Calculator Joins The Fight

Ruler, Sharpie and Compass have a new ally in The Battle. Today, Calculator joins The Fight against The Forces of Darkness.

Never fear. MathMan is here.

Let's start with gold. Below is a chart to which you can refer if you'd like to check MathMan's math:

MathMan believes that this current "bull market" in gold began in January of 2001, with gold at $275/ounce. Using that as a basis, gold then rallied for over seven years, finally peaking at $1033 in March of 2008. That is a move of $758.

A Fibonacci 38.2% retracement of that move would have been:

$758 x .382 = $290

$1033 - $290 = $743

Thus, $743 was a likely target for the inevitable "correction". When it came during The Great Financial Crisis of 2008, it should not be surprising that price overshot just a bit. In those crazy days of fear and illiquidity, simple technical targets were easily overrun. It should be noted, though, that the final bottom was just a shade lower, at $683, in October of 2008. Then, in creating a bottom, price made a low of $700 in November 2008 and $742 in December of 2008 before resuming the bull market rally in January of 2009. Therefore, MathMan concludes that the 38.2% number is significant for measuring future corrections within the gold bull market.

Let's also look at the correction on absolute terms. Again, price peaked in March of 2008 at $1033 and then fell to $683 in October of 2008.

$1033 - $683 = $350

350 ÷ 1033 = 33.88%

OK, here comes the interesting part. Using the same math, gold began it's rally in January of 2001 at $275. It peaked in September of 2011 at $1920. That is a move of $1645.

$1645 x .382 = $628

$1920 - $628 = $1292

Thus, a reasonable target for this current correction is something similar to what took place in 2008. Though $1292 is a full 38.2% correction, could price overshoot again? Of course.

Let's also use the same absolute comparison to 2008. Again, back then, price fell 33.88% from its highs before reversing and resuming the bull market.

$1920 x .3388 = $651

$1920 - $651 = $1269

Ultimately, the questions you have to ask yourself are these:

  • Do you believe that the bull market for gold is still intact?
  • If so, under what conditions could this current correction be "worse" than that of 2008?
  • Does it even matter? (Not really. I just keep buying. They'll pry MathMan's gold from his cold, dead fingers.)

Now let's look at silver. Here's a chart for your reference:

In the immortal words of Mister Miyagi, "numbers different, but same".

The first thing we have to consider is that silver is likely tracing out a full, 100% retracement of the move that began in August of 2010. Back then, our infamous BoS (Buyer(s) of Size) appeared and silver rallied from $18 to $49 in just 8 months. Giving it all back would take us back to $18. As I mentioned in the podcast yesterday, this is the most likely scenario for a price bottom.

However, MathMan would like to take a stab at silver, too, just for fun.

The bull market in silver began with a low of $4.04 in November of 2001. It then rallied to a high $21.35 in March of 2008. That's $17.31. It then fell to a low of $8.80 in November of 2008. before bottoming and resuming the rally that ultimately took it to $49.75 in late April of 2011.

OK, from March 2008 to November of 2008, silver price fell from $21.35 to $8.80.

$21.35 - $8.80 = $12.55

12.55 ÷ 21.35 = 58.78%

Using an absolute 58.78% drop versus the high of $49.75 leads to this:

$49.75 x .5878 = $29.24

$49.75 - $29.24 = $20.51

Hmmm. MathMan thinks that's pretty interesting. Now let's go back to those Fibo levels again only let's use the entire bull market as our basis and see what we get.

$49.75 (4/11 high) - $4.04 (11/01 low) = $45.71

$45.71 x .618 = $28.25

$49.75 - $28.25 = $21.50

However, using this same fibo for the correction of 2008 yields this:

$17.31 x .618 (fibo level) = $10.70

$21.35 - $10.70 = $10.65

Obviously silver overshot by quite a bit back then and it will likely do the same here. By spiking down to $8.80, silver actually retraced 72.5% of the $17.31 move from 11/01 to 3/08. A similar 72.5% spike low retracement of the entire move of $45.71 is this:

45.71 x .725 = $33.14

$49.75 - $33.14 = $16.61 (yikes!)

Again, so what's the point? MathMan has no idea. He's banged out so many numbers now that he's feeling a bit punchy.

