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Why?

The bigger question is: Why? Why was "The Iron Dome" held so desperately in place for two weeks in November? Then, after the Black Friday breakout, why has gold been so savagely and consistently beaten backwards?

It's hard to say for sure and I'm certainly open to hearing your suggestions. To me, The Iron Dome represented a critical line of defense. Once above $1735, the only remaining hurdle for gold was $1755 which, not coincidentally, is exactly where the Black Friday advance was halted. Once through $1755 and it is clear to everyone that gold is headed back to and through $1800. Maybe it's more complicated than that, though? Maybe there are massive derivative positions to protect? Maybe price is being held here as BBs desperately attempt to repay underwater leases ahead of QE∞ and skyrocketing prices in 2013? Again, it's hard to say for certain and I look forward to reading your theories.

Another reason for the brutal, two-week smackdown is this: At the close on Black Friday, gold was above all of its moving averages which, from a purely technical standpoint, made it very attractive to the momo-junkies. Now that it has been successfully broken down, it has fallen through its 20-day ($1726), its 50-day ($1737) and its 100-day ($1701). The only remaining line to challenge is the 200-day which is near $1671 and this is very likely where we are headed. But I think we will bottom there. Why?

  • $1672 is where gold bottomed on November 2nd.
  • Gold rarely plunges or soars through the 200-day. It usually bounces.
  • The $1675 area is the median line of the entire 2012 range of roughly $1550-1800. Trade has often centered around 1675 as price tries to determine which way gold will trend next.

And I have to believe that the next trend in gold is higher and toward the top of the range, not lower and toward the bottom. Absent some deflationary spiral (which global central banks have been fighting against for over 4 years), the trend as we enter 2013 is toward much more quantitative easing and fiat devaluation. Much more. To the tune of total debt financing by The Fed. Add to this the unquenchable and growing, global desire for physical metal and you get rising prices and an UP trend, not gold languishing again below $1600.

Now I must admit that silver ain't looking too hot here. It had held in there much better than gold but the action this week makes the chart look kind of lousy. The 12-hour chart has been painted with a classic-looking failure at $34.30. Price ran up on Black Friday and then was beaten lower. It tried to immediately recover but it subsequently rolled over again and now it's breaking down. Not good. Though it has been holding $32.80, I expect price will fall into the broad 32.20-32.80 support zone and that may not be it. Silver is now below its 10, 20 and 50-day MAs so it is at least possible that it be pressed down toward its 100-day, near $31.75. That line coincides with horizontal support so any steep selloff should end near there. Boyohboy, IF that were to happen, I'd be backing up the truck. NONE OF THIS discourages me or alters my opinion regarding silver's prospects for 2013. Just remember (and it is the holiday season), like Cousin Eddie says, "The Cartels got a little Mississippi LegHound in 'em. Once they set on ya, you best just let em finish."

I've got to run now to get ready for the webinar this morning but before I go, I'll leave you with the latest Keiser Report as ole Max visited yesterday with our pal, NN-L. Great stuff, as usual.

Speaking of the webinar, it begins at noon EST, about an hour from now. Both Andrew Maguire and Paul Coghlan will be speaking so I strongly encourage you to listen in. There's still time to register for both the live call and the recorded playback. You can do so here: https://www1.gotomeeting.com/register/240678176

Have a great day!

TF

376 Comments

Istack's picture

Gotta buy

i got up this morning and looked at the price of silver and decided that the only way to ease my angst on a day like this is to buy some more.  i scrounged up some dollars and will head to the local coin shop at lunch and ask for $326 worth of junk silver.  i am open to a price increase after 1 pm pacific today though.

SIlverbee's picture

no 2

When is the curtain going to be pulled back on the paper markets? 

SIlverbee's picture

no 3

as above

sorry slow internet!

Grublux's picture

fourth

!!!

Maybe I'll count that as Thurd since Silverbee is duplicate.

Bollocks's picture

thurd!!

ha.

edit: make that not ha.

Revelation's picture

The Ice is Melting Beneath Our Feet & 12/12/12

Gotta keep Gold and Silver down until...

http://moneymorning.com/2012/12/04/why-gold-prices-will-soar-after-the-dec-12-fomc-meeting/

Oh Yes! The Bullion Banks are finishing all over us! Rejoice!

القراع عصفور's picture

Serbia's NATO ambassador kills himself

OT, but things are getting weird all over, not just in the make believe banker illusionist world.

http://news.yahoo.com/officials-serbias-nato-ambassador-leaps-death-093459101.html

CaribSurfKing's picture

Even Jim Rickards is starting to tweet about the phyzz vs paper

ponzi shenanigans!

