Bear Down

Today, let's review the longer-term charts to see why so many folks continue to call for lower prices.

Remember as you look at these charts that they are the product of a corrupt system.  The way that the world "prices" gold and silver is obscene. A handful of traders at TBTF banks, led by JPM, move price around in order to activate the buy and sell programs of a slightly larger handful of algo-based, spec money managers and hedge funds. There is next to zero connection to physical reality or supply/demand. Just the whims of some traders, basically all of them speculators, in the traditional sense of the word.

First of all, this is NOT how the futures/commodity markets are supposed to act. At no point does the supply of the underlying commodity (gold) factor into the picture. The producers of the commodity should have some say in the pricing but, instead, they are held hostage by the central banks and their monkey servants. Futures trading on the Comex is now "backed" at a ratio near 100:1 versus readily-deliverable gold. At what point do we fully comprehend the lunacy of this? At 200:1? 500:1? Shouldn't there be some kind of minimum ratio in order to maintain at least some connection to the underlying physical reality?

Second, and frankly the bigger and more significant concern, is that this "market" has created a disconnect between the paper price and the physical demand. Because of this extreme "discount" and destruction of the traditional demand v price equilibrium, thousands of metric tonnes of U.S., British and German gold have been shipped to places such as Iran, Turkey, India and China. This means that, in it's lust to maintain the current world power structure, "The West" has undercut it's position in the next world power structure. It's all so foolish, short-sighted and greedy and the cause of it is a pricing mechanism that embraces the phony, paper-based Comex.

OK, now that I've gotten that off my chest, let's look at the charts and let's start with gold. First, here's a weekly chart that stretches back two years, past the point where QE∞ was announced and the massive, coordinated price smash scheme was initiated. This scheme allowed the Comex Commercials to reduce their NET SHORT position from 270,000 contracts in September of 2012 to just 20,000 contracts by June of 2013. Additionally, JPMorgan used this contrived selling to completely flip a 75,000 contract NET SHORT position to a 75,000 contract NET LONG position over the same time period.

Note that gold has once again reached a rather significant inflection point on the chart. On five, separate occasions over the past sixteen months, gold has reached toward this trendline and each time has failed to break through. Also note, however, that price has seemingly found a solid floor which has held for over seven months. Something has to give. Soon.

Now let's look at another weekly chart, this time with a 5-year time horizon. Note that I've drawn the same primary trendline in red. I've also added a basic measure of price momentum called the RSI (Relative Strength Index). You can plainly see that we are approaching a very important crossroads. Either gold breaks through the trendline and The Bottom is confirmed OR $1180 will fail and price will very likely fall toward the next clear line of support near $1050. I've added the RSI to this chart because it may very well be the key indicator of what will happen. Note the downward trend of the RSI from the August 2011 price highs. If price can rally AND this weekly RSI moves up and through the 50 level, The Bottom should be readily identifiable to all but the most ardent of bears.

Moving to silver which is, not surprisingly, in almost the exact same position. First, here's a weekly chart of silver, also with the same, post-QE∞ time horizon. Note that silver appears to be failing again, right at the trendline.

And when we stretch out to five years and add the RSI, we again get a picture that is similar to gold. Like gold, if silver fails here and breaks down and through the June lows, I'd hold off on buying for a while as the next area of clear support doesn't appear on the chart until price reached down toward $14.50. Also like gold, silver holding the $18-19 area AND breaking the RSI downtrend line at 50 would be a clear sign of The Bottom.

Working in gold's favor is the appearance...again...of very tight global supply. The February Comex delivery period has begun and...just as in August, October and December...GOFO rates have moved negative again.

DATE          1-mo            2-mo           3-mo         6-mo      12-mo

29-Jan-14    0.04833    0.06167    0.06833    0.10833    0.17333                                        
30-Jan-14    0.05000    0.06333    0.07667    0.10333    0.17167                                        
31-Jan-14    0.04000    0.05167    0.06167    0.09333    0.16500                                        
03-Feb-14    0.02800    0.03600    0.04600    0.08600    0.15400                                        
04-Feb-14    -0.00400    0.02600    0.03600    0.08000    0.14600  

This clear signal of tight physical bar supply has shown to be an equally-clear indicator of paper price support and, because gold is pressing against such a sharply downward sloping trendline, all it simply needs to do is consolidate sideways for a while in order to break the trend. All of this puts the onus on the bears to re-ignite the downtrend. Can they? Will the NET LONG JPMorgan let them?

