Levels To Watch Today

Mon, Aug 8, 2011 - 10:19am

After a very interesting and exciting overnight, the metals are pulling back a bit this morning. This will present some opportunity if we interpret things correctly and are prepared.

As mentioned last evening, The POSX and the long bond are both up today on the bad news of the U.S. downgrade. That makes a lot of sense, doesn't it? However, as of this morning, the U.S. dollar is still the world's reserve currency and, consequently, it still receives the "flight to safety" bid. It's all short term nonsense and we're not too concerned with the short term around here. Today's short term trade in gold and silver are also of little consequence. Well, I shouldn't say that. They are of major consequence if you're looking to buy and add to positions today. In the long term, though, where gold is trading this instant has zero impact on where it will be one month from now or six months from now.

Let's start with silver. DO NOT FORGET THIS: Margins in silver are now quite high relative to gold and open interest is still down 20% from late April. This implies two things:

1) Buying tends to dry up after thrusts higher. We've seen this over and over again for the past three weeks. This lack of follow-through allows the monkeys to come in and easily beat it back.

2) The current silver longs are what we consider "strong hands" that aren't easily frightened and most have a cost basis back in the mid-30s.

Taken together, you get a silver market that is consistently moving two steps forward and one step back. Actually, it's more like three steps forward and 2 steps back! Expect this to continue into the near future. For today, silver is over $1 off its highs and has pulled all the way back to 39.10 as I type. The chart I'm posting below is already obsolete but I'll post it anyway.

Gold is where I'm most interested these days and, boy oh boy, are these charts interesting. First up, let's revisit the weekly chart that Trader Dan gave us a few days ago. Note that gold is now clearly above the top trendline, which looks to be somewhere between 1680 and 1685.

1685. Keep that number in mind. OK, now look at a 15-minute chart. 1695 looks to be your initial support but there's 1685, waiting to contain the downside for us.

Now look at an hourly chart. Remember how gold first touched that top channel line on the weekly chart back on Thursday? Do you also remember the old adage about "what was resistance is now support"? Well, you can see it quite clearly here:

And for good measure, here's an 8-hour chart which takes us back to the beginning of this move last month. Let's watch the upper boundary line very closely as it already has served to contain last night's rally.

I see that things have perked up nicely since I last checked 15 minutes ago. Gold is back to 1703 and silver is back to 39.47. I haven't made any trades yet today and I don't plan to. I am, however, watching that Sep silver spread of mine very closely.

Have a fun day. More later. TF

P.S. Time for another contest. Please post your guess for the Comex closing price of the September gold contract for this coming Friday, the 12th. The winner gets a hat!!

About the Author

turd [at] tfmetalsreport [dot] com ()


GoldistheFuture beinki
Aug 8, 2011 - 1:54pm

August 12th Guess

I am guessing 1666. 666 for the mark of the beast. Because greed and corruption got us in this mess!!

Aug 8, 2011 - 1:55pm

"Slowed the pace of recovery"

"Slowed the pace of recovery" ~ Obama


Aug 8, 2011 - 1:55pm

OBUMER talking ! Watch PMs

OBUMER talking ! Watch PMs taking a hit.

Aug 8, 2011 - 1:55pm

Hmmm... is he seeing the same

Hmmm... is he seeing the same "market confidence" info that I am today?

Hard Rain
Aug 8, 2011 - 1:56pm

Pre Planned Raid

As soon as Obama starts speaking, the Fed's Primary Dealers, with liquidity provided by the Feds will launch a raid. Be alert for the opportunity.


Aug 8, 2011 - 1:57pm


Sep Gold: $1696.66 Silver: $38.53

Aug 8, 2011 - 1:57pm

Uh oh. He said "challenge"

Uh oh. He said "challenge"

Eric Original
Aug 8, 2011 - 1:59pm


That's a tough call on that beauty Camaro.

On the one hand, I think a top shelf asset like that will always command lots of fiat, no matter what form that fiat may take.

On the other hand, I'm more of a Mustang guy myself, so I'd swap that baby for a nice old 'Stang and then let it ride! hahahahahahahaha!

I know thems fightin' words. Just funnin ya!

ps. back in the day, mine looked a lot like this. Oh what I would give to have her back. My Precious, Oh My Precious!!!!

Violent Rhetoric
Aug 8, 2011 - 2:00pm

My way or the highway

Obama's speech in a nutshell.

My way or the highway.

Aug 8, 2011 - 2:00pm

"Markets will rise and fall,

"Markets will rise and fall, but this is the UNITED STATES OF AMERICA!" ~ Obama


22tlane Shill
Aug 8, 2011 - 2:01pm


Having to come out and defend your credit worthiness is never a good thing!

Tom L Violent Rhetoric
Aug 8, 2011 - 2:01pm

No shock there

This guy does not understand that the suit and the office doesn't make him a God.

President Narcissist O-Bomb-Ya you are done. And this ain't Chicago f&ck-nugget!


