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  1. #1
    Join Date
    Oct 2008


    Revisiting my September 13th RANT, “GOLD INVESTOR LIMBO”, we are once again in a situation where PM investors are licking their wounds, wondering if the vicious Gold Cartel will ever be decisively defeated in the ULTIMATE CURRENCY WAR. In the past year, its footprints have grown dramatically larger, as they have required increasingly large “bazookas” to TEMPORARILY turn the gold and silver tides from PERMANENTLY washing over the investment world.

    Aside from MAJOR Cartel operations such as D-DAY on November 9, 2010 and the SUNDAY NIGHT PAPER SILVER MASSACRE on May 1, 2011, we have seen countless MINOR attacks, in sum total achieving little but to embolden gold and silver investors further, and secondarily demonstrating that MANIPULATION SATURATION has indeed been reached. Unfortunately, not only do “desperate times call for desperate measures”, but “MORE desperate times call for MORE desperate measures”, and in the case of this week’s “OPERATION PM ANNIHALATION”, clearly the largest, most fraudulent monetary bazooka EVER was utilized to TEMPORARILY quell the inexorable advance of the gold and silver armies.

    In August, I postulated the onset of September would see the early stages of Euro Zone collapse, as well as accelerating fears the U.S. had passed the point of no return regarding its ability to staunch its descent from recession to depression, as well as the Fed, Treasury, and government in general’s ability to “save the day” with additional monetary and fiscal stimulus.

    NOTHING that has since occurred can refute this thesis, including the collapse of global banking stocks, heightened fears of the inevitability of European sovereign defaults, and the unending death spiral of U.S. economic data. This month, ratings agencies have downgraded sovereigns such as Italy and major banks from the “Big 3” in France to major American banks such as Bank of America, Citigroup, and Wells Fargo, and even the almighty Fed proved last week it had run out of monetary options. “Operation Twist”, in essence massive quantitative easing at the long end of the yield curve, was decisively panned, forcing Western Central banks to step up their MONEY-PRINTING EFFORTS on several fronts. First, the joint $500 billion credit line offered by the Fed, ECB, BOE, and SNB, and second the SNB’s devaluing of the Franc in one of the most destructive monetary acts ever witnessed (particularly from a so-called “conservative” nation such as Switzerland).

    These actions, too, failed to quell the inevitable market uprising against BAD DEBT, so the ULTIMATE “STRONG DOLLAR POLICY” WEAPON was created, although ironically in this case a “STRONG EURO POLICY” action that was required, even if only in appearance. And that weapon, of course, was to VIOLENTLY ATTACK PRECIOUS METALS YET AGAIN, for the fifth time in 2011 alone, and the sixth time since the “D-DAY operation when silver first threatened to take out $30/oz in November 2010.
    As always, the attack coincided with a seminal, MASSIVELY GOLD-BULLISH event, in this case the Federal Reserve’s pathetic policy statement of less than a week ago, on Wednesday afternoon, September 21st. Per my RANT from that evening, “LESS THAN ZERO”, the Fed essentially showed the world its hand, the equivalent of “Jack high” in poker parlance, i.e. it had no more material weapons to fight the unending decline in the U.S. economy. Following that MASSIVELY GOLD-BULLISH Fed statement, gold and silver rose sharply, to $1,815/oz and $41.00/oz, respectively, while the Dow sharply sold off.

    Lo and behold, no more than ten minutes passed before OPERATION PM ANNIHALATION commenced, taking gold below $1,800 and setting the stage for the real fireworks the following two days. With the long-awaited banking implosion underway, led by anything remotely related to Greece (i.e. ALL major European banks), the Cartel pulled out their 2008 playbook, in which gold and silver would be once again temporarily eliminated as safe-haven alternatives via a coordinated, “SHOCK AND AWE” attack on the PAPER markets. No matter that PMs had spent all of August SOARING while stock markets crashed in an environment highlighted by the EXACT SAME THEMES predominating in September, as well as the EXACT SAME THEMES as late 2008.

    TPTB’s goals were to get the U.S. dollar index to rise (Euro Zone collapse doing that for them - CHECK), U.S. Treasuries to explode (QE3 announcement – CHECK), and PM’s to collapse, which was accomplished with the most intense bout of naked PAPER gold and silver short selling EVER and COORDINATED MARGIN INCREASES by the CME and the Shanghai Gold Exchange in China, just like we saw in May.

    Remember, margin increases are supposed to be implemented in RISING markets to reduce volatility, which is exactly what the Cartel’s M.O. has been until this year. Margin increases have ALWAYS been one of their major weapons to slow down PM rises, but due to the MANIPULATION SATURATION we reached this year, were no longer effectual in RISING gold and silver markets. In fact, “D-Day” on November 9, 2010, was the last time the Cartel instituted major margin increases while gold and silver were RISING, although it was the first time they did so INTRADAY, which due to the novelty of the event caused silver to fall $4.00/oz in less than an hour. Unfortunately for the Cartel, silver hit new highs just WEEKS later (can you say MANIPULATION SATURATION?), causing the Cartel to once again alter its manipulation stategy.

