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USD Short Covering, EUR Capitulation Ending, Silver Spec Longs At Two Year Lows
As we expected, the recent rout in the EUR and the spike in the USD have largely kicked out all marginal speculative elements. As the first chart below indicates, as of May 17 net non-commercial spec EUR contracts dropped by 19.8k from 61.4k to 41.6k, nearly a third of the current bullish bet. And as that was happening, USD shorts were covering rapidly, confirmed by the weekly change from 4,563 contracts short to just 1,270, the most bullish position in the USD since January 2011, and roughly where it was back in October 2010.
And probably more important, now that speculative fervor is all the talk, the silver net long positioning by non-commercials, contrary to conventional wisdom, is not only at an all time high, nor was it recently, but instead in the last week plunged to a level last seen back in April 2009. Net silver exposure has dropped by almost 60% since its recent peak in February (40,937 contracts), and at this point it seems all speculators have left the party. The new base is now being rebuilt based on much firmer hands.
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"Banks will have to fight to keep their balance sheet up and running... The bonds markets will suffer deeply. No time to speculate on something as insignificant as silver. That is only my HO."
OR
"I have to say that unless I have clear indication otherwise, my bias is for more downside. "
So is it too insignificant to even bet on, or a highly lucrative short for right now while a total quadruple-bagger in the near future?
Price suppression of a certain commodity may seem trivial and beside the point, not worthy of one's attention when attempting to preserve the status quo of a fiat monetary system and the massive profits and control this enables -- unless the commodity in question is a monetary metal whose very existence calls into serious question the viability of fiat money.
Also, only attempt to wear the shoe if it seems to fit -- I was not talking about you specifically. But you really should re-examine your thesis that QE is ending, and that banks will be in serious trouble as a result...
QE 2 is ending that is for sure. QE3 is coming.. probably. A continuation of the correction in silver looks highly probable until next support, which is somewhere below 30$ IMO. 26's definitely is a strong buy.
Maybe your are right and no short squeeze are coming on the USD. But once stocks will start to fall ... bonds too ... what will be the best safe heaven around? Highly price gold? Or falling USD against a craking EUR? I'm incline to think about the USD. Sure QE3 will destroy all this and push the USD to unseen lows, but since trading is all about timing. Whenever which come first, I'm in. Still Short Silver. Looking to go long at a better price than 35$.
Ya that's right. You can't break it under 35 and keep it there. Sucks to be you.
LOL. It hit 34.19 intraday. Guess who made some money flipping it.
I'm not telling anyone to short it at 35 inconditionally. 36 would be better if they provide us the opportunity to do so. But ... not considering 26$ first ... prior to any bull run to infinity and beyond is not as serious as saying that I'm a fool.
Bigger folks will settle that out Monday morning, Eric Sprott on the front line. That guy is a genius. He exited SLV at the top. Poor bagholder that he left alone.
Has he entered the fray yet to buy them back?
Sigh. Every time I make up my mind to consider you a contrarian (to silver-bugs, anyway) but fundamentally honest trader, you have to go and say something like this.
I would recommend some further reading and research as to the a) facts/current events b) historical events and c) supply/demand fundamentals of silver before proceeding to place any further bets in either direction on Silver price movements. Also, the differences between spot price, physical silver in hand price (a retail and commercial quantities), SLV, PSLV and silver futures. GL.
Okidoki. Will do.
USD isn't falling anymore ... so cash settlement for Silver contracts is still on option the COMEX can live with.
Please excuse the vulgarity, but WTF does the falling or not falling USD have to do with cash settlement being an option COMEX can live with? It's always been and always will be an option, regardless of USD 'price' (laughable as such a concept is, once you stop to think about it).
It will operate just fine as an option, until miners/refiners are given/create alternative options for disposing of their a) raw output and b) hedging their risk. Though perhaps the cessation of operation as a meaningful exchange will in itself solve many parts of a) and b), as the task will mainly consist of building larger, more secure vaults and lots of teller windows for prospective clients to line up to sign long- or short-term contracts with the producer directly.
I mean that when the USD is falling, trader perfers physical delivery instead of cash settlement. But when the fiat currency still hold value for a short while, they prefer cash settlement. Paper is still easier to handle than physical bars.
