Monday, December 24, 2012

Wash, Rinse, Repeat: Is The Latest Pullback In Gold/Silver Over?

You play to win the game...You don't play to just play it  - Herm Edwards, when he was head coach of the NY Jets LINK
In order to win the gold/silver game, spotting critical information and knowing how to use can give us an edge over the rest of the market.  Using the COT report as source of information has proved useful over the last 10 years.

Last  week I suggested that the COT report might show that hedge funds have started to chase the momentum of the gold market lower by shorting gold contracts, while the bullion bank cartel used the extra selling from hedge fund short-selling to cover their shorts. I suggested this dynamic would likely mark a bottoming of this latest bullion bank paper market take-down of the price of gold/silver.

The CME/Comex Commitment of Traders report released Friday, which shows long/short open interest positions by trader category through the previous Tuesday, shows that indeed the hedge funds began to short Comex gold futures in decent size and the bullion banks continued to aggressively cover their short positions.

We've watched the banks cover their shorts quite aggressively for the past few weeks, but when the short-covering by the banks continues, aided by additional hedge fund shorting, it has over the past couple of years signaled that the metals are bottoming and getting to move a lot higher.  You can find my analysis, with data links, here:  LINK

It might not happen quickly, and this next week or two is usually characterized by low-volume, directionless trading, but it is likely that gold and silver are now set up technically to move a lot higher.  As we all know, this technical set-up is reinforced by unprecedented fundamentals.

I've been doing my best to not gloat about the Denver Broncos' season, but it now looks like the Denver will likely emerge as the odds-favorite in Vegas to win the Super Bowl after that total thrashing San Francisco took last night (SF had been the prior odds favorite, Denver was #2).  Have a Merry Christmas/Happy Holiday. 


  1. I read basically the same interpretation as you are giving here somewhere else recently and, like you, their analysis was very in-depth. Wish I could remember who because they were discussing all the times in the recent past we have had the same "event" as now and their conclusions matched yours. Good, insightful analysis once again. Thanks for all of your analysis-- it is always a pleasure to read it. A happy Christmas holidays to you and yours!
    Justin from Canada

    ps all I want for XMas is for this to play out so the juniors can raise some $$ and us geologists can get back to work!

  2. Anti-corruption drive triggers frantic property dump from officials

    Real estate agents in provinces such as Guangdong and Jiangsu have been frantically trying to push deals for a torrent of second-hand flats suddenly released on the market – many of which belong to government officials, the Oriental Morning Post reported on Monday.

    With an imminent state-led corruption crackdown looming, nervous Chinese officials - some of whom own multiple properties - are swiftly dumping assets via private channels such as intermediaries.

    Property agents have reported receiving mass produced text messages such as “Eight sets of hard-to-find flats, owner selling all at once".

    “What’s strange is that these government people are anxious enough to call us requesting an urgent search for intermediaries to help sell their property holdings,” said a Jiangsu property manager from a financial advisory who went by the alias, Yang Zhi.

    The report emphasised this was only the "tip of an iceberg", suggesting the possibility of more asset sales by anxious officials as the state government kicks its anti-corruption drive into high gear.

    A few members of the National People’s Congress have proposed the complete removal of “property privacy” for civil servants in an effort to tackle huge gains from "grey income".

    Grey income is often left unreported by wealthy individuals and government officials due to various loopholes such as supervisory weaknesses, rent-seeking and price distortions in the system. Government officials, for example, can transfer ownership of property titles to relatives and friends to avoid having to declare the property.

  3. I like the Broncos here.
    "Plan A" seems to be working out quite well for
    Mr. Elway. I for one hope Vegas calls it right!!
    Go BRONCOS!!!!!

  4. Crony Capitalism’s Power Couple

    Where is Phil Gramm hiding? The former Republican senator from Texas, who wrote the radical banking deregulation of the 1990s and was rewarded for his efforts to enrich the banks with a plum job at Switzerland-based UBS, has not been heard from since his bank got nailed by the G-men. Or, as The New York Times put it, UBS now has the distinction of being “the first big global bank in more than two decades to have a subsidiary plead guilty to fraud.”

    Surely Gramm, who retired from the bank last year, must know something about the nefarious activities conducted over a time span when he was helping to manage the firm. This latest scandal, involving the rigging of a major trusted banking interest rate, might finally test the theories that he has long written into law that assume banks are best when regulated by themselves—a now obviously dumb idea.

    As The Wall Street Journal reported on Thursday: “U.S., U.K. and Swiss authorities alleged a vast conspiracy led by UBS AG to rig interest rates tied to trillions of dollars in loans and other financial products, indicating the practice was far more pervasive than previously known.” But what did Gramm know about this criminal behavior at a bank he helped govern, and when did he know it?