At the end of the day, it's all about how you answer these questions:

  1. Will the paper derivative method of pricing precious metal will continue?
  2. If it continues, is the precious metal bull market that began back in 2001 still intact?
  3. If not, which of the fundamental conditions that prompted the bull market have changed?
  4. If the fundamentals haven't changed, is this just a correction similar to 2008?

TF

180 Comments

Bollocks's picture

Furst!

oh yes.

Dats me on a night out wid da boyz. Check it yo!

wouldyoubelieve...'s picture

2nd

missed it by that much

pbfurn's picture

Second!

Enjoy your weekend and GLTA!!

Bugzy's picture

seems quiet

Helloooooo

firstsilver's picture

Here's hoping ......

that calculator fares better than the non-digital tools

Urban Roman's picture

Wow.  ... 16.61.    Maybe

Wow.  ... 16.61.    Maybe save a little cash for that event. 

Will anyone be selling phyzz silver for $16.61?


In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

Strawboss's picture

Are you ready to quit digging?

I know that many on this site are weary from the tremendous losses they have suffered from their convictions of gold/silver going to the moon and overloading themselves with gold/silver/miners, etc... waiting for the big payoff.

Now they sit on big losses and are resigned to a strategy of faith and hope.  If this describes you – read on…

Faith and Hope are pillars of the Christian faith (with love being the 3rd and most important) but I don’t know of any investing methodology that incorporates faith and hope as part of the strategy.  I would argue that if you are in a position where you are dependent on faith and hope – you have a very flawed investing methodology and really need to reconsider.  There is that old adage – “If you find yourself in a hole – the first thing to do is quit digging”.

Now – I am also a big proponent of keeping a certain amount of your net worth in physical metals – heck , I would suggest an allocation a bit higher than Turd suggests (I would suggest 25%). 

These markets are designed to be traded – NOT buy and hold (except for your 25% physical holdings).  Surely you know by now that a buy and hold strategy in anything PM related hasn’t been very effective (unless you got in early).  The past few years have been downright brutal – right?

I am trying to show you a way to trade that is easy to do – doesn’t require large amounts of capital to implement and only requires a normal account (so you can buy/sell ETFs).  Nothing more is required.

I believe I can help you dig out of the hole you have found yourself in.  Is it a guaranteed thing?  Of course not as none of us knows what the future holds.

All the details are posted on this thread.  If digging out of the hole you are in is important to you – I promise you it’s worth at least exploring.

Depending on your circumstances – I would suggest considering using 5-10% of your account balance to trying what I am doing.  Dip your toe in the water.  If it continues to work – perhaps dip a bit more.

http://www.tfmetalsreport.com/forum/4560/agq-trading-system

Here is a listing of every trade since March 12th (about 3 months ago).  As of yesterdays close – those trades are up 57%.

Trades:

Long AGQ on 3/12/2013 at $40.02.
Short AGQ on 3/13/2013 at $39.29. Gain/Loss on previous trade: -1.82% Cumulative Gain/Loss: -1.82%
Long AGQ on 3/18/2013 at $39.28. Gain/Loss on previous trade: .03% Cumulative Gain/Loss: -1.79%
Short AGQ on 3/22/2013 at $38.68 Gain/Loss on previous trade: -1.53% Cumulative Gain/Loss: -3.32
Long AGQ on 5/8/2013 at $25.90  Gain/Loss on previous trade: 33.04% Cumulative Gain/Loss: 29.72%
Short AGQ on 5/9/2013 at $25.33 Gain/Loss on previous trade: -2.20% Cumulative Gain/Loss: 27.52%
Long AGQ on 5/10/2013 at $25.58. Gain/Loss on previous trade: -0.99% Cumulative Gain/Loss: 26.53%
Short AGQ on 5/13/2013 at $25.20 Gain/Loss on previous trade: -1.49% Cumulative Gain/Loss: 25.04%

r

Howard Roark's picture

NIce try

at math.

Beyond that, it´s the convictions. The basic values we share regarding the Truth of real, sound money.

Salut,

HR

p.s. - Knavechild, achmachat, rationalmind & QE did you guys read the message in the last thread?

