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

Shill
Aug 6, 2011 - 11:56am

Weekend ad clicking

Good call DPH...lets have a members click-a-thone for our fine host Turd.

Enter the site click every ad, upon leaving click again..Lets do this all weekend folks.

Heading out for some chores CLICK CLICK CLICK

Be well

¤
Aug 6, 2011 - 12:00pm

For Newbies and others just realizing whats going on...

Why gold is surging like crazy
"We seem to be entering a new stage of the currency wars where it's not just the emerging markets that are responding to broad dollar weakness," Callum Henderson, global head of currency research at Standard Chartered in Singapore, told Bloomberg. "Expect much more intervention in the future and further acrimony in terms of how the U.S. dollar is doing."

Now seems a fitting time to revisit the End of America… As you may recall, last November, we produced a video called the End of America (you can watch it here). Our thesis was simple… The United States (and the world's other leading democracies) are drowning in debt. And the subsequent money-printing ("easing") meant to solve the problem would only worsen the issue. Stocks, we posed, would languish. Gold, which would be viewed more and more as a monetary asset, would soar…


Since July 1, gold is up over 13%. The precious metal jumped $200, from $1,483 an ounce to Thursday's high of $1,683 an ounce. As we've said, the biggest reason for gold's surge is the U.S. and European debt crises (more on the latter in a bit). But it's also getting a boost from a lack of alternatives.

While we may be entering "a new stage," the currency wars are nothing new. The fiat currency market is "a race to zero," meaning all governments with paper money are racing to devalue.

On Wednesday, the Swiss National Bank cut interest rates to zero to devalue the soaring Swiss franc. On Thursday, Japan sold yen – which was near highs against the dollar – pushing it down over 2.5% versus the greenback. The Bank of Japan also increased its asset-purchase fund – which includes government bonds, corporate bonds, and real estate investment trusts – from 10 trillion yen to 15 trillion yen. And it increased a fund to encourage banks to lend by 5 trillion yen, bringing it to 35 trillion yen.

According to a Wall Street Journal article, South Korea, the Philippines, and Brazil are among the many other nations considering devaluing their currency.

This market manipulation means two things. First, gold will soar even higher as other currencies become less attractive. Second, global business growth will slow. As a business owner, it's difficult to plan for the future when you don't know what the value of your money will be.

The real jump in gold will come from the worsening euro crisis – namely the collapse of its banking system – and the eventual third round of quantitative easing in the U.S.

In a conference earlier this week, European Central Bank (ECB) President Jean-Claude Trichet said the European bond-buying program wasn't dormant… "I would not be surprised if by the end of this teleconference you will see something on the market," he said. Sure enough, European bonds rallied as the ECB bought across the board.

In addition to the reopening of the Securities Market Program, as the bond-buying is called, Trichet also said the ECB would offer a six-month tender of unlimited size next week. And it will maintain its policy of lending unlimited amounts at its one-week, one-month, and three-month operations until the end of the year.

This simply means the ECB will lend European banks an unlimited amount of money through the year. It won't let banks get caught up in a funding crisis as private lenders (like the U.S. money markets) retreat. The European banks' eventual losses will be monetized.

With this backdoor European bank bailout, you'd expect bank stocks to rally. Instead, they're getting crushed. The market knows these banks are toast. And I can't stress enough how bearish this action is… Despite a government bailout, European banks are still plunging. In particular, Deutsche Bank and Royal Bank of Scotland were down 9.3% and 10.5% on Thursday, respectively.
edge
Aug 6, 2011 - 12:01pm

The India Tell...

As a couple of other turdites have pointed out PM's on the India Commodity Exchange are up on the US downgrade news. Interestingly enough they are open on saturdays. I think we can gauge that traders in India are informed and responded accordingly, there was a gap up at the open in the price of silver and then it continued higher then flattened out. See chart. Granted comex is a criminal operation, there should be follow through when the markets open. I am loading up on the opportunity here as our phyz G and S prices are fixed over the weekend. Obviously there is risk involved for the short term in that equities will certainly be down monday and it could drag silver down with it, but I doubt gold. So I could be paying a bit more(but I doubt it) if silver does head to the 37 level. At this point I am focusing on Gold as I see this as a more sure bet...and I am already loaded pretty heavy with the white metal. Do your own analysis and tell me what you think

bern
Aug 6, 2011 - 12:03pm

Thanks edge.  Hat tip

Thanks edge. Hat tip awarded.

stoneeh
Aug 6, 2011 - 12:15pm

Re: Barney Frank

I'd really like to do to the guy what John Doe did to the fat guy in 7 :)

- Markus

cris edge
Aug 6, 2011 - 12:15pm

That looks like a greater than 10% increase

Am I reading the chart correctly?

