COT Update The holiday-delayed release of the Commitments of Traders Report (COT) did not come in as expected. The cut-off date was Tuesday, December 24, and you'll remember that both silver and gold sustained sharp price losses during the reporting week, with gold establishing new yearly and multi-year lows (silver only missed doing so by a bit). With gold down more than $40 during the reporting week and silver by more than 80 cents, it was expected (by me) that technical funds sold and commercials bought heavily. Actually, the technical funds did add to short positions, when one looked under the hood; just not as much as I expected. As such, the report can't be called a total surprise or disappointment. If there had been big technical fund buying and commercial selling during the reporting week that would have been much harder to reconcile. I'll offer what…

Weekly Review In thin holiday trading, the precious metals broke with recent price patterns and finished higher for the week. Gold rose by $10 (0.8%) for the week and silver added 65 cents (3.3%). Not forgetting that prices are set on the COMEX at will by the commercials (JPMorgan) and that it is generally a fool's game to rely on short term price patterns; it is somewhat noteworthy that this week's close in silver was the highest in six weeks. True, we are still scraping around the bottom of the price barrel of the worst year in precious metals practical history and investor sentiment has rarely been more negative and fearful. Certainly, it wouldn't take much of a price sell-off to put us at fresh lows and as far as I can determine new lows are still widely expected by most, particularly after the prior week's price…

Weekly Review The selling pressure continued in precious metals and gold fell $35 (2.8%), while silver fell 25 cents (1.3%) for the week. Since I contend that prices are manipulated on the COMEX, I try not to derive much meaning from short term price change. That said, it was somewhat notable that silver held up better to the downside and the silver/gold ratio tightened in a full point to 62 to 1. The price downdraft came immediately after the Federal Reserve's tapering announcement late Wednesday and the world was quick to conclude that the decision was responsible for the move to near three year lows in gold and silver. Rarely have I seen such unanimity in the media and analytical community about the reason for the precious metals price decline. Please allow me to explain why the agreed upon explanation is poppycock. As has been the…

The Bear Case for Silver There are always two sides to every market, the bull and the bear. As one who envisions sharply higher prices for silver, naturally I focus on the bull side. But it may come as a surprise that there has not been a day in almost 30 years when I have not considered the bear case for lower silver prices. Therefore, this is not a new endeavor for me; but rather one that has absorbed me continuously for decades. Only by trying to grasp the arguments for lower silver prices can one hope to balance any bullish analysis. Today, I'd like to discuss the case for lower silver prices. First, I confess to reading everything possible about the price prospects for silver. In reality, I am more interested in the bearish side, as I don't see much benefit to reading analysis that confirms…

Weekly Review If you only had access to weekly closing prices, it wouldn't have looked like much of a trading week in gold and silver. Prices closed marginally higher for the week, with gold up $8 (0.7%) and silver ending up 15 cents (0.8%), leaving the silver/gold ratio unchanged at 63 to 1. But if you observed price activity on a daily basis, it sure didn't feel like a lackluster trading week, as there were some very sharp price movements during the week. Thanks to data in the new Commitments of Traders Report (COT), there is an undeniable explanation for the sharp price movements, which I'll cover momentarily. But first I'd like to comment on what must be considered unusual price volatility, as gold moved up and down by $20 and $30 on some days, while silver rose and fell by 60 to 90 cents. My…

Big Surprise Coming? The Volcker Rule is now reality, although it will be some time (July 2015) before it becomes fully effective. Yesterday, all five US financial regulatory agencies approved the rule basically banning proprietary trading by financial institutions backed by government insured deposits. The question of the day is what does the enactment of the Volcker Rule have to do with gold and silver? The short answer, which I'll expound upon in a moment, is everything and nothing at all. First, let's examine how the US Government came to pass a regulation that basically outlaws speculative trading by banks. Yes, the Volcker Rule was always a central feature of Dodd-Frank and was always as logical as drinking water when you are thirsty, but until early this year it stood little chance of being enacted in its current form due to the great political divide in Washington…