The Impending Bottom in Gold and Silver

What a difference a week makes! Just last Tuesday, this site was aflutter with expectation and hope. Silver appeared to have won its "Battle Royale" and was threatening to take gold along with it through stout Cartel resistance. Ehhh....not so much. So here we are, one short week later, and despair reigns supreme, replete with frustration and fears that our precious precious metals are about to swoon to levels not seen since 2010. I'm here to tell you that that is complete nonsense.

First of all, a little something I've got to get off my chest. Since this little endeavor began 17 months ago, I have never been anything but upfront and honest with you. In one of my very first posts, I explained the reason why my version of technical analysis works. Namely, because the PM "markets" are so grossly manipulated, basic TA can direct you to buy signals and sell signals, resistance zones and support levels. So simple, even a Turd can do it.

http://tfmetalsreport.blogspot.com/2010/11/turds-crystal-ball.html

Lately, however, its become fashionable to ridicule technical analysis. All the cool kids seem to be saying: "Charts are worthless. TA never works in a manipulated market". Hmmm. Isn't it interesting that that seems to be 100% opposite of what I've always claimed? Interesting, too, how these comments seem to multiply during periods of price weakness. But I digress. All I can tell you is that I fully believe in the value of my "abilities". Am I going to be 100% correct? Of course not! I don't work for Goldman Sachs. However, as long as The Cartels continue to dominate the paper markets for precious metal, price forecasting using basic technical analysis will continue to work.

Ultimately the question is, do you still want to play? Your #1 best option is still to stack and hold physical precious metal. Always has been, always will be. In the meantime, if you'd like to fiddle around trading, attempting to cobble together extra fiat with which you can acquire even more physical, I will continue to provide analysis, hoping to be right more often than not.

Back in December, there was reason to think that the paper game was ending. The ugly demise of MFingGlobal had frightened many traders and, more importantly, many Departments of Compliance. As you'll recall, it was very difficult to get excited about buying the late December dip because no one could be certain at the time that the "market" for precious metal would ever be the same. What if traders and investors exited the Comex altogether? Would we see total open interest in gold decline through 400,000 contracts and head toward 300,000? Maybe even 200,000? With these doubts, the entire idea of TA was dubious at best. How can you technically analyze a "market" if the "market" in question is ceasing to exist?

I believe we got our answer in January and February. Instead of collapsing, The Comex rebounded. Trading volume and open interest slowly returned. Not to the levels of mid-2011, mind you, but enough that I no longer have any doubt as to the continued viability of the Comex paper metal platform. (Let me put that in English. Instead of abandoning the Comex, large spec money returned en masse once the metals began to generate some upside momentum. Those specs are currently being fleeced again by The Cartels but, as sure as spring follows winter, they will return again once price bottoms.)

So, now that I've made it clear to you that I continue to fully believe in my technical analysis ability and now that we know that, fundamentally, nothing has really changed post-MFG, it's time to start looking for a tradable bottom to this latest Cartel-induced fiasco.

Before we get to the charts, I urge you to click the link below. The post to which you'll be directed is a little something I cooked up back in early January, the last time we went bottom-searching. Please re-read it now as a sort of primer for what I'll present to you next.

http://www.tfmetalsreport.com/blog/3246/other-technical-indicators

Look, I'll cut to the chase: Gold and silver will soon reach a bottom for this manufactured "correction". Of this, you can be certain. Silver is not going to $20 and gold is not going to $1250. They're just not. The awareness level is now too great for that to happen. Global investors and central banks see what is coming. They know that The Great Keynesian Experiment is ending and, with it, our reliance upon unlimited fiat money. At a certain price, physical demand will always appear and paper price will bottom and trend higher. Period. All of the never-ending, deflationist nonsense has nothing to do with the long-term price of silver and gold. We know that The Fed and the ECB will stop at nothing when it comes to printing their way out of this morass. This continuing fiat devaluation will only serve to make physical metal more valuable, not less. Dips will be bought and price will continue to trend higher. And you can forget about The Cartels rigging price down to zero, too. As long as physical demand remains strong, paper price must be allowed to rise in tandem with physical price, otherwise The Comex and LBMA will sink into irrelevance. Since this cannot be allowed to happen either, we're left with "markets" that will bottom and will resume trading higher. Eventually.

