Traders Are Buying Gold & Silver At Fastest Pace In Over A Decade

Tyler Durden's picture

The last time large speculators were as aggressively buying silver as last week was September 1997. The net long non-commercial positioning in Silver futures, according to the CFTC rose almost 22,000 contracts last week to a 3-month high (which is closing in on the 'longest' since 2005). Gold, not be out-precious'd also saw major buying. Net speculative longs in gold added over 45,000 contracts - the most since July 2005 - lifting net long positions to their highest in 3 months. Perhaps, just perhaps, as Alhambra's Jeffrey Snider notes, this is due to Yellen putting the 'dollar' back on suicide watch.

 

Large speculators increased Silver net long position to $4.4bn from $2.4bn notional.

 

Large speculators increased their net long gold exposure to $14.8bn from $9.2bn notional.

Charts: Bloomberg

Contrarian or not, perhaps Alhambra's Jeffrey Snider's view that Janet Yellen's contortions have put the dollar back on suicide watch are creeping into the market...

Volatility in UST trading declined a bit in the past few days, as treasury yields became far more settled intraday. While that breaks the exact duplication Monday and Tuesday this week traced from Monday and Tuesday last week, the past two weeks overall remain remarkably similar. And for all the noise, the ups and downs along the way, treasury yields haven’t much changed. That observation applies as far back as May 6, which means that for all the mess there isn’t any more clarity.

ABOOK May 2015 Dollar Turn UST 10sABOOK May 2015 Dollar Turn 5s10s Nominal

Far be it for UST’s to be trading sideways alone, it seems as if oil prices (front end) have fallen into the same. Adding oil to the discussion immediately frames this as relating to the state of the “dollar” in more recent weeks, which looks to be in sharp contrast to the period between March 18 (FOMC) and May 6. Nominal rates were rising rather steadily in those nearly two months right alongside oil prices.

ABOOK May 2015 Dollar Turn Oil

The eurodollar curve has also gone limp, as eurodollar futures trading has found an extremely narrow range also since May 6. This, too, marks a defined shift from the March 18 to May 6 period, meaning that UST credit, oil prices and eurodollar futures all likely share the same inflection.

ABOOK May 2015 Dollar Turn EurodollarsABOOK May 2015 Dollar Turn Eurodollars2

We can also add “inflation” breakevens, at least as far as a potential change dating to May 6. Breakevens had been rising rather steadily since January 15, which I still think was an indication of hedging for (against?) the next QE.

ABOOK May 2015 Dollar Turn Breakevens

These rates and prices are a broad enough survey, especially as unified by May 6, to at least entertain the suggestion about whether the “dollar” pause that began on March 18 has ended. That may be taking it too far at this moment, since there aren’t any actual and sustained moves in a countertrend, so it may be more reasonable to instead assume a at the very least a pause to the pause.

I think that notion is given further credibility by UST trading Wednesday in response to the FOMC statement; there really wasn’t any response. The same goes for eurodollars which seemed unperturbed by the almost dispirited desperation that the FOMC was trying to forward as a reasoned basis for whatever they might do. That, then, places far more emphasis on what might have occurred on May 6 to make such a unified impact in global money and credit markets.

That was the day that Janet Yellen made her belated wish that stock prices weren’t so winsome. She referred specifically to “potential dangers” due to “quite high” equity valuations, as well as reminding everyone of 2013’s “reach for yield” critique; i.e., asset bubbles. In terms of the idea that the FOMC may have changed its mind about ending ZIRP this is another factor that may have been missing to that point. I believe it was taken on March 18 that the FOMC then was projecting a change of heart based on “shocking” and “unexpected” economic weakness. Therefore, it was some initial hope that the economy alone would dispel the nervous urgency of Yellen et al to just get it over with.

However, Yellen’s curiously rather direct focus on the asset bubbles alters that dynamic, maybe significantly. There was always background noise in Bernanke’s last year (reach for yield) that the largest dangers were getting to be financial imbalances. The worry was that at some point it may not matter so much the economy as the Fed might find itself in the Chinese position where bubbles became the larger priority (by far) regardless of economic weakness. So Yellen’s May 6 monkey wrench might have brought that possibility back to the forefront, at least as far as some initial consideration.

Obviously, it hasn’t been taken as fixed income gospel yet, thus the sideways action lasting now a little over two weeks. This week’s FOMC statement did nothing at all to clear up any perceivable favor one way or the other. The utter mess of rationalizations could actually be taken as supporting both versions, hawkish and dovish; the continued allusion and even “official” recognition of some stark economic weakness and very little of organic trends to offset it, but also that the Fed may be excusing all that as still consistent in their view with the ending of ZIRP.

