The gold open interest fell a hefty 15,091 contracts to 457,097, which means a number of gold longs ran for the exits. Silver was a different story. Its open interest dropped 650 contracts to 142,406. Despite the big drop in price, the silver longs are hanging tough. Rocket Rich follows up on his insightful comments yesterday…

Hardly a Weak Long in Sight?...

Bill,
My, Oh my!

Hi-Ho knocked for another 90 cents yesterday and they only managed to dislodge 650 Weak Longs. 650!?! The Big Short Capitulation Engine Room is billowing major smoke at present.

Hi-Ho has been smashed down almost $3 in the last week or so from it’s multi-month dizzy heights and Open Interest is still sitting at it’s second highest seat for at least an entire year!

The way I see it, The Shorts have a major major problem here, because instead of getting capitulation and a reduction in Open interest which is what anyone enticing a Bear Trend wants to see, they’re clearly fighting hard fending off a plethora of new buyers enjoying the new found discount from which to jump on Bully’s back.

It sounds horribly cliché but I’ve just had my Matrix Moment, It’s as if the entire picture’s suddenly become clear and I’ve stopped Mr Smith’s bullets dead in their tracks!

I’m getting increasingly confident that The Commercials have just about run out of Physical Metal to back stop their Shorting positions and as such they’re about out of ammo.

I think yesterday’s data was the biggest Red Flag so far for any wannabe Short out there. The price was broken down below the significant technical $33.50 level in a obvious bid to shake some Longs from the tree. Well all they did it seems is find a multitude of others sitting on the other side waiting to soak up the Offers.

Unless the Commercials can get Open Interest down from these dizzy heights and trigger enough sellers to buy back their Short Contracts, they’re going to have to sit on their hands and let the price run higher, just like we saw in the great spike ups in 2005/2006, 2007/2008 and 2010/2011.

Here’s the graph I posted out a few days showing the times when Open Interest breaches 140,000 and the clear comparable slow down in aggressive Commercial Shorting up at these dizzy heights, Contrary to popular belief the Commercials can’t keep doubling up indefinitely. Even they reach their limits, which I speculate is likely associated to how much Physical Metal they can get their hands on at any one time to back stop their Short Positions.

And if that doesn’t stir the sinews of every hardened Long out there then here’s the chart showing the direct comparable effect that a breach of 140,000 Open Interest has had on Hi-Ho’s price on past occasions, most likely because of it’s correlation with a slowing Commercial Short Campaign.

cid:image002.png@01CDA609.27ADF200

A move back into the $34 range and I think a breach of recent highs could follow shortly thereafter.

Go you magnificent Silver Steed, it is your time to shine,
Rock on,
Rich (Live from 'The Bridge of the Silver Rocket Ship')