So, the question is: How much farther can we expect price to fall in this current "correction". The answer is: A little farther. Let's begin our chart parade with daily gold and silver that also have their MACDs on them. Note that both of these charts, while beginning to look oversold, are clearly not there yet. A little more weakness in both metals ought to do the trick.

paper_3-6pmgoldmacd.jpgpaper_3-6pmsilvmacd.jpg

Next, let's examine the daily gold and silver charts with RSI measurements on them. Again and, as you can see, an RSI of 70 is generally considered an indicator of a short-term top while an RSI of 30 seems to indicate a bottom. Note that both of these charts seem to imply that further weakness may be needed before we get can confidently predict a bottom.

paper_3-6pmgoldrsi.jpgpaper_3-6pmsilvrsi.jpg

So now let's look at just a plain, old price chart. Do we see evidence that further declines are imminent? You bet! Take a look for yourself. Once gold broke 1690, it indicated a minimum further drop to around 1650. I'd say its at least heading there and probably heading as low as 1625 or even 1600. You should be asking yourself: Would a further drop of that magnitude move both the MACD and RSI into oversold (bottom) territory? The answer is: YES!

paper_3-6pmgold.jpg

Silver, same deal. By taking out 32.80 today, the chart now indicates a further drop to at least 32, maybe even 31. Heck, if The EE really hits the gas and gets a little headline "help" out of Europe, $30 silver isn't out of the question. Again, would a drop toward $31 bring the MACD and RSI into the "buy zone"? Yep.

paper_3-6pmsilv.jpg

I could go on but it's late, I'm tired and I have to go pick up LT#1 from ballet class. Let's just leave it at this:

What we are currently experiencing is nothing more than another Cartel-manufactured fleecing of the momentum-chasing, WOPR-oriented spec longs that flooded into gold and silver in the 2nd half of February. The Cartel was forced to act when price reached the critical "Battle Royale" zone on the price charts, documented here days and weeks in advance. Price will soon bottom and begin to recover. Therefore, do not let your heart be troubled. Owning physical precious metal is your only protection against the financial calamity and reset that is coming. Please do let let anyone, on this board or elsewhere, convince you otherwise.

TF

383 Comments

ThoughtCriminal's picture

Oh Yeah!!

Ready to BTFD!!

Fr. Bill's picture

Second ...

though I might have claimed first, since the previous poster didn't expressly claim it.

pourty's picture

I hope...

That we do get to $30 or $31... I'd love to stack more at those prices.

Mudsharkbytes's picture

third, okay FOURTH…

…is the best I could muster.

optimize's picture

Thurd...

My best finish ever...so far.

Thanks for the late night update Turd!

optimize's picture

Oops, I was Fifth

Damn you guys are fast!

choke on paper's picture

Please answer this Turd or Anyone

If Greece defaults, will the bottom not drop out of silver?

Is it not better just to wait? I have a huge stack.......

more than I want I guess.....

Thanks for insight on this. Should we not keep a lot of dry powder handy for later instead on now?

captaj's picture

Keep pointing out the

Keep pointing out the manipulation. The little guys need at the help they can get. Also, where did all that gold come from for JP to push the market down and cover in the money? Does Greece have any left that Germany hasn't demanded? Your thoughts appreciated. Also, there is nothing dumb about reading price and volume information. The big guys have to be careful when entering or exiting the market with people watching, unless they want to scare you.

Mantis's picture

top ten

Not first but i made it in the top 10

Totally off topic so apologies if this shouldn't be in this thread. But wondered if anyone has watched 'Thrive' yet what their opinions on it are?

Movie trailer here

Thanks for the post Turd

Santa's Elf's picture

Great post Turd

While TA may not totally give us the whole picture, it's probably the best viable tool we've got.  And the continual reminder that stacking remains the supreme investment strategy is always appreciated.  Thanks Turd, as always, for taking the time to provide a guiding light.

GuerrillaCapitalist's picture

Re: Please Answer this Turd or Anyone

choke on paper:

I'll take a crack at your question.  When Greece defaults I think it will be  positive for silver. Who knows what the cartel will do in the short term to manipulate the markets to confuse the masses. I suppose I can state this more clearly. The worse the current economic climate becomes, the stronger silver, gold, farm land and other necessary commodities will be.

If your stack is larger than you want, I'll send my address and you can ship me a few pounds of silver. I'll be happy to help.

All kidding aside; silver is money and will only grow more valuable with time. Hang on to every ounce, you'll be glad you did in the coming months and years.

Be Prepared's picture

Greece will not be allowed to default formally

TPTB, the EU and the Rest of the Gang aren't going to let this happen formally...... Now, behind the scenes..... deals will be cut.... money will be exchanged.... crimes will be committed.  That's just the way that's going to go.....  :-)

atlee's picture

great analysis Turd

Good job man. You are so right! I would only add that it does not have to happened tomorrow. Would be nice and easy if it did but when have these markets been easy? A bounce tomorrow could be a great hook.

indosil's picture

Indian Connection

Great Post Turd...ppl who don't believe in TA are simply Educated Illiterates.Period.By the way I was wondering how many mails or followers do you have from India??

tyberious's picture

Pep Talk

Thanks Turd!

Every time, these smack downs happen, they anti-PMs come out of the wood work with, I saw it coming, or PMs are going down, or they are going to fall due to deflation!

