Tuesday, February 22, 2011

One More Monday Update

I just got off the phone with Mister Hyde. We were discussing the predictability of the EE beatdowns.

Something significant dawned on us. We now know that the March open interest barely budged on Friday. It remained very high at 50,848. Blythe knew this, too, which was why she was on the floor last night, personally directing the raid like Rommel from his battle tank. OK, now, lets think like Blythe for a moment. If you're her, you're pissed. You have foreboding felling that things are getting away from you. You must raid. NOW. Not tomorrow (Tuesday), but now!

March silver officially closed on the Comex at $32.30 back on Friday. It impressively traded higher all afternoon on the Globex. We discussed that great strength here: http://tfmetalsreport.blogspot.com/2011/02/amazing-day.html
Monday comes and its a holiday. The Comex is closed but silver continues to trade on the Globex as it reflects global prices. Price reaches a high of $34.33 last evening before Blythe shouted "Genug!". At that point, if you're Blythe, you'd give anything to claw back the Globex gains and set us back to Friday's close. In fact, that might even be enough selling pressure to really get the ball rolling lower and force some weak hands to finally liquidate their March contracts.

With that in mind, look at this chart:
Actually, I messed that up. The low was $32.39 now 32.49. (Oops. Moving too fast these days.) At any rate, Blythe made it to within 9 cents of Friday's close before our BoS put a stop to her advance right there. The battle now is waging between a vigorously defended 33.40 or so and an equally strong support of 32.75 or so. Who will win? It all depends on tomorrow's open interest numbers, I guess. It will be a very interesting overnight trade. Don't stray too far from your computer.  TF

125 comments:

  1. It's pretty obvious that Blythe is chipping away at her losses. She's shorting and buying back, shorting and buying back, over and over again. Eventually she'll have done it enough times that she can extricate herself from her large pre-existing short positions without suffering too much damage (which, incidentally, will be mitigated by her gains in copper).

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  2. I don't wanna get anyone's hopes up (more than normal). Jesse, over at Jesse's Cafe' Americain, used to have a top silver spot target at $37, with an optimistic reach at $40. Jesse loves charts, to put it lightly. Today, he posted the following about Silver:

    'Except for intermediate targets I no longer feel able to give upside targets for silver, except to say that it will stop when the market is satisfied, and it 'clears.' Depending on the liklihood of a liquidity collapse A TRIPLE DIGIT PRICE no longer seems out of reach.'

    http://jessescrossroadscafe.blogspot.com/2011/02/gold-and-silver-in-morning-emperor-on.html

    When a chart reader gives you that kind of a heads up, you know something interesting is going on. Just thought I'd drop a heads up.

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  3. I was just looking at the commodity prices today, and man oh man it wreaks of blythe masters. View this great visual representation of commodity prices on the following website:

    http://www.finviz.com/futures.ashx

    Unless you think the following is normal during these inflationary times, especially this week...

    Cotton -7.6%, Wheat -7.3%, Palladium -6.3%, Soybeans -5.1%, Oats -4.4%, Soybean oil -4.2%, Corn -4.1%, Copper -3.8%, Platinum -2.7%, Silver -2.3%, Natural Gas -1.7%, Live Cattle -.8%, Sugar -.4%...

    Blythe and whoever else is on the short side of commodities is in for a beating. A great picture of the blythe masters in real life that I found on a blog should be viewed if you want to see the face of the devil "looking sexy."
    -
    http://img.photobucket.com/albums/v393/youricarma/Miscellaneous/BlitheMasters.jpg
    -

    Something tells me her face is about to become a little less "glamorous" as the losses pile on for our mistress of the metals market.
    -
    Scott J

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  4. Turd

    I think you usually refer to Tuesday as happy Tuesday(Up day)..so far so good. But it is Wednesday and Thursday that Blythe unleashes the flying monkey brigade to beat us back down, do you think it will be the same this week ?

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  5. Splo: Wow! That is very, very interesting. Thanks!

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  6. Hard to say, BigEye. She may have shot all of her remaining bullets today. We'll see...

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  7. I love the smell of paper shorts in the morning.

    http://i513.photobucket.com/albums/t331/HeyApples/aflock.jpg

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  8. Clive Maund (who called this latest rally) has just posted a very bearish article at:

    http://clivemaund.com/article.php?art_id=67

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  9. For completeness, his most recent assessment of the gold market can be found at:

    http://clivemaund.com/article.php?art_id=68

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  10. Well, I'll pass on Blythe. She's too conservative for me. I like someone with a bit of flair in her style and step...

    You know, you might be right about JP Morgan dropping the hammer on commodities in order to round up as much money as possible to buy silver and get that silver position down. I don't think it's going to happen though. She took a few months to cover what I recall to be less than half her position, maybe a third(?).

    March 28 is when the position limit start for the spot month, 1,500 contracts if I read that right.

    SE

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  11. Talk about bad news. I left at 10:00 this morning with my SLW up 7%, got back at 3:30 and its in the red. Why would this be? Does it always track silver?

    If you look at the chart, when we hit 31/oz that stock went to 41. Now look where we are and that stock still isn't there.

    Is that not undersold or what? I never would have imaginined this morning that I should have sold. That baby has room to run.

    What do you guys think?

