Ed Steer's Gold & Silver report - February 23 , 2013 - additional news and views touching on gold and silver.......

http://www.zerohedge.com/news/2013-02-24/eric-sprott-west-dishoarding-its-sovereign-treasure

Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?

Submitted by Tyler Durden on 02/24/2013 15:29 -0500

• Central Banks
 
• China
 
• Department Of Commerce
 
• Eric Sprott
 
• India
 
• Precious Metals
 
• Sprott Asset Management

Submitted by Adam Taggart via Peak Prosperity,

We are well into the financial crisis. Everyone’s trying to keep it together, even though it would appear from the reading of the economy things are not going well at all here. And everyone's ignoring things.

But I think, in their hearts, the Central Bankers must know what they’re doing is totally irresponsible. And the tell of that irresponsibility – which is the debasing of the currencies – is the fact that real things will go up in value. This should be reflected in the price of gold and silver.

So expresses Eric Sprott, CEO and founder of Sprott Asset Management, and one of the most experienced and vocal advocates for owning precious metals.

The past decade has validated Eric's thesis, as gold has risen considerably against all world fiat currencies. But what vexes him is that in recent years, when currency debasement has accelerated to extreme levels, precious metals prices have been clearly suppressed, particularly versus the U.S. dollar.

As the topic of price manipulation is nothing new, Eric finds his focus increasingly drawn to where the precious metals are going at these bargain prices - who is accumulating and who is dishoarding:

I’ve done a lot of work on the flow of metals. I come up with a net change of 2,300 tons a year in new buying in gold when the supply of gold hasn’t even gone up in the last twelve years. And you keep wondering: Well, where’s all this gold coming from?

His findings support the growing meme that there is a massive bullion transfer from West to East. This should particularly concern those in the U.S., EU and Canada as his suspicion is that, increasingly, it's monetarygold that is being sold.

There are several key questions to ask here (not that the data publicly exists to answer them):

• How much of our sovereign monetary bullion reserves have been sold to date?
• How much will be sold in the future? (Are we willing to sell all of it? or is there a limit we refuse to let go of?)
• What will happen to the price of gold & silver when central banks stop selling to another? (Answer: shoot the moon)
• What will be the fate of those economies that dishorded their treasure? (Answer: lamentable)

When I see China buying 95 tons of gold in December and I read that India bought 100 tons in the month of January, when we all collectively know there’s only about 200 tons a month available –  you have to conclude that G6 Central Banks continue to sell their gold in a very non-transparent fashion.

One of the things we saw in December was that the U.S. Department of Commerce reported that U.S. exports of gold were $4 billion. We exported 2.5 million ounces of gold. And where it comes from, [only] God knows; the country only produces 8.8 million a nd most of that’s used internally. So I don’t know how you just come up with 2.5 million ounces that you’re able to export. So I believe that even though it’s described as non-monetary gold, my guess is that it is monetary gold.

There’s lots afoot here in central banking to try to keep it organized. And I think one of those things is to keep the price suppressed.

But the non-G6 nations have been huge buyers of gold, and I think the more anybody looks at the system from outside looking in, they realize they have to have gold and silver, notwithstanding the nonsense that goes on in COMEX and the LBMA (London Bullion Market Association).

When I got involved in the gold market, it was assumed that the central banks had something like 36,000 tons of gold. And there was a great study done by Frank Veneroso where he suggests 18,000 those tons didn’t even exist anymore.

The [global] central banks are sellers of 400 tons in an overt fashion. Now we see buying of over 500 tons. That, just in itself, is a 900-ton change in a 4000-ton market, if I’m including recyclables here. And yet there’s been no increase in supply.

So I have to assume that these central banks are running low, and the question in my mind is, do they just go down to zero and then give up?

Or do they look in the cupboards one day and say look, this is just not going to work because the intensity of buying by people, like China in particular, has just gone absolutely bonkers. And it looks like India, notwithstanding putting a surtax or excise tax on gold, the demand seems to be very firm. And as you mentioned, mint sales have been amazingly strong here.

