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 ()


I Wazere
Aug 8, 2011 - 7:34pm

short memories I quess

The sentiment towards gold on this board today, is the same as it was about silver in April - it always goes up - a correction is out of the question.

okay ... good luck with that.

over and out

Aug 8, 2011 - 7:35pm

Correcto Mundo Doc (what the hell does mundo mean anyway?)

I think the muni's happen tomorrow or this week sometime. They might as well get it over with all at once.

I think your right about QE3 not being rolled out too soon. End of the month sounds about right. I also think your right about any QE3 being met with a another S&P warning about their AA+ getting downgraded because of it.

To carry it out a bit further if that happens.... I think Moodys and Fitch would definitely have to come out with a strong warning at the very least at that point if QE3 was implemented and S&P warned them again or even downgraded further.

Obama coming out today and all the other loser stuffed shirts in DC blaming the Tea Party and S&P for their failures and indifference over the debt is beyond laughable. It's pathetic and worrisome. We clearly have a leadership void who are not doing what is right for the country long term(not even short term). I honestly think they are incapable of any decisive, rational reasoning and see the world (their world) much, much differently then ours. QE3 will be a very short lived upside market reaction with more negative consequences that happen that much quicker and then the debt ceiling comes up again much quicker.

Just like you pointed out Doc.

Curious Rookie California Lawyer
Aug 8, 2011 - 7:36pm

Rumors of War

California Lawyer,

I'm new here as a member but have been following for sometime as a guest. I greatly respect your comments and thoughts on the current economic conditions. I'm very curious about your prediction #9:

Rumors of war grow louder;

==========> strangely, silent on this front. I cannot believe I missed this. I believe strongly that something is on the horizon on this issue.

What are you thoughts on "something is on the horizon on this issue." Where do you believe a war will start and what countries will be involved?

Thanks for any response!

Curious Rookie

Aug 8, 2011 - 7:37pm

New York Street corner

The market action in the last 3 years reminds me of a New York corner.

The guy stands behind his crate and shuffles the nuts around. There's a pea under one nut and you wager on which nut is holding the pea.

There are Lehman, GS, BAC, JPM, and Citi holding your nuts. Find your pea they say.

The participant says okay, I'll bet. He says $100 on the nut labelled GOOG and $100 on APPL. They also say $500 on my pension nut.

The guy shuffles the nuts.

He says, look the pea is under APPL. "you win my friend". Here's $200 as he takes the market participant's $700 on the other two nuts.

So, these people say "I'll stay in the market and ride it out". "It will come back up"

Yeah, that's right Pensioner. It will come back to Dow $10,500. You've made the trip down and around it twice. You'll see it again. Meanwhile, you lost 15% three times and you still say "I'll ride it out."

Do you enjoy this game?

I guess alot of people like it in NYC also.

Aug 8, 2011 - 7:38pm

Just wanted to say a couple

Just wanted to say a couple of things. I took time off from the Internets today and watched a little bit of Bloomberg (and Obama) to see what was going on. I usually only watch Bloomberg overnight to see what goes on in Europe/Asia

1. S&P Closes down 6.66% Hecla Mining closes at $6.66 (queue Twilight Zone theme, or AC/DC or Iron Maiden. You know the songs :p)

2. I think Matt Miller from Bloomberg is one of us. He said someone he talked to in the pit had no problem selling everything they had and putting it in gold at $1700 plus. Plus, you can kind of tell with his comments that he doesn't believe in certain things.

3. I was utterly shocked at Sean Egan's (from Egan-Jones Ratings Company) call for Hank Paulson to be brought back into the government to help "fix things". As if he didn't do enough already.......

4. It seems that gold/silver and miners are holding up relatively well compared to 2008. Isn't this a good sign?

5. I totally agree with Turd that Obama was talking up the USA.

6. So sick of a threat to the two party system being blamed for the inaction of the two party system. IE The Tea Party! (Ron Paul's Tea Party)

7. Poor Warren Buffet. Comes out says America is quadruple A in his mind. Proceeded to be downgraded by S&P. Good yuks.

Aug 8, 2011 - 7:40pm

Their gonna print soooooo much its deliberate

The ratings have already done the hit, its not just the us of a thats up it , europe is fucked, european central banks are gonna bail out italy and spain with exactly what from who ?

There gonna print or the lot collapses,

swiss banks reduce interest rate .........printing

Italy addresing austerity measures that dont stand a hope in hell of being acheived........more debt............printing

French banks fucked...........germany aint helping

The markets are gonna run when bernanke prints, gold and silver will drop back, not so much, and then bang, as turd has said the reality will sink in and sinclairs 1764 will be challenged

Aug 8, 2011 - 7:41pm

I don't think they can

I don't think they can announce QEIII tomorrow. It would be politically incorrect so soon after the debt ceiling was raised. Speaking of the debt ceiling getting raised, I don't think our debt cap will last until Halloween much less the Holidays thereafter.

Could this be the warning of the S&P for the second downgrade?

I may have missed this but I didn't see the S&P downgrade the munis today. Only some banks and insurance companies is that correct? Oh shit! And I forgot the downgrade to Fannie and Freddie! Doh! And Berkshire Hathaway! Double Doh!

Aug 8, 2011 - 7:41pm

Sinclair has written

extensively about the round numbers

he said with each 00 that falls an ever more intensive battle will be waged against the tide

like the mythical king whose name I cannot google

roared to force the repulsion of the inevitable

well, 1700 fell with less than a whimper, what of 1800? 1900?

I suggest the forces of the invisible hand are deaf to any belch of resistance until we breach 2000

Aug 8, 2011 - 7:46pm
Aug 8, 2011 - 7:46pm

Talk Radio's Howie Carr show

People calling in in near panic mode about their 401k's.

Like this is totally out of left field unexpected for them. Folks saying they need to discuss w/spouse, or pull their $ out and taking the hit sooner than later... so sounds like could be more momentum to follow from the Average Joes...

Funny how I can see a few of my co worker's ears turning my direction after hearing me rant...

Almost need a disclaimer like Turd's, " I am Not a Soo Sayer, or Witch...!" Some things I have stuffed down their necks, have unfolded so accurately I have Had to say, "Hand On the Bible, this had not happened YET, when i regurgitated what had been stated here!

Makes a target of one's self trying to explain these issues... But when you are right, The look of acknowledgement from others is very motivating! Kind Of like "seeing" some one give u a Hat Tip!

Oh and maybe I'm a sucker for punishment... but I will not yet give up on Ag!

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