After a wild and crazy Globex opening, the metals have rebounded. Is the massacre over? Maybe.
As you can see on the charts below, the PMs are going to try to form bottoms tonight and Monday. Whether they will is another question, altogether.
{CHARTS REMOVED. USELESS WASTE OF SPACE.}
With the margin hikes that go into effect tomorrow evening, you should still expect a lot of volatility overnight in London and on the Comex tomorrow. However, it is likely that we are fast approaching the point where everyone who is going to sell has sold. When that happens, you are left, of course, with nothing but buyers and UP goes price. Of the two, gold looks to be the closest to the bottom and safest to buy. It has stopped twice now almost exactly at its 100-day moving average (around $1633) which tells me that there are bargain buyers willing to step in here and halt the slide.
Silver, on the other hand, has been beaten so severely that it is almost unrecognizable. With the latest move by the criminal C/C/C, silver margins are now so high that it is going to be quite a challenge for silver to mount a significant rally. Yes, it will bottom and, yes, it will rebound but silver margins are now so high that it's going to be quite difficult for silver to generate the open interest necessary to drive the Comex futures price back to $50. Mission freaking accomplished, JPM. Well played.
Look, what do I know? I'm just a dope with a Macbook but, after a weekend of consideration and thought, here's what I believe:
1) Dodd-Frank and the pending civil lawsuit put "the fear of God" into JPM last spring. For the first time, they could see the writing on the wall for their ongoing, massive silver manipulation scheme.
2) They began covering their massive short position but, when no speculator selling and or profit-taking materialized, price quickly got away from them and they were forced to cover at higher and higher prices.
3) Sensing the risk of a runaway price, they orchestrated a huge, criminal $6 takedown of silver on the Sunday evening Globex, April 29.
4) This move started a cascade of selling from momentum-based, traditional and HFT algo traders.
5) Their friends and co-conspirators at the CME willfully played along by raising silver margins 5 times in 9 days.
6) Covering shorts at lower prices all the way down allowed JPM to significantly lessen their total silver short position. But they didn't get rid of all of it. Not even close.
7) Enter the CFTC and their next, scheduled meeting on 10/4 where, supposedly on the docket, is the discussion to finally mandate a timeline for the imposition of a strict, 1500-contract position limit in silver.
8) Caught flat-footed, JPM panics and institutes another ruthless attack in silver that is even greater in size and scope than the attacks of late April and early May. A 25% drop in 2 days!
9) By once again setting off algo-based sell signals, they are able to drive price substantially lower, all the while covering as many of their long-held shorts as the can without reversing the downward momentum.
10) Silver margin rates are now so high that the Comex has basically become a physical market. In the absence of speculators, there is little chance that silver will skyrocket again anytime in the near future. In this environment, JPM will be able to cover (buy) all of the shorts they'll need to, to be in compliance with Dodd-Frank. They'll be able to do so in an environment of stable prices, thereby alleviating the danger of steep financial losses, similar to what they incurred last spring.
11) Once position limits are implemented and JPM is, for all intents and purposes, out of silver, the price of silver will finally be free to trade. It will, in time, rally past $50 and move toward $100.
When will this be, you ask? Why don't you email Commissioner Chilton and/or Chairman Gensler. Maybe they can help you with that.
OK, so maybe that makes perfect sense. Maybe ole dopey Turd is onto something. If that's that case, why did gold get whacked? Same reason, actually.
Longtime readers and astute marketwatchers will recall that the month-long move in gold from 1650 to 1920 was almost entirely due to short-covering by The Cartel. Almost entirely. (This is why all of the "bubble" talk in gold is so much BS.) By early September, The Cartel found themselves in the same position in gold as JPM found themselves back in April. Solution: It worked so well in silver, let's try it in gold! Gold has now seen three margin hikes and the gold Comex is rapidly becoming an unleveraged, physical market, too.
Position limits will also apply in the gold pits but the short-covering in gold stems from a different kind of banker panic. Losses. Potential steep losses. The bullion bankers may be ruthless but they're not stupid. They can see what's coming just as clearly as you and I. They want no part of it. When the true nature of global demand for gold is finally realized, would you want to be short thousands of contracts with a cost basis near $1000? Me, neither. Like silver, however, a month ago they were covering into higher and higher prices. Something had to be done, and, there you go. Will gold halt its slide tomorrow? Who knows? Who cares? All I know is that it's going higher. Much, much higher. Very soon.
So what is your strategy from here? Keep buying physical metal but, for the love of pete, don't fiddle around with the criminal C/C/C. The ole Cartel's got a little "Mississippi Leg Hound" in 'em. Now that they've begun the process, it's wise just to let them do their business. When they're done, they'll get out of the way and leave us alone. Do understand this, however: The time for a massive, upward explosion in price is drawing near. Be patient and you will be rewarded. Do not get frustrated. Do not act in haste. The final days of Evil Empire price suppression are upon us. Prepare accordingly.
TF
8:25 am EDT UPDATE:
As we await the Comex opening, I just wanted to prepare you for further volatility. Do not be surprised to see the overnight lows tested at some point this morning. I must admit that it was with incredulity that I mentioned $27 and $24 as possible lows for silver back on Friday. Now, not so much.
https://www.tfmetalsreport.com/blog/2481/ok-here-are-some-charts
Let see what happens today, a day when literally anything can happen. I'm chuckling to myself as I type this because, personally, I'm only out the money I have in December calls (and, frankly, for those there is still some hope). My stacks of physical, however, just keep getting shinier by the minute. If you can find supply, I strongly urge you to use this weakness to buy more metal. Enjoy the show! TF
