Three Weekly Charts

387
Fri, Aug 5, 2011 - 6:36pm

Whew! I don't know about you but I am glad this week is over! I'm just glad I had all of you to share it with.

I made a couple of changes today within my trading account today. I guessed that a brief selloff would materialize around lunchtime and, luckily, I absolutely nailed it. I made a very quick and tidy little profit on some ES calls. I quickly rolled out of them and now I am in:

1) October gold call spreads 1700 vs 1800

2) December gold call spreads 1700 vs 1800

3) September silver call spreads 40 vs 45

Only the silver makes me nervous (time is short) and has me worried (didn't rally back today like everything else). Actually, it kind of pisses me off a little bit. The ES rallies 40 points. Gold rebounds $15. Crude bounces back $3. Silver...blechk. Oh well, I must be patient. Provided there are no overwhelmingly bad headlines over the weekend, we look to head into Monday with a general "risk ON" mindset. Maybe I'll catch a break.

Speaking of headlines, did you see this a few minutes ago?

https://blogs.abcnews.com/politicalpunch/2011/08/govt-official-us-expecting-sp-downgrade.html

If you were wondering why gold was so strong on the Globex, I guess you just got your answer! Personally, I still cannot believe that a U.S.-based ratings agency will be allowed to downgrade U.S. government debt. The implications for insurance companies, mutual funds and pension funds would be calamitous. I'll guess we'll see.

OK, onto the charts. First, let's take a look at gold. For all the craziness, the Dec gold contract finished UP another $34. Headline risk is everything at this point, however, gold looks certain to test the 1680-85 level again next week. After that, it's anyone's guess. IF it rallies another $40 next week and closes near or above $1700, all bets will come off. Gold will have the appearance of an accelerating uptrend as it would be breaking out and through its nearly three year uptrend. It's going to be a very exciting and consequential week.

Silver isn't nearly as exciting. You know I've been going on and on lately about lack of follow-through due to the meager 120,000 short interest. OI finally perked up this week as we headed toward 42+ and then, of course, came the smashdown. This weekly chart looks sickly and, frankly, gives me a feeling that 36 is in the cards before we ever go back and break through 42. In the very short-term, however, I can see an early-week rally next week that takes silver back up near $40 and maybe even $40.50. You can bet you arse I'll be dumping that spread when it gets there.

Lastly, I've received several requests for an opinion on crude. I had hoped that 88-90 would hold but, once that failed in the massive dump on Thursday, you had to figure that 84 was in the cards. You can see that on the chart below. That should do it. IF 84 fails, it looks like it could trade to 80. At 80, it would sure look to be one heckuva good buy. If anyone out there is trading crude, be sure to buy yourself plenty of time. It looks to go much higher but maybe not as soon as next week. Be patient and you'll be rewarded.

OK, that's all for now. I'm going to take a couple of days off so consider this your open thread for the weekend. I think we all found great value from this site this week. Go forth and convert as many new Turdites as possible.

TF

p.s. It's 10:00 pm EDT Friday night and I felt I had to chime in. I must admit that I am absolutely stunned and flabbergasted that S&P has officially downgraded U.S. debt to AA+ with a negative outlook. This is truly an historic event and one that will have repercussions for weeks and months to come. At first glance, I can't see how the PMs don't experience a huge rally on Monday but, who knows? One thing I do know, however, is that gold and silver will be higher in a month. They'll be higher still in six months and even higher a year from now. The Great Keynesian Experiment is ending. Do not, under any circumstances, sell you precious metal. They are your only financial protection.

About the Author

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  387 Comments

Eric Original
Aug 5, 2011 - 7:27pm

nith

Thanks for your encouraging words.

Rick Rule is one of the few guys around that I really respect, and this is my favorite video clip of his. The whole vid is great, but I'm guessing the last half of it is material that you would whole heartedly agree with. So do I!! And yet, I still like to do my own homework and participate in a select list of miners. Glutton for punishment.

Rick Rule: Cash Will Give you the Courage
silversalmon
Aug 5, 2011 - 7:31pm

Thank you brother TURD

What do you mean THANKS! THANK YOU, many of us would be in the SHIT without,your love, patience, perserverance, and dedication to wake up the sheeple, and crush the skulls of the JP Morgue. We're soldiers, keep leading and we'll follow! THANK YOU!

Boswell
Aug 5, 2011 - 7:40pm
lostinspace
Aug 5, 2011 - 7:43pm

SilverTree

You can never "blow" money on Guns and Ammo. Maybe if you buy a bunch of Jennings or hi points, but otherwise G&A are a hedge against inflation, insurance, and a way to ward off the zombie hoardes. We can always hop on gunbroker and sell our G&A, but when a woman blows $500 on her umpteenth handbag, good luck getting that back.

Mudsharkbytes
Aug 5, 2011 - 7:45pm

Sure hope them talkin' bears are right

I'm frickin' weary of the sideways up & down going nowhere movement of silver.

I pretty much got out of gold a year ago - went all-in silver - and have been pretty happy too! - up until May 1 that is.

I'm glad I found this place, though. It's pretty much kept me from screwing the pooch.

Violent Rhetoric
Aug 5, 2011 - 8:24pm

Downgrade

S&P blows. So does the Treasury department.

A mathematical error discovered late Friday by Treasury Department officials threw into limbo, at least temporarily, plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said.

The wild back and forth between the Treasury Department and S&P Friday afternoon illustrated the dramatic stakes as the ratings firm moved to downgrade the debt.

ginger
Aug 5, 2011 - 8:28pm

For those 40 and up.. ..you

For those 40 and up.. ..you will relate. ..Ah for the days we at least *thought* were more innocent.

Have a great weekend everybody.

Video unavailable
Violent Rhetoric
Aug 5, 2011 - 8:38pm

AA+ negative outlook (you can say that again)

zero hedge says the deed is done

https://www.zerohedge.com/news/sp-downgrades-us-aa-outlook-negative-full-text

United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative

We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

We have also removed both the short- and long-term ratings from CreditWatch negative.

silverwoodnith
Aug 5, 2011 - 8:42pm

Hey nith I share your pain.

I too have been invested in miners since 2003 and they never ever acted like this until the last few months. They started acting weird in early 2008 but subtly so. Now it is in your face blatantly obvious someone does not want investors in this sector to get bullish. It may be a losing battle for them in the long run. Only time will tell. I'm NOT! going to get shaken out. Ah what's that song...We shall overcome. AHhahaha.

flaunt
Aug 5, 2011 - 8:44pm

Wow... I am actually...

Wow... I am actually... Surprised for once.

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