd gladly give me face value since no one accepts them anymore for doing business (yeah, I bet he'd gladly give me face value; what a goof). Lots of sharks out there, so beware kiddies.

  4. Marcus, one thing that you have to remember from now on is that, as things get worse, thieves will abound in every form. Without trying to sound paranoid, you have to watch out for more and more people trying to rob you blind, and I don't mean just the banksters, but everyday folk.

  5. Turd,

    5,000 x 29.00 is now "140,000"...not 145,000 anymore?

    $20,000 margin, $140,000 contract value..."13:1 leverage" Ummm...not 7:1?

    Maybe this is why I find Harvey's blog impossible to understand. I have seen his conclusions contradicted by Jim Sinclair.

    and OI is both sides of the trade, no? If so, longs match shorts, no? I better go read up.

    Thanks for all you do.

  6. btw, Heat, thank you for joining in.

    I feel we are approaching a turning point in history with the outcome to be decided by men like you...choosing sides.

    Yours would be a powerful story if told.

  7. Ya know Marcus older folks go into banks across the country every day and turn in old silver coins for fiat dollars in those bogus change machines, having no idea of the true value of those coins...sorta breaks my heart that these oldsters get screwed every way they turn...I for one am sick of it and wish there was a way to give them a heads up...

  8. Yes, in my haste, I failed to notice that Harvey needs a new calculator for Xmas!

  9. I think Harvey may have made a boo-boo with his numbers concerning margin requirements. I believe the real number is closer to 10k and not 20k for one March large of 5000oz. 10k gives a leverage closer to his 13 to 1 figure, while 20k just doesn't fit right.

    timpa, if you know of anyone getting rid of some old US coin minted prior to 1965, you'd certainly be doing them a favour by pointing them in the direction of It really burns my ass seeing old folk getting swindled.

  10. Thanks Nic!

    My story is one that has been repeated throughout history. The Palace guard is nothing new.

    But I am humbled to be here with true Patriots like you, TF and our brothers and sisters.

    In time I'm going to open up my face book page to all of you. And you can see this old crusty country boy, my hot Colombian wife, and my kids.

    My wealth is measured in my family. But my money is measured on Oz's. of Gold in silver.

    PM's are the enemy of the welfare State!
    Let load our guns and fire!

  11. While PM-bugs like to see their metals making strong up moves, in the long run slow and easy may produce better results.


    Jesse's comments --

    The pattern in the gold market has greatly clarified. It is now following a more gradual path higher as the banks of the world resist its upward trajectory, and the many still do not recognize the inherent value of bullion in the face of currency devaluation.

    The gradual rise will take gold much higher over time than a parabolic spike higher would, although it demands more patience as things unfold.

    At some point it will regain a more aggressive track higher, and then likely consolidate and resume a more gradual rise for a time.

    Silver is on an aggressive but sustainable rally path. The many years of suppression and the leverage in this market may call out a path and price much higher on a percentage basis than gold.

    I like to buy both, but given a choice I would tend now to overweight silver for trading, and gold for the long term investment and wealth protection.

  12. Speaking of old folks getting swindled, I was banished from a bookstore 2 days ago when I steered an older couple away from selling their books to the store. They had walked in with a heap of books dating back to the 1750s and were being offered a pittance (less than $100). After negotiations between the owner and the couple had failed, I confided in a low voice to the gentleman that he'd probably be better off selling his books to someone dealing in antiquarian books. Well, I guess I didn't keep my voice as low as I though I had. The owner heard what I had said, heaved a book of his own in my direction (just a paperback), and told me in pretty strong language to clear out and never return. Quite a scene. So yeah, there's quite a few scoundrels out there, to be sure.

  13. As of December 10, the COMEX holds only 106mm ounces of silver, or roughly enough to cover 21,000 contracts (Go to: CME Group Link and click on "Silver Stocks"). From the most recent Commitment of Traders report from the CFTC, there are more than 137,000 silver contracts outstanding. That means if only 15% of silver long holders decide to take delivery of physical silver, a short squeeze unlike any other ever seen may result.

  14. Heat,

    Thanks for sharing.

