This Ain't Horseshoes

They say close only counts in horseshoes and hand grenades. That certainly applies here. Monday evening, I projected that a margin hike was coming this week in gold. I thought (hoped?) that gold would be allowed to run a little bit farther before the smashdown began. I was looking for the margin hike to be tonight, not last night. If it had been, we'd have had Tuesday as a peak, not Monday, and many of us would have been able to lock in gains before the fireworks began. Alas, I was off by a day. Nuts. Close. But close doesn't count.

The pain for The Cartel had become too great by Monday evening. Their paper shorts were getting slaughtered and, with the technical picture so rosy in both metals, they were looking to really take it up the bahooty on Tuesday. When the Forces of Darkness saw the OI in gold rise by an incredible 10,000+ contracts on Monday, they knew it was time to strike. First, coincidence or no, the C/C/C sees their friends(?) in Shanghai raise their gold margins by 9%. This is enough to stop the runaway train at 1918 and bring it back below 1900. Then, before the Comex opens and momentum starts anew, the criminal C/C/C gets the ball rolling on their diabolical plan. They let word out to a few of their friends (traders, hedgies and algos) that "there might be some headlines that will interest you after the close on Wednesday". Down goes gold. Gold begins to recover mid-morning and it looks like there might be hope. At about noon, you drop the hammer by telling a few more "friends". Gold seriously drops and, when it's all said and done, it finishes the day down about 5% from the overnight highs of the previous day.

I wrote Tuesday afternoon that I would be "flabbergasted" if a margin hike wasn't announced that evening. I felt this way because the C/C/C had already created the necessary volatility to justify one. Ahh...but they weren't done. Why hike margins Tuesday when you can use the fear of the hike to scalp another $100 from gold on Wednesday? And that's exactly what they did.

So, where do we go from here? I may end up looking foolish but I think they're done. I don't expect 3 more hikes over the next 5 days like we saw in silver in May. Why, you ask? Purpose and mission.

In late April, speculators were the primary drivers of price and had squeezed The Evil Empire into a corner. The specs had to be driven out and taught a lesson. The EE also needed time to regroup. This led to the 5 hikes in 9 days and a 35% drop in silver from which it is still recovering. This last run in gold was entirely different. As pointed out here and by others much smarter than I, the OI and CoT numbers for gold over the past three weeks have shown that the primary driver of the last $250+ in gold has been short-covering by The Cartel, not specs. As stated last week, this is why all of the "bubble" talk in gold is nonsense and those spouting it should be permanently ignored. Bubbles form in excess speculation, not short covering, and the data clearly showed that this was a short-covering rally. Given that gold rallied $250+ on the backs of Cartel short-covering and given that The Cartel is a primary member of the C/C/C and given that this entire episode was designed and implemented to relieve the short-covering pressure on The Cartel, it is logical to assume that the target of this attack is to get gold back down to where all the pain began.

Where is that? Well, you can clearly see it on the charts. Three weeks ago tomorrow, S&P announced they were downgrading U.S. debt to AA+.  Recall that this even caught The Turd by surprise. On Sunday night, the 7th, gold gapped open higher and never looked back. (Except for the period around the first, damage-control margin hike on the 11th.) The banks know the true significance of the ratings downgrade and they began to furiously cover their long-held short positions in gold. However, it got away from them and, by late last week, the technical picture in both gold and silver had begun to look so swell that hedgie and WOPR money was beginning to rapidly stream into the pits. It had all the markings of a serious short squeeze and the C/C/C was forced to act. Unfortunately, they acted one day too soon.

So, where do we go from here? After reaching down to 1705 a few hours ago, gold has since recovered to about 1730. That could be it. This could easily be a "sell the rumor, buy the news" type of event. Seriously, which fundamentals have changed? The debt? The deficit? Europe? The key number to watch looks to be 1750. A move above there would give me some measure of confidence that the storm has passed. Do not be surprised, however, if gold makes a run down to fill that gap on the chart from Sunday, the 7th.

paper_8-25amgold3.jpgpaper_8-25amgold6.jpg

In silver, I do think the worst is over. It reached down last night and touched the bottom end of the channel we drew for you yesterday. That overnight drop to 38.76 ought to do it. IF gold drops again and tries to fill that gap, I do not expect silver to make new lows. Again, I am very excited about silver here. The C/C/C have evened to great degree the "leverage balance" between silver and gold. This will serve to drive some interest back into silver in the coming days and weeks. I expect we'll see silver eclipse $44 again sometime soon. Not ready to go into full prediction mode yet, though. Let's be 100% certain that this "event" is over before we go there.

paper_8-25amsilv8_0.jpg

That's all for now. More later this afternoon. TF

272 Comments

SilverSurfer21's picture

First

Keep it up turd, you had that margin hike called perfectly

Mudsharkbytes's picture

Second

I'd say 'second' if I had anything important to say.

Eric Original's picture

Wow, Turd's up early this

Wow, Turd's up early this morning!

I'll have to get another cuppa and settle in.

pbreed's picture

Differnt from may

In May they drove silver from 50 to under 36.

