Silver Outlook

First and foremost, let me state that I currently have no position in silver. No options. No futures. Nothing. I am patiently waiting for silver to break back above $40 before I spring into action. However, many of you have requested an update of the silver charts so here they are. Again, if you must trade, always trade the doldrums with extreme caution. Otherwise, you're going to get your head handed to you.

We should always start our analysis with a long-term chart so below is a daily silver. You can see a number of things here but, for this discussion, the most important item is the obvious support around $32 and just below. You can see why I've always maintained that the people calling for $28 or $22 silver are nuts. No way it goes that low.

paper_7-7amsilvd.jpg

Now, let's start shortening things up. Below is an 8-hour chart. Here you can see the double-top back in late April as well as the panic bottoms near that all-important 32 level. To me, there are three, significant levels here that silver needs to best before I buy.

1) The first reaction high of 39.45 set on 5/11/11.

2) The trendline off of that high which currently rests near 37.40-50.

3) The shorter-term trendline off of the failed attempts from late May to take out 39.45. This resides near 35.60.

paper_7-7amsilv8.jpg

Next, here's a 4-hour chart. You can see the shorter-term trendline very clearly here. I've also drawn in the longer-term line in dashes. Silver is now above its first hurdle. Can it stay there? This is very important. Watch this very closely today and tomorrow.

paper_7-7amsilv4.jpg

Coming down to a 2-hour chart, we begin to get a feel for the short-term action. Note the very nice looking double bottom at 33.40. Sometimes you hear the term "W" bottom, well here is a textbook example of one but it comes with a warning. It is now very important that silver gets above the left side of the "W". That level is 36.79. If it does, a bottom for the doldrums should be in and the stage will be set for a test of the next trendline and then 39.45. If it fails, the doldrums will continue and the breakout will be postponed for another couple of weeks as silver churns in a range between here and 33.40.

paper_7-7amsilv2.jpg

Lastly, here's a 15-minute chart. It appears that silver needs to maintain its footing above 38.25-30 if it's going to have a run at 36.79. I have a last of 36.34 so it appears to be doing just that. Crude is up almost $2, too, at $98.50 so that should help.

paper_7-7amsilv15.jpg

So, in closing, silver may be in the process of bottoming and breaking out of the doldrums. It also might not be. The main items to watch are:

1) Can silver get past 36.79?

2) Can it then break the longer-term trendline near 37.40?

IF it can do those two things, I'll start getting ready to buy. WHEN it finally takes out 39.45 and heads back above $40, I'll jump back in with both feet. Until then, I wait and watch.  TF

73 Comments

SilverTree's picture

The Nothing.

 

The Nothing.

GoldenTurds's picture

Copper

Turd,  what are your thoughts on copper.  Still quietly moving higher over the summer.

bruinjoe93's picture

Look to miners for direction

The miners are leading and will lead for the next several months.

Tesla's picture

Thanks Turd

Can't wait for that break out above 40!

SE's picture

Mistake?

I think you're making the mistake of not buying phys NOW before it takes off, NOT when it starts to take off.  If I had the money, I would have gone to my coin shop all summer long since that $13 crash to buy more.  Supplies are my priority now.  The longer you stay in paper, the longer the fiat game works and the longer the gov't has to lock down and implement things like the rural council.

If you pull out of paper all at once, then we can shut down a lot of things and slow the gov't path to totalitarism.  They need to be stopped NOW.  If they're not stopped now, no matter how much more money you've got, they are going to be harder to stop.  Get out of paper now, don't let Greed take you down this path.  You're going to make things worse for us.  You need to shut the gov't's access to money by rejecting it wholesale.  I don't want the extra money, I want to avoid having to fight Terminators from Japan and the rural council on farmer's lands and the UN grabbing our guns.  All this will happen if you keep doing this.  It won't if you stop it now.

Tyler Durden's Distant Cousin

tmosley's picture

I think the Turd assumes

I think the Turd assumes everyone knows that he has not touched his core physical position, and won't until the bull market has worked itself out.