ABOOK May 2015 Dollar Turn FrancABOOK May 2015 Dollar Turn RealABOOK May 2015 Dollar Turn Gold

It isn’t completely clear either from other “dollar” proxies as to where bank balance sheets globally might be progressing. Again, there isn’t any sustained trend here to offer a more compelling interpretation, but enough of a muddle in which to accommodate the possibility of resumption toward tightening. Gold, for example, has been trading mostly sideways dating all the way back to late March. The Brazilian real devalued starting on April 28, and the Swiss franc at least stopped its ascendant run on May 6.

So these “dollar” and credit markets may not yet know what to do regarding Yellen’s version of “conundrum”, but it seems as if her introduction of complications has led to at least contemplation about it, tipping the scales, ever so slightly, back toward financial suicide.

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AIIB's picture
AIIB (not verified) May 23, 2015 5:40 PM

So... The El-IDIOT Wavers were right after all... Ag is goin' to $12...

Soul Glow's picture

SIlver is going way higher.  It is money and will always be money.  It is also anti=bacterial and anti-fungal.  It is also pretty and makes nice jewelry.

kliguy38's picture

I just buried a box of FRNs in my backyard and will dig it up in 20 years because Janet surely won't devalue it.

Achilles Heel's picture
Achilles Heel (not verified) kliguy38 May 23, 2015 6:05 PM

All the fucking fucks who JUNKED that <above> should be, like myself, ecstatic if Ag goes to $12.

 

Unless they actually were EW'ers, whereby, they should upvote it as well, if only  just to be correct on their stupid charts

 

Fucking Hell ZH is full of motherfucking IDIOTS these days...

 

Cheesy? Fonz? TRAV? Lennon H? Slewie? Where art thou?

Soul Glow's picture

I'm Lennon.  I don't know where the other guys are.

I get you, and I didn't junk.  However I don't want silver to go lower, I want it to go higher.  But if it does go lower, yes I will buy more.  I'll buy more below $16 too, but I just bought a bunch a few weeks ago and I'm pretty happy with myself right meow.

:)

AIIB's picture
AIIB (not verified) Soul Glow May 23, 2015 6:33 PM

Nice 2 see you again... MY FRIEND :-)

 

It's OK if it goes lower... or HIGHER IMO...

 

FWIW ~ You were one of the 'ORIGINAL' ZH posters who I ever listened to... Been stackin incrementally since summer '10, pre BRETTON WOODS... Everything UNDER $26...  (&FWIW ~ I get the meow, a signature within the signature ~~~)

 

f_s

Captain Debtcrash's picture
Captain Debtcrash (not verified) AIIB May 23, 2015 6:34 PM

If anyone hasn’t taken a look at this program is it a great way to buy the dips.  Its not selling anything just a calculator I came up with that helps you be a bit more aggressive when the price drops. Low stress like dollar cost averaging but more aggressive when needed. 

bwh1214's picture

Good program Capt. I started using it last month and am planning on sticking with it.  I think if the fed hikes rates there will be good buying opportunities ahead.  Temporary of course, which the program should help to take advantage of.

Captain Debtcrash's picture
Captain Debtcrash (not verified) bwh1214 May 23, 2015 6:48 PM

Thanks. The program’s free by the way. Just trying to pass on something that has worked for me.

 

THE DOCTOR's picture

What no endorsement from Pancho de Villa? Fuck off... 

MonetaryApostate's picture

Good thing JP Morgan stocked up on Silver eh???

 

Fear & Greed drive the markets, all you have to do is STEER THE QUEERS! :D

Soul Glow's picture

Those fuckers have had one desk short and one desk going long the whole time.  Then they'll hand off the shorts to the next Corzine right before the SHTF.

Hang Dimon from a tree.

CultiVader's picture

Hey Cap'n, love your blog so far. Keep fighting the good fight brother!

philipat's picture

Unfortunately, high Long positions by large specs means (On the other side of the trade) high SHORT positions by Commercials (aka JPM and The Fed). Which means the next "Rinse" cycle to the downside is due (When the Commercials will cover all the shorts at a profit), and in fact is already happening. The Commercials OWN the PM futures markets because, with a captured regulator and no position limits, they can print as much paper to naked short as they want.

BaBaBouy's picture

Right, Right, Right, Right, Right...

The SPECS Will Get Their A$$es Handed To Them, Yet Again...