Whatever!!

Thanks Again!

ReachWest's picture

Fleece Away Cartel

Thanks for the analysis and insight, Turd. It's appreciated by "this " stacker. Let them fleece the price and each other, dog-eat-dog. None of it affects those of us stacking. (other than to allow us to dollar-cost-average down). You really gotta have an iron-gut to trade these markets - I don't.

Here's another silly little video - this one sees our intrepid field reporter interview the Treasury Secretary at a Karaoke Bar.

¤'s picture

Solid Advice

A good read and a nice way to finish the night up.

Thanks!

UncleFester's picture

Sorry for the repost

Wanted some serious thoughts on this

...but this looks like 2008 all over again.  We appear to be forming the left shoulder.  No way this consolidation lasts 18 months like before, right?  But that ole saying is nagging this bald head...the markets can remain irrational longer than IFester can remain solvent.  Never underestimate the power of delusion en mass, or speaking of yourself in third person.

If history is any guide, equities should crash when Au completes the shoulder at $1900, dragging commodities and PMs with it.  I speculate that cash-strapped, weak-handed speculators added to the selling pressure in 2008.  (That's right, speculated on speculators bitches! It's that kinda market.) With the margin hikes of the past 3 yrs and MFingG, I'm thinking the PMs are in stronger hands this time around.  PMs will get caught in the downdraft, but will weather better than 2008 due to stronger foundations today.

Yeah, yeah, yeah I know...driving in the rearview mirror.  Get your painties out of your turdholes.
IFester

Disclaimer: IFester is not responsible for any losses incurred by trading on These Statements.  Your portfolio will be completely dessimated if any or all the following occurs: 1) it's all hot-fast money...MFing all of it, 2) Ben drops more hot-fast money out of black helicopters, and 3) Greece defaults and all the people MFing everywhere wake -up simultaneously.

Side Effects: The use of These Statements can be harmful if the patient reveals any of the following:
    Unrestrained low or high blood pressure
    Heart troubles such as angina, irregular heartbeats, heart failure, heart attack, stroke
    Blood cell troubles such as multiple myeloma, sickle cell anemia, or leukemia
    Bleeding difficulty
    Retinitis pigmentosa
    Liver harms
    Kidney troubles, required dialysis
    The history of severe vision loss, including NAION
    Have a bleeding problem
    Stomach ulcers
    Deformed penis form or Peyronie's disease
    The history of Priapism, an erection that lasted more than 4 hours

Debbie Downer's picture

David Morgan on the 'Leap

David Morgan on the 'Leap Year Take Down'

Rowley's picture

TA does work. Based on it, I

TA does work. Based on it, I think $28 (or gulp...less) for SLV is completely possible.

shaz's picture

if

we hit 1600 and 30ish

i know where my tax return is headed

bring it on

tis my buying comfort zone

Be Prepared's picture

Jim Sinclair's Dollar Chart....

The Bernank's statement that Business is improving... thereby lessening the need for QE3 is simply not true.

It's interesting that this chart seems to indicate that we could see further Dollar strength for the next couple of days, but the crystal ball seems foggy.

optimize's picture

More Than You Want?

I'm no expert...but I don't think you should ever have more than you want of anything.

I'm with Turd on this one, keep nibbling away...and this is another opportunity. Will I blow all my powder on this dip? No, I'll only buy with a portion of my "discretionary" fiat and wait for a further dip or another such event somewhere in the future.

ALWAYS have enough fiat on hand to cover expenses for several months and then some for more stackin'...at least that's my game plan.

kingboo's picture

I agree with Be Prepared wholeheartedly

They will not allow it to be called a "default".........ofcourse, it's already a friggin default.....but why let the facts get in the way when there is money to be stolen....  there is only 1 thing to take away from the last 5 years of economic chaos...and that is this:  they do whatever the fuck they want, whenever the fuck they want to....at the expense of anybody or everybody, it doesn't matter to them because they are self centered in the extreme.....survival of the fittest psychopath.

The fact is that as much as we would like to believe we have shaken all of our normalcy bias, the truth is we haven't.  One example is that we know they paint the charts at will, yet we are hopeful that price discovery is around the corner. The only thing around the corner is whatever they want to be "around the corner"..... don't misunderstand me, i'm not trying to be negative......i am, however, convinced that the only way we come out of this with our skin is to ride their coat tails.........so the real question becomes, do we even have enough staying power to hang on that long? Is our strategy sound in the long term. (meaning can we stack in sufficient quantity AND survive day to day to reap the rewards long term).... i have no doubt about PM's long term performance, what i do have doubts over are whether or not i can survive financially to see that day come without personally selling off in order to survive day to day.  Its like a prize fight.....i'm weaker than the opponent, with less stamina....and the odds are like 20:1. Being "financially responsible" has not paid off yet........don't believe me? Just ask your neighbor who hasnt made a mortgage payment in 2 yrs yet still lives in the house, meanwhile like a schmuck, i've always paid on-time and avoided debt. What was my reward?......well, i got to bail out all the over-extended with my tax dollars....great, just fuckin great. I really do hope one day my financial conservativism pays off..........but it's probably just the remains of my normalcy bias fucking with me..........   In the U.S.  justice doesn't prevail..........$$$$$ prevails.

pourty's picture

Collusion...

