Gold & Silver OI Hinting Short Squeeze on Horizon -SKG

Gold

Gold and Silver This Morning

Gold rally continues from yesterday as shorts cover previously sold positions ahead of Yellen testimony, and inspired by politics in the US
often when too many bears join the sellers due to disappointing price action and no follow through continues a rally ensues
just as event driven rallies do not last long [EDIT- so do momentum short plays do not either- SKG]
open interest recently in options and futures were higher than usual for now prior to roll over,options open interest at 1,045,979,started the month 915,257-futures now 477357,up from 457201
higher open interest at lower prices means shorts not liquidation.We have been constructive last few days waiting for bargain hunters and unforeseen political events and possible Yellen testimony lowered dollar..Silver 209356,copper roll over almost over into Sept from July,264573,plat-pall 51.85,gold-silver 77.60,gold-plat 316.70.

H/T George Gero

To that we would emphasize, rising open interest means shorts are piling on. These MOMO short players have little tolerance for pain. There is a point where, like a stochastic indicator, they will fail to make a new low while putting more on ( "you moron"). Then we will see capitulation. That doesn't mean they wont be right at first. This is musical chairs time on the short side. It is nice to know that MOMO players aren't just long side saps buying the top. They are equally likely to sell the hole. And at some point they will be selling to the source of real demand that is inelastic. And then watch it pop.

Short Squeeze Cheat Sheet:

Rising OI in a dropping market means momentum players are piling in.
When Oi rises in a down day that does not create a new low, beware.
When Oi goes up on a down day that does make a new low, but does not settle there, beware of the non confirming RSI

That means picking bottoms is not advised as a trader. It does mean that if the market starts rallying and OI drops, a quick spike is in the offing and will last as long as there are shorts to cover

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TOM CLOUD ANNOUNCES SILVER BUY ALERT: Five Reasons Why

via SRSrocco Report.

In this newest precious metals update, Tom Cloud is announcing a SILVER BUY ALERT. This is one of the few silver buy alerts he has made in his 40 year history in the precious metals retail industry. Tom is not issuing this silver buy alert based on trading data, but rather fundamental analysis via discussions with individuals all over the world, wealthy clients and fund managers about the precious metals retail industry.

SKG Video Synopsis: comments in italics

Mining supply is dropping off- agreed, this is a reason that would need a catalyst for a rally, as he alludes to. Tom also notes $18.00 to $18.50 area which we agree with as this is a big producer hedge area and said so HERE
Large London Trader aka Stalker sounds an alarm always be suspicious of motivations given by traders. Other sources close to JPM are saying it is time to take off paper hedges in their Silver even if the "stalker" is telling people just to goose his own position that is information to note. We believe that JPM plays the market like any trader, find the path of least resistance and give it a nudge. This is almost always lower on what we call "small plays". But when a market like silver gets completely lopsided short, they aren't scared to take it the other way for a far bigger run.
Chinese Solar Panel Demand: if fulfilled could wipe out above ground silver supply. - A reason to not short Silver for sure, but China itself is always a factor
Risk reward of Metals vs.Stocks is lopsided - no argument from us that things are priced to perfection in stocks.That does not mean metals wont get swept lower initially... but we agree in general
USD Weakness is bigger factor than known - we agree and cite petrodollar demise as a driver. The crypto phenomenon which he cites as a reason may not be a direct one, as right now most people use it as a medium of transfer from one FIAt to another . Cryptos are not money yet, but they are currency. That said it certainly does make people realize that there are choices on the horizon. Where is the Gold fronted crypto THAT is the question

Tom discusses 5 (non-technical) reasons why he is putting out a SILVER BUY ALERT:

Our Take Away:

Using this analysis and forced to action we would say the next $1.00 may be lower in silver, but the next $3.00 is higher. Thus, this is a call to be ready to invest (as in a 5 year hold) more if you have it to spare form your newly minted crypto wealth kiddies!!