Mini-Correction Time

Well, we almost got there. Gold overnight got to $1346 and silver breached $22 again before we were set upon by Monkeys. The correction we expected is now underway and will likely be with us for at leat a few days.

This, of course, will present late-comers with another buying opportunity. Personally, I hope to add to both my gold and silver stacks. It's just a bummer that I wasn't able to get out of my April $1350 call. Things happened so fast overnight unfortunately that I never saw $1350 during Comex hours. Nuts.

Sparking all of this was the turn in GOFO rates that we saw this morning in London. Note the move over the past three days. They're still quite a ways from positive but, with Feb gold deliveries now finished, I suspect that they are trending that way. Again, this shows that there is gold shaking free and The Banks use this gold to issue fresh shorts and slam price. We discussed this in yesterday's podcast. You should listen to it if you haven't already.

21-Feb-14    -0.05400    -0.03600    -0.01000    0.03400    0.11200                                        
24-Feb-14    -0.05000    -0.03400    -0.01200    0.03200    0.11200                                        
25-Feb-14    -0.04600    -0.03000    -0.01200    0.03400    0.11400                                        
26-Feb-14    -0.03800    -0.02400    -0.00600    0.03200    0.11400   

I've also been warning you this week that you had to expect volatility, especially with silver. We are approaching March contract expiration tomorrow and there are still an unusually high number of March contracts open. Anytime you see that, you know that The EE is going to slam price in attempt to "dissuade" longs from standing. And so they have.

So here we are, having our first major waterfall down day in quite some time. Is that it? Is it over? Are new lows ahead? Oh I'm sure that the usual suspects will be out in force these next few days to frighten as many as possible. Don't buy it. This is just a mini-correction, early in the resumption of the bull market.

What? You expect price to rally every single day? You expect the banks to just roll over? If so, you haven't been a Turdite very long and you clearly haven't been paying attention to ole Turd. How many times have I told you that:

  • Silver was going to have major trouble with $22.
  • It took nine months for prices to come down and bottom. Therefore, it will likely take another nine months before The Bottom is clearly recognizable.
  • Gold is going to hit a major roadblock between $1350-1360 as The Cartel attempts to connect this rally with the failed rallies of May 2013 and August 2013.
  • You must have patience!
  • Continue to stack and buy the dip. If Provident or JMB is willing to send you an ounce of gold for $1300+, take them up on it. While you can!

My point in all of this is: NOTHING HAS CHANGED FROM YESTERDAY. This is all expected/anticipated. Stick with me and you'll be fine. I'll lead you out of here. Panic and you'll be lost.

IF I had been able to sell my April $1350 call and was sitting on cash, here's what I'd be looking for next. Just a 3% correction in gold will drop it back to the 200-day MA near $1307, where it found support last week and will find it again. Frankly, as you can see in the chart below, it may not even get that far. It's possible we may only see an intraday low near $1315. Only a decisive break of the 200-day followed by a break of the 100-day near $1275 and chart support near $1280 would be cause for serious alarm.

In silver, expect support first near the 200-day MA at $21.13. If the 200-day is broken, look for a bounce from below $21. On the charts below, you can see what I'm talking about. Note the blue circles.

And the miners are going to pull back, too. Again, things don't go straight UP! Expect the HUI to fall back to, maybe even slightly below, it's 200-day near 233. Let the RSI drop and the MACD lines cross. Give it a week or two and look for a new entry point. We'll cover this in much more detail in the days ahead.

So, there you have it. All of this is right on schedule and 100% expected. Please don't get all freaked out and panicky. Recognize it for what it is and understand that market moves are always a two-steps-forward-one-step-back process.

More in the podcast later today.

TF

43 Comments

Bluebellkid's picture

First?

First?

Kevin C's picture

What, wait. First?

Really?

Bluebellkid's picture

That a first first for me -

That a first first for me - WOOHOO!!!

