Accumulation/Distribution Trends in Gold and Silver - Building the V Bottom

The accumulation trends seem rather steady despite the recent volatility in price and protracted sawtooth downtrend.

I have included GLD and SLV in case the futures calculations had induced some distortions.

On the last chart I include the Chalkin Money Flows for GLD which are remarkably positive except for the year end selling we saw at the end of 2011.

Someone had mentioned this phenomenon to me earlier today, but I did not think about it until I read Harvey Organ's futures analysis in which he noted his surprise that in the recent price smackdown's the Open Interest of gold and silver were steady or even went UP.

That seems to imply short selling into demand, rather than long liquidation as the cause of the price declines.   From this evening's commentary by Harvey:

"The total gold comex open interest baffled everyone as instead of falling badly surprisingly it rose by 3906 contracts. The raid orchestrated by the bankers somehow did not cause any gold leaves to fall from the gold tree. The May delivery month surprisingly saw its OI rise from 64 contracts to 173. How on earth will the regulators explain this as we witnessed no liquidation of metal of any kind in a huge price downfall and yet more stood for delivery?

...The total OI for silver was even more baffling to our bankers. With silver falling on its sword to finish in the low 29's one would have thought that many silver longs would throw in the towel. Nope!! The total OI actually rose by 1410 contractions from 112,139 to 113,549. Both Ted Butler and I agree that some strong entity is after physical silver. There is no other explanation for this. The front delivery month of May also shocked our bankers. The OI actually rose by 3 contracts (from 406 to 409 contracts) despite the huge downfall in the silver price.  Nobody liquidated. I wish the regulators can explain this phenomena to us."

Gold Daily and Silver Weekly Charts

The miners showed a positive divergence today.

If gold is going to set up an inverse H&S bottom it must hold support at 1570 although 1580 is preferable. Otherwise we will be looking for a double bottom.

Intraday commentary here.

SP 500 and NDX Futures Daily Charts

The momentum trade has fallen into an easy pattern of lower futures prices overnight, and then an intraday rally starting around the European close.

To say that I do not trust this market is an understatement. It is running on liquidity and waiting for another fix from the Fed or the ECB.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Miners Rally

I see you stand like greyhounds in the slips,
Straining upon the start. The game's afoot:
Follow your spirit, and upon this charge
Cry 'God for Harry, England, and Saint George!'

Henry V, Act 3, Sc. 1

If only investing were so dramatic, and the signals so clear, as they are to insiders by privilege, and foolhardy amateurs by the dawdling nature of their inevitable insolvency.

Those of us who place our pants on one leg at a time build positions steadily, buying on weakness, and holding those positions while the fundamental trend is intact, perhaps trimming a little here and there on excessive movements in price.

If you have not noticed, the better quality miners are running counter-trend to bullion and the equity indices today.

I am still running short broad equity indices and long gold bullion. I have added more to bullion here. I am sidelined for the short term on silver.   Of course it would be nice to have a dramatic capitulative buying opportunity as we have seen a few times recently in the past, but those are only clear in hindsight, even to a seasoned trader.

Those who lose their positions entirely in the bull market have a terrible time buying back in, because they want all in at once, and at the lowest price.  They are victims to their pride, for they are not disciplined, trading not only for profit but bragging rights, in service to a hard mistress, their own ego.

And so they miss opportunity after opportunity and turn sour, wishing more to join them in their regrets.  I hear from them at times like this, and they are my best indicator that things are near to turning.  

If you buy, then buy slowly and not for a trade but to build a position you can hold while the long term trend is in your favor. 
Of course anything can happen, but the most real risk is a general liquidity panic in the manner of 2008. And as then, it would likely represent a spectacular long term buying opportunity.   But timing such a thing is the very devil itself, and often a snare of pride. 

I think the Fed and the central banks were caught by surprise in 2008. So they have no excuses for inaction this time around. But there is a strong element in the financial community that would like to buy real assets on the cheap with overvalued paper.

Otherwise the speculation has been largely 'squeezed out' of the precious metals judging by these premiums.

Still, they could go lower. We need to see the price find chart support. I will not take my hedges off again until I am sure that the price trend has changed.

And I cannot caution enough when I say that these markets are distorted by easy money and tainted by fraud, and cyncially played moreso than I have seen in many years. Such are the times in which we live.

I suspect that quite a few more entities will be taking physical delivery at these prices and that will pressure supply. That is the downside of price manipulation and why it inevitably collapses against the primary trend.