And if gold breaks its downtrend and confirms The Bottom, can silver be far behind? Probably not.

I've often stated that, since it took nine months for gold to fall from $1800 to $1180 and silver to fall from $36 to $18, the process of finding and confirming The Bottom will also likely take nine months. Nine months from late June of 2013 takes us all the way to late March of 2014.

For now, continue to remain patient. Diligent (as we must closely watch the June lows), yet patient. I still firmly believe that the Cartel Bank-induced, contrived and counter-intuitive selling scheme has run its course and has reached the point where it is unproductive for the banks to allow paper price to go much lower. February will be a very exciting and consequential month as Comex gold is delivered and the March silver and copper contracts move toward expiration. The economic data, beginning with this Friday's BLSBS, is going to cause increasing volatility, too, as the realization begins to dawn upon the Status Quotians that QE really is to infinity, not simply this December.

So buckle in, stay the course and be sure to remain situationally aware. Now is not the time to look away.

TF

131 Comments

dgstage's picture

News

Elite Insider Predicted Massive Crash in 2012: “Very Large Probability… Around March 4, 2014″

http://www.shtfplan.com/headline-news/elite-insider-predicted-massive-crash-in-2012-very-large-probability-around-march-4-2014_02032014

Gold Dog's picture

Second

Guns!!!

ivars's picture

March 4 2014 is pretty

March 4 2014 is pretty accurate. March-April will see interesting events, like govt shutdown and preparations or actual failure on debt to Fed. Also, April or May could be final lows for gold, though nothing spectacular is to be expected after those lows. Slow, almost linear ascent over next 2,5 years ending around 1500 USD by early 2017. Silver might be more interesting, probably around 40-45 USD by then. GSR close to 1:30. 

rnrjimmy's picture

4th

Keep Stacking!

dgstage's picture

Richard Russell

buzlightening's picture

Been a long time coming but it's all busting loose.

Do we get our sound money free of manipulation.  YES!   Gold and silver have always win over the paper pillage games. Richard Russell comments:

With the “down January” and the market suddenly stalling, I expect public sentiment to lose its good-time giddyness and to slowly turn bearish.  I also expect the new bearish sentiment to feed on itself.  I believe the public will soon demand HONEST statistics and data from the government.  Remember, once the bear market is established, all the lying and nonsense will come to an end.

Late Notes -- It should come as no surprise to subscribers that the stock market got whacked badly today.  Today I received a clear sell signal on the point & figure chart of the Dow, which suggests continued selling.  Once the market is oversold, I expect a good rally, which will take the Dow close to the previous high.  When that rally deteriorates and declines, I expect the market to embark on an extended and frightening bear market decline. 

I expect steady bear market deterioration in the US economy to continue from here, regardless of what the market does.  Already I hear talk of a possible 10% correction.  These people are wrong.  This is not a correction.  It's a continuation of the bear market.  Meanwhile, gold's upward creep turned into a surge today, with gold up $20.”    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/3_Richard_Russell_-_The_Stock_Market_Is_On_The_Edge_Of_A_Crash.html

This from Yesterday: "ALL LYING AND NONSENSE WILL COME TO AN END."   I can see it happening and that which was hidden coming to light.  Just keep working on your economic lifeboats.  That we've had much more time to prepare has been an added plus.  The full article says it's not a recession but depression falling down around us...   PREPARE ACCORDINGLY!

ivars's picture

As one can see from ISM,

As one can see from ISM, factory orders..not much time left before statistics will start to cry for easing. So, an innovation is needed- and here it is:

http://libertystreeteconomics.newyorkfed.org/2014/02/a-mis-leading-labor-market-indicator.html

Quote:

The unemployment rate is a popular measure of the condition of the labor market. With the Great Recession, the unemployment rate increased from a low of 4.4 percent in March 2007 to a peak of 10.0 percent in October 2009. As the economy recovered and growth resumed, the unemployment rate has fallen to 6.7 percent. What other measures are useful to supplement our understanding of the degree of the labor market recovery? 