  5. Bagmen Not Statesmen

    What has been going on in Washington, D.C., since the financial meltdown of 2008 has been a disaster for the country. Taxpayers bailed out crooked, incompetent bankers while tens of millions lost their homes and jobs. The bailouts have cost trillions of dollars, and they’re not finished. The Federal Reserve has set a key interest rate to near zero percent until 2015, and it is printing $85 billion a month to prop up the banks and our own government. The Fed calls this little operation “open-ended.” No one has gone to jail for causing this enormous hardship on ordinary Americans, and not a word is spoken in the halls of Congress about stopping the bailouts or bringing criminals to justice. This is immoral, disgusting, repugnant, nonexistent leadership.

    This could have been handled in 2008 with the debt wiped clean. We should have only protected depositors. Bankers, bondholders and shareholders be damned—that’s capitalism. It would have cost about $6 trillion back then, and we’d be on our way to a real recovery by now.

    Our own elected leaders turn a blind eye and a deaf ear to fraud and crime year after year. The government also allows the banks to value assets at whatever they think they will be worth in the future. This government sanctioned accounting fraud has been allowed since April of 2009. Meaning, the Fed can’t print money fast enough to fix the gigantic mess. Meanwhile, the Federal Reserve continues buying $40 billion a month in “toxic” mortgage debt created by the bankers. This stuff was supposed to be “Triple A” rated debt, equal to the “risk free return” of Treasury bonds. Imagine the government selling you Treasury bonds and later tell you they are “toxic.” Wouldn’t that be outright fraud? You bet it would, and yet not a word from our leaders about the Fed buying this junk at a rate of $40 billion a month to infinity.

  6. GOP and Feinstein join to fulfill Obama's demand for renewed warrantless eavesdropping

    The California Democrat's disgusting rhetoric recalls the worst of Dick Cheney while advancing Obama's agenda

    To this day, many people identify mid-2008 as the time they realized what type of politician Barack Obama actually is. Six months before, when seeking the Democratic nomination, then-Sen. Obama unambiguously vowed that he would filibuster "any bill" that retroactively immunized the telecom industry for having participated in the illegal Bush NSA warrantless eavesdropping program.

    But in July 2008, once he had secured the nomination, a bill came before the Senate that did exactly that - the FISA Amendments Act of 2008 - and Obama not only failed to filibuster as promised, but far worse, he voted against the filibuster brought by other Senators, and then voted in favor of enacting the bill itself. That blatant, unblinking violation of his own clear promise - actively supporting a bill he had sworn months earlier he would block from a vote - caused a serious rift even in the middle of an election year between Obama and his own supporters.

    Critically, the FISA Amendments Act of 2008 did much more than shield lawbreaking telecoms from all forms of legal accountability. Jointly written by Dick Cheney and then-Senate Intelligence Committee Chair Jay Rockefeller, it also legalized vast new, sweeping and almost certainly unconstitutional forms of warrantless government eavesdropping.

    As a result, Wyden yesterday had two amendments: one that would simply require the NSA to give a general estimate of how many Americans are having their communications intercepted under this law (information the NSA has steadfastly refused to provide), and another which would state that the NSA is barred from eavesdropping on Americans on US soil without a warrant. Merkley's amendment would compel the public release of secret judicial rulings from the FISA court which purport to interpret the scope of the eavesdropping law on the ground that "secret law is inconsistent with democratic governance"; the Obama administration has refused to release a single such opinion even though the court, "on at least one occasion", found that the government was violating the Fourth Amendment in how it was using the law to eavesdrop on Americans.

    But the Obama White House opposed all amendments, demanding a "clean" renewal of the law without any oversight or transparency reforms. Earlier this month, the GOP-led House complied by passing a reform-free version of the law's renewal, and sent the bill Obama wanted to the Senate, where it was debated yesterday afternoon.

  7. Oliver Stone: Obama a wolf in sheep's clothing

    Published on Dec 28, 2012

    RT's Abby Martin sits down with Academy Award Winning Director, Oliver Stone, and Historian Peter Kuznick, to talk about US foreign policy and the Obama administration's disregard for the rule of law.

  8. Revealed: how the FBI coordinated the crackdown on Occupy

    New documents prove what was once dismissed as paranoid fantasy: totally integrated corporate-state repression of dissent

    It was more sophisticated than we had imagined: new documents show that the violent crackdown on Occupy last fall – so mystifying at the time – was not just coordinated at the level of the FBI, the Department of Homeland Security, and local police. The crackdown, which involved, as you may recall, violent arrests, group disruption, canister missiles to the skulls of protesters, people held in handcuffs so tight they were injured, people held in bondage till they were forced to wet or soil themselves –was coordinated with the big banks themselves.

