04 August 2021

Stocks and Precious Metals Charts - Keep the Lid On Metals - Huge Miss On ADP Payrolls


"A simple definition of concentration is a large market share held by only one or a few participants operating in concert.  The question of concentration is of utmost importance to the functioning of free markets and a more familiar term for market concentration is monopoly – which lies at the heart of antitrust law.  Sometimes monopolies can’t be avoided – in the case of public utilities for instance – but in those cases, strong oversight and regulation are the order of the day. 

Whenever I use the term concentration, substitute the word monopoly or cartel. Think of the four or less traders on the short side of COMEX silver as a monopoly or cartel whose existence is solely dependent on keeping the price of silver contained – much like OPEC or the DeBeers diamond cartel seeks to elevate the price of oil or diamonds. 

It appears to me that the big silver short monopolists on the COMEX are fighting the inevitable coming rise in silver prices, not for profit, but from the fear of what a failure to contain prices would entail.  An explosion in the price of silver, even with the recently reduced concentrated short position would involve the potential financial ruin for some of the big shorts – to say nothing of resultant legal fallout.  And please don’t think I am minimizing in any way the power of the motivation of the fear of ruin.  The big silver shorts were originally and for most of the past 40 years motivated by greed, but now the motivation is fear." 

Ted Butler, The What and Why of Concentration

The metals and stocks were rallying hard this morning.

And then Fed Vice-Chair Richard Clarida spoke at 10 AM, and shocked the markets with a 'hawkish' take on interest rates.

Clarida was under-secretary of Treasury under W, and advises firms like PIMCO and Credit Suisse Forex, when not holding an august chair of economics at Columbia.

If you listen to what he said it was not really on that hawkish, but the markets set off on it like someone rang a bell.  

What a coincidence.  I am sure no one knew what he was going to say in his prepared remarks.

And so gold and silver plummeted, and the Dollar soared.

Stocks dumped, although big cap tech story stocks managed to burble up for a bit of a gain into the close.

I had sensed a setup and took profits on about 3/4ths of my miner longs on the early spike rally. 

I did buy a little back into the close in the aftermath, but am keeping my powder dry for Friday.

As Ted Butler notes above I think the precious metal cartels and their camp followers are a little nervous.   And so are those who are beholden to the Banks and the pampered princes of finance.

Although mostly it feels like the only fear they have is spraining their ankles while kicking the metal markets ass back and forth for fun and profits.   All the other markets as well.

Is it really worth it?   Let's table the answer to that until judgement day when all the accounts are settled.

There will be a Non-Farm Payrolls report on Friday.  The data suggests that it will be a weak number, short of expectations at least.

But that is just a suggestion., ex-adjustments and stat-magic boogie woogie moves so favored by the BLS.

Below is a table outlining the derivatives time bomb, which no one can apparently talk about.

Have a pleasant evening.