Beware The Whipsaw

Yes, I know that yesterday and today (so far) have been very fun. Yes, I know that the summer doldrums typically end with sharp rallies that seem to come from out of nowhere. Yes, I know that it's tempting to get all excited. Please don't, at least not yet.

It is very important that you keep your emotions in check and not get ahead of yourself. As discussed here last week, the doldrums almost seemed designed to reclaim from you all of the profits you made during the last run-up in price. I know it is extremely tempting to buy this rally. Unfortunately, anyone buying here will likely get whipsawed, especially with the BLSBS report coming up on Friday. DO NOT forget that the Forces of Evil almost always raid the PMs in the 24 hours that precede the report. Please be patient. There will be plenty of time to get all worked up and long. The time is just not yet. Let the PMs do some technical damage to the bears first. Gold needs to break out and through 1550. Silver needs to best not only 36 and 38 but 39.50, too. This doesn't mean you can't trade in the interim but you have to buy dips and sell rallies if you're going to survive and that takes discipline and fortitude. IF you think you have sufficient quantities of both, the go for it. If not, my advice to you is to continue to wait, watch and learn.

GOLD

You can clearly see in these two charts that the rally, though powerful, has not changed the technical picture at all. Gold is simply moving within its summer range. When it finally breaks through 1550-60, then you can get excited. Until then, take profits when you have them.

paper_7-6amgold12.jpgpaper_7-6amgold4.jpg

SILVER

Like gold, the rally has been terrific and, if you bought back on Friday like Mister Hyde, you've made quite a bit of jack. However, now is not the time to get greedy and let it ride. I told Hyde to take profits and I'd tell you to do the same. Keep your powder dry. Buy the next dip and sell the next rally until silver finally breaks back through $40.

paper_7-6amsilv8.jpgpaper_7-6amsilv4.jpg

CRUDE

As you know, I was expecting crude to turn around, just not this quickly. I really didn't think that crude would be back above $96 until mid-July, at the earliest. That it is back above so quickly is great but it also makes the rally a bit unstable. Do not be surprised to see a dip develop that would take price back toward 95 or even 94. However, having bested the 96 level, crude now looks set for a run back above $100. As it does, it will cause us to create a new acronym...the FUBO. (I'll let you guess what that means.)

paper_7-6amcruded.jpgpaper_7-6amcrude8.jpg

As I close, price continues to hang in there. Gold is 1529 and silver is 35.81. Let's see where this heads today but, again, beware the EE and there desire to raid pre-BLSBS. Have a great day! TF

p.s. I need your assistance with something. This site is designed with a positive feedback loop via the "hat tip" button. Please do not use it to promote yourself. Those of you who are "self-tipping" are ruining the value of a tool which is designed to allow the reader/user to measure the credibility of the author. Thanks for your help.

128 Comments

SilverTree's picture

Shwing

SilverIsKing's picture

July 15th

That's the day highly leveraged trading in spot silver and gold ends for many in the US.  I figure they'll cap the price of PMs at least until then.  They surely don't want to let retail make some coin on a big run.

Tesla's picture

WORD = FUBO!

Thanks Turd

SilverWealth's picture

thanks Turd

Thank you Turd for all of that. Peeling off more now, selling bits and pieces into strength. The take on the coming jobs report and how these hacks stuff the PM Market on the day before is a good one.

Cotton is on sale. Bal. Corn is on sale. For anyone interested. Thinning out positions now in Silver and Gold and miners and looking to buy back in on good dips if they come, hopefully we get a fright-wig selloff tommorrow or overnight which is 'mysterious'. Its all about Sun Tzu at this point or however you spell that guy's name. There is little that is particularly genuine about much price action in the markets today so the strategy becomes anticipation of enemy action,enemy chart painting, enemy fear-mongering.

C F's picture

The PM's going up along with

The PM's going up along with a rising dollar always looks kind of strange.