    The Partnership for Civil Justice Fund, in a groundbreaking scoop that should once more shame major US media outlets (why are nonprofits now some of the only entities in America left breaking major civil liberties news?), filed this request. The document – reproduced here in an easily searchable format – shows a terrifying network of coordinated DHS, FBI, police, regional fusion center, and private-sector activity so completely merged into one another that the monstrous whole is, in fact, one entity: in some cases, bearing a single name, the Domestic Security Alliance Council. And it reveals this merged entity to have one centrally planned, locally executed mission. The documents, in short, show the cops and DHS working for and with banks to target, arrest, and politically disable peaceful American citizens.

    Verheyden-Hilliard points out the close partnering of banks, the New York Stock Exchange and at least one local Federal Reserve with the FBI and DHS, and calls it "police-statism":

    "This production [of documents], which we believe is just the tip of the iceberg, is a window into the nationwide scope of the FBI's surveillance, monitoring, and reporting on peaceful protestors organizing with the Occupy movement … These documents also show these federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America."

    The documents show stunning range: in Denver, Colorado, that branch of the FBI and a "Bank Fraud Working Group" met in November 2011 – during the Occupy protests – to surveil the group. The Federal Reserve of Richmond, Virginia had its own private security surveilling Occupy Tampa and Tampa Veterans for Peace and passing privately-collected information on activists back to the Richmond FBI, which, in turn, categorized OWS activities under its "domestic terrorism" unit.

  9. New documents obtained from the FBI and the Department of Homeland Security by the Partnership for Civil Justice and released this past week show that the FBI and other intelligence and law enforcement agencies began a campaign of monitoring, spying and disrupting the Occupy Movement at least two months before the first occupation actions began in late September 2011.

    As early as August, while acknowledging that the incipient Occupy Movement was “peaceful” in nature, federal, state and local officials from the FBI, the DHS and the many Fusion Centers and Joint Terrorism Task Force centers around the country were meeting with local financial institutions and their private security organizations to plot out a strategy for countering the Occupy Movement’s campaign.

    Interestingly, one document obtained by PCJ from the Houston FBI office refers to what appears to have been a plan by some group, the name of which is blacked out in the released document, to determine who the leaders were of the Occupy Movement in Houston, and then to assassinate them with “suppressed” sniper rifles, meaning sniper rifles equipped with silencers.

    The chilling document in question reads as follows:

    “One identified BLANK as of October planned to engage in sniper attacks against protesters in Houston, Texas if deemed necessary. An identified BLANK had received intelligence that indicated the protesters in New York and Seattle planned similar protests in Houston, Dallas, San Antonio and Austin, Texas. BLANK planned to gather intelligence against the leaders of the protest group and obtain photographs, then formulate a plan to kill the leadership by suppressed sniper rifles.”

    The wording does not sound like it’s some crank Tea Party faction they’re talking about — especially the words “deemed necessary” and the reference to “gathering intelligence against the leaders of the protest group.” Fortunately, in any case, no such assassination campaign materialized in Houston or anywhere else during the wave of Occupy actions across the country, but at the same time, there were never any arrests of whatever organization or individuals that the FBI clearly knew to be planning such a terrorist action against the Occupy activists.

    Commenting on this peculiar lack of action by the FBI and other national anti-terrorist organizations, Partnership for Civil Justice executive director Maya Verheyden-Hilliard says, “The documents we’ve obtained show that the FBI was acting as a private intelligence and protective agency for Wall Street and the banks against people who are engaged in First Amendment-protected free speech activities. Yet here you had a real terrorist threat, which, if the FBI were serious about combating and preventing terrorism it would have acted upon, and it did nothing!”

    Indeed, since 9-11, there have been a number of prominent arrests and trials and even convictions of people who were alleged to have merely talked

    If you look at how the US government viewed the demonstrations of the Arab Spring, and particularly the demonstrations against Mubarak in Tahrir Square in Cairo, they were concerned about the government using police against the demonstrators, who were said to be exercising their democratic right to protest. Only in America is such protest considered to be terrorist activity.”

  10. Thanks for the article. I can understand that with this economy, we need to invest in real gold to hold on to our real money. The question has always been when is the best time to turn that gold into cash. Need to find a good spot to sell gold in denver, but also need to consider when the best time is. Thanks

  11. With the most recent pull back of Gold & Silver, how do you feel about investing now? I personally believe it is a good time to buy gold bullion. Safe in any economic climate. What do you think?