But yes, people should be buying physical at these prices via cost averaging.  I have been cost averaging since late 2008.

bullwhip29's picture

Looks like another raid is upon us?

What I don't know is whether they are using pea shooters or bazookas this morning? You'd have to think that the EE will make an attempt to hold the line at $1530 gold (and certainly at $1550). Crude oil is basically a blip away from breaching $100 again.  Interesting stuff indeed. It looks like all this engineered price suppression stuff could be blowing up in their faces. What are they going to do next? Let's see what unfolds over the next few hours...

Captain Hank Murphy's picture

Englescottspamp & Matthey

Thanks as always, Turd. Stacking and learning is my game, and I am learning a lot with your chart breakdowns. 

SilverTree's picture

KILLS BUGS DEAD...

Dr G's picture

As was mentioned here

As was mentioned here yesterday, releasing the oil from the reserves has turned out to be a complete joke. FUBO to the fullest, that's all we can say about that.

Go oil, pull up the metals along with you!

spotgoldprice's picture

Lets get physical, physical....

Hi Turd and all,

I bit the bullet and bought in yesterday. 200 grams of silver and 1oz of gold....I figure if the price drops for a week or two then goes up, at least I have the hard and shiny already in my hot and sweaty palms.

I actually swapped a royalty check (my second ever :) from Amazon for this silver....hence why I only got 200 grams! haha I guess my book is not an Amazon best seller yet!! (search: How to Play Golf - Get your handicap down from 24 to 10 -  if you want to see it:)

Quick buy some silver!!

Cheers!!

Fred

stoneeh's picture

"I am patiently waiting for

"I am patiently waiting for silver to break back above $40 before I spring into action. ... Again, if you must trade, always trade the doldrums with extreme caution. Otherwise, you're going to get your head handed to you."

I enjoy your honesty Turd. And also your advice. I must say though at least currently, I do not understand it.

Not buying below 35$ but going back in above 40$ for me is just plainly buying high. Yes it might work as a momentum trade, but what if it goes straight to 40$ from here, then corrects to 37 or 38$ again? We have seen these kind of corrections again and again over the last few years. You'd have to pile in with big leverage anyway because if you only want to catch the middle of a move, you'll have to use that much more leverage to make it worth it. What if that move starts to go against you?

Certainly I will be watching if your strategy turns out to be fruitful. Not saying I know it better, just sayin I'm interested.

- Markus

matthenue's picture

Gold/silver price calculator

nice little chart for getting the price of silver based on different Gold/Silver Ratio

http://tinyurl.com/3jvvrld

Sneed Hearn's picture

Mistake? 2.0

Well, SE, your heart's in the right place but I'm not sure of your head. "All this will happen if you keep doing this.  It won't if you stop it now." Let's see, something like 1% of the population has any interest in silver or gold and if a portion of that 1% gets out of paper we won't have to "fight Terminators from Japan and the rural council on farmer's lands and the UN grabbing our guns." Somehow I think it will take a bit more than that.

With both political parties being different sides of the same bent coin and the "Tea Party" getting co-opted at every step and becoming "reasonable," it has gone too far. This does not end without a blowup of some kind, timing uncertain but arrival guaranteed.

I can hope you are correct while believing the chances of that approximate the truth level of the pathological liars inhabiting the WH and Congress. Cheers.

kliguy38's picture

CONSOLIDATION/ACCUMULATE

The consolidation phase in the PMs remains intact after the takedown. The hedges have covered many of their miner's shorts and are accumulating. Expect a nice pullback on the $HUI to retest the 530. It should then get up to 550 in the next couple of weeks. Traders can swing it or just hold the core and wait......over the next 6 mo this is going to set new highs. SSRI has underperformed my pair trade of SLW and I converted some SLW profit into SSRI. RIC and HL are nice channel trades.  EGO took profit and moved some into GFI. EXK remains strong as AG....but took profit half in both.........gl

gold bug-ger since 2001's picture

why I am not jumping in yet

image.png

Jordski's picture

What Happened to the summer range?