    Aside from enveloping large-cap mining stocks with an HFT cocoon that simply refuses to let go, they aimed to create PAPER selloffs by taking gold and silver DOWN sharply at vulnerable times (in May, on a holiday weekend Sunday night with China closed, and last Thursday at 3:00 AM EST when global markets were in PANIC MODE due to plummeting stock markets, ready to sell ANYTHING that looked remotely weak). Once they get their initial spike declines due to MASSIVE naked shorting of PAPER contracts in the wee hours of night, THEN they raise margins to create ‘black box’ selling, creating a selling frenzy in the process. In the May PM smash, they even released the fake “bin Laden killed” story literally AN HOUR LATER so the media could pronounce ‘reduced political risk’ and create additional selling pressure, while last week, the Cartel had the benefit of panicked investors worldwide, and perhaps even a few European Central banks DESPERATE to sell ANYTHING not nailed down for cash.

    The combination of these events was so powerful, it was able to unleash a virtual AVALANCHE of gold and silver selling, of which I’d estimate 90% related to the PAPER MARKETS, and of that amount I’d guess AT LEAST 25% was NAKED SHORTING by GOVERNMENT COMPUTERS. Remember Bart Chilton of the CFTC PROMISING he would make a statement regarding silver market manipulation by the third week of September if the CFTC hadn’t yet commented itself? Well I’m sure you see he hasn’t, and I’m sure you can guess why not!

    On Thursday, the Dow fell 390 points, or 3.5%, while European stock markets declined 5%, and only was prevented from falling 5% itself by yet another PPT HAIL MARY RALLY in the last 15 minutes of trading, as we have observed without pause for the past decade. Gold was trounced by $60/oz, or 3.5%, while silver was rocked by $3.60/oz, or 9%. I can’t say I was particularly angered on Thursday, as all commodities and stocks were smashed, and surmised it wouldn’t be long before the financial implosion led to a sharp rebound in PM prices.

    However, Friday turned out to be a DAY OF INFAMY, with gold falling $90, or 5%, and silver $4.90, an astounding 13.5%, while global stock markets marginally INCREASED and other commodities stabilized! The only “news” on Friday regarded HOPE the G-20 would do something to stem the crisis over the weekend (which it didn’t), or that the ECB would MASSIVELY increase the size of the European Financial Stability Fund (EFSF), to the tune of perhaps $2 TRILLION of FRESHLY PRINTED MONEY to TEMPORARILY bail out the European banking system. That didn’t happen either, although the newest weapon of TPTB, the RUMOR, was used to create PERCEPTION that such an increase was inevitable, in turn JUSTIFYING to the media and investors that the 100% PPT/HFT inspired stock rally was for good reason.
    Then, the “big news” on FRIDAY NIGHT that the CME had increased margins AFTER the massive gold and silver declines, and on SUNDAY NIGHT that the Shanghai Exchange had done the same (yes, the Chinese government was happy to accommodate the Cartel in this case, hoping it would bring PHYSICAL supply into the market at bargain basement prices. And thus, despite no positive “news” over the weekend, other than increased HOPE of an increased EFSF, in the WEE HOURS of SUNDAY NIGHT TRADING (starting to get it, yet?), gold plummeted by a mind-boggling $110, or 6.5%, to $1,532/oz, and silver an even more incredible $4.75/oz, or 15.5%, to $26/oz, while GLOBAL STOCK and COMMODITY MARKETS were just marginally lower.

    That point in time (IRONICALLY, EXACTLY 3:00 AM EST, when Cartel traders decided it was time to cover their INSIDER-TRADED shorts) represented the lows of “OPERATION PM ANNIHALATION”, so the final stats can be tallied. Remember, this GLOBAL MARKET DECLINE was due to the EXACT SAME FEARS that propelled gold to an ALL-TIME HIGH just three weeks earlier, and silver to nearly $45/oz., and that the below numbers reflect the action of just TWO TRADING DAYS!
    Does that look to you like market action following a BANKING SYSTEM PANIC, or did alchemists finally learn how to turn lead into gold and silver? If there was any doubt left that this ENTIRE OPERATION was an ILLEGAL PAPER ATTACK on Precious Metals, all you need to observe is that copper, perhaps the most industrially sensitive base metal of all, fell just HALF the amount of silver. Not to mention, all the stories I relayed this weekend about essentially RECORD PHYSICAL SILVER DEMAND since the ATTACK commenced, to the point that most dealers, as we speak, are now quoting FOUR-WEEK DELAYS in shipments for new orders!