Aug 8, 2011 - 2:01pm

Contest guess

Gold @ 1585. Best of luck this week, friends. It's getting weird out there...

Economical Disaster
Aug 8, 2011 - 2:02pm

Dow Under 10,995

If he talked until tonight it would be an even ZERO..

Aug 8, 2011 - 2:03pm

And there he goes - just

And there he goes - just walked off the stage. Gold hit a new 5,000 year high during his speech!

Aug 8, 2011 - 2:03pm

dow 10,997.62 -446.99 -3.91%


10,997.62 -446.99 -3.91%
Aug 8, 2011 - 2:04pm

Obama's Speech...

"Blah Blah Blah... our credit's still good, just ask Warren Buffet... Blah Blah blah... Thank you".

So, basically, he just wanted to come out and hear himself talk again.

Aug 8, 2011 - 2:05pm

Dammit, I wanted him to throw

Dammit, I wanted him to throw down the mic, Chris Rock style.

Aug 8, 2011 - 2:05pm

Flying Flag on Silver spot?

Does anyone else see a flying pennant on Ag's 5 minute chart for today?

It's about as much a banner as I've ever seen.

OI must be escalating greatly on the silver trade.

Aug 8, 2011 - 2:06pm

Au and Pt neck and neck !

Pd bringin' up da rear ! Ag gettin' ready throw off Jockey Obama and dash for the finish ! Monedas 2011 Pimlico Downs Race Results

Aug 8, 2011 - 2:07pm

I've learned better than to predict exact timings

I just stick to the odds and have learned to wait patiently for the odds to happen. I'm more focused on looking out for signs the bull market is maturing and morphing into a bubble. If I want to gamble, I'll go to Vegas and yank on the slots.

I think what's more important than the price of the PMs right now, is the fact that hyperinflation is here, now. It isn't coming, it isn't soon, it's NOW. I'll leave it to you to figure out the implications. Read history sometime.

Nothing happened. Nothing happens. That is the secret.

Aug 8, 2011 - 2:08pm


It's ugly today but looking like a bargain if you think it's going up in the future(s).

I'm going to double down on some almost free options I've been getting hammered on up to this point out into Jan. 12' (USO @$.05).

What's another $300 to bring my average share price way down to take advantage of this sell off and to double my number of options contracts I'm still holding? We all know oil is going to snap back in a mean way and it's almost back burner stiff on the MSM today. This is a opportunity for me to recoup some $$$ swith those dirt cheap contracts with this type of volatility.

I give it a week before oil is back at $90 based on some type of market theory or inventory shortage etc...

Frontal Labottleme
Aug 8, 2011 - 2:10pm

lo reefman...

nice! "gold hit a 5000 year high" hehe. too true.

Aug 8, 2011 - 2:10pm



Aug 8, 2011 - 2:10pm

DOW is tanking going to

DOW is tanking going to 10800....Scary !

PMs didn't tank on Obumer BS talk! Gold still going up !

Aug 8, 2011 - 2:11pm

Silver 40.10


Frontal Labottleme
Aug 8, 2011 - 2:12pm

Max quote

Max Headroom: How can you tell a network executive is lying? His lips move!

Aug 8, 2011 - 2:13pm

2:06p U.S. will always be


U.S. will always be triple-A country, Obama says

( And with the wave of his hand )

Aug 8, 2011 - 2:15pm

Thank you fellow Turdites who posted Indian PM market links Sat

I just want to thank the Turdites (there were several) who posted the Indian PM market links on Saturday. As soon as the S&P news broke Fri after close I put down my beer (momentarily) and wrote a note to myself that read "buy more gold Sat." I was in the camp that believed there were only two certainties in store for this morning: that the sun and gold will rise (I had no clue what silver would do). But I was unaware Indian PMs trade on Saturdays, and having the added benefit of seeing gold's strong performance there made it a no-brainer for me.

I normally trade physical using my dealer's on-line bullion exchange (which is off-line on weekends, for good reason), so when I walked into the store to purchase (versus pick up orders made on-line) I got a sly smile from my guy at the bullion desk. They price weekend gold based on Fri's close with a slight added weekend premium (very little), and I wasn't the only person in there buying. They were cleaned out Saturday (so I simply bought and locked in price for later delivery) and the bullion desk was clearly concerned about hedging headaches come Monday morning.

Anyway, thanks again to those posters for the Indian insight and free look at Indian gold action on Saturday. I realize short term action is meaningless for us longs, but Saturday presented a rather atypical opportunity.

Frontal Labottleme
Aug 8, 2011 - 2:15pm

lol.. here's another one

Max Headroom: Now, I'm no librarian, in fact, I don't know what star sign I am. But, as a famous person once said, "You can fool some of the people some of the time, but you can't fool all of the people all of the time." And as I - another more famous person - once said, "If you don't teach them to read, you can fool them whenever you like."


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