Edit: no I am not. My middle aged eyes! Mistook the 5 for a $. Still, looks like >1%.

FogHorn LegHorn
Aug 6, 2011 - 12:17pm

DarkPurpleHaze

I am so pleased that Your Pop listened to You. I wish My family would, maybe now I' ll try again. Its a tough row to hoe. I wonder sometimes if I should try to help people see, the view is so seriousely scary and being in la la land is less burden. Ostriches, silly things, do they really put their heads in the sand? The whole head in the sand thing works until it doesn't. Bam the lion chomps the neck. I know the ostrich can do a lot of damage to the lion by kicking and running and kicking. I think kicking lion butt is better than pretending the lion isn't there. ciao:) fl ps. jh was the best guitarist ever imho

bullwhip29
Aug 6, 2011 - 12:21pm

@ Jimbio

Re: Mining shares

If we are about to witness a replay of 2008 (with the difference this time being that there is no "EASY" button to press), the capital markets will once again become totally paralyzed, investors everywhere will attempt to dump everything "paper" as quickly as possible (that includes everything from junior mining co's to money market funds to high flying tech stocks) and companies that are over leveraged will simply go belly up in the blink of an eye. Startups and other projects requiring significant funding will be mothballed as it will be impossible to raise and/or borrow money. People will naturally hoard whatever cash they have and only spend it on items deemed absolutely necessary. Companies will slash and burn as we saw in the past to preserve cash and ensure their survival. Asset prices everywhere will collapse as a result (that is for the things we don't need). I am afraid that TPTB will attempt to implement all sorts of restrictive measures which will make it difficult for people to pull all their money out in one shot (think bank holidays, stock market closures, halting of fund redemptions and so forth). Unfortunately, holders of PM's will get caught in the tsunami, but many will not wind up getting swept out to sea. A quick, painful period of deflation followed by the biggest round of money printing we've ever seen could be in the cards. A few billion here and there isn't going to plug any holes and TPTB know it. In all likelihood, TARP and/or QE on steroids won't work anyway. I believe this time around, the recovery will take far longer and be more painful than anything we've seen in decades. We tried the quick fix and it didn't work. Honestly, I think we'll be lucky if we end up in the shape that Japan is in today. Given that many Americans have little or no savings to hunker down with, I am not optimistic that this will be the case.

Magpie
Aug 6, 2011 - 12:23pm

Totally OT

Sixty-six years ago today the U.S. dropped Little Boy on Hiroshima. Fat Man was dropped on Nagasaki on August 9th, 1945.

¤
Aug 6, 2011 - 12:24pm

India's Gold Situation/ FogHorn

@FogHorn ...make a copy and show them my post. Not that it's special or filled with wisdom but it will get them thinking about other people's views and themselves and your attempts to help. I have a feeling the recent market upheaval and what's about to happen will get their attention soon enough.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

https://www.resourceinvestor.com/News/2011/8/Pages/Correlation-between-I...

stoneeh
Aug 6, 2011 - 12:25pm

Re: Is it time to panic?

Kent Brockman - Goo
¤
Aug 6, 2011 - 12:29pm

@ Stoneeh

Thats pretty funny in a gruesome way. I remember the scene.

"7" is a pretty good movie imo.

MrSteed
Aug 6, 2011 - 12:32pm

Shit is getting real....

I think there's still some kick-canning to be done, but the events of the last couple days really look the beginning of the fan-meets-shit-scenario....

I haven't added to my stack in a while, but I think now is a good time to convert some FRN's into some money -- specifically a couple of Pampe Suisse 100gram Gold bars seems like a good size right about now. Just placed an order....

treefrog
Aug 6, 2011 - 12:34pm

bern, re: india gold market

the "weekend" is an element of western cultures, specifically judeo-christian western cultures. india is neither judeo-christian nor western. i don't know what the schedule for gold and silver trading is in india, but i'm willing to bet that they have been trading those metals since before the birth of christ ....probably in the same shops in the same district of the same marketplace.

anybody out there know the hours of trading in mumbai ? anybody know if they ​ever​ close?

pgd73 bern
Aug 6, 2011 - 12:36pm

Indian market is open both

Indian market is open both for future trading as well as physical trading on Saturday.

In physical trading Gold is traded as high as Rs 24950/10 gms. This is new high for India & is about 2% higher than Friday closing price.

¤
Aug 6, 2011 - 12:36pm

Dedicated to Barney Frank/warning...

...do not have any liquid in your mouth because you will spit it all over your monitor.