(Edit) - nice dancin´Bollocks!!!

wouldyoubelieve...'s picture

at $16.61

premium would bring it to $18-19 generic and $20-21 on ASE and Maples would be my guess, but I wouldn't count on getting it the same day, probably a wait on delivery

SilverSurfers's picture

10th

Alright top tenner!!! This is no challenge. Saw 9th, just posted quick, for the score!!

Challenge Accepted, meh, kicked booty, with 9th posted. Fast, super fast.

Meh, did we top tenner, share the glory today, Glorihallaloah!!

Save_America1st's picture

16.61 plus???

How high will the premiums be at that point?  plus 5, 10, 20, ???

Midnight Stacker's picture

Thanks Turd

Many thanks to all the thoughtful comments, data and perspectives.

I'm remaining steadfast and will continue to hold steady and calm.

TF golfs, I garden.

Have a great weekend with your Loved Ones.

All the best to all of you.

Peace out.

ps.....ASE's @ ITMtrading quoted at 24.28 usd

tyberious's picture

And now a little willie

Jim Willie (Hat Trick Letter)
 

DEMAND FOR PHYSICAL METAL IS EXTRAORDINARY. IF NOT THE STRONG DEMAND, THEN THE THREAT TO BANK ACCOUNTS WILL LIFT THE GOLD PRICE.

Gold expert James Turk and founder of GoldMoney is not worried about the recent sell-off in the deeply corrupt COMEX, which purports to be a precious metals market. It is more a gathering of corrupt contract fraud kings, with black ink that bears the same letters as gold. Turk is supremely confident of a much higher Gold & Silver price in the coming months. He adds how banks will undermine citizen confidence, as depositors depart the corrupt banking system, later to seek true safety. Turk said, "At this level, we have probably gone as low as we possibly can. The paper traders and the derivative traders have pushed it about as far as they can, but the demand for physical metal is extraordinary down here at these levels. Within 12 months, Gold is going to make a new record high over $2000 an ounce, and Silver is going to double. It could happen sooner depending on how events unfold. It is inevitable you are going to see bail-ins [from bank failures] as we go forward from here, because the capital just does not exist. The problems we have been confronting the past several years have not gone away. Governments have been trying to buy time, but they are not coming up with any solutions." See the Before Its News article (CLICK HERE), which includes a video interview. It has been a constant Jackass point made that the bankers are not even attempting to bring solutions to the table. They work to preserve power, to tap into government largesse, and to redeem their toxic bonds. The bankers will not liquidate the problem banks, where their power lies and their syndicate manages the whirligig.

 

SHANGHAI WILL SLASH GOLD & SILVER MARGIN NEARLY IN HALF! THE RECENT GOLD AMBUSH IS LIKELY TO CUT GOLD PRODUCTION BY 10% OR MORE, AS FIRMS FACE A HOST OF CHALLENGES. GIVEN THE BIG PROPERTY SNAFUS, EXPECT A 20% DECLINE ON A GLOBAL BASIS. DEMAND CONTINUES WHILE SUPPLY WILL ENTER DECLINE. THE BANKERS ARE SO SCREWED!!

In the first week of June, the Shanghai Futures Exchange announced a surprise cut its Gold & Silver margin requirements. It goes directly against the corrupt COMEX, which abuses margin to manage the price suppression. The Chinese bourse will reduce margin requirements for the precious metals futures contract to 4% from 7%. The change will go into effect on June 25th. Global demand has been a house afire since the illicit paper ambush in mid-April. On the other side of the price equation, the supply of gold from mine output should decline substantially. The factors are aligned in several negative ways for mining firms. When prices plunged in the 2007 to 2008 period, gold production fell by 9.4% globally. The present conditions for mining firms are much worse today. Expect gold production to fall by 20% this time around in a shocker that will NOT be expected.

Balance sheets across the gold mining sector are much worse than five years ago. Production cutbacks from the major producers are being announced, from simple economics of closing down unprofitable mine projects. These factors are at work to reduce mine output, apart from worker strikes, mine accidents, legal challenges on ownership, and nationalization by grubby governments. The Gold metal price will be supported on a long-term basis by the supply cutbacks, as shortages will remain acute. The global demand will continue as long as central banks wreck the currencies via debasement and wreck the economies from cost increase indirect responses. No stimulus exists anywhere, not from monetary policy and surely not from austerity programs. The pressure is staggering for the Gold price to rise, corrupt market or not. See the Silver Doctors article (CLICK HERE).