    Incas knew:
    Sudor del sol, lagrimas de la luna

    Au= sweat from the sun
    Ag= tears from the moon

    nary ar word about paper.

  15. Good on you Marcus...we do what we can when we can...but none of us should ever forget the greatest generation, those that are left or those that have served and are serving today...we get so caught up in this PM thing...recently a 1 oz Gold coin was found in a Salvation Army pot in northern Cal...that's what we're talking about...especially this time of year, if one can afford it...Merry Christmas all..

  16. Gold, silver could go ballistic by year end -- John Embry, Sprott Asset Management

  17. Those COMEX silver inventory numbers are unaudited and suspect. Why are they leasing silver from customers if they have so many million ounces in Inventory? And then there are still nearly 2 million ounces to deliver this month. If there are 106 million ounces in inventory what the hell is taking weeks? It should be done and over with December 1st.

    Since they've admitted it's fractional reserve scheme (from March hearing), they probably have only a small percentage of 106 million ounces.

  18. Yes, Timpa, I happen to know a senior citizen and WWII vet who recently sold his silver investment holdings because after so many years he became discouraged that the price of silver would ever appreciate. Now he is kicking himself because he is short of retirement funds, the silver rally is on and he sold out prematurely. I told him why silver had not risen in the last couple decades but I don't know if he understood or believed me. He is over 90 now but in his prime he was engaged in the great war against fascism.

    There are real consequences of market manipulation which are not always seen.


  19. As noted before, The McClellan Market Report sees gold's major 13 1/2-month cycle bottom the first week of January. While I think it's appropriate to bite at these downdrafts as they occur (I just did Thursday), save some powder for the new year.

    Let me apologize for the following lengthy post, but some may find it thought-provoking or even useful.

    I was mulling over the big picture approach to investing (as opposed to trading) in gold and silver and to help clarify my thoughts, I calculated the gold/silver ratio at this time of year for the last ten years:
    2001: 63
    2002: 72
    2003: 72
    2004: 65
    2005: 60
    2006: 49
    2007: 57
    2008: 79
    2009: 64
    2010: 48

    While I've seen transient spike values up to 85, basically the historical range is 72 on the high side and of course about 12 on the low. This suggests a possible strategy based on gold and silver in terms of each other, instead of in terms of dollars. Let's consider our own personal holdings of gold and silver as percentages of our own pot of precious metals wealth and modify its composition based on every twelve points of ratio. We should first start with the assumption that gold is in a very long trend secular bull market, and that gold is the only real money with which you can purchase everything else (including silver). Hence the ultimate goal is to have your holdings 100% gold at a ratio of 12, at which time gold will probably be real money again.

    The mental adjustment to make is that you are buying gold with your silver or buying silver with your gold. Dollars never enter into it after your initial purchase. If you do add to your holdings, then buy in the proportion dictated by the current ratio, like this:

    Ratio %silver %gold
    72 100 0
    60 80 20
    48 60 40
    36 40 60
    24 20 80
    12 0 100

    The idea is that you are in silver when it is extremely cheap relative to gold, but as it increases in value (i.e., the ratio decreases and it takes fewer silver ounces to buy an ounce of gold) you convert (trade) part of your silver for gold until eventually you are all in gold. This may take a long time.

    Let's look at an example in the next post:

  20. @dd - to which year-end do you think Embry refers? I'm guessing he means 2011.

  21. Say you begin with 100 ounces of silver at a ratio of 72 and no gold. Note that the equivalent amount of gold weight is 100/72 = 1.3889 oz. When the ratio goes to 60, you convert 20 oz silver into 0.3333 oz gold (20/60 = 0.3333). So you have 80 oz. silver and 0.3333 oz. gold. When the ratio goes to 48, you convert 20 oz silver into 0.4167 oz gold (20/48 = 0.4167). So now you have 60 oz. silver and 0.75 oz gold. When the ratio goes to 36, you convert 20 oz silver into 0.5555 oz gold (20/36 = 0.5555). So now you have 40 oz. silver and 1.3056 oz gold. When the ratio goes to 24, you convert 20 oz silver into 0.8333 oz gold (20/24 = 0.8333). So now you have 20 oz. silver and 2.1389 oz gold. When the ratio finally goes to 12, you conver the last 20 oz silver into 1.6667 oz gold (20/12 = 1.6667) for a total of 3.8056 oz gold and no silver. You end with 3.8 oz gold but your starting equivalent amount was only 1.39 oz gold. You gained about 2.4 oz gold for free.

