Gold Is Going To $800

(The reverse psychology test from yesterday is working so well, I thought I'd better keep it going!)

Well, isn't this nice? A genuine, bona fide rally! What's the deal? I imagine that much of this is being driven by new long interest in gold...well, not that new. As we approach June13 contract expiration, we have seen a bunch of contract holders sell but not immediately roll into August. In fact, total open interest in gold fell by 24,000 contracts on Tuesday alone as June contracts were sold and/or covered.

So today, with price rallying, those longs who sold Tuesday or late last week and didn't immediately roll because they had hoped for lower prices before getting back in, are suddenly rushing back in and we're up over $20 as I type. Hey, whatever...we'll take it. So now, what?

Take a look at these charts. On the daily chart, notice the undeniably pretty double bottom at $1350. All along, Andy has been reporting very heavy buying interest and huge pending orders at and below $1350. Well, it certainly looks like he was accurate because every time the paper bears tried to break price down below that level, price almost immediately reversed and moved higher, no doubt on the back of bullion bank buying which hoped to keep those orders from filling. Now, not only does the daily chart look compelling, look at the shorter 4-hour chart, too. We had that spike high of $1413.30 last Wednesday as The Bernank's prepared remarks were released. You'll recall that price then collapsed amidst all the nonsense talk of "tapering". Well, lookyhere. We are right up against that level as I type. A move through and close above would be very bullish and would set the table for a move back toward the early-May highs just below $1500.

To bring all of this in line with yesterday's post...Part of the move today can be traced back to some lousy jobless claims and other data released earlier today. Yesterday's post carried the theme that the data was about to turn worse and all the talk of tapering was going to fade away. What I postulated yesterday was the possibility that price could be shaken out one more time before the BLSBS next Friday. It could still happen but, obviously, today's action makes it less likely.

Turning to silver, it too is rallying today, though not as aggressively as gold. This is also likely due to expiration as silver didn't/doesn't have as much "dry powder" on the sidelines at this moment. Regardless, look at these charts. First, note that $22 silver is very much like $1350 gold...a very solid floor. Outside of the nonsense shenanigans of two Sundays ago, $22 has held very well. Now, can it get up and go to the upside? Well, like gold, let's watch the spike high from last Wednesday for clues. IF silver can move decisively through the $23.30 area, fresh shorts will begin to cover more aggressively and we'll see a quick move toward $24. From there, the next target is the $24.84 high of 4/26.

Getting back to the open interest numbers, tomorrow's CoT is going to be a doozy. Tuesday was CoT survey day but it was also option expiration for the June13 which goes off the board on tomorrow. As mentioned above, almost all of the paper traders are currently liquidating June positions and rolling them into August and beyond. So, for the reporting week, though the price of gold was up a whopping $1.30, the total Comex open interest fell by almost 8% or 35,000 contracts. That's a lot. I'm very much looking forward to seeing who was buying/covering and who was selling. The silver CoT will be fun, too, as price fell by 25¢ but total OI also fell by about 3,500. Again, who was selling/covering/buying? We'll see. Only have to wait another 28 hours. Grrrr...angry

Finally, LOTS of interesting stuff emanating from the MENA again today. Just a few days ago, Russia pledged to send S-300 anti-aircraft missiles to Syria and, from the looks of things, they're already there: http://www.zerohedge.com/news/2013-05-30/first-shipment-russian-s-300-rockets-arrives-syria but debka claims that they're not: http://www.debka.com/article/23002/Israeli-intelligence-denies-first-Russian-S-300s-arrive-in-Syria---contrary-to-Assad’s-claim-. Either way, this entire situation is getting stickier by the hour. Now, you may ask what this has to do with a PM-related website but I can assure you, if things get out of control in the MENA, there ain't gonna be any imminent QE tapering, that's for sure. So we're going to continue to watch this closely. One "tell" will be the price of crude. It has magically stayed below the trendline drawn on this chart since the QE∞ announcement last September. If/when is busts through, you'll know something is up, whether or not Syria is "fixed".

And all this talk about World War III has me thinking this morning about a book I read six or seven years ago. It's one of those novels that try to intertwine current events into a fictional format. This one dealt with war in the MENA and looked at it through the prism of The Old Testament prophecies of Ezekiel. Look, it's not for everybody and I certainly don't mean to turn this thread into a religious debate...but I get asked for book recommendations all the time and this is a fun and timely read. You should pick it up before heading out for vacation or to the beach.

