Three Weekly Charts

Whew! I don't know about you but I am glad this week is over! I'm just glad I had all of you to share it with.

I made a couple of changes today within my trading account today. I guessed that a brief selloff would materialize around lunchtime and, luckily, I absolutely nailed it. I made a very quick and tidy little profit on some ES calls. I quickly rolled out of them and now I am in:

1) October gold call spreads 1700 vs 1800

2) December gold call spreads 1700 vs 1800

3) September silver call spreads 40 vs 45

Only the silver makes me nervous (time is short) and has me worried (didn't rally back today like everything else). Actually, it kind of pisses me off a little bit. The ES rallies 40 points. Gold rebounds $15. Crude bounces back $3. Silver...blechk. Oh well, I must be patient. Provided there are no overwhelmingly bad headlines over the weekend, we look to head into Monday with a general "risk ON" mindset. Maybe I'll catch a break.

Speaking of headlines, did you see this a few minutes ago?

http://blogs.abcnews.com/politicalpunch/2011/08/govt-official-us-expecting-sp-downgrade.html

If you were wondering why gold was so strong on the Globex, I guess you just got your answer! Personally, I still cannot believe that a U.S.-based ratings agency will be allowed to downgrade U.S. government debt. The implications for insurance companies, mutual funds and pension funds would be calamitous. I'll guess we'll see.

OK, onto the charts. First, let's take a look at gold. For all the craziness, the Dec gold contract finished UP another $34. Headline risk is everything at this point, however, gold looks certain to test the 1680-85 level again next week. After that, it's anyone's guess. IF it rallies another $40 next week and closes near or above $1700, all bets will come off. Gold will have the appearance of an accelerating uptrend as it would be breaking out and through its nearly three year uptrend. It's going to be a very exciting and consequential week.

paper_8-5pmgoldw.jpg

Silver isn't nearly as exciting. You know I've been going on and on lately about lack of follow-through due to the meager 120,000 short interest. OI finally perked up this week as we headed toward 42+ and then, of course, came the smashdown. This weekly chart looks sickly and, frankly, gives me a feeling that 36 is in the cards before we ever go back and break through 42. In the very short-term, however, I can see an early-week rally next week that takes silver back up near $40 and maybe even $40.50. You can bet you arse I'll be dumping that spread when it gets there.

paper_8-5pmsilvw.jpg

Lastly, I've received several requests for an opinion on crude. I had hoped that 88-90 would hold but, once that failed in the massive dump on Thursday, you had to figure that 84 was in the cards. You can see that on the chart below. That should do it. IF 84 fails, it looks like it could trade to 80. At 80, it would sure look to be one heckuva good buy. If anyone out there is trading crude, be sure to buy yourself plenty of time. It looks to go much higher but maybe not as soon as next week. Be patient and you'll be rewarded.

paper_8-5pmcrudew.jpg

OK, that's all for now. I'm going to take a couple of days off so consider this your open thread for the weekend. I think we all found great value from this site this week. Go forth and convert as many new Turdites as possible.

TF

p.s. It's 10:00 pm EDT Friday night and I felt I had to chime in. I must admit that I am absolutely stunned and flabbergasted that S&P has officially downgraded U.S. debt to AA+ with a negative outlook. This is truly an historic event and one that will have repercussions for weeks and months to come. At first glance, I can't see how the PMs don't experience a huge rally on Monday but, who knows? One thing I do know, however, is that gold and silver will be higher in a month. They'll be higher still in six months and even higher a year from now. The Great Keynesian Experiment is ending. Do not, under any circumstances, sell you precious metal. They are your only financial protection.

387 Comments

tpbeta's picture

What will happen if S&P

What will happen if S&P really do downgrade? MSM talking like it's a done deal. Fitch guy was on BBC just now shrugging about it.

Gil's picture

Thanks Turd

for all that you do. I thought Eric Sprott's comment about the cartel pushing silver down to affect the gold price was interesting. Apparently gold is getting too big for them to inflict serious direct damage on, so they're targeting family members. Typical criminal mindset. Have a great weekend!