Stay OUT Of CRAPEX IMO, Just Accum Phys, What You Can Pay For...

cpnscarlet's picture

"No actual gold or silver was killed or injured in the making of this travesty."

The American Precious Metals Humane Society

philipat's picture

Gold in this next cycle will probably go down to near $1100 and Silver to $15. That is a tradeable range. Good time to make some money on the short side (GLD and SLV Options are good) then use the profits to buy more physical at the lows. Then do the opposite in the next "Wash" cycle, which will bring prices back to more or less where they are now as the Specs go long again and Commercial shorts have been covered at a profit. If the Commercials want to be so totally obvious in their game, better to get on board with them for trading purposes?

loveyajimbo's picture

"The Commercials OWN the PM futures markets because, with a captured regulator and no position limits, they can print as much paper to naked short as they want."

What do you think happens to those corrupt swine when the futures contract holders FINALLY stand for physical delivery? 

And I agree, the CFTC is, and has been, loaded with crooked scum... ditto the SEC and the "justice" Dept... hope they are all prosecuted when we finally rid ourselves of the traitor pig Democrats... and get an AG like Gowdy, helped by Bill Black.

I_rikey_lice's picture

September 1997 and July 2005. Look it up. Prices went up after those 2 dates so maybe this time is different.

HungryPorkChop's picture

Price is goin' nowhere.  Remember the unrelenting price slams started about a week after a private meeting with all the big banks at the White House in 2011.  In hindsight their goal was obvious which was to rig the gold and silver prices lower in attempt to destroy safe havens and protect FIAT.  Gold and silver is controlled 60:1 and 120:1 by paper.  As long as the FED can hit the CTRL Print Button and billion$ appear out of thin air they will continue to spend $tens of million$ per month in order to fund all of these derivative shorts. 
Until this stops, the price is goin' nowhere.  So ignore all those fancy graphs, elliot waves, head-and-shoulders, 200 day moving day averages, etc.  I think they could allow silver to rise a couple bucks just for fun and to make it look its not 100% rigged before slamming it down again.  But I fully expect it to remain capped until the wheels come off the car. 

BaBaBouy's picture

Gee Whiz... I Need Find Out What Stopped GOLD At $1230. Dead In Its Tracks This Past Week.?.
NAW... Couldn't Be...

greenskeeper carl's picture

f_s, huh? i figured you were still lurking around here somewhere. you seem pretty tame compared to the old posts.

 

and yes, i would be happy as hell if silver dropped to 12. take gold below 1000 too while your at it. my spare FRNs would go a lot further

espirit's picture

I'd like to see the delivery schedule.

(if there is one)

Infinite QE's picture
Achilles Heel


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Achilles Heel's picture
Achilles Heel (not verified) Infinite QE May 23, 2015 6:35 PM

and?

Lets Buy The Dip's picture

the gold charts and breadth above look worrying, probably bullish for the market? right?  IDK

Everyone keeps talking about a crash on the market, and the FED raising rates. 

 

What baloney! Until I see evidence of this, I have to be skeptical sorry. 

 

One Market analyst I listen to ==> http://bit.ly/1fMcakI  his calls are rediculously accurate. He basically has a great knowledge on what is coming next and has been 99% right in this bull market. 

 

Janet yellen can kiss my arse, they keep warning about interest rates, and warning the market and bonds will crash, 

yet anyone knows that even in the first 12-24 months of interest rate rises the market does not crash - that going back 50 years

or so. 

 

For now their game is get everyone short, TRAP THEM and then take us up higher!! yes that old chest nut.  Fool me once, shame on you. Then....fool me twice SHAME ON ME!

Kirk2NCC1701's picture

When  AG goes back to where I break even, I'll sell it.

If I want volatility and odds of getting screwed, I'll date a young bimbo.  Much better ROI than AG...

In both cases I end up with Acquisition & Handling fee, Storage Fee, Disposal fee.  But only in one case is the Handling and Storage quite pleasant. 

;-)

analyzer_66's picture

silver should be 30-40 dollars per ounce, its still being heavily rigged and hammered back down if it gets too close to 20.

Long-John-Silver's picture

So... The El-IDIOT Wavers were right after all... Ag is goin' to $12...