OK, that's all for now. As I close I see that the metals are still hanging in there at $1415 and $23. Keep your fingers crossed.

TF

 

184 Comments

achmachat's picture

800 thousand? that's it?

800 thousand? that's it?

Chord's picture

Long Live the Second !

Amendment II

A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.

silver66's picture

Thurd

Silver66

OrangeAlert's picture

4th!

Fantastic.  Nice to see the reverse psychology still working.

The Watchman's picture

True

tyberious's picture

Top Ten

6th, even!

Doc1800's picture

I seem to recall reading

I seem to recall reading "Damascus a ruinous heap" somewhere Turd. Interesting times indeed.

jmcadg's picture

Surely not!

6th after a 4th yesterday. Keep up the reverse psychology Turd.

DENIED, still top ten :)

Sad-descent's picture

Call me crazy but...

With the action in Japan the last few weeks I can't help but think we may be finally beginning to see actual price discovery...is bondzilla finally beginning to awake? 

JY896's picture

Prepping going mainstream

How A Trip To Costco Can Work As An Investment Strategy -- NPR

"Mark Cuban is a billionaire, so it may be a surprise that the owner of NBA's Dallas Mavericks purchases everyday items like razor blades and toothpaste in bulk batches. It's stuff he knows he'll use in the future. [...]

"The money you save by investing in bulk will provide a better return on investment than any investment vehicle on the planet."

I found Cuban's thoughts on bulk buying intriguing and a good fit for my investment adventure. So I called up economist Russ Roberts, a research fellow at Stanford's Hoover Institution, to help me fill my cart at a Costco in Washington, D.C."

Costco is no doubt a serious underwriter of NPR... But still, a step in the right direction.

Sad-descent's picture

@Watchman

Is it wrong of me to enjoy watching the jackasses begin to eat each other?

Nana's picture

Japan

The first domino to fall....a sign of thing to come....

Doc1800's picture

The FX play of late has been

The FX play of late has been buy every dip of the yen pairs- GBP being my favorite not bc I like the pound but because the volatility pays.  Japan wants to win the race to the bottom on valuation and they are not afraid .  Taro Aso has his eye on the prize and is running the QE play until the end.

sandy beach dave's picture

GDP report

Reported with the second estimate of first quarter GDP which was little changed, was corporated profits which are down $43.8 billion. This has to be a data point for continued QE or some other buzz acronym for money printing to "support" the economy thus positive for PM's. It may be a reason/catalyst for the bump in PM price today.

Thanks for the good work Turd and making it available for us in Turdville. It is appreciated.

Southern Cross's picture

Questions -The End Of The Ages & PM

"End of the Ages" is a Biblical term for mans final moments on earth prior to divine intervention.

Are we near the end of the ages?   In my opinion all the signs indicate we are quickly entering the start of the end of the ages.   I would guess we are days to no more than 50 years before The Second Coming.   Let's just say Biblical prophecy is lining up perfectly.

Can we know when the end is nearing?  According to the Bible we can.   Jesus states we can know not the hour but we can know approximately when based upon the signs.  Believers are told to know the signs. 

How much will gold and silver be worth in the end of the ages?   I suspect alot.   Will there be buyers to sell to if and when one decides to sell?   Not sure.    What effect on prices will the second coming have?    Not sure.  

How useful will gold and silver be at the end of the ages?   Depends.   The answer depends upon what else one has stacked?

Without grub, guns, God, and guts,   gold and silver will have to be traded for food and water.

Without guns your food will be taken by force.

Without God life is meaningless and the future is without hope.

Without guts victory is hollow.  

Fr. Bill's picture

Man, oh, man! What a LAXATIVE this thread title is!!

I saw Turd's notice on Facebook -- just the title.

And, SHAZAAAAAMM. Puts Ex-Lax to shame, I tell ya!

twippers's picture

MENA Book

Did I miss the name of the MENA book you were referring to somewhere in the post Turd?

Always looking for a good read.

Louie's picture

Can someone please explain to me why

Hezbollah and Al Qaeda killing each other in Syria is a bad thing? 

ballyale's picture

The Tapering has already started in the MBS buys from the EE

The EE has used this money to short the PM's artificially and at large leverages.

Once this money starts drying up, the PM's will start to go up, orderly or not.

If the US has to start pouring money into Syria to offset the Russian missiles, this may further exacerbate the Fed's continued buying of the 100% on the dollar MBS scam where the real value is probably about 20% on the mark to reality valuation.

Bally.

tyberious's picture

@Southerncross

"Without God life is meaningless and the future is without hope"!

