Setting The Stage

The action following yesterday's magnificent rise is very encouraging and following script. Is the stage being set for an epic battle next week? I think so.

So what about the price action is so encouraging? As noted yesterday, the beatdown of 4/12-15 was so sharp and so severe that it left virtual "air pockets" on the charts. This means that, as price rebounds, it runs into very little in the way of technical resistance points. The rallies of yesterday were halted and reversed overnight near/at two of the few points that we were able to identify, the 20-day moving average in June gold and the one line of horizontal resistance in silver, near $24.80.

The overnight high in June gold was $1484.80. As of this morning, the 20-day MA is $1487.80. This was close enough to inspire the remaining shorts to double down and turn price back but, after reaching back down to $1458, we've now recovered. With the lousy GDP number today, I expect gold to continue grinding higher on the back of an almost insatiable physical demand and this sets us up for an epic battle next week.

Recall that, prior to The Smashdown, gold had held $1525 as bottom-of-range support many occasions. (On the weekly chart, I can count a minimum of 11.) It was only after $1525 was swamped and overwhelmed on 4/12 that the bottom literally dropped out on 4/15. Thus, here is a point that you must understand: A gold price back above $1525 puts every single short contract initiated during or after 4/12 under water. Therefore, this level must be defended, even if it means doubling down and putting good money after bad. Perhaps some unforeseen headline will provide the impetus for a dramatic shove higher? More likely is an "Iron Dome" cap that attempts to stall momentum long enough that buying enthusiasm wanes and the shorts can then re-assert themselves.

The key to the game will, in fact, be the physical demand. IF IT CONTINUES AT OR NEAR THIS PACE, price will not be contained below 1525. It will rally through and move on to pressure the red trend line from the highs of early October. So, clearly, we are going to have to monitor demand very closely:

  • Wholesale, tonnage demand in London and Shanghai, specifically.
  • Delivery demand in New York. This includes the "non-delivery" May13 gold contract which currently shows an open interest of 1,422.
  • Retail demand through the U.S. Mint, the RCM, the Perth Mint and others.
  • Alleged demand for alleged gold in the allegedly legitimate GLD. Will it continue to be drained? What happens if retail investor demand ramps up and the 250+ metric tonnes extracted YTD needs to be replenished?
  • Comex inventory demand. As of yesterday, registered (available to deliver) gold fell to just 67 metric tonnes. At the current rate of demand, this is barely enough gold to deliver and settle the June13 and August 13 contracts when they expire this summer.

So here are your gold charts. Again, let's watch $1487, $1500 and then $1520-30.

Silver presents a similar picture with several key differences. The main one is the size, scope and clarity of the "air pocket". Chart resistance for silver can be clearly seen at $24.80. Therefore, it's no coincidence that this is exactly where silver stopped last evening. On the bright side, after falling back over $1, silver has bounced right back and is near $24.60 as I type. Watch $24.80 very closely. Above there, silver has zero resistance until the 20-day MA near $25.30 (and falling) and, above the 20-day MA, zero resistance until $26. Then, just like gold, expect significant efforts to be made to keep silver from moving above $26 and back into the 19-month, $26-36 range because IF IT DOES, the picture will turn extremely positive from a technical standpoint. The action of 4/12-15 will finally be viewed simply for what it was...a nefarious and greedy stop-flushing exercise. Nothing more, nothing less. And all of this nonsense talk about "bull market endings" and "bubbles popping" can all be flushed down the golden commode also known as Paul Krugman's mouth.

Just two other things. One, I posted this in the comments yesterday but you may have missed it. Our pal, Andrew Maguire was on the Keiser Show yesterday. Nothing earth-shattering here as, unfortunately, Max jumped in a couple of times right when Andy seemed ready to make important points. Oh well, they offered to have him back on again soon so maybe next time will be different. If anything, this is at least extra proof for the intellectually-challenged who publicly claim that "Andrew Maguire" is a figment of Bill Murphy's overactive imagination. A far more plausible story is that Jeffrey Christian is, in fact, a heavily-disguised Chinese agent, sent back in time from the year 2030, whose mission is to deliberately talk down the price of gold so that The Chinese can accumulate as much as possible, at the lowest price possible, before asserting their control over the global monetary system for the 21st century.

