The Cartel Is In A Box With Gold & Silver Prices But Don’t Start Celebrating Yet

Both gold and silver ended last week with bad omens. Let’s look at those omens as it pertains to the problem the cartel has had for months: Open Interest In silver, open interest needs to come down:



If it comes down this week, the cartel will have painted the chart rather bearishly in the short-term.  If we drop below $16.59, then we will have put in another lower-low on the charts, and if open interest is going to come down, it looks like silver very well might get below that price level.


Gold looks relatively smoother on the chart, but the open interest is still too high:



The key level to hold on to is $1263. A drop below that price will again have painted the chart very bearishly. One has to wonder, how much lower either gold or silver could drop before the dip is bought, however? If the dip is bought after the spec flush-out, open interest will literally shoot back up again as the cartel will attempt to issue as much paper as possible to contain the rally.


This really highlights the fact that the cartel is stuck in a box. They are having the darnedest time flushing out the longs, but at the same time, once they do, the longs will come right back in. It goes to show that it really is impossible to contain laws of economics, and while they have been able to for some years, it is now nearly at the breaking point.


Anybody who read the India Cash Ban Anniversary post would have seen this, but this seems appropriate right about now.


Here’s the trouble the cartel is having in keeping the prices of gold and silver held back:



 


In fact, this difficulty is showing in the GSR:



There appears to be an uptrend forming on the gold-to-silver ratio. if they are able to flush out the spec longs, that number will likely shoot up even higher in the short-term. Just more evidence of the box in which the cartel finds itself. If the ratio starts getting closer to the 80 side once again, there will be a flood into silver to take advantage of the imbalance.


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