Re: Tonight. I Have No Idea.

492
122
Sun, Aug 7, 2011 - 1:26pm

It's Sunday in the U.S., a little after 1:00 EDT. The Globex opens in about five hours. There seem to be quite a few people who are interested in my opinion regarding how the metals will trade tonight and tomorrow. Frankly, I have no idea.

First of all, I've been on the record saying that I didn't think a ratings downgrade was coming. Oops. Shows you what I know. I am still stunned that it happened. Of course it needed to happen and AA+ is still too generous. A or A- would seem to be more fitting. However, since there is no principal risk in U.S. government debt (the Fed can print all the money they need to pay off bondholders), AA+ is OK, I guess. Now on the other hand, if S&P started taking inflation risk into consideration and began to factor in that you're really only getting 50c on the dollar back in principal purchasing power...well, lets just say that U.S. debt would be relegated to junk status. Regardless, U.S. debt is now rated AA+ and the effects of this will be far-reaching. We'll go into this in greater detail later this week when I have more time and can think more clearly. (For now, I'm a little hung over and I need a nap.)

As it pertains to the PMs...There is NO WAY that this news is not bullish. Extremely bullish. In the intermediate and long term. What you don't know about is tonight and tomorrow. As we saw last week, when everything else is being sold, the PM "baby" often gets thrown out with the bathwater. Gold should open UP at least $50. It should trade UP $100 tomorrow. Will it? Again, who knows? Gold may open higher and then get instantly battered lower in a global rush for liquidity.

Just watch. U.S. debt gets downgraded but the POSX and the long bond will both probably trade higher in a flight to safety. Oh well, it doesn't really matter. Like I said, gold may be down tomorrow. Who knows? But what I do know is this: Gold will be higher a month from now. It will be higher six months from now and it will be higher still a year from now. In that context, what happens tonight is of no consequence.

I'll try to have an update this evening, after things have been trading for a while. Until then sit back, relax and enjoy the fireworks. TF

11:55 pm EDT UPDATE:

Too tired to type but I wanted to give you this update with these levels to watch overnight and into Monday.

Turd nite nite now.

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  492 Comments

curly
Aug 7, 2011 - 2:55pm

The EE creeps will try to beat PM's down...

My prediction 1: The EE will attempt beat the metals down immediately after the Asian market opens, but they will be overcome by demand by the time the NY market opens.

My prediction 2: The AG price will be at $42 by Wednesday, $44 by Friday, and the $38 lows will NEVER be revisited again, EVER!

Anyone else care to take a stab at AG predictions?

treefrog
Aug 7, 2011 - 2:57pm

what is a "dollar?"

from the coinage act of 1792 (u.s.)

"DOLLARS OR UNITS--each to be of the value of

a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver."

...just so we remember what we're talking about, a dollar is 0.7734 troy oz of fine silver.

all that other stuff (fednotes etc) is just bankster paper and/or politicians' promises.

C F
Aug 7, 2011 - 2:57pm

World Reserve Currency

It will be interesting to see what comes out of all these emergency G7 and G20 conference calls this weekend, and if we'll have a new world reserve currency soon.

pbreed
Aug 7, 2011 - 2:58pm

Sorry to disappoint...

On Friday before the S+P announcement I called my local PM shop and bought some gold. I then drove by and dropped off a check. (I pay by check so it sits in their shop till the check clears)

So based on my personal investment karma gold will open down big time.

I've been purchasing some physical on a dollar cost averaging basis for about 9 months, I have not commented on this before as I use my real name and was uncomfortable with people knowing I had PM's. I finally accumulated enough that it was worth getting a safe deposit box at a local bank. I'm a little uncomfortable about having it in a bank, but I'm less uncomfortable about that than having it at home.

P.S. I use my real name, because anyone that really wants to find out who you are will anyway. Hiding behind an alias like many do on this site is really not secure IMHO.

stingbee30
Aug 7, 2011 - 2:59pm

In these environments, you need to throw away the technicals

Today, it is all about fundamentals and what is happening around you. You have global reckoning happening on both sides of the Atlantic. You have the continued Arab spring which adds more stress and anxiety to the the world investor. You have protest in Israel, and riots in the UK. This Arab spring is the start of new movement to fight inflation, unemployment, bad leadership, greed, and injustice. This is going to reach other shores, it is just a matter of time...

Smart money is telling you that smart investors are slowly losing interest in the global currency market. You might have a few countries like Canada, Singapore, Australia who have better balance sheet, but there is not much liquidity. For smart investors, Gold is becoming an alternative means to protect their falling assets and currency debasement. In the US, we don't have the visionary leadership who will go behind their close-minded ideology, and start focusing what is good for America, not the lobbyist and special interest groups. We are hijacked by oil companies, banks, wallstreet firms, the strongest lobbyist from Israel, two wars without a sound resolution, and war-mongering lobbyist who still wants to keep the defense spending. We have to cut ties from our inflated egos and superficial claims to military dominance. We have to start thinking about America first, and then military spending. We need to cut defense spending by 40-50% just to survive. We have 50 million Americans on Food stamp, and about 25% or so underemployed/unemployed/discouraged workers. We have to understand the reality. We are not a super power like we are believed to think. It is just on paper. We have expensive military toys, but not enough money to help states continue battle unemployment benefits and other social causes. We were brains washed to think that Socialism is evil, and Capitalism is good. Well, today we are seeing what happens when we allow Capitalism at the expense of Social Democracy. Capitalism is only working for the few and at the expense of the masses. (btw, I'm not a proponent of Communism because it never works, sounds good on paper, but once again you give too much power to the government). We have to focus on a path to social democracy. It shouldn't be all about interest rates and how much i can leverage my investments. The Futures market in Oil is clear indication of greed and leveraging, and it is not about real delivery.

