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 ()


Aug 8, 2011 - 3:21pm

My Guess

By using advanced space math and wishy thinky I came up with $1746

Aug 8, 2011 - 3:24pm

I might have been too

I might have been too conservative with my $1852 guess, as ZH is now calling for QE3 to commence TOMORROW.

If that happens, $2000+ by the end of the week wouldn't surprise me. Nor would out and out hyperinflation.

Tecumseh tyberious
Aug 8, 2011 - 3:24pm

You have my wrong, tyberious

You have me wrong Tyberious. I am not talking about any grand conspiracy. I am talking about Obama's very upbringing, his academic background, his community organizer commitment, his education at the knees of Saul Alinsky and "the Reverend" Jeremiah Wright. Obama was raised, his entire life, to loathe America, or at least the America of the 1950s or thereabouts. Everything about him, from his psyche to his education to his family life, is about hating "the Man." His goal is to bring down "the Man" by any means necessary. It just so happens that his policies, assisted by a radically Left Congress from 2008-2010, have put us on the brink. In short, he has been very successful.

Aug 8, 2011 - 3:25pm

Jimmy Sinclair

Says I should go with $1764 for the contest.

Aug 8, 2011 - 3:27pm

uhhhh, down 460+

so it looks like some Sioux braves just scalped brave Timmy Custer on the way in.

Aug 8, 2011 - 3:27pm



Aug 8, 2011 - 3:31pm


My guess:

$ 1666.66

The devil made me do it...


Aug 8, 2011 - 3:32pm

RE: WTF is Morgan talking about?

Although I'm not a big on David Morgan I think that it is pretty obvious that is a misprint. I've seen him mention $35 recently.

Aug 8, 2011 - 3:32pm


The words from Ben will be equivocal, but the market and metals will take it as a sign.


Aug 8, 2011 - 3:33pm

Re action

Well I am out of popcorn! Need to wash it down. Time for something stronger, hmmm how bout some Blantons bourbon? It's 5 oclock somewhere

Aug 8, 2011 - 3:35pm

Vix index up to 42.08 not

Vix index up to 42.08 not good. Also if I Can make one comment to all the Americans on this site. Its time the country starts living within there means that Means CUTTING SPENDING AND PAYING THERE DEBT DOWN !!! You don't have to have Military all over the world !!! You have to bring jobs back to the united states ie if china wants to sell to the states you have to employ Americans thats what they do you have to employ Chinese to sell there. Last but not least I truly hope your government wakes up !


Good luck !!!

Aug 8, 2011 - 3:37pm

Guess: $1784 - Caveat

One caveat is if they decide to raise margins, which is likely. Then I expect to see a sub $1600 print, depending on the hike.

Watch and see.

Ned Braden LJ
Aug 8, 2011 - 3:40pm

Jeff Christian on CNBS now

Predicting a top in gold, whatever that means. Remember the CFTC hearings?

pheeseas rckt
Aug 8, 2011 - 3:41pm

rckt, that is not a

rckt, that is not a misprint. Read the article. https://www.theaureport.com/pub/na/10488

Aug 8, 2011 - 3:41pm

Gold Contest

Gold at $1,728.94

I_ate_the_crow Ned Braden
Aug 8, 2011 - 3:43pm

Jeff Christian....

....just had 50K deposited into his bank account. What a SHILL. "People aren't buying physical gold right now". Amazing.

Aug 8, 2011 - 3:45pm

Friday Gold


(and I won't trade it in for what's behind Door #3.)

Aug 8, 2011 - 3:45pm

$ 1692,50

$ 1692,50

Aug 8, 2011 - 3:48pm


Gold $1702.45

Miners to the moon next week!

Aug 8, 2011 - 3:50pm

Oh please do keep talking Christian

I mean if it weren't for you Mr. 100 to 1 or More, we wouldn't be where we are today.

Aug 8, 2011 - 3:50pm



Aug 8, 2011 - 3:52pm

Jeff Christian....

One of the biggest liars on the planet. Pay no attention to him.

Aug 8, 2011 - 3:52pm



Tom L
Aug 8, 2011 - 3:53pm

Rush Nails this Moment 27 years ago

Appropos for the times we are living through:

We can go from boom to bust
From dreams to a bowl of dust
We can fall from rockets' red glare
Down to "Brother can you spare..."
Another war
Another wasteland
And another lost generation

Video unavailable


Aug 8, 2011 - 3:55pm

Blorf bro, you're killin' me

I took 1744 this morning...

Aug 8, 2011 - 4:01pm
Aug 8, 2011 - 4:01pm



Aug 8, 2011 - 4:01pm


Hey, I took 1718 and Cali took 1717 later. I thought the same thing

printmemoney MisesFan
Aug 8, 2011 - 4:02pm

our guesses sure are close

That's crazy....look at the timing.

Aug 8, 2011 - 4:05pm



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