Twenty-seven months and two days ago, I was under huge emotional duress
due to the dreadful action in the gold market as prices had been under severe
manipulative pressure since mid-October. Under the excruciating weight of
incessant shenanigans (interventions), the price of gold was in abject
freefall, having plunged from $1,189.90 to $1,062.60 or around 10.7% in a
mere six weeks. On Friday, December 4, the COT for the week ended December 1,
2015. was reported and as I read the gold portion of that report, I suddenly
leapt out of my chair screaming with both surprise and excitement, knocking
wine and beer bottles askew and sending the poor dog yelping into the safety
of two womanly arms with the revelation that "something important"
had just happened.
After watching the open interest suddenly shrink on the Wednesday-Friday
after that momentous end-of-COT-week Tuesday, it became apparent that the
much-reviled Commercials had actually gone "net long" immediately
after, as gold bottomed into that fateful slide to its multi-year low at
$1,045.40. And surely enough, with gold being pillaged in one the classic
"Freaky Friday" collusive attacks, gold put in what now appears to
be THE bottom and marked the onset of a brand, spanking, new BULL market which
was subsequently borne out with one of the best market advances in history
and one of the best market calls of my career.
Last night, after arriving home late after some family time, I had a
similar epiphany of sorts and one perhaps liberally sprinkled with a pinch of
"deja vu" as I perused a rather benign gold COT with Commercials
covering a few gold shorts into the bombing to under $1,320 but what sent me
into one of my "grande mal-esque" emotional seizures was the silver
COT, where the monetarily-masochistic Large Speculators have now gone
completely and totally over-the-wall NET SHORT silver and now hold a
massively bullish aggregate short position of 1,508 contracts.
That I cannot recall ever seeing a "net short" position by the
Large Speculators is irrelevant; just as the Commercials have to be heeded in
their power to control direction in the precious metals by way of insidious
activities (the nature of which are well-documented in this publication), so
too must we heed the tendency for the Large Speculators to be found on the
losing end of the Commercial Trader's bullwhips with outsized positions,
either lightly-long (at bottoms) or largely long (at tops). To be
"lightly long" or "largely long" is still
"long" but today and now, they are "SHORT." Now, this
does not mean I'll go out and mortgage the cannabis patch in order to own
(more) silver but it does give me great solace in my recent purchase of five
(more) silver bars in the $16.65 range. I opt for physical, non-leveraged
silver for two reasons: 1. It is easier to sleep at night knowing that you
simply own it and therefore are not looking to trade it and 2. In looking
back at my trading "acumen" for silver futures and options when
reviewing tax data back to 2009, I have found myself resembling a
"mule" as in "beaten like a rented mule" or the
"schoolboy" as in "thrashed like an errant schoolboy." In
other words, it took me until late 2015 to understand that the money I was
committing to a margin deposit at the CME was actually a contribution to the
educational or vacation fund of any one of the Commercial traders. These
bullion banks have been sued, issued SEC and CFTC subpoenas, exposed via
documentaries such as "Inside Job," and via testimonies by
organizations such as GATA. Yet, with astonishing deftness, these cretins
wiggle and squirm out of any culpability, guilt, or penury because the commodity
they manipulate and the investors they defraud are not the allies of the
global banking cartel and, by natural progression, governments.
So, when I write these missives and I get all warm and bubbly over the
always-wrong Large Speculators having moved to their first-ever net short
position in CME silver futures, march forward with liberal quantities of
hubris and skepticism and trade accordingly with the knowledge that the data
upon which I base my excitement is still coming from within the walls of the
House of Smoke and Mirrors (the Crimex) and prone to further levies of
dis-and-misinformation.
Disclaimers notwithstanding, junior exploration and development issues
such as Canuc Resources Corp. (CDA:TSX.V) (formerly Santa Rosa
Silver Mining Corp.) recently announced a 10-metre section containing 5 g/t
gold and 210 g/t SILVER at its San Javier project in Sonora, Mexico, and
represent the kinds of low-market-cap entry points for speculators.
Intermediates like Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL;
F4S:FSE) and Silvercorp Metals Inc. (SVM:TSX; SVM:NYSE) are both
trading at around 50% of their recent (2016) highs and appear to be worth
accumulating. Exploration juniors such as Stakeholder
Gold Corp. (SRC:TSX.V) are in Nevada in the hunt for a Midas-type
discovery (gold-silver) with its Goldstorm Project now in the exploration
phase. Remember that these are still "stocks" and are vulnerable to
broad, non-precious-metals-related market drawdowns that can result in us
being right (on the commodity move) but wrong (on the stock outcome).
In sum, this week's silver COT can only be viewed as a bullish event and
one where only over the fullness of time can we be sure that this week's
contrarian's-delight overweight net short position by the Large Spec
masochists is a true "BUY SIGNAL" in the same vein as was the
December 4, 2015 COT for gold. I will tell you this: In discussing the silver
COT over the past twenty-four hours with fellow precious metals players,
there is a degree of cynicism and disinterest larger than the reaction I was
getting two long years and three short days ago for similar set-ups for gold.
In the next ten months into 2016, gold rallied 31%, silver rallied 52.4% with
the HUI advancing 185% in one of the biggest money-making rallies in decades.
If the yawns and body-language dismissals are any indication of history
rhyming, we are at a similarly important catharsis and the cynics and
skeptics will be residing in body bags at the shoulders of the "Atria
Argentium."
Forewarned is forearmed.
All charts and images courtesy of Michael Ballanger.
Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of
the data provided. Nothing contained herein is intended or shall be deemed to
be investment advice, implied or otherwise. This letter represents my views
and replicates trades that I am making but nothing more than that. Always
consult your registered advisor to assist you with your investments. I accept
no liability for any loss arising from the use of the data contained on this
letter. Options and junior mining stocks contain a high level of risk that
may result in the loss of part or all invested capital and therefore are
suitable for experienced and professional investors and traders only. One
should be familiar with the risks involved in junior mining and options
trading and we recommend consulting a financial adviser if you feel you do
not understand the risks involved.
