Looking To BTFD In Silver and Gold

Wow, this is crazy, isn't it? There is so much crapola going on in the world that, seriously, I don't know where to start. So, I guess I'll start where I'm most comfortable...with the ruler and the sharpie...and wait till you see what I've found!

As I've mentioned quite a few times as of late, this 20%+ equity rally over the last three months makes me nauseous. While I feel that the perfect 45-degree rally is a clear sign of Fed manipulation, others argue that it is the rational result of The Great Global Liquidity Flush of 2012. Maybe they're right? Maybe we're all right? Who knows? All I know is that the charts don't lie and they are what they are.

To that end, below is the most important chart of the day...perhaps of all 2012 to date. Note that since the panic beatdown and collapse of December, gold has been in a similar pattern to stocks. Take a look:

paper_2-22amgoldd.jpg

From this chart, I think we can deduce several things:

  • Since it's not just gold and equities that have this 2012 pattern, there really is a Great Liquidity Flush happening and it will likely continue throughout the year as the central banks desperately try to maintain the illusion of recovery and hope.
  • The Cartel is still active in trying to manage gold's ascent. Note that this range rises a perfect $100/month.
  • If we expect The Great Liquidity Flush to continue then this chart pattern should continue, as well.
  • The current floor of the channel is at $1720. This means that by late April, the floor of the channel will be at the old all-time highs for gold, near $1920, and the top side of the channel reaches there by late March.
  • Buy gold. Buy it on the dip or buy it on the rally. In the end it doesn't really matter. Just buy it.

Now, the next question is: Can we get a dip to buy? Maybe. In fact, I kind of like our chances that we'll get that dip, sometime between now and Thursday afternoon.

First of all, the POSX is rallying. In fact, at 79.30, it's actually above the level at which it was trading pre-Greece on Monday. Interestingly, the metals are holding in there today even while The Pig strengthens. I have a hunch, however, that a few WOPRS may eventually trip into "sell" and take the PMs down a few dollars.

paper_2-22ampig.jpg

So, where might that dip take us? In gold, I will be very excited if we can get a dip to 1740-45. You can clearly see that area on these two charts:

paper_2-22amgold6.jpgpaper_2-22amgoldh.jpg

In silver, the BTFD area is also clearly defined. Take a look at these two chart first:

paper_2-22amsilvd.jpgpaper_2-22amsilv6.jpg

And now check out this hourly chart. If a dip develops to 33.70-33.80, it sure looks like a solid buying opportunity. The only thing complicating matters somewhat is the pending expiration of the March options at the close tomorrow. Keep that little item in mind if you are attempting to trade today and recall how SLV call holders were treated when their options expired back on Friday.

paper_2-22amsilvh.jpg

Lastly, I'm trying really hard to bring myself up-to-speed on this Greek "bailout" deal. If you want to take a crack at it, too, try reading this:

http://www.zerohedge.com/news/summarizing-open-questions-surrounding-second-greek-bailout

and this:

http://www.zerohedge.com/news/psi-scenarios-and-greek-bond-trading-thoughts

and then consider this:

http://www.zerohedge.com/news/iifs-dallara-warns-holdout-greek-bondholders-could-kill-successful-greek-deal

What I can't figure out is why a powerful hedge fund would allow themselves to get screwed in this deal. Why wouldn't a loose consortium of hedge funds band together and deny the deal? Because the ECB and the Fed are so afraid of a CDS trigger, couldn't these funds force them to sweeten the deal in a sort of 80s-esque "greenmail" attempt? They could even short JPM and GS, profit from putting the squeeze on and then close those positions right before they accept the sweetened deal!

Anyway, it seems to me that there is a palpable sense of desperation to avoid CDS triggering through a Greek default. In the next few weeks and days, there will be some wild volatility as markets react to "deal on" and "deal off" rumors but, in the end, a deal will be struck that will be much more costly than that which was announced yesterday. Costly = more euro and more dollars. Costly = continuation of the Great Liquidity Flush of 2012. Costly = gold and silver continue to rally and perhaps even accelerate to the upside.

Of course, I could be wrong. Maybe default is inevitable next month. Gonzalo seems to think so:

http://gonzalolira.blogspot.com/2012/02/fearless-prediction-on-march-20-greece.html

However, this event is PM-positive, too, as breaking up the euro will also drive the PMs significantly higher. Maybe not so much in the near term but definitely in the longer term.