So I think there’s enough element of the world who get it that the pressure’s going to continue to be on the price of gold going higher. And yes, there’s nothing we can do in terms of what’s going on in the COMEX and the LBMA, but we keep seeing more and more people asking for delivery, even in the COMEX. So I think that the day can’t be far off. We can’t predict when it’s going to be, but the natural stage should be that the price of gold is going up, and we’re in such a tremendous financial crisis that it hasn’t been allowed to manifest itself because they’re putting out fires all the time.

For precious metals holders licking their wounds from the carnage of the past several months [23], this podcast offers both new insights and sound reminders of the long-term reasons for owning gold and silver. Those on the sidellines considering entering into the precious metals, perhaps for the first time, should consider reading our guide toBuying Gold & Silver [24] after listening to this podcast. 

Click the play button below to listen to Chris' interview with Eric Sprott (34m:40s):

and......






http://www.silverdoctors.com/gold-silver-cot-report-22213-commercials-cover-astonishing-44-million-ounces-of-naked-silver-shorts/

GOLD & SILVER COT REPORT 2/22/13: COMMERCIALS COVER ASTONISHING 44 MILLION OUNCES OF NAKED SILVER SHORTS!

FEBRUARY 24, 2013 BY THE DOC 9 COMMENTS

By SD Contributor Marshall Swing:

Gold & Silver COT Report 2/24/13:

Commercials added 2,026 additional long contracts to their total on the week after tremendous gains last week and covered a huge 6,815 shorts to end the week with 47.11% of all open interest, a huge decrease of 2.35% in their share since last week, and now stand as a group at 189,780,000 ounces net short, which is a decrease of over 44 million net short ounces from the previous week!!!

Large speculators sold off 1,148 longs and gorged on 4,468 more short contracts decreasing their net long position to 132,280,000 ounces, a decrease in their net long position of over 28 million ounces from the prior week.

Small speculators picked up 496 longs and added a huge 3,721 short contracts for a net long position of 57,500,000 ounces a decrease of over 16 million ounces net long from the prior week.

The producer merchant unloaded in a big way this reporting period covering shorts and selling longs while the swap dealers bought longs and covered shorts by about the same magnitude.

The swap dealer category of the commercials are now net long by almost 11 million ounces.

This is the 4^th straight week the commercials have added longs.  Over that period they have added about 9,500 longs.

What we may have seen on Wednesday, after the COT period, is the speculators dumping short positions for profits while realizing the commercials are in a good position to take price far higher.  Their interest in obtaining profits may have forced some commercials out of some of their new long positions.

Gold followed silver with pretty much the same numbers and ratios but the most interesting statistic was the gold commercials percent of open interest dropped 3.7% from 53.99% to 50.29%  Just 3 weeks ago the gold commercials percent of total open interest was 56.49%  Silver bugs like to think theirs is the most insidious manipulation but gold commercials and the gold producer merchant are always a few percentage points higher in net shorts than is silver.

Have we seen the bottom to the metals?  No one can say for sure but my guess is the commercial long buying is signaling at least a temporary bottom.  But, just so everyone knows, the week of last May 22 saw the commercials with just 76 million net short ounces and the producer merchant at 153 million net short ounces.

and........

GOLD BEAR TRAP IS SPRUNG

FEBRUARY 24, 2013 BY THE DOC LEAVE A COMMENT

Submitted by Morris Hubbartt:

The public’s level of ownership has declined to a level not seen since the lows of 2008. This indicates gold is probably making a major market bottom.

GDXJ has moved lower, with gigantic volume. This type of selling has driven the key RSI indicator to historical lows.   A rule of thumb is that once RSI goes below 25, buy orders can be placed.   Bearish analysts think that GDXJ has broken down from major support, but I think this is a huge bear trap.  Sentiment, climactic volume, and oscillator action suggest that junior gold stocks are about to reverse and surge higher, stunning the bears!

• The US Bond Market needs help, and it’s likely going to get it. The Federal Reserve is now engaged in buying over $1 trillion worth of US Bonds per year. Is that enough?  Bond yields are rising (bond prices are declining).  That is the last thing the US government wants to see right now, as it wallows in un-payable debt.  The Fed seems prepared to do whatever it takes to keep rates low, even if the cost of doing so is a dollar that goes right off the trading board.