    Now, a sharpie might note that if you just held the 100 oz silver until the 12 ratio was hit and then converted, you would have 8.5 oz gold. But how long would you have to wait? For the past 20 years it hasn't gotten close to that conversion level. But look at this second example.

    What happens when the ratio goes from 72 to 48 and then back to 72 (which in fact it did do in the past 10 years)?

    Begin with 100 oz silver at ratio 72.
    When the ratio goes to 60, you convert 20 oz silver into 0.3333 oz gold (20/60 = 0.3333). So you have 80 oz. silver and 0.3333 oz. gold.
    When the ratio goes to 48, you convert 20 oz silver into 0.4167 oz gold (20/48 = 0.4167). So now you have 60 oz. silver and 0.75 oz gold. When the ratio goes up to 60 you convert 0.375 oz gold into 22.5 oz silver (0.375 * 60 = 22.5). So now you have 82.5 oz silver and 0.375 oz gold. When the ratio goes up to 72 you convert 0.375 oz gold into 27 oz silver. You now have 109.5 oz silver and no gold. You are now back to 100% silver holdings, but you now have 9.5% more silver!

    In other words, you've increased your amount of precious metals without ever buying another dollar's worth. The key is that every time you make a conversion, you're buying with something that has increased in value. As silver gets converted to gold, you are doing it with silver that has increased in value. As gold gets converted back into silver you are doing it with gold that was bought when silver was valued higher than currently. As a side note, your portion of gold you convert is based on the number of "steps" back to 100% silver; in this example, from 48 there were two steps back to 72 so convert 1/2 gold holdings at 60. This is in line with the rule of dollar-cost averaging (but they never tell you the entire rule). The entire rule is: equal dollars in, equal shares out (or in this case, equal silver in, equal gold out).

  22. All,

    This conversion is what I've got in mind too... currently I'm holding 25:1. Spoke to the bullion dealer the other day, they will buy the silver and sell me the gold at their daily published, allow for some margin there.

  23. An anonymous poster at Harvey Organ's blog posted the below comment, which I think is the most plausible explanation I have heard putting together "all the pieces", including Ted Butler's recent (re)allegation that perhaps the Chinese are the big "silver short":

    The question(s), in my mind, is; did China sell covered calls against an above ground hoard or
    future production from "in the ground" stock? And if against an above ground hoard; how willing
    are they to part with it? Or would they rather cash settle the covered call hedge contracts?
    If they have in fact sold calls against an above ground hoard, physical settlement would tend to
    depress the price of silver as supply is increased. The USG without a doubt would love to see this.
    On the other hand, if China were to cash settle the covered calls, either because they sold against
    future supply and can't deliver - or because they do not want to part with the physicall, then the
    price of silver would rocket higher on supply shortage. China would love this and the USG would do all
    they could to prevent this given what they did in the gold mkt.
    Now enter the Tropos story.
    Could that 700 Billion have been intended to cash settle China's covered calls? Whatever their motivation?
    If so, that would explain the alleged theft in order to prevent cash settlement and the resulting explosion
    in the price of silver.
    This is how the pieces fit for me and the resolution of which will change the world. Or not.
    It depends on how much above ground silver China actually hedged and/or delivers.
    If they hedged anything over 100% of actual above ground supply, both govts.'s are in trouble.
    If they hedged "only" 100%, it could go either way.
    If they hedged less than 100% then it would seem that they would prefer to cash settle and keep their silver
    for industrial production use.
    We are witnessing world history here, can you feel the earth moving under foot?


    Any thoughts by people on this blog??

  24. Audit of SLV, GLD, COMEX, and Fort Knox could show the stash is trash.