WYO Silver's picture

Turd's words are to be heeded

Turd's words are to be heeded in the short-term.  Here are some fresh comments from London whistleblower Andrew Maguire on KWN concerning the new China gold and silver exchange, which should excite PM investors over the longer term:

This morning London whistleblower Andrew Maguire told King World News that the launch of the new gold and silver exchange in China will destroy the remaining gold and silver shorts.  Maguire stated, “The launch of this new gold and silver exchange has flown under the radar, but certainly has my attention.  I firmly believe we are marking a pivotal point that will in very short order affect current precious metals price discovery dynamics.  We now have an additional factor to be vended into the supply demand equation.  This factor will ultimately destroy the remaining short positions in both gold and silver.”

....."One of the key points here Eric is that many of these shorts are naked and heavily leveraged.    Thus for every physical ounce of gold and silver taken out of the physical market and into this new exchange in China, it will force many multiples of that to be covered in the paper market.”
 

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/6_Whistleblower_Maguire_-_This_Will_Destroy_Gold_%26_Silver_Shorts.html

alexdgn's picture

Problem with RSS feed not being update frequently enough?

Hi, Congrats on the new site and all. Not to be picky, but is it just me or is the site not updating its RSS feed frequently enough? I do come to the website to comment and read comments from other users, but I usually take notice of new feeds thru my RSS Reader.

Meanwhile even with choppy EURUSD, downtrending intensively for the last 2 days, Gold and Silver are holding up and rising. EURCHF is on a rip, and the CHF is almost as good as gold (since it has the largest ratio of Gold per GDP). Silver looks like its moving on to a HoD now. Wondering if a secure close above 36 today will trigger alot of long signals for EOD traders and funds.

TexAsh's picture

Buy an AUG put

...and let the EE do their bidniz.

YukonCornelius's picture

Whistleblower Maguire - This Will Destroy Gold & Silver Shorts

This morning London whistleblower Andrew Maguire told King World News that the launch of the new gold and silver exchange in China will destroy the remaining gold and silver shorts.  Maguire stated, “The launch of this new gold and silver exchange has flown under the radar, but certainly has my attention.  I firmly believe we are marking a pivotal point that will in very short order affect current precious metals price discovery dynamics.  We now have an additional factor to be vended into the supply demand equation.  This factor will ultimately destroy the remaining short positions in both gold and silver.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/6_Whistleblower_Maguire_-_This_Will_Destroy_Gold_%26_Silver_Shorts.html

Eric Original's picture

ewc58

I guess you should have bought those July calls after all!  oh well...

aurum argentum's picture

When

does this new China exchange begin trading?

Thanks

HappyNow's picture

YukonCornelius.  Welcome

YukonCornelius.  Welcome back.   I had just posted last night that it was a shame you'd left town.

Good article.  Looking forward to the competition being good for PM's.

stoneeh's picture

Sound advice about not buying

Sound advice about not buying this rallye Turd. Ofc 1. one should never have sold in the first place 2. how to make money when buying something that has already gone up?

Buying time was most of the last 30-60 days at anything from 35$ to the absolute bottom of 32,5$. We may yet dip below 35$ again. Then there might be another buying opportunity for everyone who missed out so far.

- Markus

tmosley's picture

I honestly hope it doesn't.

I honestly hope it doesn't.  If the price breaks out, the EE will be able to save themselves by buying off the open market.  Similarly, if a FUTURES exchange (not a spot exchange) opens in China, then the likelihood of a commercial signal failure and/or COMEX bust drops dramatically.  These things WILL lead to higher prices, but are likely to create an orderly price rise, which is not what I personally want.  I want a disorderly price rise that culminates in a blow off top at or above gold parity.  This can only be achieved via an industrial panic, and the only way to achieve that is to force the industrial users out of the futures market altogether, and into the spot market more or less all at once.

Oh well.  You can't win them all.  Or maybe you can.  We'll see.  None-the-less, the smartest move right now is to continue to hold and accumulate physical silver, and never to trade it for paper.

SilverTree's picture

The Shift

Jake's picture

There are Always Buying Opportunities

As long as the coin shop or on-line dealers have physical silver, there are always buying opportunities. You can buy at $35, $34, $33, and more today at $36.