Speak for yourself! Billions of people on this planet do not hold your religion, and I am sure that their lives are meaningful, rich and very hopeful of the future. That was/is a very egocentric view!

NonoverlappingMagicCereal's picture

Doubt

As I close I see that the metals are still hanging in there at $1415 and $23. Keep your fingers crossed.
Why would a PM bug convinced of the ultimate failure of fiat currency and steep rise of metals want prices to rise immediately?  If you were utterly convinced, then shouldn't you want prices to drop hard and often so that you can buy at a discount?  To be fair, I have seen this sentiment expressed, but not nearly as often as celebration on the upside and despondence on the downside.
 
Correct me if I'm wrong, but the only explanation I can conceive of for this mentality is doubt.  If you doubt your own understanding of the macroeconomic future, then price rises are comforting and validating, which is apparently worth more emotionally than the opportunity to add to the stack at 'bargain' prices.
 
If so, it's odd that when doubt is expressed here explicitly it is so vilified, when it clearly already exists in the minds of almost everyone including the host.
Southern Cross's picture

@tyberious

Sir, I do speak only for myself.  

Your attitude demonstrates the Bibles Truth.  Jesus said His words, His people, His teachings, and He would be hated by unbelievers.    It's reasonable to disagree with someone and not believe what they state; however, it verifies the Bibles prophetic accuracy to express outrage at Biblical Truth.   Such anger is not natural but deep seeded, from the heart,  and is anti God.   Makes sense.   There are only two forces in play.   One is God.  One is not.   

What proof do you offer the Bible is incorrect? 

Muslims, Jews, Christians, Budists, Hindus, and known historical books  all teach Jesus existed.  World history demonstrates the footprint of Bible accuracy.   Biblical prophecy if researched and studied is beyond question.

The question for each of us is was Jesus God's Son? 

Sad-descent's picture

Ag complex

I just took a quick peek, and the agriculture complex looked weak.  Anyone have an opinion on what that might mean for the metals if anything in the next few trading days.

Sad-descent's picture

Re: Doubt

"Why would a PM bug convinced of the ultimate failure of fiat currency and steep rise of metals want prices to rise immediately? "

I think some may be over-leveraged, or impatient for the "end" to get here.  I find that if I am upset at the price action it tends to be because of opportunity costs that arise from keeping a portion of assets in something that is a store of value rather than what I would consider an investment.  I usually calm down pretty quick because there just isn't much in the way of investments price attractively because of the zero interest rate environment.

¤'s picture

NOLMC

I only need to see the title line to know that you're only here to spread skepticism on the site and tarnish the host at any opportunity or cause a derailment.....as usual.

Whatever.

If that aspect of yourself 'still' hasn't been recognized at this point then it is what'll be.
Haze...out

The Watchman's picture

Interesting-

Source: StockCharts

MPR20130528a.jpg

delacroix's picture

southern

southern cross                       define biblical truth

Bugzy's picture

Some stuff

I see you are still with us nonoverlap! The paper price is manipulated. The thought here is that sooner or later the manipulation will have to end, as the physical stuff will be in short supply. This will see TRUTH happening. We may be seeing truth today. DO YOU HAVE A PROBLEM WITH THAT? Our belief is that metals will indeed go up one day, a lot.

They go up and you come to gripe, AGAIN! Well how do you like those apples? Tosser!

Southern Cross. For 'heavens' sake, give the religious stuff a rest. I find it nauseating.

My life has meaning and richness thank you very much.

meegoreng1's picture

Too much religion in here..

I thought this was a metals site. Take your religion and non-metal crap to the forums ...please.

BTW, Turd, please keep making negative comments about PMs, not just on your headlines but in the content too.

Looking forward to your next negative write up.

Reverse Psychology at its best!

Turd Ferguson's picture

"Correct me if I'm wrong"

MODERATOR

OK. You are exactly 100% wrong.

The reason I look and search for bottoms is to provide hope and dissuade doubt and fear. Most of us here understand the inevitability of the future course of events but there are far larger numbers of folks who are easily frightened by price manipulation, SPIN and MOPE.

Let me state this again for you: I AM 100% CONFIDENT THAT I AM CORRECT ABOUT WHERE THIS IS ALL HEADED.

Look, CerealMan, you're usual path from here is to parse these comments and then ask further questions in the hope of catching me in some king of contradiction. No such luck today. Maybe some else can help you. I'll be busy the rest of the day.

Response to: Doubt
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