A Rally Cometh?

Though I am still guarded in my short-term optimism, I have been itching to give you a rally thread. A couple of items have come together today so I'm ready to stick my neck out just a bit.

Before we begin, I'm not talking about THE rally. I'm talking about A rally. The metals still have lots of work to do in order to generate sufficient speculator interest to really get things rolling. However, all trips begin with the first steps and I think that we are close to embarking on a fun, little journey.

First of all, look at the HUI. After having been savagely beaten for the past two weeks, it has bounced off of what looks to be stout support around 500. It went out on its highs today and rests tonight at its highest level in over a week. This is very encouraging.

paper_10-11hui.jpg

Even more encouraging are the latest Open Interest numbers. During the trading day yesterday, gold rose about $35 and silver closed nearly unchanged. However, gold open interest declined by about 2300 contracts while silver expanded by about the same number. How can this be, you ask? Actually, it makes perfect sense when you dig into the numbers and, while keeping in mind that this is primarily guesswork based upon experience, begin applying some common sense.

In gold, the change in OI was primarily due to a 2100 open contract reduction in the Dec11. This is short-covering, my friends, most likely of The Cartel variety. From this, we can conclude a number of things:

1) Just more proof that this latest $200 beatdown in gold was orchestrated by The Cartel in order to allow themselves room to cover contracts at lower prices.

2) Net short-covering (buying) by The Cartel yesterday provided the impetus for the $35 gain.

3) Net short-covering (buying) created conditions of more buyers than sellers causing the gain.

4) A short-covering rally of this magnitude is a clear signal that the selling pressure of the specs is nearly exhausted. In other words, those who were going to sell have now sold.

All in all, this is a reason to be short-term bullish.

In silver, the picture is the same but different. Yesterday's OI expanded by about 2200 contracts and almost all of the expansion was in the Dec11 and Mar12 contracts. However, silver was unchanged. Again, how can this be? It's quite simple, actually. Nearly every new spec buyer was countered by a new seller. Believe it or not, this is actually a "normal" market in silver. Specs buy and The Cartel supplies the fresh paper. It's worked that way for years. The odd thing is the apparent willingness of the shorts to add to positions ahead of the CFTC meeting scheduled for 10/18. Here's what I'm thinking:

1) Total volume was very light yesterday, around 29,000 contracts. Maybe it wasn't JPM supplying the fresh paper. It could have been some other seller or any of the "raptors", as Ted Butler calls them.

2) Silver was up almost $1 today. If I'm right, then the OI numbers we get tomorrow afternoon (again, the numbers tomorrow reflect today's close) will show a total OI that is nearly unchanged vs Monday.

3) Why would that be? Because today's rally in silver was caused by some additional new longs (more OI) and some fresh short-covering (less OI). This would produce a $1 rally on very little OI change.

Anyway, what does all this mean?

The miners are rallying. Many here feel, as do I, that moves in the miners precede moves in the metals.

Open interest looks to have bottomed. Spec selling has ended and spec long money looks to be moving back into the metals. Short-covering by The Cartel looks to be intensifying as they fear that they will not be able to shove prices much lower.

Now, let's look at the charts. First, gold. Note that gold is pressing up against significant resistance between 1680 and 1705. Should it clear that area...and I have a sneaky suspicion that it soon will...your next target is 1755-1765. That may not sound like much but that would be a $100 rally from where we stand this evening. Not too shabby. Additionally, a rally that carries gold back to 1765 may extend through there and, by extending higher, would excite more spec longs back into the pit. Gold could trade back above 1800 very quickly.

paper_10-11goldd.jpgpaper_10-11gold2.jpg

paper_10-11goldh.jpg

Once again, silver is the same yet different. Technically, it is trying to rally but it is going to be really hard for it to get through 33-33.85. Really hard. In fact, its best chance may be to sneak by that entire area in a day or two. Never let The Cartel know what hit them. Either way, IF it can get through 34...and that's a big IF...it will move quickly toward $37 and, from there, be poised for a late-autumn rally back toward the highs of August.

paper_10-11silvd.jpgpaper_10-11silv2.jpg

paper_10-11silvh.jpg

OK, so there you go. Like I said, I've been itching for a rally and it certainly looks like we are on the edge of one. Yes, I know I've been warning you about the potential for drops to $1500 and $24. That potential still exists. However, please keep in mind that I can only work with current information. Situations change and we have to be able to adapt and adjust to the changes. For now, many signs point to a rally. Let's just see what happens.