They have not achieved the same level of drop, add to that the fact that London is closed on Monday so the CRIMEX has the market to itself and I would be very cautious until Tuesday morning.

Watcher's picture

Will the Gap be filled

I'm wondering if the gap will be filled or not. That is the question of the day. Nervous shorts may decide to take the hit and not wait to see if the gap is filled. We will soon find out. Looks like 1700 held. Looks like a double bottom.

mrgneiss's picture

The seasonal charts have

The seasonal charts have worked fairly well for silver since the beginning of June, if people had been using them combined with the knowledge that the metals get hit going into options expiration - everyone could have made some money!  Please look at the seasonal charts if you haven't yet!  They call for a quick snap back from here - great entry point!  But also hedge yourself and buy some cheap OTM SLV puts for Oct or Nov. 

http://seasonalcharts.com/classics_silber.html

http://www.spectrumcommodities.com/education/commodity/charts/si.html

margaritatime's picture

Bump and Run?

Is anyone else seeing a possible fall through line at $1700?

I can’t help but to point out an obvious Bump and Run [Reversal]. The lead-in occurring around the beginning of August. A bump around the 17th of August. A run to last Friday. Assuming that, the retracement looks to go to $1650.. Looking at the lead-in of $1625ish, that is typically where a BARR would return to.

However, in a typical BARR pattern you do not have margin hikes to contend with. Any of you chart peeps want to take a stab at that? Or am I completely off-base here?

edit: morning Turd! Ya know what, sometimes you throw a ringer, sometimes you don't. Who cares, your calls are well informed and concise. I don't think any of us could ask for more. You don't have to explain anything to anyone. Thanks for all you do. Now grab your horseshoe and don't worry about it.

BlackHawk's picture

Buffet Pumping BAC

Injecting $5 billion in BAC - Thank the Oracle for maintaining our free markets!

Didn't he just meet with Obama a week ago? So special.

sevin's picture

The Oracle

The oracle just destroyed my FAZ. Oh well, I guess I will have to load up some more thanks to this drop! 

Cleburne61's picture

Ben Davies

In the last two weeks, Ben Davies called for a correction to $1675 in gold, followed by a blast to $2,100 by Christmas.  So, we're within 1.5% of that low thus far.  We could hit it, but the two previous days were so fast and complete, that another 1.5% may not benefit them enough to consider taking that chance.  If the commercials have covered and gone long...it could be snatching defeat from victory's jaws to do this...

But as TF and Margarita have said....it's possible.  Stay on your toes, but this is definitely nibble-worthy territory. Good luck friends!

watcher01's picture

Options Expiry tommorrow

With Options Expiry tomorrow, there is a good chance to slide down a bit further. Should be perfect timing to buy phyz. 

New Highs >> Margin Hike >> Options Expiry >> Buy Phyz >> Ride >> Rinse, Repeat, and accumalate.

50Jim's picture

I sleep well

I sleep well

 
0

I saw your point on walking away some days.  It is exactly what I have had to do. 

It seems like on days that it is going up, you get excited beyond compare.  But, on

days like we just saw, I find myself working in the yard, or on some project and

only on occasion peak at what is happening.  I usually will throw out a guess that is

lower than I would like (say $37 for silver) and then when it is $39.50 I can be happy.

I stopped swearing at the computor years ago.  Just remember at the end of the year

month it has been going up, the day to day crap just gets in the way.

Keep stacking.

tpbeta's picture

I don't agree you got it

I don't agree you got it wrong. You said to sell immediately IIRC

Tesla's picture

Thanks Turd

B Kickin' Some Bahooty Back Very Soon!

1544413788_a25ec03207.jpg

ndmaster's picture

I'm not a large trader, but I saw what was coming

So I shorted via ZSL and GLL. Am I part of the cartel now? Give me a break. Incessant bullishness, even in a long term bull market can hurt, sometimes badly.

¤'s picture

Housing and property will never be more affordable

http://www.tfmetalsreport.com/comment/38473#comment-38473

Dragged this forward from end of last post.

A incredible opportunity will happen in housing and land , (albeit born of economic desperation) so get ready for when they do implement the above article in the post.

This plan is a drastic (albeit necessary) change in the nations housing direction and who controls it. Going forward it will be drastically different with a blend of quasi-private entities and the Fed. Govt. back stopping "everything" for "everyone".

Going forward after this is implemented, it will be the easiest time ever to buy a house or property. And I'm unashamedly going to let them give me as much cheap credit (or property) as I can honestly pay back. This will be a historic time to buy a property and if a person doesn't seize the opportunity they will have missed one of the biggest housing discount sales in history.

Just consider the possibilities of land/property ownership due to the still increasing amount of foreclosures and delinquencies and the Govt. backstopping the whole thing at super low rates and the properties are at a discount just to clear the shelves.

Land/housing for gold or silver to be discussed at some point as the banks want as much as possible from any source and trading it for a piece of paper (deed) would be a bargain for them as most of their real; estate loan portfolios have already been made whole by the Fed. or just written off in their creative accounting methods.

