Watching Crude

Wow, what a crazy weekend! Thank you all for your active participation on the blog.

We opened higher on the Globex tonight and we've managed to stay there. I have an April gold last of $1413.40 and a last in March silver of $33.46. Very nice when you consider how much the PMs rallied on the Globex Friday afternoon. You can bet that Blythe would like to claw those gains back but, so far, she's either been unable or unwilling. I suspect its the latter because of what's going on in crude...its up over $1.50. Take a look at this 60-minute chart:

I would not be surprised to see WTI over $100 when I wake up tomorrow. This is significant because we know that instability and unrest in the Middle East have consistently translated into higher PM prices. I need it too, boy, because my accounts a mess and I need to clean it up. Hate to do that on a down day so I'm hoping for a nice, solid UP Monday and Happy Tuesday in which to get it done.

My inbox just exploded tis weekend but I think I was able to get back to most everyone. I don't have time tonight for a full "Turd's Mailbag" edition but I do have a couple of things to pass along...

First, reader Badu took the initiative to set up a chatroom for us until the new site is ready. Here are the instructions for how to access it:
"Thanks!
Ok it's set up, when you want to take control over it just go to www.tinychat.com/ and sign in with username "turdworld" and password "password123" and the link to the chat itself is www.tinychat.com/turdworld.

If you don't like the name I can change it!"

Next, Vineet from India sent this. Pretty interesting:

"hello Turd

This is your humble follower and regular reader from India. I want to share the following piece of news that I stumbled on Yahoo.

I went over the brief communique many times -- if we prune away the other details regarding tax collections etc, the core info reveals that :

1] Contrary to the expectations of most, it is not Mexico or China, but India that has taken the first step towards remonetisation of silver. I noted that these coins are not 'special edition' or 'collecters' items', but intended for general circulation.

2] I would hazard another guess that the Indian govt will bring out silver coins in other [maybe greater] denominations, to replace the paper money notes of INR 100, 500, 1000 etc

3] It seems that India has been aggresively stockpiling silver [ stockpiles had dwindled between 2002 and 2005] and now has the reserves to gradually introduce monetary metals as medium of exchange. This is probably the first step. In time, India may phase out a large part of paper money -- in approximately the same period as some other countries like China, Russia, Mexico also start re-monetising silver.

4] There was another news that Bank of India is now facilitating trade between China & India in Yuan instead of $. BOI is one of the largest public sector banks in India, and other banks will follow its example. Consider that India is now paying for Iranian crude oil in a combination of gold & INR. In 2006, India picked up half of the IMF gold sale [200 tons], the inference being that India was accumulating gold reserves before and has being doing so till date. My point is that the largest Asian economies [also the main growth engines] are gradually but surely detaching themselves from the US $ and towards re-introduction of monetary metals in their internal economies. These seem to be subtle indications that the gold standard is inevitable in the not-so-distant future."

A reader in Virginia passed along some correspondence that informed me that Jim Willie likes to read this blog. Yes, the real Jim Willie! I'm flabbergasted and truly honored!

Lastly, another reader sent me this regarding the situation in WI. Its my favorite, so far:

"I have to tell you: I read your blog daily for the measured commentary and often spot-on analysis regarding silver. As someone who's not a trader or market insider, your plain analysis is greatly appreciated. Occasionally though, when you veer into political discussions, your ignorance is cringe-inducing."

Which is why I so rarely go there....

OK, that's it for now. I'm headed upstairs to watch the Oscars with Mrs. Ferguson and the two little turds. Still can't believe that "Hot Tub Time Machine" wasn't nominated. TF


Midnight EST UPDATE:
I've received several requests that I pass along this information from Ted Butler. Duly noted.
We should all take time to participate in Ted's campaign. All the information you need is listed below. Thanks!

Speak Up and Be Heard

 On several occasions over the past couple of years, thousands of you have taken the time to write to The Commodity Futures Trading Commission (CFTC) concerning the issue of position limits in COMEX silver.  Now the CFTC has solicited your opinion again for what will be the last time.  The current open comment period, through March 28, is the culmination of all the public hearings and commentary over the past two years.  Your comments on silver position limits make a difference.  Private legal counsel and even sources within the Commission have assured me that there can be serious consequences for the CFTC should they ignore the will of the public, when that public opinion is reasonable.

The silver market has been manipulated by a concentrated short position.  You can’t have a manipulation without a concentrated position.  The only effective way to prevent concentration is by enacting legitimate speculative position limits.  The key is to set the speculative position limits at the right level; not too high, so that speculators control the market, not too low as to restrict trading liquidity.

The proposed position limit for silver comes out way too high, over 5,000 contracts.  It’s too high because it gives speculators too much dominance over real world producers and consumers.  5,000 contracts is the equivalent of 25 million ounces of silver.  There are only three mining companies in the world who produce more than 25 million ounces of silver a year.  In addition, there are only a handful of silver consumers in the world who consume more than 25 million ounces a year.  There are hundreds of important miners and consumers who produce or consume less than 25 million ounces of silver a year.  Therefore, it makes no sense to empower any speculator who comes along with the ability to hold, long or short, more than the amounts most of the important world producers and consumers make or use in a year.

The proper level for position limits in silver is about 1500 contracts or 7.5 million ounces.  That amount is still larger than what the vast majority of the world’s silver producers and consumers make or use in a year.  If you agree, please make your opinion known to the Commission.  It’s crucial that you do.

Here’s my letter.  Use any part of it or just the last sentence on a copy/paste basis if you wish.

Dear Chairman Gensler and fellow Commissioners:

I urge you to approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers.   I would ask you, however, to readjust the proposed formula in silver.  The current formula would result in a position limit of over 5,000 contracts for any single speculator, on an all-months-combined basis.  5,000 contracts is the equivalent of 25 million ounces of silver.  This is too high of a threshold in light of the realities of the world silver market.

There are only three mining companies in the world who produce more than 25 million ounces of silver per year and only a similar number of industrial consumers using more than that amount.  Any speculator holding an amount of silver derivatives greater than what 99% of the world’s silver producers and consumers make or use in a year would have inordinate pricing power.  The purpose of speculative position limits is to prevent such a circumstance.

Please institute a 1500 contract (7.5 million ounce) position limit for silver.

Respectfully submitted,

Ted Butler

The instructions for submitting a comment can be found here http://comments.cftc.gov/PublicComments/CommentForm.aspx?id=965  All that is required is your first and last name and email address (repeated) and to use the validation code before submitting your comment. Your email address will not be published, but you will receive a confirmation that your comment was recorded. If you have difficulty entering your comment electronically, you can mail it in, but I just did it and I’m not a computer maven.

Please remember that your comments and name will be published for the record. Accordingly, please be professional and limit your comments to position limits, the issue at hand. Also, please comment only once, but be sure to comment. It is important that the Commission knows your opinion on this matter. You can view the public comments on position limits here http://comments.cftc.gov/PublicComments/CommentList.aspx?id=965