Have a great evening and a fun Wednesday.   TF

9:50 a.m. EDT UPDATE:

The Battle Is On.

After a strong overnight rally, The Evil Empire is actively suppressing price this morning. Note that two forays into the Max Q resistance area have been repelled by The Forces of Darkness. The Evil Ones saw gold approaching 1700 and silver above 33 and knew they had to act. Knowing that today is Wednesday, which means that they have until next Tuesday to cover any new short positions, Satan's Spawn have been actively supplying fresh paper metal this morning. The keys to watch from here are the support levels I've drawn below. Holding those levels will indicate that short-term specs are returning to the market. Getting that money back is vital to turning the charts higher and forcing our Tyrannical Oppressors to retreat to higher ground.

paper_10-12amgold.jpgpaper_10-12amsilv.jpg

More later. TF

301 Comments

silver foil hat's picture

LAST!

oops, wrong thread.

Turd, your analysis jives with the options buyers in GLD for Nov and Dec calls.

I smell some volatility coming soon to the upside.

Hau's picture

Holding Out

Thanks, TF! 

I'm a little upside down on a few purchases of ASE at $40, but I'm very happy with my current stash. I'm waiting for $28/$24 before adding more physical. As a newbie, I'm personally hoping for volatility to the downside to catch up. :)

I Run Bartertown's picture

Hi Turdtown!

First, I'm nowhere near my target - no rallies please - just her royal Blytheness squatting down on silver to chase it lower ;-) please...

OK, my turn to intro myself and stop lurking. I’ve been reading and learning here since the blogspot days when every 3rd comment was about a post that didn’t go through. My opinions on a few posters have changed more than once, and it seems a bit voyeuristic to always read and not even say hi to Turdtown. I’m coming from more of a SHTF ‘prepper’ background than a trader background, but the market education I’ve been receiving from the good people here (and their many links) is great. Thanks!

I’d like to tip the hat first to Turd. Please don’t ever get discouraged about complaints about calls or timing of trades – I’m not going to do any of it and I find tremendous value in the community you’ve built. From the tradition of ‘first’, to the voluminous discussions of salmon and ham – it’s a cool place. I can’t name another on the internet that has more meaningful discussion and less pointless flaming.

Having said that, I’ll confess that I’m from the ‘harsher’ half of the dichotomy we seem to be witnessing recently. I’m glad the ‘kumbaya’ types have a presence – and our host seems to lean that way, so I’ll not rage on about my personal desires for TPTB’s fates’. I do, however, think that as each of us tries to develop a sense of ‘how awake are my peers?’, we each could use a sense of how many ‘out there’ might think our way.

So I’m raising up a flag to be counted on my ‘side’ of the divide. I’ll state that  a) government thugs have made a choice, and they are not innocent or excused by ‘duty’; b) leftists have implemented most parts of some very old communist plans for us – and it’s us or them. I think America (and I take no joy in saying this) is a carcass that various groups (think La Raza, etc.) will pull chunks out of in time. The constituents of Barney Frank and Maxine Waters and Barry Soetero will never be my countrymen. They are my enemy in a way that no Iranian could EVER hope to be my enemy. That’s my $0.02; and thank you all for your contributions. There’s really no other site like this.

Turd Ferguson's picture

Hmmm....

MODERATOR
crackor's picture

I like it!

.

GoldMania3000's picture

TURD?

any thoughts to what silver will be at the end of 2015? and then another ten years at 2025?

Bobbejaan's picture

@Ivars .... RE:- Your "I suggest" Quote

Quote:
I would suggest distribute these 6 trillion straight to the people, that is about 20000 USD/head, and forbid (recipients) to use this money for debt repayments, only for spending in consumption. That could incrase money velocity and help economy to create value.

Sounds like an EXCELLENT idea to me !!!