Fat Bastard - Get In My Belly!
Silver Monkey
Aug 6, 2011 - 12:37pm

All that blabbering to my pops paid off too!

I can't believe it but I got the text from my dad that he took my advice and went down to the local coin shop this AM and bought some junk silver! He will be totally sold when silver now starts its run to $75 and beyond. I was surprised when he told me there was no one else at the local dealer. He has also been helping me prepare my "safe house" for the last month as well and somehow hasn't had me comitted yet, ha. It makes all those hours of what seemed like bashing my head into the wall trying to educate him, worth it! Don't give up turdites, your work in opening the Sheeps eyes can pay off!

Shill
Aug 6, 2011 - 12:39pm

The Republic can survive a

The Republic can survive a Barack Obama. It is less likely to survive a multitude of fools such as those who made him their president.”

https://dont-tread-on.me/

Dyna mo hum
Aug 6, 2011 - 12:40pm

Hope and Renewal

I only hope that there are some high ranking military folks that are looking at the astounding mess this great nation is in. I hope these good men are pouring over 5 to 600 arrest warrants for the traitors who have presided over this mess we are in. First would be martial law of course. Trials and punishment for the traitors. Then a peaceful restoration to all that is basic in our constitution. Now would be an excellent time to pray for this great but broken nation. We are all being held hostage by only a handful of bastards.

LongGoldLongSilver
Aug 6, 2011 - 12:43pm
¤
Aug 6, 2011 - 12:47pm
stoneeh
Aug 6, 2011 - 12:47pm

DPH

Only know how to be gruesome anymore in this society. Hope it ends soon.

Edit: but I should say that I do not believe this is anywhere near the end. We might have a rather unexpected downgrade but I think just as the debt deal, in a few weeks this means nothing and we're back to where we were. They need to remove us of a lot more freedoms and wealth, and they need to keep us docile until they have completed that. Maybe we enter another downdraft, which could be pretty bad, but be very assured that this right now is not the last one.

- Markus

ewc58
Aug 6, 2011 - 12:53pm
ewc58
Aug 6, 2011 - 12:57pm
¤
Aug 6, 2011 - 1:02pm

@shill

You are so right. Our educational system and the drop out rate have been high for many, many years.

I look around me sometimes in stores or where ever and the people working at some places or just some situations you come across in the general public are kind of alarming. I'm seeing a lot of crude attitudes and the appearance of not being the sharpest tool in the shed type thing. I hate to be judgmental I guess, but I think some of you know what I'm getting at.

Walmart on a Black Friday and the mob mentality in even the best of times and you get a small micrcosm of what other element we might need to be prepared for. I hope not, but here are a lot of people who can't even conceive of providing for themselves except for it to be made available and supplied to them in a conveinient manner....or else.

Black Friday Walmart
Black friday stampede
¤
Aug 6, 2011 - 1:04pm

Uh Oh...go to ZH for the latest

It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden

Submitted by Tyler Durden on 08/06/2011 - 12:20 Bank of Japan Central Banks China European Central Bank Germany Italy Japan Monetization Quantitative Easing Reuters

Remember when we said (yesterday) that Germany will soon balk over the fact that it is pledging its entire economy to bail out an insolvent Europe? Well, that moment has come.

  • German Govt: Italy Too Big For EFSF To Save - Spiegel
  • German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
  • German Govt: Italy Must Make Savings, Reforms To Exit Crisis - Spiegel
  • Italy Debt Guarantee Could Raise Doubts Over Germany's Finances - Spiegel
  • German Govt: EFSF Should Only Help Small, Mid-Size Countries - Spiegel
survivalwstyle
Aug 6, 2011 - 1:06pm

oFF to the coin shop

again today ;o) ~~ wiLL come back to read the blog later, for now i goTTa get rid of aLL this paper. AA+ hahaha ~~ our SILVER is about to be worth 2x as much...i am going to get my 90% in here @ 28X face dimes and quarters, it is a race....get as much as you can, before lunch!

¤
Aug 6, 2011 - 1:08pm
Shill
Aug 6, 2011 - 1:16pm

China tells U.S. "good old days" of borrowing are over

China tells U.S. "good old days" of borrowing are over

https://finance.yahoo.com/news/China-flays-US-over-credit-rb-3974888722.html?x=0

Former Chair of Council of Economic Advisors says ... We're "pretty darn f**ked".

Video at the link: https://newsbusters.org/blogs/noel-s

More Doom as we count down toward Sunday evening.

question
Aug 6, 2011 - 1:33pm

Totally OT

Dropping bombs of another sort today!

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