So, there you go. That's all for now. Crude is still over $106 and, the more time it spends at $106+, the more certain you can be that it is headed to at least $115. Got UCO?

More later. TF

161 Comments

iceman321_2k2's picture

DOW Gazillion

Gazillion is a fake number, and so is this rally.  I am so sick about hearing Dow 13,000.  Who cares?  It's all relative...

"According to Zero Hedge, even though the Dow is back at May 2008 levels, the Dow priced in gold is down a staggering 50 percent.  While the Dow was busy getting back to a nominal break-even point from May 2008 to February 2012, gold prices surged from $900 to $1,750 per ounce.  During the same period, silver prices increased from $17 to $34 per ounce."

http://wallstcheatsheet.com/investing/do-central-banks-care-more-about-the-dow-or-gold.html/

pbfurn's picture

GSR Trade

@ Hondo

I think one can get around the tax implications on trades using a Gold Money or Bullion Vault type of account.  The articles to which you refer discussed this matter.

I think donnojackshit  vamoose and byzantium were the people who were kind enough to share their knowledge on the subject.  Reading their posts should provide the answer.

Kouen's picture

Thanks Turd.     : ) I'll buy

Thanks Turd.     : )

I'll buy more gold on Thursday (I got my money wd from my stock broker that day)

*edit

I forgot, It's tomorrow.  ha ha my bad  xD

The8thHabit's picture

Just a pinch from EE?

Thank you Turd for your post! So if I understand your post and subsequent comments right we anticipate not a beatdown but just a pinch from EE this afternoon. 1%-ish to 33.70-33.80? Certainly nothing to take us out of month-long 32.80-34.40 range? Hell, I can surely live with that without stacking on high blood pressure pills! Thanks again! Staying Sturdy in Silver.

ClinkinKY's picture

@ Turd--re:FWIW

All credit should go to my son, who is "in the  computer business", and sometimes thinks I'm "paranoid" when I tell him about the "end of the great Keynesian Experiment" and the reasons for my "stacking". The fact that he sent me this link gives me hope that he's starting to "trust his old man" in matters of "government intrusion" and the importance of "prepping".

lairdwd's picture

Why the $12 spike in gold?

Anybody? 

Groaner's picture

I just bought back in

hows that for power?

exiledbear's picture

Whoa, what just happened?

Gotta love these manipulated markets, where something spikes for absolutely no observable reason at all. Just la-di-da, I'm going to spike today.

If you're long the PMs, you're also long chaos and anarchy. I suppose you could be reluctantly long chaos and anarchy or you can do what the Sex Pistols did...

ink's picture

Beatdown?

Come again?

Gold: 1770

Silver: 34.36

as i type... :)

SRSrocco's picture

SRSROCCO RANT

MY THOUGHTS ON SEVERAL SUBJECTS

I got the inspiration to write this post by watching the SENIOR vs JUNIOR AMERICAN CHOPPER episode "Winners and Losers".  In this episode Donald Trump asks Senior to do a bike.  In the beginning of the meeting, Trump asks Senior if he has talked to Junior.  Senior responds "No".  Trump goes on to tell Senior, "Don't leave him ten cents... don't leave him anything."

I can't begin to explain the loathing I have for Trump... even before this American Chopper show.  Trump to me is the epitome of what is wrong with the United States.  Trump is a complete waste of time, capital and information.  At some point in time, he will be washed up due to his lousy investments in OVERBLOWN COMMERCIAL REAL ESTATE.  

THE EROI - ENERGY RETURNED ON INVESTED between the GOLD RUSH SHOW vs BERING SEA GOLD

I don't know how many of you all have watched these two gold mining reality shows on the Discovery channel.  So far this year, the Hoffmans in the Gold Rush Show have mined 82 ounces of gold... and basically the mining season is over.  From my memory, Dakota Fred got about 65 ounces so far.  From what I could get from the show, the Hoffmans consumed over $1,000 worth of diesel a day, while Dakota Fred probably uses close to that amount.