Turd Ferguson's picture

See...here you go

MODERATOR

Already, BoA is telling you to sell due to a failure at $1350. F-ers.

http://www.zerohedge.com/news/2014-02-26/silver-slumps-worst-day-2-months-bofa-says-sell-gold

chocolatechiphorses's picture

APMEX SPECIAL

APMEX  SPECIAL

@  $122.25

2013 5 oz Silver ATB Fort McHenry National Park, Maryland

Any quantity only $3.19 per oz over spot!

Sales Blitz!   This deal can expire at any time!

BUY THE DIP

CCHORSES

flyinkel's picture

Exactly B of A

Sell to meeeeeee!  Bye, bye paper

Edit:  Geez Tyberious, you going to take the $$ and convert to stacks or let it ride?  What a pleasant predicament.

Joseph Warren's picture

Pretty much as expected . . .

by many of us including Turd at the $1350 and $22 neighborhoods. Just keep building those higher lows.

Personally, I don't think they'll be able to keep silver below the 200 ma very long, even if they do breach it.   We'll see.

tyberious's picture

I'm up

500% on my AGQ puts!

Bought FebWK 4 Puts at 72 for .16 each, moved to .88, sold!

perdman's picture

DUST

Its a risky play because I believe the gold fundamentals is a tinder box right now but DUST is extremely oversold at 52 week lows. Here. Could be a nice pop for a week hold...Then back to NUGT

-SilverIsMoney-'s picture

Meh I still dont regret

Meh I still dont regret picking up a 100oz over the weekend. 

Gamble's picture

Hmmm

Lately these beat downs have been met with buying 

buy the dip buy the dip buy the dip buy the dip 

or was it sell the rally ? I can't remember ! 

Turd Ferguson's picture

Hot Turkey

MODERATOR
realitybiter's picture

Having made and lost

several times, over the last dozen years in this manic metals market, I will suggest the following:

If this is the beginning of a strong upmove in the metals, any sell-offs will be brief, possibly hours.  Previous periods of strength were decidedly North.

Couple of clues of strength.  RGLD is up today.  SLW was up earlier and still leading silver.  If those go weak, heed...

It is insane that the FT article on manipulation appeared then disappeared...why did they post it at all?  hmmmmm....insider?

You know you are getting close to the target when you start taking flak.

If SLW shows strength after 10:30 I'd be careful pressing those short bets.  wtfdik?  I have plenty of scars.  Good luck all.  shortsellers, too!

tyberious's picture

Inflation or

Inflation or Deflation?

IDW-2014-02-21

People who follow and understand true free market economics, namely, the Austrian economists, know that current policies instituted by the U.S. Government and the Federal Reserve Bank, which “owns” our government, agree that current policies are leading America on a road to economic and political hell. But which road to hell we travel on is of great importance in our attempt as individuals to avoid that trip or at least prepare ourselves with some kind of asbestos suit to reduce the pain and suffering once that hell is thrust upon us by the communist/fascist/crony capitalists who are planning damnation for all of us middle class folks.

The majority of Austrian school advocates envision a hyperinflationary outcome. They simply reason that despite the ability of the Federal Reserve Bank to create an infinite amount of money out of thin air, the currency will eventually become debased and the price of everything denominated in that currency will approach zero. In other words, they envision a hyperinflation that at its extreme would rival that of the German Weimar Republic prior to World War II or that of Zimbabwe today. People like Peter Schiff, John Williams, Ron Paul, and many more whom I have interviewed on my radio show are in this camp.