Give me $20,000 (or even better GB£, but I'm not fussy) on the condition that I have to SPEND the money on goods rather than paying off my non-existent debt .... and you WILL see the velocity of that money increase to near-lightspeed on my way to the Local Coin Shop to create REAL value by buying Silver & Gold ! wink devil

.

... The one small flaw in my cunning plan is the fear that this particular cripped old fart would probably get crushed by the LCS stampede of all the other fitter readers of this site. laugh ... Still, I reckon I could probably sabotage at least a FEW of you other old farts by hacksawing part-way through your crutches or letting all the air out of your wheelchairs. devil

Regards

Baldrick wink

GoldMania3000's picture

limits

so if they are implemented in Jan, then we should expect more downs so they can get out of the way?

ewc58's picture

funny about that position limits story eh?

Could the waiting be nearly over? 'Cause the way I see it, the way-hay-ting is the haaardest paaart...

Ranting Andy: The Waiting

October 11, 2011

I wasn’t planning to write this morning, but as usual found something to RANT about.  

Following the commencement of OPERATION PM ANNIHILATION just HOURS after the Labor Day holiday, the PAPER gold market has been put back into its box.  That “box” is quite familiar to me, as I have been watching tick for tick for 9½ years, and see EVERYTHING the Cartel does. 

As I’ve noted numerous times, the gold market ALWAYS seems to be falling, yet rises every year, just as the Dow ALWAYS seems to be rising, yet never goes anywhere.

Read the rest of this entry »

Bobbejaan's picture

@Turd ... RE:- First Steps

Quote:
However, all trips begin with the first steps ...

All journeys begin with the first steps ... However, all trips begin with the first mis-steps! devil

Sorry ! (Oh, No, he isn't !!!) ... I just couldn't resist the pun. wink laugh

Gont's picture

Silver price in 10 years....

priced in what ?

JY896's picture

@Puck T. Smith - viability vs. credibility from previous thread

re: http://www.tfmetalsreport.com/comment/69585#comment-69585

Alan and Jesse are being allowed to speak precisely b/c neither can be considered a serious candidate for DC office. If it is Ron you are mentioning, I am afraid it is precisely his qualifications, convictions, moral stance and resistance to corruption that make him unviable (according to the current 'rules'). The last time a reasonably young, idealistic candidate --  but scion of one of the 'right' families -- was afforded the chance at the post, and by many accounts may have turned on the puppeteers... Well, we've all seen that film. And the sequels. Perhaps it had a chance once, perhaps it never did, but it sure ain't going to be allowed to happen now. 

As to the MESSAGE and the cause -- well, that game is not yet finished. But the way to allowing decent, honest, altruistic, knowledgeable, uncorrupted leaders to the helm of real power leads through some rather unpleasant adjustments and conditions which are most certainly not benevolent, IMHO. The questions that raises are all unanswered, in my mind:

How bad can it get?

Will THAT afford any window of opportunity for meaningful reform/change, and if so, HOW?

If no such window appears, or does but opportunity slips or is quashed - what then?

And of course the all important question - what is the timeline?

In the meantime, I will stick with this:

"During times of universal deceit, telling the truth becomes a revolutionary act."

George Orwell 

​Hence my many hat tips to TFMR, and to the gents above. I have become familiar with a long, long list of failed revolutions over the years. In fact, I am leaning towards the idea that all of them are doomed to fail - it's merely a matter of time. But what IS accomplished through telling the truth counts, and cannot be undone (OK, it needs generations of brainwashing to be undone).

TheGoodDoctor's picture

Hey guys just wanted you to

Hey guys just wanted you to know my Dad recently passed away. It's been a lengthy and emotional process. Don't worry I didn't get banned! cheeky Trying to stay caught up on Turd's missives. Other than that just trying to get by. May take me awhile to get back to major postings. But I'll be around. Laters.

LaMachinna's picture

So sorry to hear that...

Good Doctor  sad  Our hearts go out to you. 

backseatdriver's picture

Doc

I am so very sorry to hear that Doc, I will be praying for you and your family. We will all be around here waiting for you when you get back. Take care.

BSD

JY896's picture

Doc

Very sorry to hear that. Went through the same (what feels like) not too long ago. Peace be with him, and your family.

