I found our next holiday video while listening to Glenn Back back in 2007. It's a sort of anti-PC anthem. If you are overtly political or easily offended, I suggest you simply skip it. If you're not, you'll likely have the frustratingly catchy chorus stuck in your head all day.
Sorry that I was unavailable most of the day yesterday. I had a lot of thinking and planning to do. With that done, I'm very excited about the direction we'll be taking this site in 2012. I don't have any big announcements at this time but we are going to be changing my format just a bit. I'll keep you posted.
Gold and silver continue to wallow after the expected rally of Tuesday played itself out. I find it somewhat comical that the ECB can magically print 500B frickin euro and yet gold goes down but, in the brainless world of WOPR, the euro went down so the dollar went up so gold had to be sold. Makes brilliant sense, doesn't it?
A couple of other things to point out. Feb12 gold OI continues to contract. During Tuesday's $25 rally, the Feb12 OI shriveled another 2000 contracts. This tells us two things:
- The Cartel is actively covering shorts down at these levels.
- Whether simply cautious or frightened off by the MFing Global situation, spec buyers are refusing to establish and/or add significantly to positions.
Again, on balance, Cartel covering and spec selling is a bullish indicator.
Volume is abysmal, particularly in silver. Yesterday's total silver trading volume was 27,712 contracts. In gold, it was 135,251. For perspective, contemplate these numbers:
- At the paper price peak in April, Comex silver volume regularly exceeded 100,000 contracts. There were days in late April where total volume reached 180,000 contracts!
- At the paper price peak in August, Comex gold volume reached almost 400,000 contracts on several occasions.
My point in discussing these numbers is this: Without buyers (volume), we are not going to see rapid paper price recovery in either metal. Between the MFGRAP (MFGRehypothecationAwarenessProgram) and all of the margin hikes, it's possible that we may never see those kinds of volume numbers again.
This lack of volume also confirms what the charts are telling us. Take another good, long look at this weekly chart of gold. Again, note that the recent beatdown stopped right at the 3-year trendline, just as we had expected (hoped). Pay particular attention to where I've drawn the arrows:
Notice that, depending upon how you draw it, this trendline has been approached 6-10 times over the last three years. Each time, the line has held, as I suspected it would here. However, note that price never sharply bounces off of the line. Often, price bangs along for 2-3 weeks, skimming the line while consolidating. I certainly expect that again here, especially given the time of year so don't go getting all excited about a sharp price recovery. Conversely, don't go getting all despondent if price hangs around 1600-1640 through the end of the year. Considering the chart above, why on earth would you expect otherwise?
OK, just a couple of additional items today before I start wrapping presents. First, this guy, Mylchreest, must be a closet Turdite as he sent this report to me directly. It's too long to be published here but I recalled seeing it on ZH yesterday so here's a link to the report there. It's an interesting read, to say the least.
This next item is a pure, TA analysis of the PMs from "Inside Futures" magazine. I don't agree with all of the conclusions of the author but what do I know? I'm just a Turd.
Lastly, the war drums for 2012 continue to rumble in the distance. Sadly, they seem to get louder with each passing day. Our esteemed President O'bottom likely sees a new war as a chance to raise his approval ratings during an election year. Since there is little else he can do to lift his ratings, logic allows us to conclude that a new war of some kind is inevitable.
(Uh-oh. In a post NDAA2012 world, I'd better watch what I say or I'm going to be on a boxcar, headed to a re-education camp, before Christmas.)
That's all for now. Prices continue to be pressured this morning but as long as gold stays above 1600 and silver stays above 28.60, there's really not much to be concerned about. Hang in there and enjoy the day. TF