They are buying paper Silver and Gold, not physical Silver and Gold. Paper Ag is actually going to $0 when they attempt to have their physical Silver and Gold delivered. They will suddenly discover they will be delivered worthless Fiat Dollars instead of the physical metals they thought they were buying. When that happens physical Silver and Gold will do a moon shot just as it did in Weimar, Germany and Zimbabwe.

midtowng's picture

The four year bear market is over. It's obvious from the charts that gold isn't going to stay under 1,200. That means its only a matter of time before it starts going up again.

ultimate warrior's picture

I agree but I think it is possible for a quick dump back to the 1080-1100 level IF again this is a big IF Yellen has the balls to raise rates. Now with that said I would only expect a rate hike between 10-25 basis points which is a joke of a rate hike but I think that's all it will take to bring the stock market tumbling lower, dollar gets one last run higher maybe retest the 100 level, gold drops but quickly (hours not days) bounces of the low and to the moon we go.

This is just guess work but it's what I'm thinking waiting patiently with some dry powder ready to pounce.

shepsdad's picture

"It's obvious from there charts that gold isn't going to stay under 1,200"

Hey midtowng... may I make a suggestion?

Look at what you are basing the price of gold on... US DPleaseollars.

The DXY is at 96...Ninety - f-ing - Six!!! 

And... keep in mind...The Fed Funds Rate is at 0...ZERO!!!

Please wake up and look at the fundamentals... As the dollar goes up the price of Gold (in dollars) goes down.

What happens when Yelled raises rates?  They can't stay at ZERO forever.

"That means its only a matter of time before it starts going up again"

WRONG... its a matter of time before it (Gold) starts going down.

The Gold market is done...2006 was the time to get in... find another investment.

We are entering into deflationary times.  The great deleveraging is under way.

<OK Gold bugs... you can being to reply telling me how the "charts" are going to save the day... Have fun... its your money>

cpnscarlet's picture

Charts are meanungless and DXY is meaningless as long as you HAVE A PRINTING PRESS to cover any loses your hoodlum friends take by naked shorting.

It's not about supply, demand, or fundamentals. It is about THE BIG CON.

(Until China decides to stop it).

damicol's picture

What happens when Yelled raises rates?  They can't stay at ZERO forever.

 

Therein lies your first and most fallacious assumption.

Care to explain why they cannot remain at zero.

Mathematically by any measure  and believe me I do the calculus, rates cannot rise without wiping out trillions, not billions, but trillions if any meaningful increase came about and I am not talking a few pips.

 25 bp and its a pointless exercise.  even 50 even 75 to the guy on the street or the local economy, but believe me even 5 bp will start trashing the banks the fed and the hedges more than you can ever know, and that doesn't even begin to take into account what happens to the utter fuck up called Europe.

No rate rises, only more printing until they start to seize SME's to replace the end of funding for stock buy backs and fucking utter junk corporate bonds.

Years of frenzied feeding for the Wall St sharks when they start to rip the SME's apart  and wreck the valuations and merge and package them into moar fucking toxic investments they will flog the gullible and stupid.

Rates will stay zero, and QE 4 will start to feed the Wall St cunts the cash to take over the rest of the economy.

All the ingredients are already in the fucking cake mix

heisenberg991's picture

So the market is close to crashing big time hooray

Automatic Choke's picture

those plots look like flatline + noise to me......

Sutton's picture

If the Funds (large specs) are mega long Silver, it's going to get whacked.

Tegrat's picture

Specs are contrarian. from what i heard and have seen.

10mm's picture

Yeah yeah yeah. 

Bobbo's picture

You know, as I read this interesting article, I have to think I don't know either.  I can sure wish something, but that regularly jumps up and bites me in the ass when I do--even if I just sit here and wish I did know.  Duh.

keremetski's picture

Blyze Masters can suck my dick. I mean it.

keremetski's picture

And that fucking cowardly clown ex-conmisioner Fart Chilton may kill himself.

Son of Loki's picture

Some of those You Tube videos of the voracious Chinese buying gold in HK and Mainland stores are fun to watch. I like the one with the little old lady buying several 24k gold dragons. The store will even furnuish you [for free!] a guard to take your purchase to a safe area.

 

Incredible!

MansaMusa's picture

The Chinese and Indians will buy it off me if shtf.  Good enough for me

Jonas Parker's picture

BTFD! It may be our last chance!

CHX's picture

Whatever they are buying, it is neither gold nor silver, just some paper claim. If they actually had bought gold and silver (fizz) then the charade would already have been exposed.

ISEEIT's picture

Gold (and silver) will remain 'on sale' for a bit, in fact both are more likely to soon get smashed.....Buy it while it's cheap (and legal).

Omega_Man's picture

2% inflow from the market into PM's will blow her wide open

Illya Kuryakin's picture

So what? It also means that other traders are SELLING gold at the fastest pace in decades too.