On the other side of this argument are those who believe that the massive amount of debt is too great for central bankers to overcome, no matter how much money they can create. The deflation proponents believe that creditors will not accept being repaid with worthless money and that they will force interest rates higher, which in turn will force a rise in the currency and thus cause prices to decline. Some deflationists like A. Gary Shilling also believe an excess of supplies play into this deflation dynamic that result in what Dr. Schilling calls “good” deflation. Dr. Shilling has been on my radio show, as has Mish Shedlock. More extreme deflationists who have been on my radio show have been people like Ian Gordon and Robert Prechter, both of whom believe the Dow Jones Industrials are heading for 1,000 or below.

http://jaytaylormedia.com/inflation-or-deflation/

Dr Jerome's picture

Nice move

Tyberious,

Congratulations... and thanks for sharing the details of your success. I probably ought to refund my day-trading account and be ready to go "leveraged short" like that. I got set up with Jim Comiskey for my long trades. His commissions are higher so I don't like to be nimble with that account. I'll ride this one out and not bail until 1220.

Hopefully, we have seen the bottom here at 1322 and 21.12

OceanX's picture

Fort McHenry...

Yes, I have a bunch of those!

My latest purchase:  2014 1 oz Canadian Silver Peregrine Falcon  and 2014 $200 Canadian Gold Howling Wolf .9999

If gold drops to ? 13 -- I may get the gold lunar horse from the Perth mint.  However, I think this is starting to become and obsession...

SilverSurfers's picture

Channeling II

So yesterday, a channel was drawn, showing a today's 1325 bottom, (that worked today, on the money), yet today, the channel is redrawn again, but now lowered, with a today's bottom at 1280. I like the first one better. ;)

Channeling

Submitted by Mad5Hatter on February 26, 2014 - 10:38am.

Stonewall at Antietam. Doctor McQuire, they have done their worst.

http://books.google.com/books?id=PTdAAAAAYAAJ&pg=PA114&lpg=PA114&dq=stonewall+jackson+They+have+done+their+worst&source=bl&ots=HsPAIqQ82p&sig=BlifKH6NJTIA6i6hAaLKa5CMVWE&hl=en&sa=X&ei=lToOU529AuHX2QWSvYGoAw&ved=0CCQQ6AEwAA#v=onepage&q=stonewall%20jackson%20They%20have%20done%20their%20worst&f=false

was not Ft McHenry a civil war era goolag? ..... Yeap

http://en.wikipedia.org/wiki/Fort_McHenry

Turd Ferguson's picture

Podcast will be a bit late today

MODERATOR

Need to help MrsF with some stuff. Should be posted by 6:00 EST

Gamble's picture

Wow continental gold

Just went green

SilverSurfers's picture

8 and counting

hhmmm ... Kitco 60 day gold chart is showing, now, 8 minni-corrections, as well as turd's chart, so to speak, and 1320 is holding, and at 1328, with 1330 in range, seems like the 8th should be no big deal. shooting for 1330 globex close, and stuff em.

Pete's picture

A useful pattern for traders

Mickey's picture

End of Month

which does coincide with futures expiry week.

But here we are, hui is up 21% YTD. A lot of this was started overnight, sure, but also people -traders--have profits and took those profits. Part of the overall market action.

Also, here we are near end of month. RIA's who have PM in accounts probably also did some selling to lock in profits and show a good month--however that does not work for the overall market which also has had a good month.

I see TGT is up 4 bucks today despite weak sales and profits and lowering guidance. Whatever happened to "paying up" for good performance?  Or PEG ratio. (Price earnings growth ratio where the PE should  be about the growth rate.

Market does not care that consumer spending is drying up and revenues in many companies are weak as are profits, especially GAAP profits.  Is there anybody with discipline buying stocks?

Perhaps the right question is where has investment discipline gone?

The higher this rises, the harder it falls--if we do not see some real growth soon its going to be a real mess out there. For many reasons.

And why should there be growth-whats promising out there?

pforth's picture

Things don't always go up...

But it still sucks that when they go down it's always a waterfall attack.