So the COMEX default on shortage inventory theory holds only, and only if, the USD continue its fall IMO. That was one of the main argument behind the last bull run. COMEX default seems less likely right now. Silver bars can be traded for paper, still. That is what the markets is telling us right now IMO.
Really? Really? So let me get this straight. 1000 oz. silver bars are too bulky to handle when USDX is at 75.x and going up, but are perfectly easily handled and warehoused when USDX is at 73.y and going down?
Just because you cannot be bothered to read reports on open interest, COMEX inventory (dubious though their statements are), do you REALLY have to assume no one else does either?
Traders prefer whatever makes them the most money. Continued existence of the COMEX maximizes profits, they have no interest in causing a 'default'.
Industrial users do NOT have much use for paper promises to deliver silver at a future date IF they have current need for the metal. And investors who are serious about protecting their wealth will not be satisfied with these promises either.
And none of this even touches on any .gov interest in making sure the shellgame continues, with just enough spectators to keep the sheeple fleeced, but not so many that it might turn into a lynchmob.
Thank you, Captain Obvious. Good luck on making sure your timing on the continued viability of these pieces of paper is accurate down to the nanosecond
Just a thoughts on Gold.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3186525&cmd=show[s179421086]&disp=P
That weekly charts (thanks to genius Shanky chartsbooks) shows that Gold/EOD is reentering a bullish wedge. Typically when that cracks .. the correction that follow is impressive.
MACD about to bearish cross in few days, few weeks. RSI tops days ago.
Just a thought. I'm not short Gold yet. Gold has been hovering just above 1500$ lately with no clear intention to go to 2000$. Statu quo isn't a trader's thing IMO. Someone will have to give up somehow...
Truly...you are not among friends. No one gives a fuck about your day-trade blathering.
The trend is in place, no matter how much the the Ponzi paper-scheme apologists lie.
Invest accordingly...
Will do.. Silver have lost 15 bucks out of the top. The investement of the decades indeed. In fews trading sessins maybe.
It could be the booze but your english seems to deteriorate as the night goes on.
Or you've had a few sessins.
I look forward to a more credible impersonation of marc faber turn long duck dong.
I see, trollspace has once again become a little crowded with new usernames. Ideally, we'd just be able to ignore them (AFAIK, there is an ignore-plugin for this website's software). Since we cannot (yet), here's updated list of current troll-accounts. I have left out older accounts, as well as accounts of which i am not 100% sure yet. As usual, don't take my word for it, but verify yourself, i.e. via "track" in the user profile.
meth and RT of course are well known. We also have our favorite someone who regularily needs to create new accounts - i'm of course talking about zing aka fed supporter, The Axe, wirtschaftswunder, WorthlessShaftUnder, long juan silver, William the Bastard
Besides of those, we currently have:
texas gunslinger
hamywanger
what does it all mean
ivars
Maniac Researcher
mick
Spalding_Smailes
OuaisBla
gittyUP
longorshort
P.S.: We also have two accounts who almost never post thread relevant content, but rather only post spam to their sites: silberblick and icm63
???
Funny. I just post that I was Short Silver with my personal thoughts on this. Now I'm identify as a troll.. with a bunch of other guy that I don't know.
Nevermind. I'm a Quebecer... French Canadian for those who don't know the difference. Tyler, please tell me that you are aware of this ...
Like I said, few penny off up or down from the today's close of 35$ bucks will settle the tone for what's next in the Silver market IMO. I'll trade accordingly...
The safest thing about Canada is on a good day our Salvation Army can kick their ass.
As far as the french... Well, they've always been there when they've needed us.
Party on, Garth.
You are not posting any "thoughts". You are simply flooding threads for the sake of provocation - not just regarding silver, but also other topics. You are the very definition of a troll. Not someone with a different opinion, but someone flooding threads with posts designed to annoy people. Destruction for the sake of destruction.
So basically anyone not of "the herd"?
ivars for example is doing his own analysis of the markets and not just silver. Tried to warn everyone several times that what we were seeing was blindnigly obviously silver fever.
My own facile analyis (extrapolate an exponential decay in the value of dollars) suggested mid 30s in value for silver. Guess what, here we are.