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  12. “If I had to, I’d pick silver over gold,” said James Dailey, who manages about $200 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania. “Gold and silver are picking up market share in the currency world as a store of value. Silver’s also got the tailwind of the global industrial expansion.”

    http://edegrootinsights.blogspot.com/2011/02/money-moves-into-gold-and-silver.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EricDeGrootsInsights+%28Eric+De+Groot%27s+Insights%29

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  13. Turd,

    I loved seeing that post from Jessie last night, I had to rub my eyes. Jesse is about the last person given to hyperbole.

    I think Jesse is every bit as good as Trader Dan, just in another way. Perhaps the best writer I read regularly, God only knows the education that man has under his belt. He's another indispensable, go-to member of my (free :-) PM Advisory Committee

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  14. Silver lease rates courtesy of SGS

    http://1.bp.blogspot.com/-RT5AdfrWx0o/TWP3rVviU3I/AAAAAAAAAGs/JFnMoZV9vrk/s1600/silverlease.jpg

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  15. flowers, don't sweat it, Clive Maund and his shtick is well known and is not to be taken seriously. Been singing this song for ages. A pretender. The quality of info you'll get exposed to here is the real deal.

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  16. Regarding Clive Maund... Remember the mistake of relying on TA only. Look at everything else going on around you. Sean Broderick from Uncommon Wisdom mentioned a possible pullback because of the margin call requirements being raised. He pointed out on a chart in a video that in the last three times that margin requirements were raised, silver took a short pullback before rising. He must be talking to traders rather than the strong, long-term hands.

    SE

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  17. Seems to me that todays action in the miners, overall, might qualify as a dreaded "Outside Reversal Day". Ouchy.

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  18. Also, Monday's action blew through his "bull horn".
    Highly, highly doubtful that silver will see 28 again anytime soon. Also, what about the gold chart is bearish???
    Sorry, Clive. I'm not buying what you're selling.

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  19. Turd,

    Long time lurker, 2nd time poster. Just put an ounce of sterling in the tip jar. Thanks for the service, and thanks for keeping the sniping and trolls to a minimum. Staying focused on the subject matter makes this a unique place.

    Been long silver and gold for a while, and miners (thanks to your help and others in the blog). I'm a fairly active trader.

    I am a cheesehead. My great state is broke and we need to cut our expenditures. What you all are seeing here in Wisconsin is a sign of things to come, either in small steps in the interim to limit state expenditures or in catostrophic ways later on.

    I dig this little House of Turd you put together. I've been with you since late November and am going nowhere.

    Cheers.

    N.T.

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  20. Oops! There I was at the end of the last thread, talkin' to myself... :)

    @John 97205

    Thanks, John.

    No, there was another CO_DAN post that talked about silver ETF (AGQ, I believe, but maybe SLV) and switching from long options to short at 20,000 OI, I think. I didn't completely understand the reasoning at the time and was trying to get a better understanding of his thinking as I own SLV calls right now.

    I am a novice trader and sometimes the dialog can be a little over my head...

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  21. I have to wonder about the silver lease rates... Really, if you look at the long-term chart of several years, it's really very small compared to years past...

    SE

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  22. @ Flowers

    I read that first article about silver turning to the downside, but that is when you get when you only go off technical analysis. It fails to understand that gold has yet to reach new highs in this dramatic new world scene where Libya is literally burning. Did you know that Libya just cut off 1.6 million barrels of oil a day to Europe? This is about 2-4% of the world's oil output, there is going to be a runup in oil prices.

    With Oil about to head back to 150$ then to 200$+, I don't expect to see any "major pullbacks." The author fails to indicate that the downward movements in silver have been caused by manipulation, which is really running this market. Without this understanding, and use of current world conditions, all those fancy technical indicators mean nothing.

    I think Turd is so good lately because he knows we are just gonna keep going up, but there is predictability to the way up. He cannot be right every time he "predicts," but I bet you that after the market confirms a new direction, The Turd is right 95% of the time.

    Fundamentals > Technical Analysis.
    Notice how Turd isn't writing about MACD and "overbought" status. What type of status is overbought in a market that is about to enrage in flames as the paper ponzi scheme ends? If anything, the overbought status is confirmation that we can keep getting to this level extremely fast, meaning it really is not overbought.
    -
    Long Term, and Fundamentals... always...
    -
    Scott J

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  23. I did a cursory check earlier today of open interest on in-the-money call options for March silver (expires on 2/23). I counted roughly 14000+ call options in the 26 to 32.50 strike price. If silver closes near 33 on Wednesday, then the writers of those options might owe hundreds of millions. I don't feel like doing a thorough analysis, but I estimated that the average value of those options in dollars is $4, which yields 4 * 5000 * 14000 = 280,000,000 due. If I did this correctly, that is worth about 8.5M ounces of silver. It is probably not that significant, but many of those options holders would conceivably be able to use the proceeds from a portion of their winning options to exercise the remaining portion and stand for delivery.

    In other words, depending on what happens to the price of silver on Wednesday pit close, the open interest for the March contract may drift higher because of the many thousands of in the money call options that expire tomorrow.

    If I had say ten 28 strike call options, each being worth (33-28) * 5000 = 25000, I would sell 9 of them for $225,000, and then I would exercise 1 contract and stand for delivery for a cost of $140,000, knowing I could probably sell 5000 ounces of silver in a couple of months for $40 per ounce. Free silver.