Not long ago I heard everyone talking about the summer range of silver being 31-50 to 34-50 - didn't even get close before this breakout!

GuerrillaCapitalist's picture

Doldrums are for Stacking High and Deep

"I think you're making the mistake of not buying phys NOW before it takes off, NOT when it starts to take off.  If I had the money, I would have gone to my coin shop all summer long since that $13 crash to buy more.  Supplies are my priority now.  " Written by SE earlier in this thread and I'm too fuzzy brained to figure how to properly quote it, but you folks get it.

I agree, I've been buying hand over fist ever since the gift of the market crash in May. I was afraid I'd gotten in too late, but I've managed to build up a nice pile.

I too, have been laying in supplies, fortifying the home place, putting up food, acquiring more tools, and building small cabins for rental income and help on the farm. We'll be very careful who rents these, most likely friends and family.

Mike Victory's picture

Quality

thanks turd ferg.

Seacap81's picture

stoneeh:  Turd is

stoneeh:  Turd is correct, heed his advice.  A break above 40 is considered a buy signal.  If you were to pull up a 5o dma on a silver chart you would clearly see a nice little umbrella with it's canopy draped right over 39.50 - 40 dollar mark.  Puncture that canopy and it's game on!  Fail at the canopy and again it's a waiting game.  Most smart traders wait for a strong buy signal when trading on technicals.  They would rather lose a buck or two profit in exchange for an all clear buy signal.  In other words, it is better to potentially trade for smaller profits at clear technical buy indicators than to jump haphazardly for a shot at bigger profits.

Having said all that....I am not a trader ( not anymore ).  I just buy physical silver and call it a day.  I rest so much easier at night and my blood pressure is down considerably. 

¤'s picture

Wish I Could Say the Same

I'm still going "glug, glug" and am sitting on my options at the moment. Not a good feeling at all but at least I'm out into Jan. 11' so it's not a imminent type of dread but it's there nonetheless.

I think I'll be alright and recover hopefully most of what is underwater at this point. We can all hope for that I believe.

In the meantine, my fat and heavy sack of physical PM's isn't going anywhere  anytime soon and  "...it's mine, mine, all mine!"

If you need a smile, check out the AliBaba cartoon in the Gold Forum under Bonanza Bunny and you'll get that last quote.

snoochieboochies's picture

What worries me right now is

What worries me right now is that the EE seems to be conspicuously absent at present. Either they've gone off on holiday for the summer doldrums or they've changed tactics but there hasn't been a noticeable smackdown all week.

¤'s picture

Todays Oil Smackdown

Well wouldn't you know it, as I just finished my  post regarding  todays crude price action in the Energy Forum under "Criminality or Political Stupidity?", the usual daily 11:00 a.m. market boomerang happens.

How can a guy sitting in a chair behind a computer who is no market expert see how clearly and obvious the pattens are on a daily basis?

And yet, no one in any real position of power seems to wants to acknowledge the obvious market steering. Is it fear or being a accomplice that turns a eye blind?

There is no way they are going to let oil get above $100 just 3 weeks after that desperately criminal SPR move. Free market economy?

Bay of Pigs's picture

ETF's

This is interesting considering Horizon just unveiled two new gold and silver ETF's today in Canada (inverse).

I don't how anyone could consider buying and holding these things as an "investment" or "having a position" in the metals. They are only for the day traders and addicted gamblers.

http://www.bloomberg.com/news/2011-07-05/exchange-traded-funds-marketing-said-to-face-u-k-fraud-prosecutor-review.html

brokeboater's picture

If $40 is a forgone

If $40 is a forgone conclusion before, say, the first of the year, I see no real risk in buying at $34 or so.  The %16 run from 34 to 40 over six months seems a bit pigish.  I see less risk buying at $34 than I do $40, but that's just me.  I enjoy the charts and analysis, but I go on a gut feeling.  Gold at roughly $1,500, and silver at roughly $34, seemed to be holding up pretty well, except for a few brief pushed below that point.  I saw that as a fairly safe place to take a position, as long as I'm willing to hold for at least a few months.  I am.

