Because I Said So

Mon, Aug 8, 2011 - 3:34pm

Just when world markets were seeking assurance, our esteemed and supremely qualified leader uttered this:

"Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we have always been and always will be a triple-A country," Obama said.

Nothing quite like living in FantasyLand. I hear it's particularly beautiful at this time of year.

How are you feeling about your gold and silver today? Let's see...Dow is down 506. The S&P is down 66. Crude's at $80. Copper and the grains have been pummeled. I know that silver is pissing you off but, considering the absolute demolition of everything that isn't gold, you should actually feel pretty good about it.

Speaking of silver, here's a 2-hour chart. When the selling of everything finally relents, silver will rally sharply. It will carry through 40.40 and it will move rapidly toward the highs of last week near $42.

However, gold is your clear, hands-down winner on the day. I have a last of $1714, up an amazing $62. There's more to come, too. First up, here's your 2-hour chart. It shows another "stair" higher.

More significantly, I've tried to recreate Trader Dan's weekly chart. Notice the clear breakout of the three-year channel. If it can hold in this area and extend gains...and it's hard to see why it wouldn't...a breakout of this magnitude is extraordinarily bullish. I can see why JPM came out with their "$2500 gold by year end" prediction today.

Three years is an awful long time so we must be careful. Gold could easily fall back into the channel and give us a "false breakout". However, the fundos are so strong at present that it may very well stay up and begin a rapidly accelerating extension higher. Watch this very closely as we may be about to be given a once-in-a-decade opportunity to make big fiat, real fast.

Lastly, I did switch a few things around today in order to take maximum advantage of what I see coming. In silver, I eliminated my Sep spreads and am now simply long the $42 calls. In gold, I dumped my October 1700 vs 1800 spreads and went long just the straight 1800 calls. I'm still long my December 1700 vs 1800 spreads, though.

Thanks to all who entered the new contest. If you haven't entered yet, you must pick the Comex closing price for this coming Friday in the September11 gold contract. Use the previous thread to post your guess. No entries submitted later than 5:00 EDT today will be accepted. Btw, if someone has a few extra minutes, would you please help The Turd by compiling all of the entries onto a spreadsheet? Thanks in advance to anyone who can help.

That's it for now. Keep the faith! TF

5:10 pm EDT UPDATE:

As the Globex closes, gold is back to $1722. I can't imagine that it won't make new highs overnight, particularly when Asia is in full swing at around midnight to 2:00 am EDT. For your comic relief, I present below something I just received from a friend. It's the opening paragraph of a "SPECIAL BULLETIN", just released by MSSB. What absolute fools these people are. They can't even spell "committee" correctly! If you are currently working with a traditionally-trained "financial advisor"....well, you know what they say about a fool and his money.

Latest Report from the Global Investment Policy Comittee: Downgrade .

GIC Special Bulletin: Impact of US Credit Downgrade on Markets

Applegate, Jeffrey – Morgan Stanley Smith Barney

August 8, 2011 6:37 PM GMT

The downgrade of US long-term debt by Standard and Poor’s, which is notable politically and historically, is having a prompt and negative short term effect on global financial markets. However, the next stop is not a recession—nor is it a drop in corporate profits. This a split decision on ratings, as the other two major ratings agencies, Moody’s and Fitch, have maintained their respective top-drawer ratings for US debt. As this latest sell-off abates, expect the markets to refocus on the fundamentals: an intact global business-cycle expansion that in our view, should deliver double-digit profit-growth into 2012. Our base case remains that a US economic rebound will occur in the second half of this year and that European policymakers will eventually be forced to take more decisive action to stabilize their debt markets and the euro.

11:25 pm EDT UPDATE:

These late nights are wiping me out. Holy cow, gold is up another $42 as I type at $1755! The S&P is down 28. Crude is down another $4. The grains and copper are getting smoked. At least silver is hanging in there at 39.12.