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  24. Scottj,

    Dude now THAT is a great way to see the commodities complex. Thanks a lot for the link, it's already on my bar.

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  25. Nigel: Thanks for joining the party.

    Eric: Yes, that is an ORD. Expect some follow-thru now, down toward 540 and maybe a shade lower.

    Can someone help Mr. Hyde? He's trying to find a list of non-hedged junior miners. Anyone have any ideas?

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  26. Turd I have read your blog for awhile.

    Great info and blog, although short and medium sharting must be pretty worthless, when there is a manipulated market. At any time things might change.

    Here comes my point. Just go long, own physical and mining shares and it don´t matter much what happens short term. Long term it will, thanks to fundamentals go higher.

    I thank you for the blog, it is interesting to read.

    All these ups and downs have been predicted and I suspect, they are still very small, compared to what is to come.

    Long term it is only one direction and it is up.

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  27. I'm still recovering from the shock that SLW closed in the RED today. How can that happen. In fact I barely broke even today in my miners. How does that happen on a week like this?!

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  28. Yep, the inability of the HUI to hold 560 which should have become support made me decide to sell most of great performing miners today for profit, as well as my losers. It's probably a bigger risk to sell but, looks like a range trade between 540-560, will build positions at 540 and below. Still holding a core position of solid miners.

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  30. Turd, Mr Hyde could do worse than look here

    http://silvergoldsilver.blogspot.com/2011/02/friday-morning-juniors-update.html

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  31. Something just does not feel right. I had a strong urge to sell my miners today but didn't. I hope did the right thing not selling.

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  32. Reefman take a look at commodities shares in general. Absolutely hammered today, dragged down by the broad index dropping. SLW got off lightly.

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  33. @oldNavy. I think this post is the one you're talking about.

    Basic premise: March OI could go so high, there's no realistic way Blythe can cover those standing for delivery. At that point, COMEX and SLV lose all credibility and the SLV price completely dislocates from physical.

    It's looking more and more like we may get to find out. My target for potential armegeddon is about 20K contract (100M oz).

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  34. Ok. So you all read Franklin, right? (http://silver-and-gold-prices.goldprice.org/)

    Here's his take on silver (and you all know I'm a PM bull, but expecting a short-term correction)....

    "Stick a little note up on your mirror to remind yourself that stocks and the SILVER PRICE trend together. When the stock market breaks, silver won't be long behind. (Whoa! No fiery emails, please, silver lovers, I am only talking about silver's performance relative to gold. When investors are risk-hungry, they buy stocks and silver. When they are risk-fearful, they sell stocks and silver and buy gold. I don't make the facts, I just report them.)"

    Thanks for all your comments, but I've closed my trades for the time being (obviously not the physical).

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  35. @JoeJost -

    That last message you posted made me really wonder about the 50,000 OI number for March.

    If your analysis is correct, people could just let some of the OI contracts expire without acting upon them and still close the "gap".

    I'm amazed because I just looked at TF's posting of the CME report. When you look at May 2011 Silver contracts, the OI is about the same March. So, the contracts are getting bunched up and coming down the tracks in multiple waves at the Comex.

    About the miners....
    Does anyone have a spreadsheet that shows the amount of hedge positions owned by the miners?

    If I understand Dan Norcini's "Commercial Signal Failure" posting correctly, the commercials basically hedge future productivity in order to leverage and capitalize in the present.

    Since Silver has really gone ballistic in the last nine months, the hedged miners will not ride the same wave of future profitability that a miner without much of a hedge position.

    In the event of a disorderly upside trend, the weaker commercials should not experience the same rise because people in the know will not buy a company that is in jeopardy of going bust due to their hedged position.

    I am assuming that both gold and silver miners are in these camps.

    However, I can not find a list of the companies with disclosure of the amount of hedging they were doing in the futures and options pits.

    Any comments anyone?

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  36. The clive maund links are 3 days old. no new news there.

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  37. I guess Clive's trying to figure out what happened...

    SE

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  38. Silver now at $33... not too bad. Think I'll go buy some.

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  39. I checked all three of my PM dealers today as I wanted to see how frenzied it was. It was. My Boise observations for anyone interested in the physical markets. http://thecivillibertarian.blogspot.com/2011/02/on-groun-in-boise-town.html

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  41. Flowers quoting Franklin: "...When investors are risk-hungry, they buy stocks and silver. When they are risk-fearful, they sell stocks and silver and buy gold. I don't make the facts, I just report them.)"
    -----------------------------------------------

    I understand the traditional risk on/off trade with equities but doesn't it seem counter-intuitive when investors are risk-fearful that they would sell PMs? Don't PMs rise when there is unrest and fear? How did they get lumped in with the equity/fear trade?

    I guess they will decouple if the fear becomes systemic instead of a simple trade-fear?

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  42. If anyone is talking about Technical Analysis, Fundamentals and overbought situations, look at the damn Stock Market. It has been going up without any healthy correction and is on a runaway pattern. Everything but Oil went down today, because of the Libyan crisis. Remember Egypt? Only one down day and the rest were all business as usual. In fact the market started to go higher after that while they were still in crisis.

    Here is why I think the Silver/Metals market will keep going up....