Sitting Bull's picture

Turd's "Fraud" Post From Yesterday Afternoon

This morning I'm reading Turd's post from yesterday afternoon and a couple comments. Thought provoking, especially newcomer Quakokikeriki, who points out the similarity between the ETF structure and fractional reserve banking. 

Blythe has been the Master (no pun intended) of the fractional reserve banking for several hundred years so why wouldn't she apply the same concept to the PM market?

Correct me if I'm wrong but using Endzeit's hypothetical doesn't Blythe have the ability to "borrow" and resell Turd's original 10 oz of physical silver an unlimited amount of times?  Can't Blythe borrow from Buyer #2 and sell to Buyer #3 and so on?  What's to prevent Blythe from borrowing and selling that original 10 oz to a thousand or even a million buyers?

We've established that if Turd and 100 of Turd's lineage want to sell then Blythe needs to go out and find 101 sellers, presumably in the SLV ETF.  But what's to prevent Blythe from going to another ETF, bullion exchange, or bullion bank, and "borrowing" those 101 shares?  What we've got then is not only the biggest shell game, but the biggest price manipulation in history.

Is this was Nielsen was talking about when he said the bullion banks are leveraged 100:1? 

On the other hand if Turd's original 10 oz in SLV can be borrowed just once (i.e., Blythe is somehow prevented from borrowing #2's 10 oz) then the max leverage would be 2:1.  Still not acceptable but the consequences far less horrific.

Sockeye's picture

I think everyone should be

I think everyone should be buying right here.   It has already broken out to the upside.  what more is needed.

http://www.caseyresearch.com/gsd/edition/new-chinese-exchange-will-destroy-gold-and-silver-shorts-whistleblower-maguire-predicts

Turd what do you think of the breakout chart shown here about half way down.  it shows a perfect clear breakout.  I do not see any sense in waiting.  This rocket has left the launch pad.  Next stop the MOON. 

Lets see from $35 to $40 is $5 * $5,000 = $25,000 per contract.  That is a huge amount to leave on the table.  I would suggest consideration of at least a call option at a low price.   That same option price might be $25,000 higher very soon as she crosses $40.  No matter when someone buys there is always danger of price going down.  after all one has to pay the price while the price is right there at the time. 

Sure there will be some up and down.  but by the time December options are completed those purchased now will do better than the higher price paid as it crosses $40.

If the strategy is to buy the dip.  then buy now in the dip before it goes above $40.

Particularily cash paid physical.  But even commodity futures and options.  or a grab on slv gld and the 2x and 3x kinds.  just hang on through any pullbacks.  and profits are assured. 

do your own due diligence.  never listen to Sockeye.  Listen to yourself.  I am only expressing my view.  But that breakout chart is extremely powerful to me.

Bay of Pigs's picture

@SittingBull

I think you are entirely correct but I'm one of the Tin Foil crowd when it comes to the Banksters and their devious schemes and plans. I think they are the most corrupt and evil arseholes to ever walk the Earth. 

That is why I cannot, and will not, buy into Gene Arensberg's or Kid Dynamite's views on this matter. 

treefrog's picture

dr g,

yep, the oil release was a pointless political joke, but i liked it.  it dropped the local wholesale price of unleaded a little  over 25 cents, for just long enough that i could call my friend the distributor and get him to come fill my two three hundred gallon bulk tanks.  i worry that fuel prices will be higher next year, but it won't bother me 'till then.  :)    

Prize Fighter's picture

Cluster Map

Turd,

Here is a link to a "cluster map" if you wanted to implement one for the site.  It anonymously logs visitor locations and displays them on a world map with dots.  I haven't looked completely at it but at first glance, it's pretty neat.

http://www.clustrmaps.com/index.htm

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