Marchas45's picture

Well Marshall Swing Called

Well Marshall Swing Called The Banksters Crash The Price Move. Guess pure luck. Lol

http://www.tfmetalsreport.com/comment/386691#comment-386691  

Markedtofuture's picture

Mini-Correction Time - Housing in full blown mode

Zerohedge

The Housing Recovery Myth In New York And New Jersey Ends With A Bang As Foreclosures Surge

It was about a year ago when we noted a core component of the US housing non-recovery: thetime to sell foreclosed homes had just hit a record of 400 days across the nation. We showed the following chart from RealtyTrac confirming just this:

foreclosure%20time_0.jpg

We also proceeded to highlight some thoughts from a real housing expert, not a made for financial comedy TV "housing guru", in this case Marc Hanson, who pointed out the Bottom line on the Zombie housing market:

Of the 54 million homeowners with mortgages -- the primary repeat buyer cohort and a primary builder demand cohort -- over 22 million are dead to the housing market. Of the 70 million homeowners -- mortgage'd and free and clear -- 33 million are Zombies. Thus, we can't expect housing to act like it has in the past. With so many Zombies it will be impossible for repeat and new home sales to perform as expected. The past 18 month bounce -- especially on prices -- has been on cheap and easy money from investors looking for a dividend stock and/or Treasury replacement trade. some foreigners following their lead, and finally the 'dumb money' (retail) chasing into this summer.

But we are running out of greater fools very quickly, especially with first-timers sidelined and new-era "investors" who are quickly pricing themselves out of markets nationwide.

(More can be read in the original article).

Fast forward to today when even the last traces of the lie that sustained the housing recovery myth are being swept away, and we get the following article from Bloomberg titled "Foreclosures Surging in New York-New Jersey Market." The punchline is quite clear but below, for those who are new to this story, are the key supporting points:

The epicenter of the U.S. foreclosure crisis is shifting to New Jersey and New York, threatening a housing rebound in one of the country’s most densely populated areas.

New Jersey has surpassed Florida in having the highest share of residential mortgages that are seriously delinquent or in foreclosure, with New York third, a Mortgage Bankers Association report showed last week. By contrast, hard-hit areas such as Arizona and California have some of the lowest levels of soured loans after allowing banks to quickly foreclose after the 2007 property crash.

The number of New York and New Jersey homeowners losing their houses reached a three-year high in 2013. Banks in these states have been slowly working through a backlog of delinquent loans that enabled borrowers to skip mortgage payments for years. Now these properties are poised to empty onto a market where affluent Manhattan suburbs neighbor blighted towns that are struggling most with surging defaults.

The good news (according to some): thousands of people could live mortgage free for years until the bank delays obtaining the keys to the foreclosed property. This was money which instead of going to the mortgage owner, would instead go to buy Made in China trinkets and gizmos and otherwise keep the US retail party humming. Specifically, as we observed long ago in March of 2011, the benefit to the US economy from "deadbeat squatters" was about $50 billion per year. Which brings us to the bad news: the party - retail and otherwise - is ending, as courts and banks finally catch up with inventory levels on both sides of the foreclosure pipeline, and those who lived for years without spending a dollar for the roof above their head are suddenly forced to move out and allocated the major portion of their disposable income toward rent.

Lenders in New Jersey are pushing cases through more quickly and it now takes about two months to process final judgments against delinquent homeowners, compared with a backup of nine months a few years ago, said Kevin Wolfe, assistant director of the Civil Practice Division in the Administrative Office of the Courts.

The Office of Foreclosure, which reviews case files before they can move to the final step of sheriff sale, has added four permanent staff members, six law clerks and 10 case analysts since 2012. It previously had seven employees.

“We are staffed up to move these cases faster,” Wolfe said. “But the other reason cases are moving more quickly is that lenders have improved their foreclosure practices and worked out logistics with their law firms and, as a result, they’re geared up to handle foreclosures more efficiently.”

Which means that as the inventory bottleneck suddenly unclogs and thousands of new properties hit the market with an urgency to sell before anyone else does, things in New York and especially New Jersey are about to go from bad to worse.