    1. Massive Silver Short to cover by Blythe Masters - Sort term impact but a huge one.
    2. Ben Bernank will Print More $$ - The Fed will print a lot of money to slow the rise of interest rates and that will be terrible for the dollar so you will want to own the precious metals.
    3. Civil unrest in the Middle East will keep the price of Oil higher.
    4. China, Russia and India buying Gold to hedge against the US Dollar and Inflation.
    5. China may demand that the G-20 accept its proposal to remove the US dollar from its privileged role as the world's reserve currency.
    6. "As gold gets more and more expensive, there are a lot of people who cannot afford to buy an ounce of gold anymore. So they take what's left of their paycheck and buy silver" - Peter Schiff

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  43. @CO_DAN

    Thanks! So, that confirms my understanding of what you said. Looking at today's numbers and giving credence to the WB scenario, it looks like we're going to be above, maybe way above, 20000 OI on Friday.

    I think I'll play it safe and exit my SLV APR calls before then and buy SVM calls instead.

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  44. JP Morgan (JPM) stock was down 2 points today, from 48.00 to 46.01, or a shocking 4.15%, considering its usually small daily spreads. (Goldman Sachs (GS) was down 3%.) Thanks to the guy this morning here two or three threads ago who recommended shorting it!

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  45. @ Roger Knights - I hope you covered your Shorts today. I would not hold that position long.

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  46. How much do we think managed money has come back into the silver market in recent weeks? (Aside from the WB Group, that is.) Those are the investors that will flee on fear when the stock market turns down, not you and I, but they could have a big impact on price.

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  47. ewc58,

    I agree whole-heartedly regarding your assessments regarding Clive Maund and Jesse.

    Clive Maund = Shill
    Jesse = Real Deal

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  48. Check this out from Rob Kirby.

    He outright calls the BIS "liars".

    http://news.silverseek.com/SilverSeek/1298394627.php

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  49. I think it's more than just Morgue controlling their silver loss. Uncle Sam needs nervous investors to go to TBond rather than gold & silver when there's turmoil so they have double as much incentive to rig it today and the coming days.

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  50. @oldNavy: I'm toying with the idea of playing some way-out-of-the-money calls AND puts tied to spot next week, especially if 20K+ stand for delivery.

    Unprecedented volatility -- One goes worthless, the other increases x10.

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  51. Antrobus and Ginger, thanks for your comments on CZN (aka the lottery ticket).

    ScottJ, did you post some commnents on CZN? If so, could you repeat them or point me to them? Thank you.

    Am I slow or are others having trouble keeping up with all the comments here in Turd's blog?

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  52. @turdle,

    I thought it was just me who was slow

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  53. @ Spencer and others - regarding the miners today:

    My thoughts...just blogged about this http://mattjohnsontrading.com/

    I interpret today as two trading days wrapped into one. The morning session played out according to what yesterday’s action would have looked like had the market been open. The afternoon then played out according to today’s action.

    In the end, the market gives us what it gives us. Silver and most other commodities were hammered down by Blythe and the usual suspects overnight. The algos were then triggered into sell mode. Silver did then recover slightly after the COMEX close this afternoon. The fact is silver is still $33/oz and it took a ton of firepower today by the shorts to restrain it to this level.

    Many that just had to get in given silver’s moves over the weekend are sitting through some pain tonight deep in the red as day traders or those that have large gains that held over the weekend sold into the buying. Those that bought at the top today may have even puked out of their positions same day.

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  54. Regarding Clive Maund, he's a freaking duchebag, a real shill dipshit. He belongs in the same category as Jon Nadler. Anyone that has been in the PM market for a while know these two assholes work for the bad guys. Sorry for the rant and the unprofessionalism but if anyone new to the PM market would take the time and read some past posts by these two assholes they would figure out their game real quick.

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  55. @everyone bashing clive maund

    No one should take any one person's word for anything in this market. I read a lot of sites and assess the validity of the various positions of those I respect and make my decisions accordingly. I read maund but don't always agree with his assessment, or perhaps agree with his assessment but not his timing.

    Maund has provided some solid mining stocks that have done well although he's not 100% correct.

    Regarding his latest gold and silver updates, he quickly revised his outlook in one of his articles for paying customers.

    Regardless, you should use whatever tools you are comfortable using to make money in this treachery we call a market.

    Turd's blog is the newest addition to the collection of sites I read. It's very specific and he always comes with a sensible point of view but he won't always be right either.

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  56. Nice start to the day in Asian trading for silver.

    Looks we are all fans of Jesse here. As for me, I like his "Madame Le Moderateur"! (Turd could recruit her to police the comments board here in Turd Town?)

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  57. WineGuy,

    Agreed. I've read Clive Maund's stuff over the years that when I see someone posting about "how he called it", to realize that the person is either a neophyte to thew PM markets or is easily led.

    Nadler, Christian, ... there's a bunch of them. I even lump David Morgan amongst them.

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  58. I seems to me that they have pulled the pin on liquidity to bring down the entire commoditiy complex. Look at copper, wheat, corn, soybeans etc. The dow down almost 200 points. This attempt to undermine the buyers of size in silver is only partially working, as silver is still holding ground. Some higly leveraged late players have been whacked, but the majority seem stronger than that. It smells of a desperate, last ditched attempt. This is all very interesting. Slightly terrifying, but very interesting.

