Loading ...The Desperation of the Silver “managers”…
First of all and to start with, how many times have I written about the utter uselessness of technical analysis in the gold and silver arena of analysis?
Each time I am quoted by some obtuse tea-leaf reader over my clarion call to “Sell breakouts; buy breakdowns” (in precious metals markets), what follows is an entire litany of reasons and excuses why the “empirical evidence” and the “system backtests” and “conclusive datasets” all prove me full of proverbial horsefeathers. And yet, this has been the consistent theme and one which invites great ridicule from the technical analysts out there in the blogosphere but the reality is that T.A. is largely ineffective in predicting what type of manipulative capping exercise will be implemented by the Commercials. To wit, if you go back to every chart point in the past forty years, you will find that on very few occasions are those points actually predictive. They are used by the bullion banks to lure liquidity into the market by enticing the Large Speculators with those “breakout/breakdown” points and as soon as the volume piles in, the bullion bank traders are there to supply any and all liquidity to the point where the trend indicated by the chart point is reversed.
The gold chart is fairly obvious in that the $1,250-1,260 level has been held out on a silver platter as the launchpad technical chart point where gold will catch a mammoth momentum bid once it surmounts $1,250 such that saliva glands the world over have been working overtime, not to mention word processor keyboards and youtube podcasts, to be seen by way of Twitter and Facebook and Snapchat to have “CALLED THE BREAKOUT” this week. However, as the chart below would indicate, one would have been well-disposed to heed the advice of this particular author (from the past twenty years at least) and SELL that attempt by the Technical Funds and the Large Specs to follow that well-advertised “breakout point”. The result, shown below, is that $1,272 was rejected soundly after the Syrian missile attacks and the abysmal NFP report on Friday as were all sustainable bids down to $1,260 as well as finally going out for the week at $1,256.10, a level still most-respectable but one which clearly supported my long-held belief that technical analysis is for suckers when it comes to trading gold and even more so silver, as you will see below…
If you came away with a warm feeling and were nodding your heads in agreement after reading the afore-written paragraph, then understand that everything I wrote concerning the world of gold trading was mere “irritation” compared to the outrageousness and criminality seen in the silver arena late last week. Again, and not intending to sound like a broken record of megalomaniacal self-indulgence, the megaphone-delivered and breathlessly-highlighted $18.50 BREAKOUT POINT (!!!!!!!) (Note the capitals and exclamation marks) proved to be in the crosshairs of every technical trader in the universe as the May Silver contract nudged right up to $18.49 on Thursday immediately following the missile strikes but was then soundly rejected. That is closed out the week below $18.00 per ounce was bad enough but to close a full 26-cents beneath the “TECHNICALLY SIGNIFICANT!!!!” (note the capitals and exclamation marks) 200-day moving average at $18.25 was adding insult to injury.
Then, at 3:30 on Friday came the thunderous COT Report in which we saw somewhat muted activity by the bullion bank gold traders albeit the pickup in aggregate shorts above 170,000 would be consistent with the seasonality charts which show April and May the two weakest of the calendar year for gold. What smacked me like a sledgehammer was the massive increase in Commercial silver shorts to levels not seen in quite some time. From the chart posted above, observe the diametrically-opposed positioning by Large Specs and Commercials and from the silver COT shown below, look at the aggregate shorts held by JP More-GAIN and Co…
The $64,000,000 question remains whether or not the manipulative interventions of late last week will be sufficient to turn the near-term trend into a tradeable downtrend or not. I suspect it will and no better evidence than in the highly-reactive headlines from the past forty-eight hours in the blogosphere:
“Gold Market Update: Fading Fast” – Clive Maund (technical analyst)
“Bearish Reversal in Gold and Silver” – Jordon Roy-Byrne (technical analyst)
“What a day! The Powers-That-Be were everywhere on Friday…” – Ed Steers (gold and silver analyst)
So the “Powers-That-Be” need not be veiled in the seemingly-clandestine moniker implying some secret organization that meet dressed in hooded shrouds chanting mantras of allegiance to their elitist masters: call them what they really are – well-paid traders of the bullion banks operating with the full and very criminal blessing of the Central Banks and the G20 governments. It really is THAT SIMPLE. No margin calls, no accountability, no SEC or CFTC scrutiny – simple and direct orders to contain any and all price movements in silver in the interest of “national security”. The net effect of their price interventions is that armchair quarterbacks trading the silver market next week and following the technical analysis of the notables mentioned above are now going to re-think any possible purchases of gold or silver and certainly waylay any thoughts of initiating positions in silver or gold junior miners or ETF’s. They will await the possible “TECHNICAL BREAKDOWNS!!!!!” (Note the capitals and exclamation marks) to sell and/or short into such events at which point the Commercials will be standing there with their bushel baskets gathering up all of the short-covering fruit falling from the bountiful tree of interventional illegality. Ladies and gentlemen, what you continue to witness is a crime. That crime is in the form of fraud and theft. And it is totally condoned and embraced by the “Powers-That-Be” by way of the burgeoning envelopes handed out at bonus time. It is THAT simple.
Despite today’s desperation by the silver price managers, I continue to favour the precious metals and further believe that the U.S. and global equity markets as well as most base and industrial metals have become overextended. Today’s NFP Report was a disappointment from the get-go despite the “weather effect” that had the CNBC spin machine fired up within seconds of the release. Next week, I will need to see the trends identified (and expected) in this missive kick into gear by Tuesday with the dye having been fully-cast lest I be forced to resort to aberrant behaviours and deviant diversions…
In the interim, any weakness in the monetary metals (with specific attention paid to silver) should be bought.
MJB
“Every stock market bull out there whether in New York or London or Mumbai or Beijing is in a drunken myopia of elevated expectations and deviated denial scrambling and scratching and pleading for assurances that “it is truly different this time”.”