• This weekly chart shows that the bond market is substantially oversold. I expect TLT to rise towards the $120-$125 area.  At that point, a right shoulder of a h&s top pattern would be in play.  A huge crash could occur in the bond market, unless the Fed becomes even more aggressive with bond purchases, than it is now!

T-Bond COT Report Chart

• This chart is from www.sentimentrader.com.  It shows that commercial traders (“smart money”) are short-term bullish.  Each time their net long position has touched the upper green dotted Bollinger band on this chart, a substantial bond rally has ensued.  Gold has usually rallied as well, which is great news for gold investors.
Dow Triple Arc Chart



• Another event that could fuel a bond market rally, is a stock market correction. I don’t see a deep correction in stocks, yet. I think this will initially play out as a modest pullback, with the Dow declining to my Fibonacci arc target of 13,400. From there, I’m forecasting a small rally, and then a much bigger sell-off, taking the Dow down to about 12,200. As the Dow falls, gold should have a great rally.
Gold Triangle Action Chart



•  This week, the bottom line of this symmetrical triangle was almost tested, but it held strong!


•  Many technical indicators are now approaching oversold status. The RSI fell to under 20 at one point (now 25), and a CCI buy-signal spike is in play.  Technically, gold looks superb, and is poised to rally.


Gold Public Opinion Chart



• The public’s level of ownership has declined to a level not seen since the lows of 2008. This indicates gold is probably making a major market bottom.


Gold QE Bars Chart



• After the Fed unveiled QE1 & QE2, gold rallied strongly.  This time, it has declined.  It’s been a very frustrating time for gold investors, but I want to point out that many money managers have moved their focus away from gold, to the Dow and the S&P500.


• Business conditions have improved, but not dramatically.  A sell-off in the general equity markets would bring the focus of money managers back to the gold market, and I think we’re on the cusp of such an event right now.


GDX Sentiment Washout Chart



• Gold stocks are more hated than any other asset, according to all the sentiment data that I study. This chart highlights the gold price action, after a number of  “sentiment washouts”.


• There could be a test of this week’s lows, but this sentiment chart suggests that a major bottom is here.


Market Sector Comparison Chart



• This chart indicates what the average trader thinks of gold stocks. To take advantage of this negative sentiment, do the opposite of the crowd.


• When almost all the money flows out of a sector, like it has here, prices can only go in one direction, and that is… up!


GDXJ Bear Trap Chart



• GDXJ has moved lower, with gigantic volume. This type of selling has driven the key RSI indicator to historical lows.   A rule of thumb is that once RSI goes below 25, buy orders can be placed.


• Bearish analysts think that GDXJ has broken down from major support, but I think this is a huge bear trap.  Sentiment, climactic volume, and oscillator action suggest that junior gold stocks are about to reverse and surge higher, stunning the bears!


Silver Snack Pack Chart



• Last week, silver was not on my immediate-buy list. It is now. Investors should buy modestly, and gamblers could be a little more aggressive, with the size of positions they take now.


• I call this the snack pack chart, because traders can enjoy modest “snack packs of profit”, by selling some positions for quick gains, while holding 70% of their position for banquet-sized profits.


• For silver investors, the bigger profits will come after inflation returns.  That’s probably 2-4 years away, which is a long time to wait.  So, I recommend that investors use 30% of silver positions, for short term trading!


http://www.caseyresearch.com/gsd/edition/bob-moriarty-calling-tops-and-bottoms/

Bob Moriarty: Calling Tops and Bottoms

Feb
23

• Yesterday in Gold and Silver
• Critical Reads
• The Funnies
• The Wrap

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"The technical funds and small traders are now loaded for bear on the short side."

¤ YESTERDAY IN GOLD & SILVER

The gold price rallied slowly until mid-afternoon in Hong Kong...and then began a long, slow slide that ended around 12:40 p.m. in New York.  Once the Comex closed, gold rallied a bit into the 5:15 p.m. electronic close.

Gold finished the Friday trading session at $1,581.50 spot...up $4.50 on the day.  Gross volume was pretty decent...around 151,000 contracts.

It was pretty much the same chart pattern in silver, but once the Comex opened for business, the sell-off in silver became much more pronounced and, like gold, had it's low price tick of the day [$28.29 spot] at 12:40 p.m. during the New York lunch hour.