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  59. Since the discussion has shifted to a relative comparison of silver or gold against other types of investments, I have another nugget to post.

    If you go to www.stockcharts.com and enter "silver" in the search box, you will see $silver come out of the engine.

    If you put $silver in the search box, you will get a curve of silver continuous contract price over the past few months. You can expand this to several years.

    The best part is that you can enter comparisons and the server calculates the graph for you.

    I interpret (someone please chime in and criticize if I am not correct), the comparison charts as a reflection of the relative demand between the two commodities.

    For instance, $SILVER:AG would yield you a comparison of the silver price against First Majestic. You find that the silver price ratio to AG has declined steadily over the past two years from around 10 to around 2.25 now. Gee, that seems to be about a 50% fall in stock relative to the precious metal.

    For instance, gold vs. silver is $GOLD:$SILVER.
    The pre 2008 crash ratio was around 50. The ratio was then holding around 80, fell to 70, then plunked down from 65 to 45 and is now at 42. When you put the Slow STO curve, there seems to be a favor of silver over gold.

    $GOLD v. SPX (S&P 500 Large Cap Index)
    Look at the Slow STO...the crowd is favoring gold over the SPX.

    $USD v. $SILVER shows current favoritism of silver over fiat currencies (nothing new here, we already knew that... or at least the people here did... Jim Puplava doesn't...lol).

    Silver v. 10 Year UST bond yield (which is a sample of the pressure to buy silver against the pressure to buy UST's. Silver is in a significant rise against US Treasury YIeld.

    Interestingly, Silver is also favored over JPM shares. See "$SILVER:JPM"

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  60. I think we see a large decrease in open interest later this week. Ofc the number will be higher than December, but not at a huge breaking point. You can pull up a report from CME showing OI a week before first notice day at the end of Nov. It was around 40k. Later in the week it dropped to 11k or so. Cheers to hoping the longs stay resolute and stand for delivery :)

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  61. If the BoS want to keep BM off balance and reeling, they will keep up the attack tonight. I would not worry about the mining shares. It is all part of a picture they are trying to paint. Just BTFD! Don't think yourself out of the correct position. GLTA! Love the blog. Love the Turd.

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  62. @ Matt

    Regarding Miners....

    I read your blog and added it to my watch list. I agree with you on the "two days in one" concept. Next time I will have learned my lesson regarding stocks that come out of the gate up 7%. Sell and wait and see.

    My question is, looking at previous highs in SLW and PAAS it is clear that they are way undersold, lagging, and have a lot of catching up to do. When will they get back up to parr with where they should be considering the price of silver, or won't they? Will the presidents day $1 up be forgotten?

    Everyone else feel free to chime in....

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  63. Hey, what's up with agriculture? Did the banks remember that people have to eat and are shorting? ZH called for a surge in rice, and we are seeing it plunging... anybody with an entry point in mind?

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  64. So what's the story with Rhodium? It walked off a cliff from $10,000/oz during the 2008 crisis down to $1,000/oz, and now sits at $2,500 oz. Just read some articles claiming it is the rarest metal on earth and is used in cataltic converters and jewlery.

    Why has it only recovered to $2,500? Is the auto-industry still in the dumps?

    30 year Rhodium chart:
    http://www.kitco.com/charts/historicalrhodium.html

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  65. SSJ,
    what you're describing is a facet of technical analysis called Relative Strength analysis. It has a strong following in the stock market, particulary when comparing one stock's performance to its sector or the market overall.

    Another neat thing you can do is to compare silver's performance in different currencies, by using the ETF's that track particular currencies (e.g. FXA, which tracks AUD, or UDN, which tracks currencies apart from USD, or FXE, which tracks the Euro). It's also good for tracking the performance of commodities in general in different currencies. GCC is a broad commodity ETF, nwhich is priced in USD. If you want to see how commodities are doing in EUR terms, for example, you can do search for GCC:FXE. Also try GCC:FXY. You'll see that commodities are rising in terms of all major currencies, which is a sign of a true bull market

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  66. Has anyone heard of or have an opinion on a company called Comstock Mining Inc?

    Bob Moriarty of 321Gold had a positive article about the company several months back.

    Here's a link to the article. http://www.321gold.com/editorials/moriarty/moriarty102910.html

    Any feedback is appreciated.

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  67. to quote Adam hamilton who I totally respect.

    Silver is radically overbought and is exhibiting the technical signature of a terminal surge before a plunge.
    And plunge silver does after these terminal surges, by an average of 30% over less than 6 weeks! The average first-weekloss after one of these major tops is 11.4%. If silver falls this far this fast again, the silver stocks including SLW will get obliterated.

    The average two-week (10 trading days) loss after a major silver top runs 17.5%. Silver could really be in for some rough sailing here, its corrections are wickedly brutal.

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  68. @Saul - If TPTB/EE are pulling plugs like that (which Harvey Organ's blog already stated that the ECB was providing unprecedented levels of liquidity into EU banks), then this is about the consumption demand out stripping even the ability of the paper-hanging banks to print more.

    I guess the $SILVER:$UST10Y tells it all and so does $GOLD:$SPX.

    Would you rather own 1 oz of gold or a paper that says you own SPX?

    Gold wins right now.