Try taking delivery of 100 tonnes of Silver/Gold right now, its not happening!

AlexCojones's picture

Goldman reason for Gold Downturn?

Zerohedge has this.

Tyler Durden's picture

Golden Showers As Goldman Tells Clients To Sell Gold

Reminds me of some quotes for a column I wrote in 2004 called “Buy Gold, before They sell Out.”

“Writing in Gold and the Markets, Jay Taylor observed: ‘Two articles from the Financial Times relating to gold are excellent examples of how the mainstream media is spinning lies to keep the public out of the gold markets. The first article, titled, Rothschild To Pull Out Of Gold Market by Charles Pretzlik, was published on April 14. When I first read this article, my suspicions immediately were raised to a very high level. First of all, the Rothschilds are very private. This is one of the most private families and many believe absolutely the richest family on the face of the earth . . . . When I first read this article, I suspected what the Financial Times article was being used by the Rothschilds to mislead the public into thinking they were 'getting out of gold' as in selling all the gold they owned, when in fact, I suspected they were actually getting out of the business of lending gold . . . ."

"The Rothschilds are not stupid, " Taylor continued. "And they wouldn't get out of gold exactly at one of its lowest points in history, to enter a real estate market that is at its peak in history. Smart money simply doesn't behave that way. So when I read this Financial Times article, I was sure I smelled a rat."

Was Rothschild a contrarian indicator then, like Goldman today? Of course I was such a newbie back then I didn’t even know that gold fractionals existed.

AC

SCPatriot's picture

Goldman

Goldman told its clients to sell gold:

http://www.zerohedge.com/news/2012-12-05/golden-showers-goldman-tells-clients-sell-gold

(Which means Goldman will actually do what, regarding gold, class?)

ratioarbitrage's picture

If you were a communist country

sitting in the middle of the world on a cool T in the clearly defunct promises of the bankrupt government of a dying, decadent empire, and you knew that if you went into the market like a moron fast you would get maybe a hundred million oz and seriously hack them off, if you went in like a moron slow you would get maybe two hundred and hack them off almost as badly but if you used ten percent of the cash to jerk the whole market around over years you could get maybe three hundred million oz and you could even make the bankrupt  fatties with the nukes smile and work with you, and if you were even averagely smart, what would you do?

Bollocks's picture

So they're knocking the price down...

...as they tell their clients to sell it.

Well well.

Ooh, I wonder where the gold that does get sold ends up. Hmmmm.

babaganoush2307's picture

I would love to take 100 tonnes of delivery right now...

...that is like a gazillion times my weight in silver! cool

Al Huxley's picture

Why?  Because commercial

Why?  Because commercial short:long ratio was 2:1, which, while not high enough to mark a top, was definitely high enough to cause serious headwinds blocking further advance in the short-term.  And fundamentally why?  Because according to Basel III gold becomes a tier 1 asset in January 1, 2013, which seems to me to mark the fundamental change in gold as far as it's value to FI's as an asset on their balance sheet.  Which should mean a big drop in selling pressure, and corresponding increase in buying pressure come January 1.  So those short the paper market right now, being fully aware of the pending change in the fundamental nature of the gold market, will be taking advantage of the last days of 2012 to close out as many shorts as possible to position for this.

zpring's picture

My comments

Turd,

My comment is that as long technically the metal is in a downward trend, do not fight it although we believe the fundamentals are solid. 

If gold fails 1675, it it can go down to 1550.  

When it reverses technically, it is never too late to get in. 

Meanwhile, I remain bearish unless it reverses technically although I am very bullish on gold fundamentally.

Remember, stock can remain irrational longer than you remain solvent.

What Paul Coghlan is teaching on his webinar is very useful and can be applied to what is going on now.

Let me share a joke which can be relevant to the discussion:

"A Technical Analyst and a Fundamental Analyst are chatting about the markets in the kitchen.
 
Accidentally one of them knocks a kitchen knife off the table landing right in the fundamental analyst’s foot!
 
The fundamental analyst yells at the technician, asking him why he didn’t catch the knife?
 
“You know Technicians don’t catch falling knives!” , the technician responded.
 
He in turn asks the fundamental analyst why he didn’t move his foot out of the way?
 
The Fundamental analyst responds, “ I didn’t think it could go that low”.
¤'s picture

A New Debt Ceiling Or Elimination?