The subsequent rally lasted until 4:00 p.m. Eastern time...and from there the silver price traded sideways into the close of electronic trading.

Silver finished the day at $28.76 spot...up 8 cents.  Net volume was pretty light...around 27,500 contracts.

The dollar index opened on Thursday at 81.36...drifted a bit lower and hit its low [81.22] at 9:00 a.m. in London. From there it rallied to its high of the day [81.58] at the London p.m. gold fix at 3:00 p.m. GMT...10:00 a.m. in New York...and drifted lower from there into the close.  The index ended the day at 81.46...up 10 basis points from Thursday's close.  Nothing to see here.

*  *  *  

The CME's Daily Delivery Report showed that 27 gold and 1 silver contract were posted for delivery on Tuesday.

Once again there was another big withdrawal from GLD.  This time it was 309,694 troy ounces.  Since the engineered price decline in gold began two weeks ago, almost 1.5 million ounces of gold have been withdrawn from GLD.  And once again the SLV ETF was a surprise, as it reported no changes.  As I reported in this space yesterday, since the engineered price decline in silver began two weeks ago, almost 3.5 million ounces of silver have been added to SLV.

The U.S. Mint had a small sales report yesterday.  They sold 7,000 ounces of gold eagles, along with 24,000 silver eagles.  Month-to-date the mint has sold 63,000 ounces of gold eagles, 9,000 one-ounce 24K gold buffaloes...and 2,546,500 silver eagles.  Based on these figures, the silver/gold sales ratio is a bit over 35 to 1.

Over at the Comex-approved depositories on Thursday, they reported receiving 871,417 troy ounces of silver...and shipped 474,597 troy ounces of the stuff out the door.  The lion's share of the silver reported received, ended up in the JPMorgan Chase depository.  The link to this action is here.

Well, the changes in the Commitment of Traders Report yesterday were right in line with what both Ted Butler and I were expecting.

In silver, the Commercial net short position declined by 44.2 million ounces...and now sits at 189.8 million ounces.

The Big 4 traders in silver are short 233.0 million ounces, which represents about 123% of the entire Commercial net short position. Ted Butler says that about 142.5 million ounces of that amount is held by JPMorgan Chase all by itself.  The '5 through 8' traders are short an additional 53.6 million ounces of silver.  The Big 8 in total are short 286.6 million ounces of silver.

As far as concentration goes, of the 155,353 contract total open interest in silver, a full one third of that amount are market-neutral spread trades...and once they are netted out, the true open interest in silver falls all the way down to 102,722 contracts.

Using that net number, the Big 4 are short 45.4% of the entire Comex silver market...and JPMorgan [the Big 1] holds about 28 percentage points of that number net short on its own.  The '5 through 8' short holders are short an additional 10.4 percentage points of the Comex silver market on a 'net' basis.  So the Big 8 in total are short 56.2% percent of the entire Comex futures market in silver...and that's a minimum number.

In gold, the Commercial net short position declined by an eye-watering 2.86 million ounces...and the new Commercial net short position has fallen all the way down to 13.21 million ounces.

The Big 4 are short 8.95 million ounces of gold...and the '5 through 8' traders are short an additional 5.50 million ounces.  So the Big 8 are short 14.45 million ounces of gold, or 109.4% of the entire Commercial net short position.

In gold, the market-neutral spread trades are far fewer...only about 17% of the total open interest...or about half the amount of spreads on a percentage basis that are present in silver, so the concentrations aren't as high in gold as they are in silver.

On a net basis, the Big 4 in gold are short 24.2% of the entire Comex futures market in gold...and the '5 through 8' largest traders are short an additional 14.8% of the futures market in gold.  Add the two numbers up...and the Big 8 are short 39% of the entire Comex futures market in gold...and a big drop from the prior week's COT report.

Of course, the two most important days of the engineered price declines in all four precious metals occurred on Wednesday and Thursday...and none of these numbers were in yesterday's COT Report.