 
        The employment-population (E/P) ratio frequently is used as an additional labor market measure. The E/P ratio is defined as the number of employed divided by the size of the working-age, noninstitutionalized population. An advantage of the E/P ratio over the unemployment rate is that it is not impacted by discouraged workers who stop looking for employment. The E/P ratio also dominates a measure focusing just on total employment in the economy, since it adjusts for changes in the size of the working-age population. The chart below shows the E/P ratio since 2001. The gray shading represents time periods when the economy was in a recession. Over the Great Recession, the E/P ratio (red line) declined by 4.1 percentage points relative to the average of the E/P ratio over the prior expansion (blue line). Since the end of the recession, the E/P ratio has largely remained constant—that is, virtually none of the decline in the E/P ratio from the Great Recession has been recovered to date. An implication is that the 7.6 million jobs added since the trough of employment in February 2010 has essentially just kept pace with growth in the working-age population.
 
The authors then proceed to prove that this  obvious  fact is not true. They claim the USA is just 1,7% below full employment!!!! Pseudoscience . but each such work by FED requires 10 academics to write against it. And of course there is almost none as who will pay his salary? AMAZING! But typical of how elite controls things with lies.
 
And of course the paper refocuses erring analyst to magic 6,7% number which will get lower (6,2%) on Friday whatever the number of added workplaces is. And then FOMC comes together and says: Oh we have overheated economy unemployment falling too rapidly, running into full employment (!) as studies show, lets remove QE at once. We will get terrible inflation! And to prove that last point, Israel hits Iran not to far down the line to get oil prices up, so inflation is here as if by magic:)
 
As I noted previously, the opportunity window for tightening is closing fast, things need to be done NOW ( geopolitical instability and taper and shutdown and no statistics and Obamas heroic action with default on FED or some other form to free debt below debt ceiling). NOW is here, this week is beginning.
SilverSurfers's picture

Run Baby Run

We need a new beat. Down trend approaching critical timing and support levels. Its a nail bitter, as the beat goes on, but perhaps now to a new beat. Silver is in triangular coffin corner, at a low. JPM poised to pounce to zipo the COT Silver Shorts, as gold hits trend line coming off a double bottom. Both could collapse, from a TA guesstamate, but with GOFO going negative, JUST NOW, hang on sloopy, it seems shes back, looks like she's poised to jump to the upside as JPM gobbles up longs for silver short cover, as their gold hoard rockets, breaking both down trends to the upside, and then ...

Dr Jerome's picture

broker call

My broker called this morning and suggested I add a modest silver futures (option) position during this dip. We did. They feel the bottom is in and a move up toward 22 is on deck.  I can heartily recommend Jim Comiskey if you wish to nibble at the futures market. I feel that he and Teddy Sloup have given me the attention with my small account that is deserving of someone with a 6 figure + account.

I stack with 98% of my available funds. But I guess I am hooked on trading just a little bit. It keeps my interest to have at least one position working.

Turd Ferguson's picture

That's fun

MODERATOR

Jim is also this week's A2A guest.

Response to: broker call
ivars's picture

These things ain't helping-

These things ain't helping- they increase trigger happiness in people, may switch off electric devices and satellites:- today a flare from sunspot, relatively strong-class M(60% chance)  or even X flare (30%) -so called Coronal Mass Ejections:

But look what is coming on Feb 9th. This coronal hole is really massive, and will launch solar wind stream ( protons mostly traveling at high speeds ) towards the northern hemisphere high latitudes of Earth ( protons  will reach the Earth atmosphere then,bending Earth magnetic field strongly out of shape)  the radiation part will hit the earth earlier). Our brains work with electromagnetic impulses..but You know that.:)

This is how interaction with Earth Magnetic field happens. 

This is called ..bad space weather.

4 oz's picture

Well, No Question Hell Has Frozen Over!

Well, Can be no question hell has frozen over!

http://queenbeecoupons.com/seattle-seahawks-super-bowl-champs-shirts-hats-gear/comment-page-1/

rl999's picture

CNBC - Schiff, Faber @ 1pm

Peter Schiff and Marc Faber are scheduled to be on CNBC @ 1m today.