Market Takes Leg Lower As Treasury Supports Use Of "McConnell Provision" In Debt Ceiling Fight

As the Fiscal Cliff discussions get progressively more acrimonious, more people are being reminded that the new and improved $16.4 trillion debt ceiling, which the US will breach in a few days, is just as important, and just as much at an impasse. Which is why the Treasury just opined on the issue, by openly supporting the "McConnell Provision" and in doing so may have made any future Cliff/Ceiling discussions more difficult as the US has effectively invoked the nuclear option, aka a Presidential Veto to effectively elimiante the debt ceiling, something which will antagonize the GOP to such an extent any potential Fiscal Cliff deal may become unfeasible. The market is hardly happy that the already record polarity in Congress is about to get even worse as a result of this hardline stance, and just took another big leg lower.

http://www.zerohedge.com/news/2012-12-05/market-takes-leg-lower-treasury-supports-use-mcconnell-provision-debt-ceiling

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The longer this 'cliff' talk goes on the more likely it is something bold/dramatic/historic happens.

Does Obama have it in him to eliminate or drastically raise the debt ceiling via Executive Order?  I think so.

If not him, it'll be someone else at some point. It's interesting to see the mere concept of it being talked about openly and when Geithner let it 'slip'  2 weeks ago it indicated to me he was prepping the markets via the MSM regarding an outright ceiling elimination or raising the ceiling much higher.

I'm expecting something bold/audacious either way. Obama would seem to have it in him to do so and I don't think the Repub.'s will have any problem with it at all.

Fulgurite's picture

Yawn...

For Pete's sake Turd, stop being such a short term day trader!

The more I read about "imminent break-outs" on goldbug sites, the more I just know that Gold and Silver are about to be whacked.

Your TA bullsh!t just doesn't make any sense Turd, never has, never will. You might as well start throwing darts at PM charts. You claim the market is not to be trusted and is heavily manipulated, yet you think you can forecast those very same markets.

Well, guess what: you can't...so stop hiding behind this "Cartel" conspiracy sh!t if your predictions don't turn out as planned, and stop boasting if you accidentally throw a dart in the bulls eye once in a while.

Oh yeah, now everybody can just continue gving hat tips to the 'Turdites' posting the biggest conspiracy theory or the most YouTube music videos.

Corsair's picture

Fib retracements

11/3 lows and 11/28 highs - bounced off the 50%.  The 11/3 low was approx 50% Fib retrace of the 6/26 lows and 10/3 highs.

Are back-to-back 50% retraces a sign of something? It does make for nice gradual rise.

PhysicalDelivery's picture

The Reason for the Cap..

I think the reason for the cap is that the cartel is trying to beat down gold as much as possible before Dec. 11/12. Once the fed begins QE4, gold will pop, followed by some capping in late-Dec (with the fiscal cliff worries). Once the can is kicked down the road, and moodys has downgraded the US, 2000+ gold will be here by mid-Jan. 

Groaner's picture

Maund has to be licking his wounds too.

He just said ready to fly.. 

I guess Murphy is changing his tune on extremely bullish with the HUI closing up..for today.

guesses anyone?

Dr Jerome's picture

What do algos monitor

Instead of candlesticks, don't the algo's monitor moving averages, volume, and resistance/support levels, price of dollar, tea in China.  

But then we have the arbitrary manipulative moves--capping and takedowns. Too complicated to even have fun trading a single $50 call or put contract. I tried trading corn on the drought news last summer and saw the same manipulative patterns kick in once it reached the old highs. I have thrown in the towel several times and picked up a washcloth. I ought to throw that in too, but then I don't pay as much attention to things. 

Looks like they are holding us under a down-trending line. Maybe we'll get back up to 33 today and I'll just close my foolish position.

I feel the need to buy more physical. Maybe just an eagle or two at the LCS will satisfy this overwhelming craving.

TJeffson's picture

DPH re Debt Ceiling

McConnell was too clever by half... he showed his true colors with that provision.  If I understand it, he basically gave Obama the power to permanently remove the debt ceiling simply by vetoing any bill that disapproves of his plan.   And the odds of getting a 2/3 majority in both houses of Congress to override a veto is literally zero (at least until one party takes a 2/3 majority in both houses at some point, if ever).    The Republicans and Democrats are now openly showing they are the same party. 

tobydaniel's picture

High 20's by years end?