Get ready for the opportunity of a lifetime.

silvergoldsilver's picture

Banks

are.....running....away....what ...the....fuck

AMERIKA IS SAVED!

DefiniteMaybe's picture

@Margarita: Support Levels

Hey Margarita,

Overnight the gold market tested $1700 and had a little bounce up. I think it's going through $1700 and will eventually go to $1650 if not further down to $1625 and then some where there is support around the 50DMA. There is congestion at the $1625 level that goes back to ALL the way to late July (LOL). I would be hard pressed this (healthy and needed) correction go below $1550.

Now I am wishing I stayed in my Sep GLD Puts... would've made a NICE 500% profit on them from Monday. But I remember remain humble and be glad I made >200% on them. I don't need to get slaughtered in this market.

Just my thoughts, FWIW

DM

PS Nice to see an early morning report from Turd.

Tesla's picture

@ndmaster

Wow a member for 4 whole minutes - welcome to the board - try not to disrespect the Turd, thanks man!

Dr G's picture

Before we get all excited

Before we get all excited about silver, don't forget The Bernank tomorrow. That could send silver down in the short term. And, sometimes such a reaction is very short-term (lasting only until Asian trading begins for example).

This, in addition to London being closed on Monday, tells me that there may be more pain coming. Let things settle a bit before jumping in the shark waters.

Justin's picture

How about sub-$18.00 silver by December?

If silver continues to mimic the price action during the same 14th month period in 2008 then we are currently at our highs and about to get a serious haircut.  I'm not trying to be a Super Bear, but after someone posted a chart link yesterday(think it was Turdle GG or Dr. Durden) I couldn't help but to throw together some charts of my own last night. 

The original link: http://static.safehaven.com/authors/nouf/22243_h_large.png

Link to the charts I made and posted in Hi-Ho Silvers thread: http://www.tfmetalsreport.com/comment/38497#comment-38497

ndmaster's picture

dear Tesla

I have read the Turd for several months now. I believed and listened to the previous blog when He predicted gold to $1600 before summer. My point is that incessant bullishness (or bearishness) is a bad thing.

Just because I just 'joined' and commented for the first time doesn't mean I haven't been around nor that I am a fool, that your sarcasm would suggest.

Who elected you the Turd police?

Shill's picture

Check this out

Violent Rhetoric's picture

Tech points 30 DMA ~1697

Tech points

30 DMA ~1697 (I'll buy some here)

next (61.8%) annual Fibonacci level of 1652.10 

90 DMA 1581 

50% Fib is 1571.35.

38.2 fib level of 1490.60

Mudsharkbytes's picture

Sub-$18.00???

I'm not so whuppy with charts, but I have a sense that if silver even tried to go that low the physical buying frenzy that would ensue would, essentially, buffer silver from such a low price.

ScottJ's picture

The Bernanke

Early morning action is just flushing out all hands that were caught off-guard by margin requirements, and once the artificial selling has ceased, I expect this train to keep on riding up.  The Bernanke will not disappoint tomorrow, he will surprise.

Market has Expectations that he does QEIII

Market has Expectations that he does Operation Twist

Market has Expectations that he does Nothing....

--

I expect it to be nothing that the analysts are talking about... but definitely not nothing...

--

On a side note, very well done post Turd.  Educating all who wish to learn.  Bravo.

¤'s picture

peace

peace

Colonel Angus's picture

I'm calling for a FUCME

I think gold drives higher today and then goes on from there. Will call for a 1750 close and 40 on silver at 1:30pm. For some reason the Bernank wanted things to be down (maybe so that he could say inflation is in check without being called on the price of the PMs.) Enough of us are thinking that we'll get it in the Jackson Hole tomorrow because now QE3 would be a "surprise" that would make the market go up. I think he gooses the banks a little more to try to get them to lend. We see the end of the interest on excess reserves as well as a "we're watching with a helicopter and a printing press already gassed up."

Some Colonel Angus, then some FUCME. Sounds like a good day to me...
 

Dr G's picture

ScottJ, thanks for your

ScottJ, thanks for your comments re: The Bernank. I can't help but feel he is ready to screw the PMs all over again.

SRV - ES339's picture

DEAR TURD

Not sure why, but listening to the news about Buffet and watching the B of A stock take off (of course select scum get tipped to help the pump... Becky Quick "just got off the phone with Warren and he thought this whole thing up in his bath tub yesterday"... lol) it occurred to me that this community is plenty large enough to make some serious noise about the criminal acts (PMs).

I was ready to bash my computer as Gartman called in to Fast Money yesterday to 'call' the bubble and 'predict' a $300 drop in gold (almost word for word from his 'call' on silver just before the CME did their last two margin hikes... the guys obviously got a crystal ball). So, we all know what we're up against, but I'm thinking that if 20 or 30 thousand angry Turdites channeled that anger, we should be able to find a way to get someone to listen... starting with congress (20,000 emails to a single Senator would be a good start).

As someone who has more than 30 full seasons of hockey behind him, I say why get mad, lets get even, take names, and put some feet to the fire!

Syndicate contentComments for "This Ain't Horseshoes"