On Guard Against The Banks

Sprott Money's picture

 

On Guard Against The Banks

Posted with permission and written by Craig Hemke, TF Metals Report 

 

Following the events of yesterday, it seems wise this morning to take an in-depth look at the charts in order to discern what moves The Banks may take next in the hope of stemming this rally and reversing the trends.

 

Let's start with Comex Digital Gold. It has been in an UPtrend since July 10 and this rally has carried it $150 or about 12.5%. In doing so, The Commercials on the CoT have increased their NET short position by 182,000 contracts and, specifically, the 24 Banks of the Bank Participation Report have doubled their NET short position, going from 104,748 contracts NET short in July to 213,746 NET short last week.

 

This places the CoT in its "worst" position since last September and this BPR reveals the largest NET short position on record. Therefore, you KNOW that The Banks will do just about anything at this point to reverse the trend and begin flushing The Specs back out of paper gold. Though they are clearly capable of pulling this off, it may take them a while to do it. Why, you ask?

 

For CDG, it's all about the moving averages. We noted early last week that CDG's 50-day had bullishly crossed UP and through both its 10-day and 200-day MAs. This is a very bullish trend indicator and, most importantly, it sets the Spec HFTs into a "buy the dip mode". You can see this playing out already when you look at the daily chart.

 

Also last week, we began to discuss the significance of the $1331 level as support in any pullback. This was the level of resistance and then support in late August so we hoped/expected that same action on any pullback. And look what has happened thus far this week! Even though the all-important USDJPY is up another 50 pips today and pressing against 110, Comex gold is hanging firm at....$1332! For us, this is clear evidence of the HFTs buying the dip.

 

 

And here's the big challenge for The Banks. Check where you can find those MAs. The closest is the 50-day but it's all the way down near $1280. The Banks are not going to be able to flip the Spec HFTs until, at a minimum, the 50-day is violated to the downside. So, this is why we can say "it may take a while" for The Banks to really generate the downside momentum that will flush The Specs in the same old, wash-and-rinse pattern.

 

This doesn't mean that a massive raid can't happen. What is DOES mean, though, is that aggressive traders should have plenty of warning and can use this time to hedge and prepare. Again, use the chart below as a guide and watch that rising 50-day closely.

 

 

Now let's look at Comex Digital Silver. It, too, is holding the support area that we identified last week. This support is quite clearly the most recent highs near $17.90 last June.

 

 

Like CDG, Comex Silver has seen its own rally over the past two months, moving up a full $2 or about 13%. Also like CDG, the silver "Commercials" have fought this rally by increasing their NET short position from 21,900 contracts on July 18 to 79,700 contracts last Tuesday. Therefore, you know that JPM et al would just LOVE to smash price and force a Spec exit but they, too, are going to need some downward momentum to get the ball rolling.

 

As you can see below, the MAs for Comex silver are not in the same bullish configuration as Comex gold. Therefore, the very clear target for The Banks is the 200-day moving average found today near $17.28. They'll hope to break this level on a closing basis sometime soon.

 

 

And the reason for trying to break the 200-day is clear. On the chart below, you can see four instances in just the past twelve months where price was broken at the 200-day and a steep, Spec-rinsing decline followed. This is easy money for the colluding Bank trading desks so you can be certain that they are salivating at the opportunity to pull this same trick again!

 

 

OK, as I close, I've still got $1331 and $17.92 so our initial support levels are holding. Let's hope this continues and a rebound follows.

 

However, you must be aware that The Banks are still in charge and nothing in their behavior suggests that they are "on the run" or "losing control". Therefore, plan and trade accordingly.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

On Guard Against The Banks

Posted with permission and written by Craig Hemke, TF Metals Report 

 

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Carpe Tutti Bastardi's picture

No sooner said than done!

Gold 1321+ -

Silver 17.65-

Greenspazm's picture

Moving averages are bullshit. There is not one iota of mathematical basis for their validity in trend prediction. To believe they have forecasting value just because you think that algobots are programmed with them is like believing that Buttcon is anything more than a sucession of unbacked digital nothings.

And by the way, which moving average are you talking about?

simple

LWMA

EMA

Wilder

GMA

Triangular

Variable

Kaufmam adaptive

MAMA

FAMA ?

(Kirkpatrick & Dahlquist, Technical Analysis 2009)

Grandad Grumps's picture

The article admits there is no free market. Odd, eh? If there is no free market in gold, then there is no free market anywhere. The entire financial system and the people who run it are irredeemably corrupt. God may disagree and insist that everyone is redeemable through his grace.

Aireannpure's picture

Free markets ended when LBJ started his Great "gimme" Society in 1965. There is no looking back just cheating forward.

EmmaCharlotte's picture

This is really something to consider deeply. https://www.theacademicpapers.co.uk/

Frankly Speaking's picture

I've read recently that much of the upside in PMs has gone into strong hands filling portfolio allocations with no stop loss. Not speculators. If not now, it will be true in due course. I've never sold an ounce and buy the dips.

Lets Buy The Dip's picture

great charts there. S&P 500, are now at records after interest rates jump, tax reform

The benchmark 10-year Treasury yield rose  & Financials followed yields higher, with the Financial Select Sector SPDR Fund exchange-traded fund (XLF)

There are some other cool ways to play this action into XMAS. see this accurate report. ==> http://bit.ly/2hHfN90

remember when U.S. stocks initially jumped after President Donald Trump's election on hopes of tax reform, 

seems like "People are in wait-and-see mode in terms of tax reform. We get a bit of a pop every time it gets mentioned, but I think the market is in a bit of disbelief....... next few months will be interesting. 

ReturnOfDaMac's picture

It will not dissapoint. I saw the monkeys.

Albertarocks's picture

By "monkeys" I assume you're referring to the twelve members of the FOMC?  The twelve monkeys?

Manthong's picture

 

Craig….one of my favorite turds..........

I like you and the Sprott organization …. I own some Sprott stuff.

It is disaster insurance… you know like Bernanke testified… “when really bad stuff happens”

THERE IS NO F’NG MARKET…. Ask Chris Powell / GATA about it.

The 200...50  MA's, the Stochastics, Fibbonaccis etc... and all those charts are just BULLSHIT now.

For the benefit of the readers here…   the BIS, the London bullion banks, JPM, GS and their coharts are all agents of the cabal.. likely with a Rot Shild at the top.

The market was wiped out at the end of 2011 with QE, the Draghi "Whatever it takes"  Bazooka and the secret Fed/Euro swaps.

The market will not come back until the F’n banks really go bust.

 

SubjectivObject's picture

i anticipate craig fully acknowledges the environment of manipulation, but his analysis looks for patterns in the manipulation practice/timing, e.g.: the wash-rinse-repeat cycles of the bullion banks against the commercial specs