Turd Ferguson's picture

HUI

MODERATOR

Here's an interesting chart of the HUI. Note two things:

  1. The closing pennant, the lower end of which starts the day the HUI broke through significant resistance and the 50-day MA near 210.
  2. The action has now been centered along the down-sloping 100-day MA for nine days.

Pining 4 the Fjords's picture

Doc J rolling the dice in the silver pit!

Dr Jerome's picture

I needed a chuckle...

Thanks Pining,

I needed a chuckle. I am mired in essay grading today. I grade an essay, check the charts, check the blog, then grade another essay. Seems that is my life these days. Wish I could include more art and posting here.

98% physical, 2% idiot--hopefully a lucky one.

J

tyberious's picture

@4 oz

You going to the parade?

Turd Ferguson's picture

For The Doc

MODERATOR

Considerable effort being made this week to keep silver below the $19.50 level. Hang tough.

California Lawyer's picture

TF- Nice Post Today, Thanks

This quote is particularly appropriate:

"The Cartel Bank-induced, contrived and counter-intuitive selling scheme has run its course and has reached the point where it is unproductive for the banks to allow paper price to go much lower."

The concept of manipulation must be understood from a dynamic point of view, as opposed to a static point of view.

If, as we here agree, there is manipulation of precious metals prices through paper schemes like the Comex, then because of such, there must be some intended purpose.  On that point, we can disagree, and the various theories are as diverse as are the tinfoil wearing progenitors of such theories.

But, understanding that there is indeed a reason for the manipulation, then the manipulators obviously have some parameters in place which they have designed as markers, or signals, by which they accelerate or decelerate the manipulative scheming. 

I have long believed that basic micro economic theory, supply and demand fundamentals, is constantly in play, and being watched closely, manifesting in many different commodities markets, and financial markets like Forex.  

So, with that in mind, I have no doubt that should the paper prices for gold and silver get to point that extraction costs exceed the spot price, that the manipulators will have to decelerate their manipulation schemes in order to allow prices to increase sufficiently to incentivize producers to actually extract the metal from the ground.

I have also believed that some bright elites figured out that the acquisition costs for gold in the USA, by means of cash for gold retail buying from the stupid, dumb, low information populace was far lower than actual mining, such that prices, while high, allowed sufficient supply to come to the banksters from the cash for gold scheme.

Now that gold has lost its luster, so to speak, then the cash for gold concept is not bringing supply onto the market like before.  Hence, mine producers need to actually produce the metals.  But, if the spot price is too low, or the selling price from hedging forward is lower than the cost of production, then the banksters cannot allow this because that will cause a huge supply imbalance.

Hence, absent some increased effort to secure gold from the low information dumb as a box of rocks retail consumers, the only way to increase supply and meet market forces is to allow the spot price to increase.

Stated differently, the physical supply and spot price operate in a dynamic system.  Both influence each other.  The operator(s) of the system must manage both, relative to one another, or the system becomes dynamically unstable and crashes.  

It is EXACTLY like a helicopter with a single rotor system.  There must be a counter acting force, a tail rotor, with constant control inputs from the pilot, who is managing the forces of the main rotor, and the tail rotor, simultaneously, to control flight, or the helicopter will crash.  If the pilot increases control inputs for one, but not the other, the system becomes unstable and will diverge exponentially until failure.  If the pilot does not quickly act to counteract a disruption to the airfoil surfaces, say from a gust of wind, then the size of the control inputs required to regain control increase exponentially, perhaps exceeding the flight envelope and the helicopter will crash.

Hence, the whole gold / silver precious metals system, just like a helicopter, requires constant control inputs, and management of competing forces simultaneously.

I firmly believe that we are witnessing the controlled descent of metals prices.  Those prices are being lowered systematically to allow buyers of size to accumulate massive positions.  The retail MOPE proves this.

Do what the buyers of size are doing, and ignore the retail MOPE.  I am.

Prepare accordingly.

Marchas45's picture

@4oz

Hi! Brother 4oz you should be so happy that you should be handing out Silver oz's especially to we Stackers. You know where you can reach me. laugh

SilverSurfers's picture

What up doc?