“It is really a delayed reaction in New Jersey and New York,” said Michael Fratantoni, chief economist for the Mortgage Bankers Association in Washington. “Loans that were made pre-crisis have been in this state of suspended animation for a number of years. And now, we are beginning to see the pace of resolution pick up.”

In January, the number of New York foreclosure auctions reached 527, the highest monthly level since October 2010, according to data firm RealtyTrac. Foreclosure filings in New York City increased 30 percent to 15,993 in 2013, a three-year high, according to RealtyTrac.

Almost 10,000 cases in New Jersey headed to a sheriff sale in 2013, 47 percent more than the year before and the highest level since 2009, according to the New Jersey Administrative Office of the courts. Across the country, repossessions fell 31 percent in 2013 to the lowest since 2007, according to RealtyTrac.

The implication is that prices - already suffering in these two core states - are about to go far, far lower:

The real estate markets in New York and New Jersey are trailing the rest of the country as a result. Prices in New Jersey, the most densely populated state, climbed 2.9 percent in the fourth quarter from a year earlier, compared with a 7.7 percent jump for the U.S, the Federal Housing Finance Agency said yesterday. New York values rose 3.7 percent.

“Price increases that are occurring in the rest of the country are not likely to happen in the New York-New Jersey area, with the potential inventory that can come at any time,” said Lawrence Yun, chief economist of the National Association of Realtors.

“When one sees a price increase in Phoenix or many other parts of the country, one can assume it’s a genuine increase from falling inventory,” he said. “If it happens in Edison, New Jersey, or Long Island, New York, one has to ask, ’Is this for real or just temporary?”

Actually, Larry, when one sees price increase in Phoenix i) one will be wrong as prices in Phoenix just posted their first monthly decline since 2011, and ii) nobody can assume anything is genuine in a housing market in which mortgage origination just dropped to a 19 year low, meaning only those with abundant cash and no regard for cost can continue buying.

Everyone else is about to get a very harsh lesson in what it means to have been lied to by the propaganda machine for years, and suddenly have nothing to show for it but some vastly overpriced real estate.

AgAuMan's picture

Nickels

Ok...  This may bit off topic but its still metal related....  I was thinking about the US Nickel (5 cent piece)  its made of 75% copper and 25% nickel.  currently they are worth $0.0442103 (http://www.coinflation.com/unitedstates/).  To diversify my silver pile and gold stack I am going to start buying Nickels.  This is the perfect investment.  You have no downside risk.  they will always spend as 5 cents (face value).  Since we wont be getting any interest from currency on deposit in a bank account any time soon there is no real opportunity cost either.  But once inflation really kicks in their melt value will be greater than their face value.  This is the same thing that happened to the silver coinage in 1964.  Maybe 200,000 nickels ($10,000) in your basement will come in handy some day.  They will spend just like junk silver will but you will not have to dip into your silver pile right away.   LOL 

47 Protons's picture

@AgAuMan -- Beware the slippery slope!!

I had that same thought a few years ago...

Now, I have:

> $2,500 face of US copper pennies (That's a TON!)

> $500 face of Canadian Nickels (Paid a bit for shipping...  but, technically I could melt them, if I want.)  :-)

I found the $25 and $100 boxes for rolls were great!! I stopped rolling after a while (at least with the pennies), and just reinforced them with strapping tape & filled them to weight.

a_guy_in_hainesville's picture

from +3000 yesterday

to down 1400 today on my GLD options.  wow  To not book that, I just don't get it.  Why am I so stupid?  I never thought 1350, thinking "they" know we know 1350.  So I was out at 1246, and we are 1243 and I don't sell them and take the money and run.  Why can't I figure out the risk reward there is not in my favor.  wow.  I am not dealing with this well, I haven't eaten all day.

Anyone have any tips for when you royally mess up?

SilverSurfers's picture

1330!!

"shooting for 1330 globex close, and stuff em." ....

Johann Strauss, how about a hit tip?  pretty please?  at 4 minutes in:

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