    To drive the point home further, I want to UPDATE these stats to show where the aforementioned markets stand TODAY relative to the same starting point, the close of markets last Wednesday the 21st.

    Now that the GLOBAL PPT has created yet another MASSIVE, COUNTERINTUITIVE STOCK RALLY based on nothing more than HOPE the EFSF will be “leveraged” to roughly $2 TRILLION, all’s well again in global stock markets (for now). Commodities have rallied sharply along with stocks, but the current stats suggest that not only have alchemists in fact learned how to synthesize gold and silver, but that the moon was discovered to be made of pure gold and silver!
    Wow, that is remarkable! A BANKING CRISIS, the most PM bullish event possible, which has not even REMOTELY been resolved (and WILL NEVER BE), has resulted in a three-day cumulative INCREASE in global stock markets, PARTICULARLY those at the EPICENTER of the 10.0 Richter-Scale financial earthquake. Not only that, the most economically sensitive commodities in the world, oil and copper, are down marginally, while the SAFE HAVEN CURRENCIES of the past 6,000 years, gold and particularly silver, have been CRUSHED!

    No, no manipulation here.

    Going forward, take a guess what my advice is – BUY GOLD AND SILVER, and do it NOW!

    Yes, you will find silver premiums higher than at any time this year (other than in late April prior to the SUNDAY NIGHT PAPER SILVER MASSACRE), but you will find lower prices for both gold and silver than last month, in an economic and monetary environment where gold and silver’s VALUE has increased materially each day.
    By the way, the long-term chart of gold is not only uninjured in the slightest, but has fallen to a MASSIVE technical buying zone (yes, even I care about LONG-TERM charts, despite my utter disdain for those that try to interpret short-term RIGGED charts).
    For silver, the chart looks uglier, but still the three-year uptrend remains in place, and technically silver has fallen to oversold levels seen ONLY at the BOTTOM of the SUNDAY NIGHT PAPER SILVER MASSACRE in May. Once silver retakes the 200 DMA at roughly $36/oz, I’d expect it to make yet another run for the magic $50/oz level in the next 3-6 months (or sooner, if the Europoop hits the fan).

    And for those of you trying to “read something” into the sudden, unprovoked (except by the GLOBAL PPT) stock market rally, there were NUMEROUS instances of markets surging during the 2008 meltdown, each signifying NOTHING except a combination of HOPE, SHORT COVERING, and stepped up activity by the PPT. Today, of course, the PPT is GLOBAL, and GOVERNMENT COMPUTERS (including those employed by their henchmen at the major TARP banks) account for the majority of stock trading, so the impact of ARTIFICIAL stock demand is stronger than ever, as are the ALGOs that seek to make sure the PM complex never rises when the Dow is falling (ALGOs which decisively FAILED this summer).

    DO NOT for even a MINUTE believe that ANYTHING has fundamentally improved regarding the outlook for the Western banking system, and KNOW that NOTHING will fundamentally change for the worse in the PM sector for perhaps DECADES.

    Use this opportunity to PROTECT YOURSELF, as you never know when you may run out of time.

    Andrew C. Hoffman, CFA
    Managing Director
    San Diego Torrey Hills Capital
    B (720) 350-4130
    C (917) 324-7602

  2. #2
    Join Date
    Oct 2008
    Why silver price crashed? I got me another 13kg on sale. Thank you very much.

    Click image for larger version. 

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    The COT numbers came out for the week and were stunning...unless you understand WHY the price of silver was destroyed. The banksters covered an AMAZING 16,446 contracts (82M paper oz) so far on this slam to have them post one of the lowest short position since the November 2008 crash.

    Here's an excellent article on the situation:

    This is since the Thursday cutoff so I'd expect even more short covering at the release of the COT report next week.

    So why is this happening now? To me it's very simple...the CFTC is going to FINALLY implement position limits and the bankster have to position themselves properly before it happens.

    This also confirms the fact that the CFTC has been delaying the implementation of position limits TO HELP the banksters get back "on side". They did this to try and not cause a huge disruption in the market...which it would have.

    So where do we go from here? Position limits will prove to be deadly to the banking cabal because they cap their ability to rig the markets. Not 100% but significantly enough such that silver will be able to rightfully express it's true value at some point without the massive market manipulation. Usually, the banksters short on the way up from slams to keep the price under control but position limits will cause problems for their control mechanisms.

    Not that it will stop manipulation all together but it will assist the Good Guys with their plan to end the game.

    The next few months should be a DOOZY for silver so get your hands on as much as you can. If they slam it lower buy more. If they let it rise from here buy more. If the last slam scared you... you now know WHY it happened and it couldn't get much more bullish for silver than the Bad Guys covering a huge amount of shorts on the slam!

    Silver is on sale today but we can't be sure how long this mega-sale will last!