Just because someone disagrees with you doesn't mean they are a troll, they may just have a different view of the situation. It may even be worth your time to find out why their view differs. A lot of the time it will be trolling, some of the time it will be ignorance and occasionally you will learn something to your advantage.
css1971,
No, that isn't the case at all. ivars bashed silver long before it went to $49 and has been calling for even lower silver, which has not materialized. I believe he said $32 by last monday. That said, price is just one issue here.
1)Consider it a gift to purchase physical silver at these levels. If it goes much lower, shortages will be everywhere, much like 2008. Delays on delivery are already present in some places.
2)There is no "herd" in silver. Try a "remnant". 1-2% of investors does not represent a "herd". Talking that kind of crap will get you nowhere. ZH is on the cutting edge on this subject and not the norm. Please try to get a grasp on that.
3)"True value"? Using inflation as a gauge, we need over $130 to reach a new real high in silver. Maybe you're like Paul Van Eeden and Jon Nadler who said golds "true value" is only worth $700 or so? Both have been completely discredited in the PM sector, much like Jeff Christian and Dennis Gartman.
4)Do you even know why silver went down and what caused the massive drop? Try listening to some silver experts before popping off on things you don't understand. Ignoring important evidence will not help you around here, I can assure you of that.
http://www.youtube.com/watch?v=elzmzwaicl4&feature=related
after reading the above what can an old man say?
oldman
The dollar has turned against the euro and will strengthen further. The gold and silver market will probably rally alongside the dollar versus risk currencies as the market will finally start to digest what correcting commodity prices and a eurozone default actually means. Then in a few months, uncle ben will announce QE3 under another moniker, and we will start the decline in the dollar again. Right now, I think being long the dollar is an excellent trade.
One thing is the speculative short postion in the currency being reduced. But of much greater importance is the enormous implicit short position in the dollar that is expressed by the market being so effing long any type of commodity. This summer is likely to see a sickening correction in industrial commodities like zinc and copper as global growth slows. Hopefully, gold and silver will correct so I can get more at bargain prices. But I'm not so sure.
Many traders and blogger warns that an hyperbolic silver without proper downside on the USD would be a great opportinuty to sell Silver.
Which was, obviously. The Sell Off happened. But, my question is, is it still happening? That would be great for two things. Shorts Silver position would be still valuable, long position could be acquire at a better price.
Heres a link to 30 min SLV CHart.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3186525&cmd=show[s233460667]&disp=P
A Bearish Cross will occur in the next trading sessions. If you go back in Fedruary, when Silver goes from 30$ to 26$, before the incredible bull run he had. (I'd like to say thanks to ZH team for pointing that out at that time.) Then the bearish cross back then was an opportunity to buy at low price. History could repeat itself this time as well. So a Silver Short position right is risky. I admit that! But I just can't rule out more downside yet. I still have in mind that the rebound from the lows might have some room left. So I'll be quick to exit a not profitable position.
On that Chart, note that MACD is turning to the upside slowly. But that is not a perfect indicator, cause it could turn slowly up on side ways action. Clear breakout require RSI and Slow STO to turn up as well. But since they are still down, price movement might follow the down trend for a little bit longer. I'll be monitoring those closely in the next few days.
We all know that the Ben Bernak got inflation uncontrolled cause he got mad using its printing press. But, when the Bonds markets will lack its main buyers (The Fed) in a month. Banks balance Sheets will be in jeopardy and liquidity contraction will start, desptite the continuation of low interest policy. That liquidity contration will push the Stock market down as well. That is JMHO.
Now two things. A falling Bonds market, plus a falling Stock market means that the only safe heaven left would be the USD. That would be temporary of course. Like Silver at 40$ was a few trading days opportunity as well even though it took a bull run of one year to reach that goal.
It's May 21st and I'm going to have to go check the neighborhood to see who got "raptured-the-fuck-outta-here". I'm going to hazard a guess and say not one sole was saved.
But seriously folks, if any of you have ever been exposed to "The Greatest Fairy Tale Ever Told," then I've got another one for you. It's about the US Dollar, "The Greatest Reserve Currency That Could Never Fail."
Whenever I read these threads and the troll-to-truth ratio goes way up, I have to ask myself, what the fuck are the trolls up to.