Two things. Watch gold overnight. Santa's number of the final frontier is 1764. For whatever reason, his numbers usually pan out and he's maintained for weeks that 1764 would be defended by The Cartel. In silver, watch this triangle play out. Silver could collapse through 38.50 and head toward 37 but I doubt it. I expect silver to instead charge through the down-sloping line overnight and begin heading higher. We'll see. Anything can happen. Have a great overnight. See you in the a.m. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 8, 2011 - 7:05pm

If the stock market was a carnival...

...and the EE were the carnival huckster's, it might go something like this......

The markets are a circus. We know who the clowns are.

Emerson, Lake & Palmer - Karn Evil 9
Aug 8, 2011 - 7:07pm

Fox Biz - Lou Dobbs just now...

Sandra Smith was reporting from Wall St. to Lou Dobbs just now...she said she spoke to a trader as he was walking out tonight and asked him what to expect for tomorrow. He said expect a lot more selling. She said she asked him "what about the Fed?"...he said expect QE3 that's all they can do.

Aug 8, 2011 - 7:08pm

Gold hit $1725

I'm pretty sure it hit $1725 briefly a couple minutes ago.

I see $1722.60 right now.

I Wazere
Aug 8, 2011 - 7:09pm

Gold - I'm not buying

I've listened to a bunch of interviews with gold bulls over the past weekend, and the common theme is "We believe you should own gold, but we hate to recommend buying any at this level". Only Marc Faber is consistent with his reco to buy a little every month regardless of price.

Beware a "substantial sell-off".

There is a strong possibility of a strong short term blast to the upside now, fuelled by short covering. I am projecting that the rally could take price to around $1700-1800. From there, I think a substantial sell-off occurs, and I mean something much more painful than you experienced yesterday. Most investors have been caught flat footed on this rally. The metals rally is a solid month ahead of “seasonal schedule”. Morris Hubbartt, August 5

Dr GLaineyisat
Aug 8, 2011 - 7:21pm

From that MSNBC survey,

From that MSNBC survey, notice that the LEAST amount of people are moving all their cash into gold. Maybe some are moving some into gold and didn't want to pick that answer. I suspect it's pretty true though. Gold is just a tradition.

Aug 8, 2011 - 7:21pm

Their gonna print soooooo much its deliberate

Need i say more, check out jim rickards latest on cnbc !

Dr GI Wazere
Aug 8, 2011 - 7:24pm

@I Wazere, good don't buy. It

@I Wazere, good don't buy. It leaves more for me. When making such comments you have to preface it with letting us know whether or not you are buying paper and trading or physical and investing. If physical and investing, I think anybody not buying when they can is quite the fool. As I've said before, regardless of the price, what else are you going to put your money into?

Aug 8, 2011 - 7:29pm

The refrain of the chart

The refrain of the chart readers is that gold is overbought, therefore wait and buy at a cheaper price. But what if this isn't about chart reading anymore? What if what is taking place is a flat out flee to safety leading to a panic run to get into 'real money' while it's still available?

Those who want a position in gold like major insurance companies, major hedge funds, and pension funds will just take a position without reading the charts.

According to Trader Dan's chart, there won't be major corrections in gold, just dips.

Jesse has a weekly chart of silver. Looks like a H&S with the shoulder ready to form around 38 or so. If you're nimble you can catch that, but then it seems silver is going to jump on Brother Gold's coattail.

It's scary right now. Stay safe and learn to pray... to find peace.

Nick Elway
Aug 8, 2011 - 7:30pm

50/50 CEF and PHYS is my personal idea of money

@icarus and @rhome123

I've struggled with what should be my own personal definition of money(usable in an IRA account). We know Federal Reserve Notes are going down in value. I've made "my money" a 50/50 allotment of "uninvested" funds into CEF and PHYS. When in doubt, that's where I'll "ride out the market"

In my mind, any FRN (or SKF or TBF or GDXJ) amount is a bet that that vehicle will outperform my CEF+PHYS default. Much of this investing psychology depends on your unit of measure. I found comfort in consciously choosing something other than Federal Reserve Notes.

Aug 8, 2011 - 7:30pm

@Nick Elway I hope you have

@Nick Elway I hope you have that in a Roth IRA!

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