And lastly, I haven't plugged this yet so I thought I would do so today. Kerry Lutz is having a one-day symposium in Dallas, Texas in late June. He graciously offered me the opportunity to be a featured guest but I had to decline due to previously-scheduled family time. That should not stop you from attending, though. It looks like an terrific event with speakers you should get to know. I noticed that Martin Armstrong is on the list of presenters. Hmmm. That ought to be interesting. Here's a link to check it out: http://libertymastermind.us/

OK, that's it. As usual, I'll check in this afternoon with some immediate reaction to this week's CoT. It should be pretty interesting again. For the reporting week, gold was up $21 while its OI rose by 2,000 contracts. In contrast, silver was down 81¢ but its OI was also up, rising by 1,700. Hmmm.

Have a great day and a relaxing weekend!

TF

 

239 Comments

tyberious's picture

First!!!

First!!!

Mr. Fix's picture

Smack down is now in progress.......( 2nd )

Near the end of the last  thread, I predicted that JP Morgan would go all in with a smack down today.

[Most Recent Quotes from www.kitco.com]This looks a lot like it!angry[Most Recent Quotes from www.kitco.com]So I carried this post over from the last thread, it seems strangely relevant.

Here is a clue, that it may be getting much worse.

I wouldn't want to be in paper right now. The miners are getting clobbered.

Live XAU Quotes

Daredevil73's picture

3rd!

Ready for the weekend.

prius_driver's picture

everything tanked right about when this was posted

everything just tanked...nearly straight down.

tyberious's picture

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mrneutron's picture

Oops looks like a takedown in progress

Grublux's picture

Top Ten?

Hard to do nowadays...

It will be interesting to see where the broad market closes.  Really feels like powerful players are prepping for a major transition and its effects will be tumultuous to say the least...Wonder how long till COMEX is fully drained

PS.  I am starting to look forward to these takedowns in a strange way.  I get more excited on the drops, anyone else feeling that way?

TheGreatKD's picture

Mickey Mantle

# ???

Prize Fighter's picture

Only .40 to go

I should learn not to post these this time of morning before the new thread.  That's two threads in a row I posted right before a new thread. 

I'll be happy to see this fill sooner than later.

edit: only .30 to go.  Fill that sucker and ramp into the close, please!

woofwoof's picture

Attention K-Mart Shoppers

Attention K-Mart Shoppers .... Blue light special.

images?q=tbn:ANd9GcS6XEosfwTItbn1d4I29sh

murphy's picture

hat tip to Enough

Posted in AM's thread.

not sure if it's made it's way round yet.....

indeed, it's ALL RIGGED

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps

http://www.rollingstone.com/politics/news/everything-is-rigged-the-bigge...

edit- makes me want to vomit

In any case, this all-star squad of white-shoe lawyers came before Buchwald and made the mother of all audacious arguments. Robert Wise of Davis Polk, representing Bank of America, told Buchwald that the banks could not possibly be guilty of anti- competitive collusion because nobody ever said that the creation of Libor was competitive. "It is essential to our argument that this is not a competitive process," he said. "The banks do not compete with one another in the submission of Libor."

 
Groaner's picture

Just your normal trading, for a manipu;ated market that is.

How can anybody look at this and say it's not?

miners were down all morning, a dead give away?

Beastly Stack's picture

yesterday is well....

Yesterday, with these crazy markets- WE ALL NEED TO BE CAREFUL!

http://tradermartinstake.blogspot.com/2013/04/twins.html

Juggernaut Nihilism's picture

You must have pissed someone off

You posted this around 11:30, and the metals got mini-flash-smashed starting at 11:28.  They must have taken it as a challenge.

NonoverlappingMagicCereal's picture

Why are the steep drops 'smack downs'..

...but the steep rises not 'smack ups'?

Al Huxley's picture

The paper boys still run the paper market

Any life in the paper market is counter-productive, because it means paper's still relevant.  And as evidenced just now, the paper boys still do what they want with the paper market.  What's important is the unpublished and unavailable real price for metal, which should continue to diverge as the paper market fades to irrelevance.  The thing that will end the paper gaming is going to be the complete depletion of GLD and Comex inventories, but until then, attributing significance to the moves in paper price is accepting the paper market as relevant.  I'm with Jim Willie on this one, paper price is no longer relevant, and anybody following it or acting on it is giving it respect it doesn't deserve.  Looking forward to the impending death of the Comex, LBMA and GLD...

ancientmoney's picture

This smackdown is easily explained . . .

by Armstrong in his lecture on commodities trading.  Pure supply and demand in action.  The more demand and less supply, the more the price drops.

See?  Very simple.  Armstrong is a gooooood economist!

ancientmoney's picture

Obama wealth redistribution effect on PMs . . .