But Ted and I are speculating that we'll see more big improvements in the Commercial net short positions in both silver and gold...north of 5,000 contracts in silver...and north of 10,000 contracts in gold.  Even with these numbers factored in, we are not yet at the low COT numbers either from last summer, or between Christmas and New Years back in 2011.

The other thing about yesterday's COT Report that Ted mentioned was the massive short positions being placed in silver and gold...particularly gold...in the technical fund and small trader category.  Ted figures that a lot of the negative price action on both Wednesday and Thursday was the result of new short positions being placed.

Here's Nick Laird's "Days of World Production to Cover Short Positions" for the week that was.  Note the extreme short positions of the four largest short holders in silver...and as I pointed out last week, it's my opinion that JPMorgan Chase, the Bank of Nova Scotia...and HSBC USA...hold 95% of the short position of the Big 4...and the positions of the remaining five traders in the Big 8, either individually or collectively, are irrelevant.

I've decided to include the same chart from February 12th, so you can see the week-over-week changes in each commodity.  If you want to see further back in time, you can click on the interactive silver COT charts here...and the interactive gold COT charts here.

*   *   * 

Selected news and views...

Fed unlikely to curtail stimulus despite rising doubts

U.S. Federal Reserve officials are likely to press on with their bond-buying stimulus program even though some harbor growing concerns the purchases could fuel an asset bubble or inflation if pushed too far.

A full-throated debate among U.S. central bankers over the wisdom of ongoing quantitative easing, or QE, sent U.S. stock prices down sharply when minutes of the meeting were released on Wednesday.

Investors were right to assume the Fed is treading more carefully as it weighs the risks of its effort to spur a faster economic recovery, but that does not mean policymakers will conclude the costs outweigh the benefits.

Indeed, the officials who have voiced the greatest angst over the central bank's course do not currently have a vote on the policy-setting panel and the Fed's two most influential officials -- Chairman Ben Bernanke and Vice Chairman Janet Yellen -- are seen as committed to the bond-buying plan.

I found this Reuters story in a GATA release yesterday.

Doug Noland: The Fed, Chinese Tightening and Distribution

"When one takes an objective view of the world, I along with others see a deeply flawed monetary policy experiment run amuck.  I see myriad historic Bubbles.  I see, as well, a global “risk on” speculative trading dynamic that will eventually impart pain upon the unsuspecting.  The short-term is significantly less clear.  Does the sophisticated leveraged speculating community continue to play “risk on” for all its worth?  Or will a more susceptible global backdrop dictate a change in strategy? Will the speculating community now seek to begin selling their holdings to the less sophisticated rushing to participate in the “new bull market”?  It’s traditionally called “distribution.”  In today’s highly distorted financial backdrop, it’s probably more aptly referred to as “wealth redistribution.” 

One could add wealth redistribution to the list of “unintended consequences” from Federal Reserve reflationary policymaking.  That is, except for the fact that the Bernanke Fed is rather open in its view that it prefers savers out of safety and into the risk markets (jungle).

Doug's weekly Credit Bubble Bulletin posted over at the prudentbear.com Internet site is always a must read...and yesterday's commentary is no exception.  I thank reader U.D. for sending it.

Moody's cuts U.K. AAA rating by one notch

Moody's Investor Service late Friday cut its triple-A rating on the United Kingdom because of a weak growth outlook and the country's rising debt burden. Moody's lowered its rating on the U.K.'s domestic and foreign-currency government bond ratings by one notch to Aa1 from Aaa. The outlook is stable. Explaining the main reason for the downgrade, Moody's said "the UK's economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy from the ongoing domestic public- and private-sector deleveraging process.

This short one-paragraph story was posted on the marketwatch.com Internet site yesterday...and the first one through the door with this news item was reader "David in California."

Turning Up the Heat: Banks Could Face Massive Fines over LIBOR Scandal

The European Commission plans to turn up the heat on banks allegedly involved in rigging the benchmark LIBOR lending rate. Not only has the body widened the scope of the investigations to include the Swiss franc, it has also threatened heavy fines on uncooperative banks.

Global banks will soon face even more intense scrutiny and the threat of heavy fines over their alleged involvement in the LIBOR rate rigging scandal. The European Commission is now widening the reach of its 18-month antitrust investigations to include Swiss franc-denominated swaps, the Financial Timesreported late on Thursday. Until now, the probes by the competition authority have included yen and euro interbank lending rates.