 

Subscribe to Hat Trick Letter for full article.

Bollocks's picture

16.61?

Anyone know who sells hardcore suspension?

ragandbone's picture

Manipulation

I'd like to believe we can make sense of this brutal correction in the PM's.... But we're clutching at straws if we think that there is rational order and reason for the sell off over the last two years during debt monetization and ZIRP... The markets are rigged and charts and Fibonacci have no place in measuring the price action anymore.

Prices will change when the Fed and the commercial specs allow it too. Let's face it hindsight now tells us that the COT was really the indicator we needed to understand the direction of price movement. Recently it's looking positive again... Maybe the commercial bullion banks are manipulating prices in relation to Fibonacci but somehow I doubt it...

On a side note.... If anyone has the misfortune to meet Blythe throw a bucket of water over the bitch.... You never know she might just shrivel and vanish in smoke.... If that doesn't work go the medieval route....

Maradona's picture

Turd: a hell of a leader!

Dear Turd, I just wanted to thank you for all the hard work you have put on this during all these 3 years. But mainly because in hard times, you have been at the height as a great leader: emotionally strong, motivating and never losing the faith on what you, and many of us believe. The time will come when you and others will be proved correct. Later in our lives I am sure you will be remembered not only for your right predictions but for your strength as a person. Thank you Turd and please, keep doing it!!

El Diego

SRSrocco's picture

MUST READ; THE GREAT 1975 GOLD CRASH

After yesterdays gold and silver takedowm this article is a must read as it details the central bank and IMF market rigging during the 1975-76 time period. 

http://srsroccoreport.com/must-read-sunday-gold-fix-the-gold-crash-75/must-read-sunday-gold-fix-the-gold-crash-75/

Just A Regular Guy's picture

@Bollocks / NotRelevant

Bollocks - great gif! Legendary!

NotRelevant - where is Obama now, wasn't he in Berlin a few days back. I assume Merkel is going to tell some stuff to Obama that Putin couldn't directly say.... Something like that would be my guess. Painting shmating, considering how delicate the world is at the moment I highly doubt some nonsense about a canvas and paint would spark such a potential insult to your potiental future ally/big trading partner... It's yet another of the glorious BS media spin stories....  We'll find out why she left early in due time.

Peace

tyberious's picture

Retracements

Now how about some projections?

atadheavy's picture

Tulving - is something wrong??

I have purchased more Ag and Au from Tulving than I care to admit (at prices just a wee bit higher than today's). I purchased some Au over a month ago and wired funds over 30 days ago. Karen (with Tulving) told me early last week that my order should be shipped this week.  I had called her the prior week and been told largely the same thing. When I spoke with her today she told me that she "had been instructed to inform me that there was no longer any info she could give me concerning my order". She also would not provide any explanation for the longer than usual delays.

Question to the community: Is anyone else having similar issues with Tulving? Believe me, I am well aware that long delays are part of the deal with Tulving and I have always put up with them. I am also aware (but have never experienced it personally) of Hanne's reputation as a bit of a "soup Nazi," but Karen has always been very friendly and forthcoming with info. My Spidey senses tell me that Hannes may have put the Kibosh on all that - for some unknown reason. 

There is a huge measure of trust involved in sending over $40K off for a month and then be told "No information for you!" Would appreciate any feedback others can provide.  Thanks.

Stock_Canines's picture

Rambus

This all sounds good and well, but then I read this and again feel that we have a ways to go. Is it possible that the HUI could hit 2008 lows without gold and silver selling off substantially? I imagine so if the equity markets tank, but I have a feeling that is not what is suggested by the analysis. Looking at these charts is a little sickening. Furthermore, his analysis/charts look to have been pretty spot on thus far.