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  69. About silver, isn't the option expiration tomorrow? If some option holder calls the future at strike price, say everybody until 33, we would have even more March futures holders standing for delivery and that may be a problem. I think it would be logical for them to drive the price down as much as they can until option expiration and relieve their short position from then on disregarding the price.

    Just a though.

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  70. and to add to that, he says that silver has decoupled from gold now and is latching onto the spx. If the spx corrects so will silver.

    The problem with this SPX/silver correlation is once thestock markets roll over, silver plummets like a rock. Fallingstock markets scare traders who bought silver near highs asit was surging, and they rush for the exits with a vengeance.This dynamic is one of the key reasons silver’s correctionsoff of major interim highs tend to be so violent. Silver tendsto plunge by 25% to 35% in just 4 to 6 weeks!


    Keep your eyeballs open. Remember things go down as well as up, even more so with with the Silver beast.

    Safe trading guys.

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  71. Pat and other TRE followers:

    I follow Eric De Groot's blog, because he's one of Santa's CIGAs. His stuff is often prescient but unfortunately often quite incomprehensible!

    Today's he posts a chart of TRE, under the title Divergences Convey A Message. His only comment is "Interpetations left to the readers". I have in the past tried to ask Eric questions but he never answers.

    Anyone have a stab at interpreting the chart?

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  72. Does anyone have an opinion on investing in micro/small cap silver stocks? I have been looking at a few that peaked around the 2008 "panic" and have dipped since then. Here are some of them:

    KLSVF
    CMCXF
    ECUXF

    Obviously I know the risks of trading stocks under a dollar...blah blah blah...I'd rather lose money for $400 worth of KLSVF than on polo shirts/starbucks/gas.

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  73. Turd,

    thank you for providing all that you do on this blog and for attracting such a wonderful collection of commentators. I have really enjoyed all that is here.

    This is my first post here and with that I would like to ask a question. If you are to busy to answer I will understand.

    At KingWN there was a post there that stated the Asians were buying SLV with the purpose of taking physical delivery. This was stated by an un-named London trader which I believe most know the name of. JPM is the custodian of SLV so they hold the silver backing SLV at their storage facilities in England (fox in the hen house).

    Anyway here is my question .... the last 2 trading days SLV has done 50M & 46M shares ... is it possible that the Asians are buying SLV to cut off JPM from raiding SLV physical to help themselves with the COMEX squeeze .... I could be way out in left field with this but it has been on my mind for awhile .... thanks again

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  74. Hi, perhaps this is a dumb question, but when BM raids silver why does gold follow suit and also drop precipitously? How do we know for sure it is a raid and not just gold and silver both correcting for an outside force?

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  75. @Turdle GG,

    I was going to take a crack at this and saw this post on his blog: http://edegrootinsights.blogspot.com/2010/06/comments.html.

    Apparently the indicators are his own proprietary indicators and he doesn't explain what they mean. However, if you look closely, you'll see that the red one is going down, and the green one is going up, which is very significant.

    Disclosure: Long green, short red

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  76. Chin Music,
    check out Harvey today. He doesn't make the connection to JPM, but certainly thinks buyers are taking physical out of SLV:
    "I can now safely say this: when oz are removed from the GLD or SLV it is real assets that are removed and they head for China.
    If the inventory is added then it is just "paper" added without any physical presence."

    http://harveyorgan.blogspot.com/

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  77. Xaritas,
    Eric keep his cards close to his chest, doesn't he!
    Given the small hints he gave in his response to the questions, I'm going to interpret his chart like this:
    Price has not yet broken out (see almost horizontal red line across the top of the price panel) despite the fact that "Pressure", denoted by REV, has been building up. Pressure has also not yet broken out, but it's getting close. A pressure breakout would likely lead to/be coincident with a price break out.

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  78. Turtle GG / Xaritas, Re TRE/TNX

    I'm a little perplexed to what Eric is trying to say as well but looking at the chart it looks like TRE/TNX is at a reflection pt. It either breaks down to the $5.85 - $6.00 area or it breaks up through resistance. The timing for either appears to be now. Disclaimer, I own TRE/TNX and purchased more last week.

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  79. thnx Turdle GG, you are most kind ....

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  80. Chin: First, can I call you Ricky? "Give em the heater, Ricky".
    You're very close. IF SLV dos own some physical, redeeming shares for bullion would be a very efficient way of making acquisitions.

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  81. Apartment guy,

    Your buddy is one who may not consider the big picture enough. Yet even if his unlikely prediction were to pan out, here's how most PM people would now handle a 30% drop in Ag:

    Physical Metal: this is known as a Back Up the Truck buying opportunity. A BTFD from Heaven.

    Miner shares: that's what sell stops are for. Yeah, silver shares are volatile as hell, tell me something I don't know (from pain :-). You sell out, then buy back in at a lower price per share for miners you were happy to pay lots more for. Many of us did this in the collapse of miner shares in 08/09 and cleaned up.

    Awareness, resolve, conviction of purpose in the average joe and jane. That's what the EE is up against now.

    For the metals: start counting your holdings in ounces, not "price". Buy metals and miners month in and month out and the rest will sort itself out. The demise of fiat is the rise of PM, and silver's solid fundamentals will take it much higher over time. Grab it while you can at anywhere near these prices while your frns can still buy it.