    Stock up.

    Bix Weir


    Friday, September 30, 2011

    Stunning Plunge in COMEX Commercial Silver Net Short Positions

    The CFTC just released its commitments of traders (COT) report at 15:30 ET for trader’s positions as of the close on Tuesday, September 27 and the data show a stunning drop in the large commercial net short positions in both gold and in silver futures.


    For example, as silver fell $7.88 or 19.8% Tues/Tues, from $39.76 to $31.88, traders classed by the CFTC as “commercial” reduced their collective net short positioning (LCNS) by an extremely large 16,446 contracts to show 24,262 contracts net short. This, while the open interest fell by 10,089 to 102,014 open.

    Just below is our graph for the commercial net short positioning for silver futures on the COMEX.

    Source CFTC for COT, Cash Market for silver.

    Not since November of 2008, during the heat of the 2008 Panic, has there been a smaller commercial net short position for silver futures. We can say that as of Tuesday, the largest, best funded and presumably the best informed commercial traders of silver futures had taken the price downdraft opportunity to very strongly reduce their short bets for the second most popular precious metal.

    We will have more commentary on this unusually large reduction in commercial net short positioning, including a 30,945-contract reduction in the LCNS for gold futures, in the technical graph comments for Vultures, which we intend to complete by the usual time this weekend.
    (Ed. Note added at 16:35 ET. The last time the combined commercial traders were this "small" on the short side of silver futures, November 25, 2008, the price of silver then was $10.33 the ounce. Therefore, with silver at $31.88 on Tuesday, having tested as low as $26.04 in panic liquidation selling the day before, we can say that commercial traders had about as much confidence in the price of silver going lower as they did at $10.33 silver three years ago.
    Incidentally, for Vultures, the relative commercial net short positioning also plunged to a very low and usually bullish 23.8% of all COMEX contracts open - the lowest LCNS:TO since October of 2008. (Graph below.) This is a very bullish COT report for silver. Let's see if the market "gets" that in the days and weeks ahead.)

    ***Further notes added at 18:31 ET: ***

    Factoids about this unusually large reduction in commercial net short positioning for discussion purposes.

    Silver LCNS

    -16,446 contracts net short is the largest 1-week drop in large commercial net short positioning (LCNS) since February 14, 2006 (-25,048 contracts then, with silver then $9.22).

    24,264 contracts net short is the lowest LCNS since November 25, 2008 (LCNS was 23,682 then with $10.33 silver).
    23.8% is the lowest relative commercial net short positioning since October 21, 2008 (23.2% then with $10.10 silver).
    As silver fell a net 19.8% Tues/Tues the large commercial traders reduced their net short bets by 40.4%. To find a larger 1-week drop percentage wise we have to go all the way back to March 25, 2003 (-47.7% then with $4.39 silver).
    The largest portion of the net short reduction was by the Producer/Merchants, the category which includes bullion banks. They covered or offset 11,213 down to 33,563 contracts net short – the lowest net short position for the Big Sellers since December 9, 2008 (32,878 contracts net short then with $9.83 silver).
    Swap Dealers, the “other commercial” traders, increased their net long positioning for silver futures by 5,233 to 9,301 contracts net long. They more than doubled their net long position in other words.
    102,014 is the lowest open interest for COMEX silver futures since August 25, 2009 (101,539 then with $14.28 silver).

    Gold LCNS

    Since September 6 (3 reporting weeks) gold has declined a net $224.95 or 12% (from $1,874.87 to $1,649.92 Tuesday) while the large commercial net short positioning (LCNS) fell by 61,031 contracts or 26.8%.

    166,683 contracts net short is the lowest LCNS since May 5, 2009 (160,445 then with $896.75 gold).
    465,414 is the lowest COMEX open interest for gold since February 1, 2011 (462,907 then with $1,341.10 gold).
    Since August 2, (gold $1,659.23), gold drove up to test the $1,920s and round tripped back to about $1,650 for this COT report. As it did the large commercial traders got the heck out of 42% of their net short positioning (from 287,634 to 166,683 contracts net short). So, in effect, since August 2 gold has dropped a net $9.31 or 0.6% but the large commercial net short positioning plunged a net 120,951 contracts or 42%. – Gold is very close to where it was August 2, but the commercials are hugely less net short, 12.1 million ounces less net short at virtually the same price today.
    Producer/Merchant’s reduced their net short positioning by 19,531 or 10.7% for the week.

    Swap Dealers were down to just 4,270 contracts net short gold, having covered or offset 11,414 contracts for the week. Swap Dealers have reduced their collective net short gold positioning by a stunning 87,424 contracts or 95% just since August 2.

    465,414 is the lowest open interest for gold since February 1 (462,907 then with $1,341.10 gold).
    That is all for now, but there is more to come.


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