Cleburne61's picture

Turd, you really helped us

Turd, you really helped us see things clearly this week, through all the hell and EE assaults.  Thank you.  Really.  I wasn't shaken, but it was nice to have others validate and reinforce the vital mission right now: HOLD THE LINE!

Have a great weekend.

Old Major's picture

more AGQ at 38 and even more at 36

I bought a some more proshares ultra silver (AGQ) when we hit 38 today.  With GOLD so strong, I'm hoping we see the slingshot effect in silver.  Monday will be a terrible day for the stock market if US credit is downgraded.  I know the EE will probably continue their attack, I just can't see how anyone would sell or short the PM's right now.  When the banks failed, investors got into cash fast.  When governments fail the PM's are the only safe haven.

nith's picture

Nobody Gives a Shit About You...

Nobody gives a shit about mining investors... Especially not mining executives...

How low can we go?

My hunch is that we're going (at least) to 160-170 on the XAU index...

Why do I think that?

I believe that so many short positions have been accumulated by TPTB near the 220 level (6 times failed to break out!) and  then near the 210 level (I counted at least 5 "breakout failures")... Those shorts need to be disposed at your expense... They will do anything in their power to shake you out of your positions... The clueless will now say that "the mining shares are weak because they follow the stock market"... "They behave more like stocks than like gold, yada yada yada...)... I followed the price action yesterday.... The mining shares were the first to crash... They did this when gold was making new all-time-highs above 1,680 and the stock market was only down by 1.50% at the beginning of the session...... If I ever hear again the term "ratio trade" I am going to puke.... You should try to form your own opinion.... Nothing is written in stone.

beinki's picture

Will silver go higher?

             

SilverTree's picture

I blew another 2-G's today on

I blew another 2-G's today on G&A. The wife is not impressed. Ah well she'll thank me later. Food and phyz is my main focus now.

flaunt's picture

The farce is complete

"S&P served notice it planned to downgrade U.S. AAA rating but is reconsidering, a senior administration official says."

Hope nobody here actually believed the S&P was going to go through with it, in spite of their barking over the past few weeks.  It was always just a ploy to bring the politicians to heel, nothing more.

nith's picture

@Old Major... Is AGQ backed by Silver?

???

SilverTree's picture

The Bears part 7

Eric Original's picture

nith

Thanks for your encouraging words.

Rick Rule is one of the few guys around that I really respect, and this is my favorite video clip of his.  The whole vid is great, but I'm guessing the last half of it is material that you would whole heartedly agree with.  So do I!!  And yet, I still like to do my own homework and participate in a select list of miners.  Glutton for punishment.

silversalmon's picture

Thank you brother TURD

What do you mean THANKS! THANK YOU, many of us would be in the SHIT without,your love, patience,  perserverance, and dedication to wake up the sheeple, and crush the skulls of the JP Morgue. We're soldiers, keep leading and we'll follow! THANK YOU!

lostinspace's picture

SilverTree

You can never "blow" money on Guns and Ammo. Maybe if you buy a bunch of Jennings or hi points, but otherwise G&A are a hedge against inflation, insurance, and a way to ward off the zombie hoardes.  We can always hop on gunbroker and sell our G&A, but when a woman blows $500 on her umpteenth handbag, good luck getting that back.  

Mudsharkbytes's picture

Sure hope them talkin' bears are right

I'm frickin' weary of the sideways up & down going nowhere movement of silver.

I pretty much got out of gold a year ago - went all-in silver - and have been pretty happy too!    - up until May 1 that is.

I'm glad I found this place, though.  It's pretty much kept me from screwing the pooch.Don-t-Screw-the-Pooch-13372.jpg

Violent Rhetoric's picture

Downgrade

S&P blows. So does the Treasury department.

A mathematical error discovered late Friday by Treasury Department officials threw into limbo, at least temporarily, plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said.

The wild back and forth between the Treasury Department and S&P Friday afternoon illustrated the dramatic stakes as the ratings firm moved to downgrade the debt.
 

ginger's picture

For those 40 and up.. ..you

For those 40 and up.. ..you will relate. ..Ah for the days we at least *thought* were more innocent.

Have a great weekend everybody.