Then you hold it. and buy more later. It's fun!

Even this Guy can do it!

SilverTree's picture

?

 

Baby Zuckerberg?

stoneeh's picture

OI just came out. Silver at

OI just came out. Silver at 35,5$ with OI still at 111k as of yesterday. This was bullish a month ago and has only grown more bullish since. Actually becoming more bullish every day. Would not be surprised if this launch was for real and we're above 40 in 1, 2 weeks.

- Markus

Mike Victory's picture

good stuff

thanks t.f.

Tom L's picture

Gold breaking through the 1%

Gold breaking through the 1% rise barrier @ 1527-8 is interesting.  Let's see if it survives the noon takedown.  If there's a close above 1528 today that would be a secondary signal that the market has turned the corner in the short term, I think,

The XAU and HUI are currently above their 50 DMA's, the HUI is 8 points over, or 1.5%.  Gotta love that.  The 10/20 cross on Friday has been confirmed.

Ta,

Jake's picture

Trading Paper is Just a Guessing Game

I once thought that I could make a little money playing mini baccarat in the casino. I knew it was just a guessing game that had a vig of 1.3% and an over advantage of Bank at -0.05% over the player of -0.1%. So I devised a "system"---You know...much like traders try to devise systems to guess where the paper metals market is going.

My system automatically bet the exact ratio of bank to player (slightly more often on bank). And...the beauty of the system was that is was totally random. I thought that by following this "system", that the randomness of my betting would soon match the randomness of the outcome of the game. And Viola!---sometimes it worked!---during those times I thought I was a genius ---you know---like traders who think they're right?---Then, I hit bad streaks and eventually lost all my money. Sound familiar?

Moral of the story: Buy physical and leave the trading to the evil banks.

Endzeit's picture

Magnificient article.   FUBO

Magnificient article.

FUBO = Faster Up Before Others smiley

SilverTree's picture

FUBO

Darth Smoker's picture

SLW above 50sma

If SLW closes above $35.33 may nibble on some Jan12 calls. or maybe that's what EE wants me to do?????

stepman's picture

Convert FRN's NOW!

Great work, Turd.  I really enjoy the charts and commentary.

IMHO, convert to gold and $ilver coins quickly.  The available is slow to come and I personally do not want to be without.  Especially the 90% or "junk $ilver coin".

snoochieboochies's picture

Thanks Turd. I've been

Thanks Turd. I've been itching to get back in the last couple of days after seeing silver go up. I'll be patient and stay dry for now.

SilverTree's picture

@stepman

Don't you mean 10% junk?

mastercylinder's picture

everthing else is smoke n mirrors

"It is very important that you keep your emotions in check and not get ahead of yourself." TF...another burntraderofthelostchart(s).

Not a lot of emotions need be checked to git hip to the perma-dip. That's all this market is now...a 24/7 buy opportunity for anybody with the cojones to step up. 

"A few days ago, Erste Bank shared the following spot on description of gold's function in the modern monetary system:"The possession of gold is tantamount to pure ownership without liabilities" ".  Gold Surges On Reminder It Is The Only Currency Without Liability And Counterparty Risk...  zero hedge today.

for those too brilliant to understand the imparted wisdom of the Mcduck shared here (Laugh lately?) some time ago...the above is written for yu... 

here is a translation...

buy any time at all, night or day...then hold.  Nothing will stop the steady appreciation of the value of yur acquired investment.  Nothing a'tall.  

That's all Folks! 

MC

a correspondent not indulged in tippin themselves here...

Tom L's picture

MFN is too

MFN has moved above the 50 DMA.  Resistance is between 13.50-13.60, horizontal. A close above that would be tempting to buy some Feb 2012 calls.  A failure (Beware the Whipsaw) would mean buying Aug $13 puts in case of another collapse back to the $11.40 low.

Ta,

Shill's picture

Hmm

And TBT goes green. Interesting development here Dollar Green, Gold Green, Rates Green and Equities Green Ya this is going to end real well.

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