If you are a PM basher, and you want to be taken seriously by anyone, and have some shred of intellectual honesty, you need to answer one question with some amount of rigor: How the hell is the US Dollar going to survive the crushing debt that exists and that is being piled on? All paper currencies eventually fail due to exactly this problem. That's history. The average currency lifetime is 40 years. The US is behind the Massive debt 8-ball and has no way out. A reset is needed. The reset is always accomplished by inflation, and rarely by stupid people through default.
So start doing your homework. Tyler has made is super easy by collecting tons of relevant information about exactly how cooked the fucking goose of the USD is, in numerical, debt laden terms.
Now, just because you don't like the shiny-shiny, doesn't make you a bad or stupid person. There are lots of smart people on ZH who hold different views. But you need to explain, either to yourself, or someone, in a convincing fashion (please convince yourself first), that the dollar is not going to turn into worthless confetti.
Explain to everyone how we are going to magically escape debt implosion, by the rapid acceleration of more debt creation. If debt is our problem, how is more debt, faster, going to solve the problem? If you can do this, even a little bit, you'll definitely earn my respect. If you can't, that doesn't mean STFU, but it does mean that YOU DON"T HAVE THE SLIGHTEST FUCKING CLUE beyond the typical 1 week in and out trade.
Dow saw the market as the ocean. There is the tide, the waves, and the ripples. Traders see the ripples, and play them well. But the tide here shows that the DEBT TSUNAMI is approaching. So talking about your little ripple is meaningless. I understand that's how lots of Traders make their living (and I wish I were better at that particular part of the market, I'm really envious). But it doesn't change the fucking TIDE. Will a currency crisis happen in 6 months or 4 years? No one knows. I'd argue we are already in it, and it's accelerating. But I just can't see it taking too much longer than that. The debt creation process is too out of control to last a lot longer than that, in my opinion.
So for all of you who believe in fairy tales, let me remind you that your un-raptured ass is still here, down in the trenches with us. So you'd better start figuring out with the rest of us how to survive the coming clusterfuck.
You are totally right. The USD will get crash on day. I'm not arguing against that. Simply, that I think that it will not happens in timely and ordely fashion. I'm expecting USD to rally in front of the ending of QE2 . Then, debts problems next Fall will arise.. the roots of that being the Bonds markets that will be crushed at the same time QE is ending. There is many that are short treasuries right now. Ie Yield curve will start to rise once the short trem part of it. So, the USD will rise! Pure cause and effect, nothing related to common sense or general knowledge of how things "should be". JMHO.
So, this bring me to an alternative to you guys, those south of the border. You might consider to flee your homeland while your dollar still at par with the Canadian loony. Come here up North where summer time lasts only few months, if not few weeks. The Canadian stable economy is an hedge against a falling US one.
Then after many years of debt ceiling increase, following a default of your country. You will be able to use your loonies to buy back what you have left behind at a better price.
Australia? A little bit too far away. The eurozone? Germany maybe. But closer you have ... Canada! :)
On a side note. as you say it is supposed to be Doom day today for many stupid fanatics out there .. But what is closer than the truth IMO its that Wall Street have created a Doom generation of youngsters that will have to think differently to survive. ZH is a good start for most of us. Contrary to the first impression that I gave in earlier post, I'm a usual reader here on a daily basis.
I standing on the Porch right now, being beaten to see I much I can endure prior to be accepted. Tyler rocks!
The dollar will continue to rally against the euro until it goes too far, and then the euro will rally against the dollar, etc.
However, both of these currencies are in a downward trend. They rally against each other until the trade gets too one sided, then everyone heads to the other side of the Titanic.
The dollar has already had a really nice bump due to the "we got bin laden" effect, but it seems like it's going to roll over imminently.
As far as being accepted, just support your position with facts, and put forth well-reasoned, sincere arguments. This is the only way for people to determine whether you are a replicant (paid troll), or a real person.
It's analogous to the Voight-Kampf test from Blade Runner.
Of course, tests can be faked.
"In politics, sincerity is everything. Once you can fake that, you've got it made!" - Groucho Marx paraphrasing Jean Giraudoux paraphrasing someone no one remembers.
Fiat2Zero,
Love your writing style....very nice rant.