Divergence In Gold and Silver Open Interest

Someone asked to see the open interest divergence in the gold and silver futures graphically that I mentioned in an earlier post here.

As always, Nick Laird of Sharelynx.com has the goods.

By itself the open interest divergence is not compelling, just odd.

But with everything else, especially the great and ongoing divergence in ETF and Fund physical inventories, and it begins to approach the irregular.

 

That is not to say we can comfortably call a bottom here, as oversold we might be at old support.  The downtrend will not be broken until we see a higher high.  

 

It would not be well to underestimate the thugs and pampered princes and the markets they that they control.  

 

What they cannot manage is the physical market which will eventually break them, as it did the London Gold Pool.  But that will take time.  But when the time comes, it will fall apart rather quickly unless some of these jokers wise up first and stop the spiral of inventory leverage and paper before it becomes a critical, systemic problem. 

Gold Daily and Silver Weekly Charts - Peak Empire, In Time of Plague

Sculpture after Albrecht Dürer's Knight, Death, and the Devil

Beauty is but a flower,

That wrinkles will devour.

Brightness falls from the air;

Queens have died, young and fair.

Dust hath closed Helen's eye.

I am sick, I must die.

Lord have mercy on us.

Thomas Nashe, A Litany in Time of Plague

We had a nice bounce after an overnight smackdown with gold tagging the 1180 support area.

There was intraday commentary about the interesting divergence between gold and silver here.

 

I am focused keenly on what I consider to be one of the greatest macro-economic events my generation will probably see in the Bretton Woods era when Nixon took the world off the dollar/gold standard.

 That set the world out upon some very uncharted seas that were easily overlooked in the sturm und drang of the Cold War.   But that all changed in the 1990's.   Few have yet perceived it, and what it implies for us.

And so here we are.  Peak Empire.

China comes back from holiday on the 8th.

Gold and silver need to break the downtrend of lower highs and lower lows. That is the technical market analysis in a nutshell.   I do not know when it will happen, and what it will lead to next.  One can only forecast, relying on probabilities.

 

Have a pleasant evening.

 

SP 500 and NDX Futures Daily Charts - Skittish

I do not like the idea of holding equities here, although a big selloff is unlikely before the November midterm elections. They seem rather fully valued, and the risks inherent in this unreformed financial system and globally interconnected mélange of mispriced exogenous events do not seem equitable.

So, for example, we saw stocks unable to rally even with a big financialisation announced, with the splitting of Hewlett-Packard into two different companies, although the stock itself could rally.

But the algos have these markets 'in hand,' and the Fed continues to pump money into Wall Street. The problem is that Wall Street is reported using 95% of their profits for stock buybacks and payouts.

 

And so money continues to be scraped out of the real economy and aggregate demand to the one percent.

This will be a fairly light week for the economic calendar.

Have a pleasant evening.

Gold And Silver Divergence: Enter the Dragon

After beating Chuck Norris like a rented mule.

Most people who follow these things are aware of the remarkable expansion in open interest on the Comex in silver contracts during this price decline.

This is unusual because more often open interest follows prices, as metal bulls open contracts with buying or close them out with selling.

Gold is following the more conventional decline.

But on the other hand, we have silver inventories increasing remarkably in the 'transparent holdings' which Nick Laird, data wrangler, tracks for us.   Nick has some of the best collections of regularly maintained charts around.

And gold inventories have continued to be drawn down.

One might say that physical gold is disappearing, and silver is being overwhelmed by paper selling.  You could conclude other things of course.  And that is part of the problem with the opaque NY-London markets, so many of which have been revealed to be rigged.

I emailed my friend Dave last night and said, 'I think with this overnight plunge to 1183 the bottom is in, with a possible retest.'   Let's see if that holds.  It certainly is oversold with record short interest in gold.

One of the reasons it feels like a bottom, besides horrible sentiment,  is because the usual suspects and shills have been slithering out from under their rocks to spread their gloom, for their own books and for some of the funds as well I suspect.

China comes back from its holiday this week.  And they are not happy about alleged US interference in the Hong Kong demonstrations among other things.

As you may know one of the big rumours is that a deep pockets long is holding quite a few December silver contracts and refusing to fold them against downward price pressures.  The most frequently heard name is China.  There are a number of motives attributed to this.

Since the markets are opaque we can only guess.  I am keeping a close eye on the fundamentals, as I think the technical measures on the US markets are dodgy to say the least.  The Banksters have their fingerprints all over these markets, and there are too many odd things going on to make a reasonable person confident in their integrity.

Of course only about 1 out of 10 Americans bring a reasonable skepticism to these matters.  So for now the bullion Banks are having their way.  Not so with the rest of the world, however.

Do you feel a marked friction between the US and Russian/China and a few other nations?  Those I believe are the manifestations of the ongoing currency war, which is another name for the strain of a continued supremacy of the Imperial Dollar as the measure of value and primary basis of international exchange.

The times they are a-changing.