Back to Gold and Silver Story: Today, stop looking at the charts (yes, it gives us numerical benchmarks to follow). Today, it is all about what is happening around the world. It is not just the US, but Europe, the Middle East, two wars. I think you get the picture. There is a lot of anxiety and stress in the world. The classic safe-havens of US Treasury and dollar is becoming a thing of the past. Silver and Gold always had real value based on our history. It is a real hard assets. So, on Monday, we could easily see Gold passing the $1700 mark, and killing all the shorts with the buy-stops. Silver is going to follow it's big brother lead because Silver was used as a currency a while back. It really doesn't matter whether the dollar goes up or not. The reality is that it is for traders to make a few bucks. But, Silver and Gold will de-link or de-couple from what Oil is doing or Dollar. The reality is that smart investors are not going to pile-up on more dollars because the currency is worthless because it is not backed by anything. The idea of "Full Faith and Credit worthy" of the US has been challenged, and it is going to get worse. The idea that America was the savior of the financial market or the place of last resort has come to a climatic phase. There is always hope that as humans we will eventually learn from our mistakes and wake-up. We are in dire need of visionary leadership who don't prescribe to ideologies that seem outdated. The two party system is not working. It was working back then because people still believed in compromise and crossed their ideological base for the common good.

The Euro/European Union sounded good on paper, just like communism. But in reality, it is a dysfunctional organization with so many different countries and ideologies. Germany the most stable country in Europe is supposed to save all the other countries. France (taking the lead) is another joke. In summary, the World problems are far much bigger than our daily charts and daily resistance or weekly levels. The Macro economic fundamentals are far more important. So, do me a favor, stop looking too much at the charts. You will be handsomely rewarded in the PM's area because of the global financial Tsunami, not because of charts. The World Story is much bigger than my charts or your respective charts. Good luck...

cpnscarletbeardeus
Aug 7, 2011 - 3:02pm

Gutsy $1700

Stand by it you will. And I would take a wager hoping you would win it.

stingbee30curly
Aug 7, 2011 - 3:09pm

You are facing a tidal wave

You are facing a tidal wave of Investors who were waiting to buy Gold at a lower price because of the Summer months. Well, i think you are going to see many investors who are going to chase Gold and Silver because of the current financial situation. The chasing will start on the ASIAN Markets. I wouldn't be surprised to see many investors who have stayed on the sidelines to start chasing GOLD, and this will trickle down to Silver. The G-7 or G-20 or G-50 can do whatever they want to, but it will not fix the structural problems of a leveraged global financial system.

My assessment: Silver will gap-up, just like Gold. Gold will close around $1700-$1750. Regardless, it will cross the $1700 mark, and it should close above it on Monday. Silver will gap-up and close around $41.00-$42.00 area. Expect further gap-up on Tuesday. We could see Silver around $50.00 by the end of this week, and Gold around $1800. The Buy-stops are going to kick in because many shorts are on the wrong side of the trade, and the S&P downgrade caught many of them by surprise.

D.B. Cooper
Aug 7, 2011 - 3:09pm

Back the truck up!

All the phyzz that I purchased Friday is going to be backing up this week. Thanks for the cheaper prices, Blythe! *kiss*

C Fcurly
Aug 7, 2011 - 3:11pm

I don't know how high Ag will

I don't know how high Ag will go, but I'm with Curly in that I don't think we'll ever see it go below 35 again.

ewc58
Aug 7, 2011 - 3:12pm

Just remember this about Gold during crises the past 10 years

One thing Bill Murphy and any GATA person can attest to is how PM prices go (read: are sent) down at the very times we know they should rise.

Among other things, what happens in the next 36 hours will also be a test of whether the EE still has any of that old Black Magic (BM: how odd) left in the cauldron, and whether it remains effective in stemming reflex rises in the PoG now that the Asian masses all get it now too. There could be a whole new playing field soon, maybe starting tonight.

Just don't underestimate what the EE has left. As long as the USD is the primary beneficiary of any "rush to safety" after Asia opens, I think the EE will hold back most of their own ammo until gold intrudes on the trend. Meaning, don't pop your head up to soon, you could lose it later. Or they may try to bury gold right out of the starting blocks, trying to prevent a momentum snowball by shutting 'er down early. Perception management. Or maybe gold just takes off like a Saturn V no matter what they throw at it, inspiring Tesla to be up all night creating and posting awesome PM Rocket Shots on Turd Town. Me? I'm sure hoping for the last scenario

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