Banking authorities are investigating dozens of banks from around the world for colluding to fix LIBOR (London Interbank Offered Rate), a key interbank lending rate used to price trillions of dollars of financial instruments.

Reader Marshall Angeles sent me this spiegel.de story from yesterday, along with the comment that "No one will go to jail."  That's a fact, Jack!

France is a 'problem child', says Merkel ally

A leading member of German Chancellor Angela Merkel's conservatives said France was a "problem child" in the eurozone and must scrap its 35-hour work week as well as push back its retirement age. 

He was speaking before the European Commission announced that France's public deficit was set to be worse than expected in 2013 and 2014, veering up to 3.7pc of output this year and 3.9pc next year. The EU sets a ceiling of 3pc of output.

France's wages and work ethic have been under the international spotlight this week after the head of US tyremaker Titan, Maurice Taylor, mocked French workers for putting in only "three hours" a day, prompting a sharp retort from Paris.

This commentary appeared on The Telegraph's website late yesterday afternoon GMT...and I thank Ulrike Marx for sending it.

Iran to Execute 4 Bankers on Fraud Charges

Iran's judiciary system recently worked through the biggest banking fraud case in the nation's history.

According to The New York Times, the outcome of the case was made official on Monday. Results were dramatic to say the least.

Judiciary spokesman Gholam-Hossein Mohseni-Ejei told reporters that four people had been officially sentenced to death on charges of corruption and “disrupting the country's economic system.”

The guilty party was responsible for mishandling $2.6 billion of funds – using forged documents in order to receive credit from banks, permitting them to purchase state-owned companies.

This story was posted on the wealthwire.com Internet site on Thursday...and falls into the absolute must read category, because there's much more to this than the three above paragraphs that I've cut and paste as an introduction.  It's another offering from Marshall Angeles, for which I thank him.

Global Support Grows for Legalizing Drugs

After decades of the war on drugs, the desire for an alternative is greater than ever. The eternal front in the war is crumbling.

When about 30 national leaders met in Cartagena, Colombia, in April 2012 for the Summit of the Americas, there was only big, behind-the-scenes topic: a new drug policy. Suddenly Colombian President Juan Manuel Santos was saying: "If the world decides to legalize (drugs) and thinks that that is how we reduce violence and crime, I could go along with that."

General Otto Pérez Molina, president of Guatemala, wrote: "Consumption and production should be legalized but within certain limits and conditions."

Uruguayan President José Mujica said: "What scares me is drug trafficking, not drugs".

This 5-page essay, posted on the spiegel.de Internet site yesterday, now bears the headline "Our Right to Poison: Lessons from the Failed War on Drugs"...and I thank Marshall Angeles for sharing it with us.

Five King World News Blogs/Audio Interviews

The first three blogs are with Andrew Maguire.  The first is headlined "Stunning 225 Tons of Physical Gold Bought by Central Banks".  The second blog with Andrew is entitled "Whistleblower: Gold and Silver Smash Orchestrated by the BIS".  And lastly is this blog that bears the title "Stunning $24 Premiums for Gold in Shanghai".  [It will be interesting to see which central banks bought all this gold when the data starts showing up in the official reports, or on other wire services in the days ahead. - Ed]

The fourth blog is with Richard Russell...and it's entitled "3 Key Charts and Some Things to Think About".  The audio interview is with Dr. Marc Faber.

Frank Holmes...Investor Alert: A Test of Strength for Gold

This week, we saw the gold bears growling louder and gaining strength, as the world’s largest gold-backed ETF, the SPDR Gold Trust, experienced its largest one-day outflows since August 2011. The Fear Trade fled the sector following the Federal Reserve’s meeting that revealed a growing dissension among some of its members over the central bank’s bond-buying program.

Despite the discord, the Fed is continuing its course to purchase $85 billion of bonds every month and keep interest rates near zero. Ben Bernanke’s plan bloating the balance sheet to more than $3 trillion has been keeping the Fear Trade coming back for more metal.