So today's hyperreport had an interesting piece about a new mozilla (firefox) add-on called "Collusion".  It creates a chart of sites that report your access to 3rd party sites.

So I loaded it and then opened up SGTreport.com... which evidently sent a message to TFmetalsreport.com that I had visited there?

Can someone explain this?  I'm not much for conspiracy theories, but... oh who am I kidding, I've got the tinfoil strapped on tight!!!

Doc Scurlock's picture

Hear you nothing that I say...

Every time we have a take down, panic ensues.  Relax.  Warren Buffet says to wait for the perfect pitch, and there are no penalties for not swinging.  The cartel take downs provide nice fat pitches to swing at if you are patient.  My only hope is that they keep it up until I can prudently allocate all my resources to the sector.  The fundamentals continue to change,...that is they continue to get MORE favorable for the precious metals sector.  My work indicates a bottoming process from this damage may take a 2-6 weeks, but then the bull will be loose.( for whatever my work is worth)  Keep a firm grip on the bat, keep your eye on the ball, and be patient.  The fat pitches keep coming, and we are seeing some right now.  Keep stacking.

Kuchek's picture

Aww man

I'm just a stacker but I come here often to keep track of the market through all the input from everyone. I was hoping to have my GTO sold by now for this dip. Alas. Bright side. This would not have been my first time BTFD. Thanks to all you guys!

victorthecleaner's picture

guerrillacapitalist,The

guerrillacapitalist,

The worse the current economic climate becomes, the stronger silver, gold, farm land and other necessary commodities will be.

The worse the current economic climate becomes, the more the banks will be squeezed and the lower (paper) gold and silver will trade. The (paper) market is full of leveraged speculators and weak hands who will sell if things become deflationary, driving the (paper) prices down, gold through $1000 and silver through $20. There will be no short squeeze because nobody has been (net) short. The only problem is that the bullion banks will run out of physical reserves, and one day the London market will remain closed.

No financial product related to gold or silver is going to survive this. The ETFs  will wind down when the prices are below $1000 and $20 and will pay out their shareholders in cash. Mining companies in the U.S., Canada and Australia will be nationalized. No worries, you will be compensated in cash once these stocks have crashed because gold just dropped below production cost.

Only what is hidden in your sock drawer counts. Before you are relieved about the contents of your sock drawer, you will be frightened to death when you see (paper) gold and silver prices crash when the world goes down in a deflationary collapse. Many who were in the game just for a quick price gain in dollars, perhaps on margin, hoping for the big short squeeze, will not understand what is happening, will be weak and will sell.

captaj,

Does Greece have any left that Germany hasn't demanded?

As long as the old London gold market operates, it is unlikely that the Europeans will use their gold. They won't deploy their gold for less than its fair value. Once the London gold market is closed and the dollar block (U.S., UK, Japan,...) is in disarray, the gold block (Euro zone, China, Middle East, ...) will put gold back into the international monetary system as the major international reserve. Gold will trade physical only for $30000+ in today's purchasing power. Silver will trade at $50 to $100 in the usual futures market of an industrial commodity. GSR eventually 300 to 600. Happy stacking. Just make sure you stack the right one of the two.

Victor

PS: Runaway price inflation in US$ will happen indeed, but only after the shakeout.

Georgie's picture

Outstanding Analysis

That was an outstanding analysis--One item I would like to suggest exception to is your comment that--

"And you can forget about The Cartels rigging price down to zero, too"

​While it is highly improbable that they would rig the price down to zero, I would not dismiss the possibility of them doing this out of hand, given the players.  

What would happen if they flash crashed it to zero, took out all positions either through stops or by just selling them out due to margin violations, ran it down to zero, and then bounced it right back to market prices, say in the course of an hour, scooping up all of the cash in one major cluster####

​And if they did that, what would you do?  Write your congressman?  How would you wrestle your money back?  Good luck.

MFG on hyper-steroids.

Dexter Morgan's picture

My take

I would say if you have a huge stack don't worry about hitting the exact bottom.  Just accumulate.  Buy some every so often regardless of the price.  Your alternative is stay in paper and watch it lose purchasing power.  Buying at 200-day moving average for gold has been money for a decade.  "A trend is a trend until proven otherwise."--Edwards and Magee.

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