Perfect, 100%-predictable OI moves yesterday.

Recall that I began feeling yesterday that the decline we saw yesterday morning was "it", the final low, at least for gold. Gold rallied in the late morning yesterday and closed the Comex down $7.70. I expected the OI to decline marginally as this has been the trend in this "correction". The numbers are in and the OI did decline marginally, falling back under 432,000 and a near double-bottom in OI with Tuesday's number, which coincides with a near double-bottom in price. With the rally today that continues this afternoon, chances are very high that I will be proven correct in this latest "Turd's Bottom" for gold.

Silver also acted as expected yesterday. Recall that, on Tuesday, silver declined $1.12 but total OI surged by over 3,000 contracts. I surmised at the time this was indicative of spec shorts being added at the bottom...shorts that will soon be fleeced by the EE with a sharp move to the upside. I was curious to see if OI rose again yesterday because, as you know, silver declined by $0.88 yesterday on the Comex session. Well, whaddayaknow? Total OI rose by 1,400 contracts yesterday during the near $1 selloff. I have deep faith that this was the final suck-in of extra spec shorts before the bottom, just like 2/28 was the final suck-in of the spec longs before the beatdown. For further evidence, as of yesterday the total silver OI is now 5,500 contracts higher than it was on 3/15/12 yet price is $1.38 lower.

Once again, this helps to complete the bottom picture. Spec longs have been wrung out of gold as total OI has now "double-bottomed" below 431,000...an OI level we last saw on Valentine's Day when price was $1718. Spec longs have been driven out of silver, too, and importantly, fresh spec shorts have now been driven in as total silver is already 5,500 contracts off of its "correction lows".

Submitted by Turd Ferguson on March 23, 2012 - 3:21pm.
WOW WOW WOW!!! I LOVE THE CoT REPORT!!!

GOLD
Exactly what I was hoping for! The large specs longs shed 15,468 or another 6% while large spec shorts grew by 3,975 or, roughly 11%. Beautiful! Even the small specs got in on the action by punting 4,500 longs while adding 1,600 shorts. The all-important Cartel did exactly what I'd hoped---They added 15,424 long (10%) while covering 10,126 (3%) shorts. This means the net short position of The Gold Bullion Banking Cartel shrunk by over 25,000 contracts during the week where price fell nearly $50! The net short ratio is now almost exactly 2:1, down from the 2.7:1 that it reached on 2/28 and is actually a shade lower than where it was on 12/27 when price was $1598. A very, very bullish picture!

SILVER
Like gold, almost perfect! First of all, remember that total OI barely budged over the 3/13-3/20 reporting period, only falling by about 300 contracts while price fell by nearly $2. Ideally, in this situation the large spec longs would be resolute while, at the same time, the EE shrunk their net short position. Additionally, I had hoped that the bulk of the downside price pressure had come from new large and small spec shorts. THIS IS EXACTLY WHAT HAPPENED! ​While price fell $2, large spec longs actually added 30 contracts. This is what we mean when we say that "silver is in strong hands"! Another good sign is that large spec shorts surged by 17% and small spec longs punted almost 9%. Perfect!! Then...the all-important Evil Empire. The Forces of Darkness added 2,281 longs (+6.45%) while covering 1,224 shorts (1.7%). This is a net change in the overall short position of 3,500 contracts (-9.84%) and brings the net short ratio down to 1.85:1. Again, for reference, the EE net short ratio on 2/28 was 2.32:1 and, on 12/27/11 it was a scant 1.34:1. From a purely CoT perspective, you might conclude that silver still has a little ways to go before reaching the extraordinarily bullish levels of late December. However, you must keep in mind that silver is still $3 higher in price than it was back then, too. Therefore, these silver CoT numbers are perfectly acceptable to those (like me) who are searching for a bottom in the here and now.

In conclusion, I am very, very excited for next week and the weeks ahead. Combining the CoTs with the current OI, then adding in the recent backwardation and and the looks of the charts and other technicals and you get a picture that looks, smells and feels like a significant bottom and "markets" that are poised to rebound very soon.

3:45 PM EDT UPDATE:

I don't even know what to say.

As of the close yesterday, total gold OI fell by almost 10,000 contracts to just 407,387. I personally can't recall a level that low. Even in February of 2010, with gold near $1100, total OI was 450,000+. Here we are at $1650 and 2+ years closer to the end and total OI is 10% lower. Incredible! What other proof do you need that the Comex is now almost entirely populated with Monkeys and WOPRs? Additionally, paper price has now fallen by about $150 (8.5%) from the late Feb highs. Total OI has fallen an amazing 71,657 contracts for a drop of 14.96%.

What does this mean? As discussed back in December, is the Comex fading into irrelevance? Maybe.

In the meantime, this has to have price implications. Has to. It has to. Over the past five trading days, total gold OI has fallen by 28,000 contracts (6.5%) while price has actually risen about $11. WTF?!?! ​There is no doubt that the stage is being set for an upward jump in price. The Cartel is clearly lowering its net short position while spec longs are dumping and NOT rolling. This has to mean higher prices ahead. It has to.

In silver, things are equally interesting. Yesterday, while price declined almost 80 cents, total OI surged by over 4,000 contracts. The only possible explanation for this is the establishment of brand new shorts. And, there is no way that its the EE adding shorts down here at $32. Not happening. This has to be almost entirely new large and small spec shorts and they are about to get fleeced. Total OI is back to 114170. The last time total silver OI was over 114,000 was on 2/29/12. Does that date ring a bell for ya???

​Look, I may be dead wrong and we may currently be in a brand new paradigm on the Comex and my way of looking at things may be about to send me the way of the Dodo Bird. However, these numbers truly are astounding and paint the picture that we are on the verge of some solid UP moves in paper pric