"what makes the HUI so negative looking is each consolidation pattern is sloping down into the downtrend. Under normal conditions, in a downtrend for instance, a small flag or wedge will slope up against the downtrend. When I see a consolidation pattern sloping in the same direction of the trend, it tells me the price action is in a hurry to go to the next level and when I see one form after the other in a series that tells me all hell is breaking loose"

http://www.safehaven.com/article/30214/precious-metals-stocksa-cold-hard-look-at-the-unfolding-carnage

Bugzy's picture

Tulving

Call her back and get her to do a search for TF metals and direct her to your comments above. Then ask her if she has anything to add as the US private metals market wants to know who they can give their money to.

Edit : and if someone had my 40K and not delivered then I would not be accepting any fob off answers. You have every right to know what is going on. They contracted with you. Failing that - Cancel the contract.

Strawboss's picture

Projections using Turd’s

Projections using Turd’s math:

Gold

Lets call the decline $650 to keep the math simple.

$650 x 1.618 = $1051                      

$650 x 2.618 = $1,701

$650 x 3.618 = $2.352

Now – let’s call the bottom $1275 to keep the math simple

$1275 + 1051 = $2326

$1275 + 1701 = $2976

$1275 + 2352 = $3627

Silver

Let’s call the decline $31.75 (assume a low of $18)

$31.75 x 1.618 = $51.37 

$31.75  x 2.618 = $83.12

$31.75  x 3.618 = $114.87

So –if the bottom ends up being $18

$18 + $51.37 = $69.37

$18 + 83.12 = $101.12

$18 + 114.87 = $132.87

musicmaker99's picture

Ker-ching!

I own much bullion in private vaulted storage, and some UK sovereigns and silver maples at the bottom of my favourite lake, but I have always hankered after a 100 oz Ag bar. Well, thanks to my friends at Chard's in Blackpool, I will now be receiving one next week. I know, HAA, but I'm in the UK, and I wanted the bar in my sticky mitts, and since this one is second hand, there is no VAT to pay! (That's a 20% tax on new silver for us Brits - unbelievable.) Just over 1400 quid. I'm very happy. I was looking at these on eBay a year or two ago at 3000!

The Green Manalishi's picture

16.61

On my chart I have that on about 24th July 2013. 

I feel a bottom call hat contest coming on.

Mr. Fix's picture

" Bottom Call Hat Contest":

I'm pretty sure tmosley, ancientmoney, and myself, are taking zero.

Does anyone else want in on that action?

JackPutter's picture

Bad Moon Arise?

Repost from the podcast thread.

This could be the Chinese Lehman moment, so what happens when Chinese banks scramble for cash?  I may have to task my dry powder stash for this one.

Chinese Banks Ready to Go Bust

"Dive! Take cover! Or, at least, hold on to your pants in the scramble. The Chinese bubble has just burst. It looks like the world is going to have egg on its face and elsewhere as Chinese banks are scrambling to get the hands on cash.

Chinese cash rates didn’t just increase they shot through the roof today, Friday June 21st. This is not hyperbole. This is not exaggeration. They reached 25% when they were at their peak, and the only thing that calmed them down was the talk of a possible cash injection from the Chinese central bank. Rates dropped to 10%."

http://www.zerohedge.com/contributed/2013-06-21/chinese-banks-ready-go-bust

Big Buffalo's picture

Tulving

I don't have information concerning Tulving, only unsolicited advice: STOP ORDERING FROM THEM. Same advice I continue to give regarding Chris Duane's business dealings.

F*** me once, your bad,

F*** me twice, and I'm a dumb shit of turd for not learning my lesson the first time and deserve what I get.

And for good measure:

JackPutter's picture

Worldwide Lehman moments?

Lets see,,,,If I buy from the LCS today I may see a precipitous drop in the prices with no availability.  If I wait I may see no availability for a long time.  I am not confident in the system that is under such nasty duress.

Cyprus seeks help from creditors for troubled bank

NICOSIA, Cyprus -- Cyprus' president has warned the country's international creditors that its largest bank's cash reserves are running dangerously low, a problem that could undermine the country's 23 billion euro ($30.8 billion) financial rescue package.

http://www.cnbc.com/id/100828234

Spartacus Rex's picture

Turdieth?

2013-gold.jpg

Syndicate contentComments for "Calculator Joins The Fight"