There are four different water dredges on Bering Sea Gold show.  The largest is the Christy Rose which cost $500,000 to build in 2009.  The other smaller dredges cost between $20-$40,000 to build.  So far this past season, the Christy Rose has found 282 oz of gold.  

If we consider that the Hoffmans spent about $100,000 on equipment it is only 1/5 th of what was spent on building the Christy Rose.  But if we consider the amount of fuel that is consumed by the Hoffmans mining gold in Alaska compared to the fuel consumed by the Christy Rose, it is a drop in the bucket.  The Hoffmans have 4 earth moving machines running all day plus their big sluice box which is run by a diesel powered generator.

The Christy Rose uses a little diesel to get the barge out to sea, but they only have to power the water pump, backhoe and sluice box.  I would imagine the diesel consumption for the Christy Rose daily is 1/3 of the Hoffmans.

Here is the difference.  In a day of mining the Hoffmans get about 5 oz of gold.  The Christy Rose has found over 75-90 oz a day on three different days.  The Christy Rose dredge consumes 1/3 the amount of diesel but can produce at least 50 oz of gold a day, whereas the Hoffmans can only produce 5 oz of gold while they consume 2-3 times the amount of diesel.

Here we can see the EROI is much better for dredging in the Bering Sea than it is mining gold ore from the ground in Alaska.

THE SUBJECT OF POLITICS & FOREIGN POLICY

I read and watch a great deal of debate on the U.S Govt and foreign policy.  I see a lot of people getting very passionate about their feelings in these issues.  my articles are more on the physical side of the situation when it comes to the economy, precious metals and energy.  I rarely write about the US Govt or what is taking place in countries throughout the world.  

The reason why I stay away from this sort of debate is due to the fact that IT IS A COMPLETE WASTE OF TIME TO GO AGAINST THE LEVERAGE WHICH IS CURRENTLY IN CHARGE.  If we look at the past, political parties whether they be socialist, communist, fascist or etc..  run for quite a long time before they disintegrate.  No amount of protest or revolt works.  In the end, it is the entropy of the system that takes down the political party.

The Peaking of Oil and the coming energy shortages will destroy the present political systems.  The threat of these Drone planes flying all over the United States is nice on paper, but the future logistics will prove this system a HUGE FAILURE.  There is no need to protest and try to keep this sort of SPY PROGRAM from becoming reality. 

UPDATE ON THE FIVE STAGES OF COLLAPSE

In my THE COMING PARADIGM SHIFT IN SILVER, I wrote how the price of silver would take off when the U.S. hits STAGE 2 or the Commercial collapse.  Dmirty Orlov recently did an interview on Max Keiser where he updated his theory of collapse.  Orlov now believes that because of the continued manipulation of the markets by the US Govt and Fed that we will have all three stages collapse at the same time.  Basically, the whole system falls apart at once and there is no time to protect ones wealth if you have not done so already.

STAGE 1 the Financial Collapse took place in 2008, but the banking system is still functioning due to  the US Govt manipulation.  When the system finally goes, it will take down the Banking System, the Supply Chain system (Commerical Collapse - Stage 2) and the Political System (Stage 3).  Things will really get out of hand.

When we have this huge collapse of 3 stages at once, we will not have to worry about the Federal Govt and its Homeland Security and etc, but rather we will have to protect ourselves from our more unprepared neighbors.

THE COUNTRY LIFE WILL SURVIVE, WHEREAS THE LARGE CITIES WILL BE THE WORST PLACE TO LIVE

My wife and I left the big city over five years ago.  We have goats, chickens, garden, orchard and fresh water creek on our property.  We can live without the supply chain or the electric grid.  We have a neat solar cooker that uses the sun to cook meats, grains, breads and vegetables by the power of the sun.  The unit gets up to 350  degrees and can cook a chicken in 2 hours.  The neat thing about it... the chicken will not get burned if you leave it in the sunoven for most of the day.

Today, my biggest concern is not the breakdown of the system, but the collapse of the electric Grid and the failure of Nuclear Power Plants as a result.  Living in the country can protect oneself from the negative forces in the big city... but not from RADIATION spewing from failed nuclear power plants.

This is why my wife and I are now planning to leave the mainland.  I believe the probability of the FAILURE of the NUCLEAR POWER PLANTS is 100% at some point in time.  How many go down and in what areas is up to chance.  If just 10-20% of the Nuke Plants go down, it makes a great percentage of the country uninhabitable.

