February 22 2013
Well, I'm guessing that we saw the bottom in all four precious metals during Far East and early London trading yesterday...as there was no price activity worthy of the name during the Comex trading session that followed. If I'm wrong, we should find out shortly.
But where we go from here...and how fast we get there...is the other $64,000 question without an answer as of yet. As Ted Butler has already pointed out...JPMorgan et al spent the entire engineered price decline buying back short positions and going long...as the technical funds were forced to sell their long positions, and have now loaded up on the short side.
Unfortunately, today's Commitment of Trader Report due out later this afternoon, won't show what happened during the final two days of this sell-off...as the cut-off for today's report came at the close of Comex trading on Tuesday. The crucial Wednesday and Thursday price action...the final capitulation to the downside...won't be included.
Here are the 6-month charts for all four precious metals. I found it very intriguing that 'da boyz' would set the low price in both gold and silver in Far East trading...and then do the same for platinum and palladium shortly after London open a few hours later.
For all those pundits bemoaning the state of GLD, I would like to point out that the situation is far different in SLV...and one has to wonder why that is the case...especially the deposits in SLV and the withdrawals in GLD during this price decline. If the precious metals were going lower in the long term, why would JPMorgan go to all that trouble of covering their monster short position in that ETF? The short positions in both these ETFs have been relegated to background levels...and are so tiny now, that they are of no significance.
Along with the recent frantic activity in SLV, there's the other matter that Ted Butler has been going on about for about the last two years...and that's the phenomenal churn in Comex silver. It's not happening in any other metal...and you have to ask yourself why that is the case. Ted thinks that "da boyz" are hand to mouth in silver...and I agree. I'd also bet serious money that most of these good delivery bars that have been arriving and departing the Comex in the last couple of years are picking up quite a few "frequent-flyer" points during their travels, because it's my belief that a significant portion of their journeys are by air, as almost all of U.S. silver production is ending up at the U.S. Mint.
There are lots of commentators out there that feel that a re-pricing of gold is inevitable...and I'm one of them. With the COT structure set up favorably once again, this may be used as an opportunity to let prices rip to the upside. However, I'm choked with caution, as we've been at a similar COT structure several times in the last fourteen months...and nothing of that sort happened, as JPMorgan et al poured back on the short side during the subsequent rallies in all the precious metals.
Will it happen this time? Beats me, but if I was the powers that be, this would be the sort of timing I would pick. As I and others have mentioned many times over the years, the world's economic, financial and monetary systems are circling the deflationary drain ever faster...and they all want some 'positive inflation' in the world's economies...and a re-pricing of the precious metals, whether by market forces or by decree, would be an important step in attempting to right over 40 years of monetary malfeasance. If there are any big changes forthcoming, I would expect them to happen quickly.