For good reason, too, as the correlation between the Fed’s balance sheet and the price of gold has historically been very high, at 0.93, according to Macquarie Research. The firm found that for every $300 billion expansion in the balance sheet of the U.S. government, there was a $100 an ounce increase in the price of gold. When you factor in the Fed’s current bond purchases totaling $85 billion per month for the next nine months, the central bank will be adding $765 billion in new assets. “Using the previous ratio, this would compute to a $255 an ounce increase in the gold price,” says Macquarie. By this measure alone, gold would rise approximately 16 percent over the next several months.

Frank's weekly gold commentary is worth reading this week.  It's posted on the usfunds.com Internet site...and I thank West Virginia reader Elliot Simon for bringing it to my attention...and now to yours.

Bob Moriarty: Calling Tops and Bottoms

We just had a major, major bottom. I’m going to include a bunch of charts that show the current psychology is worse than any time in this bull market including 2001 and 2008. That’s what happens at major bottoms. The CHEERLEADERS, of course, were mumbling into their cups whining about how the “BANKSTERS” are behind all the evil in the world and manipulation is rampant. That may well be true, but nobody ever made a cent investing in “MANIPULATION.”

We are going to have a massive run in gold and silver and the shares. Platinum is due a rest but it will be a nice place to be in this bull run after a rest. My favorite of the physical metals is rhodium and if you can put your hands on some, do so while it’s still cheap.

Being the pleasant personality type that he is, Bob dumps all over everyone who even hints that the precious metals markets are anything but free and fair...and he also dumps all over Sprott's physical silver ETF, saying..."It's paper silver, no matter what Eric Sprott says."  Well, that's patently false, because if you own enough shares in the fund, you can redeem for physical metal. It's right in prospectus.

But, having said all that, his commentary is a must read anyhow...and it was posted over at the 321gold.com Internet site yesterday.  I thank Elliot Simon for his third offering in today's column...and also the last story of the day.

*   *   *

¤ THE WRAP

Be careful to leave your sons well instructed, rather than rich, for the hopes of the instructed are better than the wealth of the ignorant. - Epictetus

Today's pop 'blast from the past' is a tune I stumbled across when I was actually looking forthis piece...and I snapped it up right away when I saw it posted in the right sidebar on the youtube.comInternet site.  This American band was founded in Chicago in 1969...and you should know the song straight away.  The link is here.

The short classical piece I've chosen today was written by Norway's most famous composer/pianistEdvard Grieg.  It's Solveig's Song from Henrik Ibsen's 1876 play, Peer Gynt.  Sarah Brightman does the honours...and the link is here.

So here we sit on the launch pad once again.  Even though Wednesday and Thursday's Commitment of Traders data is not available to the public, I know what it would show if it was.  It would indicate that JPMorgan et al would have covered as many short positions as possible in all four precious metals...and they would now be as maximum long as they could possibly be.  On the other side of this trade, the technical funds and small traders are now loaded for bear on the short side in gold and silver...and have been forced to sell a huge percentage of their long positions during this 10-day long engineered price decline.

What happens next will answer the second most important $64,000 question that I've been talking about in this space all week...and that is, will "da boyz" go short against all comers when the next rally begins?  If they do, then it's the same old, same old scenario.  But if they don't, then you won't have to ask "Is this it?"...because it will be self-evident on the price charts.

But, having said that, as I pointed out in my COT comments further up, even though we've been blasted to the downside with a ruthlessness that certainly took my breath away...we still aren't at the low levels in the COT structure that we had at last summer's low price...or the low price ticks between Christmas and New Years in 2011.  That's the only potential fly in the ointment, but in the grand scheme of things at the moment, it may not mean a lot.  Ted Butler says that there's still potential room to the downside if JPMorgan et al want to push it...but can they, or will they?  I don't know...and neither does anyone else.  I don't want to rain on anyone's parade here, but these are the facts of the matter.

Here's one of my favourite charts that Nick Laird was kind enough to send my way last night.  It's the "Total PMs Pool" graph..and he had the following comments to go with it..."Hi Ed, The total pool is still rising.  Looking at the major ETFs, it seems like they're selling gold and buying silver."

And, dear reader, I hope you're doing the same thing as well.

That's it for the day...and the week. I'll see you here on Tuesday.

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