It's only a couple bucks away and with the action clearly taken over by Algos, there will be nothing holding them back. The cartel does not care about supply. Otherwise they would have never pounded it to the ground like they have since may of last year. In the meantime, they will print unlimited amounts of currency, let the dollar fall but also take silver along with it so that nobody sees it as a safe haven. Just look at the dollars action. Down two days and up today. The metals have been down everyday. This is ingenious. They can do this for a lot longer than you and I think they can. Remember, markets can stay irrational longer than we can stay rational:) lets enjoy these beat downs because the cartel looks to be upping their ante. Buy the dips but only a little at a time. This consolidation looks to be gaining momentum so don't use all your dry powder.

Orange's picture

Ready and Waiting

USS Eisenhower aircraft carrier arrives off Syrian shore

DEBKAfile Special Report December 5, 2012, 4:20 PM (GMT+02:00)

The USS Eisenhower in a lightning storm
The USS Eisenhower in a lightning storm

The USS Eisenhower Strike Group transited the Suez Canal from the Persian Gulf Saturday, Dec. 1, sailing up to the Syrian coast Tuesday in a heavy storm, with 8 fighter bomber squadrons of Air Wing Seven on its decks and 8,000 sailors, airmen and Marines.

http://www.debka.com/article/22586/USS-Eisenhower-aircraft-carrier-arrives-off-Syrian-shore

Dr Jerome's picture

Right call

Somebody called 1688 yesterday, no?

Good call! and that is why I don't dis the bears anymore.

But I hope that is the end of it.

القراع عصفور's picture

Why?

Hey y'all, Turd asked for some input from his readers!  paraphrasing, "Why the seemingly more brutal, more desperate capping of late?"  I will repost my thoughts towards the end of the last thread, and pose a question - If you already knew you were losing, but losing meant your total demise, would you just lay down, and accept death?  Maybe.  But if you ask a sociopath that question, the answer will be always "No, I will fight to the death."  

Again, please no hat tips.  I want no hat tips ever.  The hat tip system here has been gamed - and it got disgusting again this weekend.  If you want to hat tip - hat tip only the bigots, the liars, and the thieves, but not me.  Thank you.

The Battle of Iwo Jima (19 February – 26 March 1945), or Operation Detachment, was a major battle in which the United States Armed Forces fought for and captured the island of Iwo Jima from the Japanese Empire. The American invasion had the goal of capturing the entire island, including its three airfields.[2] This month-long battle included some of the fiercest and bloodiest fighting of the War in the Pacific of World War II.

The Imperial Japanese Army positions on the island were heavily fortified, with a dense network of bunkers, hidden artillery positions, and 18 km (11 mi) of underground tunnels.[3][4] The Americans on the ground were aided by extensive naval artillery and the U.S. Navy and Marine Corps aviators had complete air supremacy over Iwo Jima from the beginning of the battle. American seapower and airpower were capable of delivering vast amounts of fire onto the Japanese troops.[5] This invasion was the first American attack on Japanese home territory, and the Japanese soldiers and Marines defended their positions tenaciously with no thought of surrender. The Japanese general in charge never considered surrendering to the Americans to save his men, and he and his officers had vowed to fight to the death, no matter how hopeless their battle was.

Iwo Jima was also the only battle by the U.S. Marine Corps in which the overall American casualties (killed and wounded) exceeded those of the Japanese,[6] although Japanese combat deaths were thrice those of the Americans. Of the 22,000 Japanese soldiers on Iwo Jima at the beginning of the battle, only 216 of these were taken prisoner. Some of these were captured because they had been knocked unconscious or otherwise disabled.[1] The rest were killed or missing and presumed dead.[1]

Despite the bloody fighting and severe casualties on both sides, the Japanese defeat was assured from the start. The Americans possessed an overwhelming superiority in arms and numbers. These factors, coupled with the impossibility of Japanese retreat or reinforcement, ensured that there were no plausible circumstances in which the Americans could have lost the battle.[7]

more...  http://en.wikipedia.org/wiki/Battle_of_Iwo_Jima

BagOfGold's picture

Why?...Why?...

'Cause when they cry...

Smut Sheep - STOP! YOU*RE HERDIN ME!

I BUY!!!...

Bag Of Gold

babaganoush2307's picture

HAHAHA!

They are selling silver the same way they are selling their dicks, once everyone finds out they are only packing 1 inch vs. 12 the paper/silver relationship is over! broken heart Poor bankers <sarc>

achmachat's picture

The horror! The horror!

I received "three rolls" of Armenian Arks today through UPS.

It has never been this difficult not to start swearing in front of my little daughter.

I'm waiting for the dealer to respond to my email before I share what they did... to think that I had previously recommended that dealer :-(

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