Bay of Pigs's picture

Peace Silver

I believe they were talking about last January with respect to implementing the position limits. They couldn't do it then as silver prices had already gotten away from them. Thus, the May and Sept takedowns. Bought them more time to cover and made them a lot of money cleaning out the longs.  

Good Doctor, my condolences to you and your family.

Dr Durden's picture

Gary Savage

Listened to an interview with him last week or so where he mentioned he was 99% sure gold would go into his projected "d-wave collapse" and retrace to $1300. 

Then I see this week he's a little less confident in that and gives another possibility of a breakout to $2000.

Must be nice to peer into the magic waves and chart whisperings that don't exist and adjust your "1%" based on the voices in your head.

Oh, and his subs are 100% in a USD ETF. Forget the name, but it's not doing too well right now and past performance is less than stellar.

Dig in, kids...it's a hoot...http://smartmoneytracker.blogspot.com/

Tom L's picture

@GoodDoc

DPH told me what happened the other day and it stung.  I'm terribly sorry for your loss and take your time.  It's not an easy process.  My dad's been gone for nearly 20 years now.

Be well good sir.

Ta,

JackPutter's picture

The challenge I have with charts

They are kind of a sterile analysis in my book.  Absent are the events that we have bouncing off the walls of the universe.   I do come here to learn though.

So it all looks good to me.

lakemike49's picture

doc

sorry to hear about your dad here is wishing you well

lakemike

boatman's picture

doc

i know its hard to see this right now.

my dad died when i was 13........in '62........its like a piece of me was cut off...forever.

but i am happy for those 13 years.......some don't get that much time......

screen gettin pretty blurry about now.........gonna go find my beer.

hang in there......

JackPutter's picture

Hey Doc.

My father passed last June just three days short of his 93rd birthday.  My heart goes out on your personal journey.

¤'s picture

Doc

Good to see you back on board. You know how I feel when we last spoke a few days ago.

I'm sorry if I leaked the news via PM to some of your friends on here. I kept it private as you wished but thought they would want to know.

Peace with you and yours Doc.

RuNuts's picture

Re: people were using modems

Another reason to get this site in a mobile/text only format.

ewc58's picture

Holy crap these moving averages suck

This gives a pretty good idea of how f*cked over the commodities and PMs are from a technical standpoint for a while. It wasn't just the damage done at the moment of Op PM Annihilation (h/t R. Andy :-). Oh no no. Now we're also locked into some ugly "X" day moving averages and bands as a result.

Who did it, or why this takedown occurred, is not this Ira guy's cup of tea. But I think he makes some good points about where it all leaves us in Au, Ag, and Cu. He says the Cu Bull is Oh-ver. Don't know about that call of his b/c I don't know if Ira accounts for the Big Picture, or even sees it. But his points do lead me to think I'll have lots and lots of time to listen to Tom Petty. More than I was looking for. I'll give 'em this, the EE has succeeded in temporarily making the exciting positively mundane. What a buzzkill.

Yeah well, don't take their bait. I contend this "boredom" is a Stage 2 thingy, a nasty one-two combo following the concentrated chaos that characterized Stage 1. Weeks of nuttin' meant to stymie and frustrate hopes of a quick turnaround in what (in most cases) have been horrifying paper losses.  Help those hopes ferment under pressure, and morph into vinegar and anger. Boredom meant to demoralize the faithful and knock any remaining adrenaline junkies and bandwagon jumpers clear out of the sector, having 'em swear off it forever as the door hits 'em in the ass on the way out of the joint.

Yup, same old shit. New wrinkle is all.  Boredom: another insidious form of Perception Management in service to the black art of so-called "Behavioral Finance" economics. 

ewc58's picture

Doc, same from me, I'm very sorry

to hear the news. Missed seeing the last few posts before I put Ira up...

Farpdinkle's picture

Calls

Who knows about timing...?  But I'm calling the bottoms:

Au--$1477

Ag--$22.80

Buy when they hit.

- Farpdinkle

P.S. Good wishes, Doc

Larry's picture

Good Doc

So sorry to hear about your loss. Blessings, good thoughts and condolences to you and your family. My dad passed many years ago... the love he left and his memory is as strong as ever. You'll have that.

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