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  82. Chin, be sure to read this, too:
    http://harveyorgan.blogspot.com/

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  83. I like Harvey but I think he almost has an irrational bias against SLV due to JPM's involvement. On the one hand he says there is no silver there but on the other hand when a reduction in inventory is reported he says surely it went to China. Both can't be true.

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  84. Reading off of Gramercy News, what is the possibility that a large portion of the silver sales at the US Mint went to JP Morgan in order to help them find as much silver as possible for delivery? I suspect they're trying to get it ANYWHERE they can find it.

    SE

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  85. Hello all.could some tell me where i can get free streaming chart on comex silver.
    thanks

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  86. @napa698

    I was tipped off at this chart yesterday and can't stop watching it...

    http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChart.aspx

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  87. flaunt, I think SLV is a topic up there with multiculturalism for many in this crowd. If Harvey is biased, ya gotta say he has the right reason: the JPM and the rest of the EE has used GLD and SLV to not only shunt rising desire for PM portfolio exposure from the real to the phony, and then went and used those gains to further rig the market and fleece we plebs. If I don't like Blythe & Jamie, why would I put my money at their disposal- - to hurt the value of my physical?
    I wouldn't be caught dead owning either of those P's o' S. But that's just me.

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  88. napa698, sign up for a demo trading account with oanda or one of the spread betting (CFD) firms.

    This will give you access to live prices at no cost

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  89. Flaunt,

    I'm glad that I'm not the only one that has seen Harvey's contradictions and quite frequently outright error's in his writings. I don't think it's intentional. I just hope that it is not an early sign of senility.

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  90. Must read at Jesse (apologies if already posted):

    link

    napa698, Netdania is a good source. It's silver spot price tracks the live XAG/USD quote on OANDA very closely. Netdania also shows volume.

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  91. Turd ...

    I used to throw the high hard stinkin' cheese ... also had glasses like that back in 1967 while pitching HS baseball ... hated them but had to do it ... nearly peed my pants laughing when I first saw Major League had somehow based a character like me ... who knew?

    Thnx for the insight ... Chin

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  92. Jesse has posted, here's the upshot. See the full piece at http://jessescrossroadscafe.blogspot.com/ :

    "Did we mention that this is an option expiration week at the Comex? Tomorrow is the day.

    Silver was reaching for a definite high note while Uncle Thug was on vacation yesterday. And the sell off in equities helped to shake it back down on profit taking to the strong hands. So far normal market action.

    If you do not care for volatility you will not like silver. It is tough to sit it out, because if there is a break in the commercial positions known as a 'commercial signal failure' the price could easily go up several dollars per day.

    In this case given the insiders who are short, and the semi-official backing which I suspect they have, I doubt they will fail all at once, but in stages and over time, and so the price will continue to creep higher until the market clears."

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  93. I would still like to know if AGQ will plummet in the event of a "commercial signal failure" aka comex default?????

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  94. IPO filings at hoover.com .

    Banksters will pump the market up enough, for long enough, to launch these. Après ceux, le déluge.

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  95. According to the prospectus for AGQ, it trades contracts at all exchanges. I suppose (hope?) that price discovery for silver will still be taking place somewhere in the world, even if the COMEX goes into a coma. So if it is well-managed, it should continue to do its job. However, I definitely consider the possibility that it will go to $0, which is one reason I just applied to add option purchasing to my brokerage account. I am going to sell my long positions and use options going forward.

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  96. I want to thank all that stopped by my site. (Shameless blogwhoring alert) I had my best day for hits.
    Thanks Turd, while you can't eat silver or gold/ or stocks and bonds. I'll get a few with good food stockpiles and they'll have food to eat, water to drink and all the other stuff and be self-sustaining.

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  97. Has any else counted the number of runs that the EE have tried at blowing gold under 1395?

    Not one of the runs/raids has worked.

    I count more than 18 attempts to sell down the gold price and blow through 1395. The only one that got to 1395 was this morning after Hong Kong closed. It blew back up through 1400 within 2 hours in london.

    I get the distinct feeling that the Asian and Middle Eastern power knows that the EU, UK, and USA sellers have to punch down the price.

    So, they're all just sitting and waiting and choosing where to enter.

    But, once entered, they enter hard and with conviction.

    The disorder was setting in yesterday. That disorder was not helpful to many who want to go long on the physical gold and silver.

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  98. Turd and Trader Dan starring in a Western over at Trader Dan's blog, getting a little respect - check it out

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  99. Nice one Turdle. I've often wanted to deal with "dawdling service" with a sixgun myself.

    The show gets even better if you pretend that it's Blythe behind the bar.

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  100. Looks like silver is currently forming a symmetrical triangle. A breakout could happen on the upside or downside so be prepared.

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  101. Turd and Hyde, I remember Jason Hommel used to keep an online database of all the miners and their hedgin information. This was a year or two ago, so I'm not sure if it is still updated and free, but it was back then. I'll try to find the link and post it here.

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  102. Sprott: http://www.youtube.com/watch?v=T2w7wGwUZ9Y

    His last sentence is an eye popper.

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  103. @ flaunt

    On the other hand, people don't seem to mind that Sprott's Silver trust is managed by HSBC? Go figure.

    At any rate, it seems that money and credit is easier to find than silver right now.