Edited To Add: ......Not sayin' I AM 40 and up.  :D

Violent Rhetoric's picture

AA+ negative outlook (you can say that again)

zero hedge says the deed is done

http://www.zerohedge.com/news/sp-downgrades-us-aa-outlook-negative-full-text

United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative

We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

We have also removed both the short- and long-term ratings from CreditWatch negative.

silverwood's picture

Hey nith I share your pain.

I too have been invested in miners since 2003 and they never ever acted like this until the last few months. They started acting weird in early 2008 but subtly so. Now it is in your face blatantly obvious someone does not want  investors in this sector to get bullish. It may be a losing battle for them in the long run. Only time will tell. I'm NOT! going to get shaken out. Ah what's that song...We shall overcome. AHhahaha.  

Indentured_Servant's picture

AA+!

Just saw it on dare I say it......FOX News. Should make Sunday evening/Monday interesting!

B'rock O'bummer must be furious as I heard earlier that the regime was in direct talks with S&P to avert the downgrade. Happy Birthday dumbass!

I_S

flaunt's picture

Wow... I am actually...

Wow... I am actually... Surprised for once.

ginger's picture

...downgrade.. ..very sad

...downgrade..

..very sad that our country is here. ...and scary..

Dr G's picture

Of course the downgrade comes

Of course the downgrade comes after hours when trading is closed. Shocking, I know.

Prize Fighter's picture

Aaaaaand it's gone!  My fiat

Aaaaaand it's gone!  My fiat that is.  Nice haul of 90%, roll of ASE, and my coin guy had a Liberty Dollar!  That's the coin which that guy went to prison over.  Nice conversation piece laugh

Reasons I purchased now instead of waiting:

1) I was more fearful than greedy in terms of price.  I'm my own contrarian.

2) The GSR moved up enough to close that gap down in July, touched the 200DMA and 40WMA.

3) FRNs are still being accepted.

I can't seem to paste the ratio chart here but here's the link.  Check out that weekly GSR.  Lots of room to fill below down to 31 smiley.  Let's do this!

http://stockcharts.com/freecharts/gallery.html?$GOLD:$SILVER

Eric Original's picture

Ginger

You've mentioned an interest in natural gas occasionally in the past.  I don't know if you have had a chance to listen to Rick Rule's newest interview on KWN, but he mentions nat gas starting around the 9:20 mark.   Though as usual, I don't recommend skipping anything Rick has to say.

cris's picture

Is it wishful thinking or can you draw a head and shoulders.....

on this graph.  Lot of gaps to fill.  Nature abhors a vacuum.

http://stockcharts.com/freecharts/gallery.html?$GOLD:$SILVER

ginger's picture

Nat Gas... Oh Yeah.. ....Def

Nat Gas... Oh Yeah.. ....Def have plans to buy some shares *soon* EricO... ...Thinking of some LNG, UNG and a few others. I have not listened to the Rick Rule interview yet. ..I normally will listen to all the KWN broadcast interviews for the week on Saturday morning but I may have to go ahead and break tradition and check in over there tonight. ;)

Thanks for the heads up!

BTW... ...Bill Haynes has become one of my favs over there in the weekly metals wrap.. I don't generally hear too much mention of him on the blog here.. ..Are there other Haynes fans here? .....He speaks in a way that I get alot from what he has to say.

Violent Rhetoric's picture

Peter Barnes “Is there a risk

Peter Barnes “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”

Geithner’s response: “No risk of that."
 
“No risk?” Barnes asked.

“No risk,” Geithner said.

kenklave's picture

Haynes

I am a little wary of Haynes.  He talks like a salesman.  He may be ok, but I don't trust salesmen.

¤'s picture

Holy Shit!

0

S&P Downgrades US To AA+, Outlook Negative - Full Text

Bond Congressional Budget Office Debt Ceiling default Demographics France Germany Gross Domestic Product Medicare Monetary Policy ratings Recession recovery Reserve Currency Sovereigns Structured Finance

Well, so much for the conspiracies. S&P has just released a scathing critique of the total chaos that this country's government has become. "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability." What to expect on Monday: " it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021." And why all those who have said the downgrade will have no impact on markets will be tested as soon as Monday: "On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors." Translation: unpredictable consequences: you are welcome!

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