Obama has been trying to gain backing for his plans from the Free Shit Army by making it look like he is Robin Hood. We know all the tricks he has used, so won't go into them all--would need 20,000 pages.

This has been going on for quite awhile, but mostly the last 2-2.5 years. It was about that time that Bernanke mentioned that while the Fed was going to continue to loosen, QE, bond-buys, etc., that it wasn't working anymore--that in essence, they were pushing on a string. The debt ceiling was being reached soon, and he admonished congress that they needed to start reining in spending or raise taxes, as system was failing.

We all know what happened since. More debt, baby! QE has continued. Gold and silver clamps were installed May 1 2011, not to be removed since. Financial fixes installed everywhere for short term. All media announce we are back to normal.

Now, we like to pretend that the people at the top are stupid dopes. But we know they are actually smart, cunning predators to have gotten to where they are in the fraud-riddled world of finance and politics.

We know Cyprus was the financial "shot heard round the world." Since then, the big money is selling paper assets and going to real wealth in size. Anybody not paying attention is deemed too stupid to keep their wealth, after such a warning.

The bail-ins, when/if they occur, can now be sold to the Free Shit Army as another, necessary way to redistribute wealth. I do not think gold will be confiscated, because the big money was warned to go to it. Silver will not be confiscated, either, as there just ins't enough of it in easily raidable form. Maybe COMEX or SLV, but something tells me there is a whole lot more paper silver there than physical.

The government can get the silver it needs quite easily--it can outpay anyone else directly at the mines. Same with gold. They may clamp a "windfall tax" on the miners to make the Free Shitters happy, but the mines will be profitable--sort of like utilities. May not make you rich, but generate decent comparable returns.

Physical gold, silver, farmland, and other real assets will be stores of wealth.

Amberjack's picture

Ready on the right? Ready on the left? ....

Monkeys, start your hammers!!

Still working on an algo that sees the monkeys coming and pings my LCS to auto-add to my stack...

AJ

Groaner's picture

Just so ya knowwww...

who's boss!

There is no need to hide anymore, this system is total broke, Kleptocracy in action!

Mr. Fix's picture

The smack down has just been picked up on Zero Hedge.

Who Got The Golden Margin Call At The European Close?

Gold and silver prices are plunging after the European equity markets closed. It seems someone got the tap on the shoulder and needed to fund some liquidity.

http://www.zerohedge.com/news/2013-04-26/who-got-golden-margin-call-european-close#comment-3502668

 
Dr Jerome's picture

And we were haviang such a nice day

I am about sick of the continuous beatdowns. I got out a gold eagle from the safe to fondle today. I remember having a "blankey" that I slept with from infanthood that I drug around until I was about 4 or 5 and my mom decided to take it away, but nobody is taking away my metals and I'll fondle them all I like at times like this.

ForWhomTheTollBuilds's picture

...but the steep rises not 'smack ups'?

"...but the steep rises not 'smack ups'?"

Uhh.  Zero hedge used that exact terminology earlier this week to describe gold's recent rise

dropout's picture

Proof That consumer Confidence is Tanking

Yahoo finance poll as of 11:45 AM EDT today asked; "Do you think the economy will ever fully recover?"

Out of 30,372 respondents, 17,421 (57%) replied; "Not for a very long time."

Turd Ferguson's picture

Here, this is fun

MODERATOR

First, there's this tweet. Note that the time today's $3.4B POMO closed was 11:00 am EDT.

POMO over, Fed injects $3.378 billion

OK, now look at these three charts and note the time. Did a Primary Dealer (JPM, GS, etc) take their newly-created cash and immediately run a "sell all commodities" algo??? Nah! Couldn't be! All U.S. markets are free and fair. Totally unencumbered from Fed and Central Planner influence.

Prize Fighter's picture

Things fall faster than they

Things fall faster than they rise because 9.8 m/s2 takes no capital or energy.

boatman's picture

geeee

it was a FULL hour after the michigan sentiment bombed.

there is NOTHING on seeking alpha news

touching lower 5 day channel NOW

lets see what happens

tyberious's picture

9.8 m/s2

Free fall!

Grublux's picture

So

We should all go short on Fridays.  We all see it, shouldn't we front run em.  Short the paper buy the Phyzzz

NonoverlappingMagicCereal's picture

@ForWhomTheTollBuilds - I will phrase it more pragmatically

Uhh.  Zero hedge used that exact terminology earlier this week to describe gold's recent rise

Why are the steep drops interpreted as obvious manipulation, but the steep rises interpreted as the market re-asserting itself?  If it is simply that we 'know' that PM prices should be higher, that begs the question.

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