Looks likes 15 taps upside and 7 taps downside, in a channel carved with sizeway action, Bears having to intervene 2x the bulls, And that is inherent push to the upside.

s1lverbullet's picture

Jim Comiskey

He's great, thanks for scheduling him this week.  I watch his podcasts on youtube every night. 

silver66's picture

Hell has frozen over

4oz, if I send you my Leafs jersey, could you rub your Seahawks jersey over it and send it back, it would be greatly appreciated

Siver66

question's picture

Simpleminded Thoughts (mine)

“This means that, in it's lust to maintain the current world power structure, "The West" has undercut it's position in the next world power structure. It's all so foolish, short-sighted and greedy …....“

Maybe, just maybe, the west is handing off the economic hegemony to the inheritors (the east) as the British did with the US back in the day when their empire had reached it's end as ours (western industrial) has done. The pound, the dollar, the yuan?

It seems to me that with the ending of cheap easy energy sources the industrial age we've been living in is transitioning into another way of being for the planet; more agrarian (the east has been farming the same land for many generations; they produce food, we produce dead dustbowls)) and human powered (the east has many hands to perform the same tasks we use machinery for).

Yeah, I know, overly simplistic and fraught with egos and a$$holes but what the heck, dreaming is free, no?

SS121's picture

The Nile

When those fake 'Silver'less markets crash and burn and are exposed as the 100% frauds that they are-  friends, loved ones and probably some folks here, are going to be greatly distressed at the disappearance of what was once their perceived wealth and security.

California Lawyer's picture

@Question

Economic hegemony = power = the golden rule = who has the gold makes the rules.

I just do not see this current crop of elites as knowingly, or voluntarily handing over the reins of power voluntarily.

I do see the elites negotiating an exit plan, rife with deceit and scheming, which will play out like it always plays out: in war, conflict, and human suffering.  See this.  

The negotiating process is unfolding before our very eyes.  One need only look and see.

When the new currency reset happens, watch who benefits.  Then you know.

4 oz's picture

Appreciate the kind thoughts!

Appreciate the kind thoughts!
Won't be parade attending, cuz never been into crowds; Do remember leaning on the fence as they broke ground on the old Kingdome as a kid.....
And while still hopeful that David Sterns proctologist has extremely large hands--- Seattle suffers from BFS no More. (Battered Fan Syndrome.)

Look for the NHL to take notice of the fan base and market appeal--

Have read in Turdville for several years and was inspired to finally register and post by something I saw a few months ago....
Back at Christmas TF gave me a months Gold Membership out of the kindness of his heart....
Deciding that $99.95 for a year {Or $8.32 per month--- or something less than $2 a week) was way worth the pop money--- became a Gold Member a few hours before the SuperBowl and after making a much anticipated Phyzz add of some size...at least was size to me...at 2008 price levels...

"Go Hawks!"

question's picture

@California Lawyer

Thanks for the response.

I was just trying to formulate a thought as to why the west is feeding so much wealth to the east.

The birth of "the new" anything is painful and fraught with danger. I think that what is now playing out will be so as well. I did not mean to imply that this transition would be otherwise. We'll witness, or our children will, suffering on an unimaginable scale as one age closes and another begins; many parts of the world already are, and have been, as the dinosaurs jockey for what's left of the carcass of the industrial age. As it's been said "we aint seen nothin' yet".sadangrybroken heart

I tried the link you gave and got a message that they no longer could provide service due to technological changes and that they're working on it; too bad that; history has much to teach. ("We have all been here before" the song says). Reminds me of someone in the future  trying to extract information from a dvd without a computer.

"I just do not see this current crop of elites as knowingly, or voluntarily handing over the reins of power"

I agree; it will happen anyway; we've "shot our wad" as they say but an empire doesn't go quietly into the night.

As we here say, prepare accordingly; we're in for one heck of a ride and the safety belts have been removed.

Blankone's picture

@Question

California Lawyer, you are exactly spot on with your deduction..  The elites wont voluntarily step aside.  Their corruption and greed runs so deep they would sell their children if they could make a profit.  I only hope to have enough shiny to be comfortable when the reset occurs..

Gold Dog's picture

ALittle Gold Porn and a Silver Happy Ending!

I like the lady at the bank, she gives me a lollipop when I visit!

Your Friend,

Dog

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