Well....that's enough for now.

HAPPY TRADING

The8thHabit's picture

Silver charts

Today 11am to 1:15pm Silver chart is absolutely identical to yesterday including over 1% FUBM in the last 15 min...

Groaner's picture

up on some serious volume too

something just came out

Dr Jerome's picture

Au & AG spiking?

Pull up a chair, set your software for 1 minute bars and enjoy the action! It is only .30 on AG, but that is a refreshing change from watching the paint peel.  AU is exciting!

opalboy's picture

somebody

must have just said something, gold just jumped to 1771,

that's cool!

indosil's picture

What's up

what's up??silver & gold just shot up...any breaking news?

Sean Connery's picture

$34 held

...and it starting to spike now.

slavador's picture

1772

Gold just broke $1772. Turd, if it holds to the close in 8 minutes would you consider this sufficient to call it a break of the $1760 barrier that good things are supposed to happen above?

BUSHMAN's picture

TF IS THE CNBC OF GOLD ANALIST

BTFD? LOL...whatever turd says just do the opposite

realitybiter's picture

WHAT ANGEL?

I'd suggest that Santa's 1764 angel  non-event is an ominous sign that "there ain't no breakman on this train."  Not even a hi, how are ya?  Like a hot knife.  1849 soon?

The $hui is creeping up on 555...I know all the arguments agains miners and frankly, I agree with them.  But if it keeps trading so well, it will be hard to ignore.  The Slw/Slv is screaming "buy me.'

Per always, wtfdik?

Patrancus's picture

Buffett billions keep a tight lid...

Buffett billions keep a tight lid on his Pebble Beach home, heard about this the other day when they media was touting his expert opinions of how America's rich are not taxed enough, and he lives a spartan lifestyle in a modest country shack in Omaha, like I even earn the chunk of jing his secretary makes in the first place. This guy is so f**k*** rich he forgets about his super secret Pebble Beach estate. Tried to locate something on it, it is off the map folks could not locate even a smigen of info on it. When you are clever as crusty old Warren in making fools out of the sheeple, you use the billions to keep your info out of the sheeples pasture so they won't be able to dissect your true nature and intent in keeping the sheeple fat & happy, with plenty of bread and circus. 

Lightning's picture

Cap at 34.40

They seem to be serious about capping silver at 34.40.  What is in store for us on the other side of 34.40?  I can hardly wait.

lairdwd's picture

Could be opEx shennanigans?

That's why I wanted to see max pain. Damn. Somebody is probably long and strong on crimex and has to push it up to avoid the margin clerks. Also with paladium and platinum very strong, it was supportive to gold. 

Let's see if it can hold on globex, and if silver can start to catch a bid. Cartel is still nowhere to be found... so it could be THEM doing the buying. Two bids wiped out all the asks in two $5 chunks. Very nice. 

agrock's picture

did the bernake just speak?

what's up with the vertical in AU (not complaining)

I was looking to BTFD but have to delay a little.

survivalwstyle's picture

GSR @ the LCS

from the strEEt to TFMR...this is not as easy as it lOOks or sounds from the retail end....of course again, unleSS you have a hOOk up...if you do. shOOsh.

and we are on blast oFF alert right now....so taking the last tick i get AU 1770 Ag 34.25

joe blow walking into the LCS this is the breakdown. we take your AGE and you get a credit of 1770.

you then get ASE's we are seLLing at 40. 1770/40 = 44.25 you get 44 ASE for 1 AGE

so you want .999 rounds....those are 36.25 a pop.    1770/36.25 = 48.83...i'm a nice guy. you would get 49 rounds today for 1 BU AGE.

i am giving my patience a test....but i just have a tiny bit of fiat left...i can buy guns aMMo and TP if we never come back....

Dr Jerome's picture

Copper

Dr copper is making a bit of a move here with the other metals also.

Groaner's picture

must of been lists of stop orders just above 1760

nice move

Hondo's picture

Pbfurn

Thanks

Hondo

Hanuman's picture

Greek Debt

Biderman sums up the Debt situation fairly well in this 3-min video:

http://www.youtube.com/watch?feature=player_embedded&v=nlxwtJ0nWkg

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