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  104. I especially like the sequence of movie posters on Jesse's site...

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  105. Ugrev: He is right, and the EE knows that we know that they know it is over.

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  106. Things should get interesting here with silver at around 10:30-11:00 central time...break out the popcorn or beer and sit back and watch.

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  107. Flaunt:
    Re: Harvey & SLV - It's actually not a contradiction, but it is a little convoluted. SLV does have physical metal, but it's not theirs - It's the Bank of Englands, and it's not really the Bank of Englands, it's whoever the bank of england has recieved deposits from, which are then leased to SLV. So technically, the metal IS there, but it does not belong to SLV. Thus when inventory leaves, he attributes it to the Chinese taking possession via SLV, which really means taking posession of metal that isn't SLVs to give, but if they were to admit that then the game would be up. Similarly, when new "silver" is added to the "vaults", it's not metal moving in but just more paper promises which again, as long as the custodians think they can get away with it will still be callable by someone tendering SLV shares, but again it does not belong to them.

    Thus SLV has no metal of it's own, but is able to distribute OPM (other peoples' metal) to those tendering SLV shares for physical.

    Convoluted, but given how much rigging is happening I have a hard time proving him wrong either.

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  108. RE: Harvey Organ and SLV

    FWIW, and with apologies if this has already been covered and I missed it, here is the url to an explanation of the "China Short Theory" which posits that China loaned the US 300m oz of silver and is now trying to get it back via the COMEX. I saw another version of this somewhere that suggested China might be redeeming ETF shares as a way of getting their bullion as well.

    http://www.thetradingreport.com/2011/01/19/an-interpretation-of-the-china-silver-short-theory-and-fractional-reserve-bullion/

    I have been trading SLV options because they have a very liquid market and offer some very good profit opportunities, but I have had the same concern that Harvey has, that they don't really have the bullion to back the shares. It doesn't matter to me as long as there is a market for the options, but with more and more talk about whether that is the case I think I will find another vehicle to trade.

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  109. lord koos, uhh, here's 2 key difference:

    SLV, GLD: Bogus metal holdings
    PSLV, PHYS: Real metal holdings

    SLV, GLD: Jamie and Blythe
    PSLV, PHYS: Eric Sprott and John Embry

    Not much of a choice there for most

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  110. checking out ZH briefly and a poster brought up an interesting point I hadn't considered/read about in any posts - does anyone know whether Egypt/Libya, etc., have any silver holdings and if so, are they being 'borrowed'? simple answer might be they don't have much/any but don't know for sure...

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  111. I have a really nice, new thread for you. I think you're going to like it.

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  112. Well I have a problem when people start claiming to know what the trust has in inventory and who it belongs to, etc. If they know then they should product evidence. If people want to avoid it because they don't trust it, that's reasonable. I really doubt whether anyone has done much homework on any of the trusts. It's all based on reputation. JPM has a bad rep and Sprott has a good one. That's about as deep as it goes IMO.

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  113. Thanks Turd! I love thread... :)

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  114. It never ceases to amaze me that some people will post BS that can be disproved with just a mouse click or two. HSBC has nothing to do with managing Sprott's Physical Silver Trust or any other Sprott fund.

    =========

    "The Sprott Physical Silver Trust’s bullion holdings are stored and fully allocated by the Royal Canadian Mint in Ottawa, Canada. The Trust’s silver is segregated and fully-audited to ensure the highest security and assurance. The Royal Canadian Mint is NOT a financial institution – it is a Crown Corp. of the Government of Canada and does not lend out bullion held in its vaults."
    http://www.sprottphysicalsilvertrust.com/WhyInvest.aspx

    For those interested in learning the facts about the fund here is the Prospectus: http://www.sprottphysicalsilvertrust.com/documents/Sprott_Physical_Silver_Trust_Prospectus_US.pdf

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  115. Apartment Guy....the Moneychanger said this a few days ago:

    "Stick a little note on your mirror to remind yourself that stocks and silver trend together. When the stock market breaks, silver won't be long behind. (Whoa! No fiery emails please, silver lovers, I am only talking about silver's performance relative to gold.)
    When investors are risk hungry, they buy stocks and silver. When the are risk fearful, they sell stocks and silver and buy gold."

    I guess owning both is sort of like having your own hedge fund going.....

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  116. Adam Hamilton sounds like he is going by historic silver moves. He doesnt' seem to realize that we are in a whole new era right now. I imagine that he was saying the same thing when silver when silver spiked last year

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  117. Re: Sprott & HSBC, my bad, it was a silver ETF that HSBC is custodian for. Sorry for the mistake.

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  118. You know guys we are in a different era now. Even if there is a short squeeze going on things come back down to earth. It is like saying houses prices only go up and it is different this time. In economics one of the first things you get taught is that people have short memories.

    Those of you who think silver is going to 50 or a 100 very soon are no different from anyone buying their house at the peak. Please do not flame me, I follow with interest what is going on here but I keep a healthy sense of suspicion.

    As far as Adam Hamilton goes I subscribe to his PM newsletter, he is not really my buddy but as a long time PM trader I respect his opinion.

    For those of you who are interested

    http://www.zealllc.com/intelligence.htm

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  119. Blyth,Blyth! Come on sweetpea, time to get up

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