The Madness Continues

Tue, Aug 9, 2011 - 10:28am

After a wild night that saw crude drop all the way to $76, the S&P has now rallied about 50 points and brought everything along with it except, of course, the PMs.

Before we get started, a caveat. If you come to this site expecting me to tell you exactly what is going to happen in the short-term metals trade, I suggest you leave now. NO ONE can do that in these unprecedented times. I'm trying my best but, with no history upon which to base opinion, the job is nearly impossible. Knowing that, I built this site so that a visitor can easily glean knowledge from the experience documented within. Check the forums. Visit the chatroom. You will find all kinds of diverse and wise opinions there. You can measure the potential "worthiness" of the opinion by the cumulative number of "hat tips" the poster has received over the past two months. As I stated Sunday, no one can predict 24-48 hour moves in the PMs at this point. What I do know, however, is that the metals will be higher a month from now, three months from now and six months from now. Trade if you must but your best strategy is still, and will always be, to buy physical and take delivery.

Onto the trade. After reaching 1782.50 overnight, gold has come off by about $50. Holy cow! That's enough to keep your stools loose! Santa has told you to expect unprecedented volatility and you are seeing some of that. For today, do not be surprised if gold goes even lower. I could see it reaching all the way down to 1720 or so but, obviously, none of the fundamentals have changed, so it could rally back just as fast. There is, however, one thing you need to keep in mind. All of this volatility almost begs the criminal CME to raise margins. Do not be surprised if it happens. As we all know from recent experience, the CME doesn't necessarily stop with one margin hike, either. IF it happens, we'll have to re-assess. Do you recall the first time the criminal C/C/C raised margins on silver back in November of last year? Silver dropped 15% in a week but the price still went on to double over the next six months and is still 30% higher even today. My point is, one margin hike is not the end of the world. Five? Well, that's another story.

With that as a segue...doesn't silver just piss you off? Not the metal so much but the The Forces of Darkness that control it. Helped along by the dopey hedgies and their WOPR machines, The Evil Empire just stands back and laughs while all of us pull our collective hair out. Market bad = silver down. Market good = silver down. You can't win. Well, we'll see about that. To me (again read the caveat that began this note), silver is poised to explode. The drop in total open interest is fantastically bullish. As of Friday night, OI was back to late May levels. This tells you two things:

1) The shakeout from $42 to here blew out all of the new longs that came into the market in July.

2) Those who are going to sell have now sold. The remaining longs will likely be resolute. Declines from here will have the effect of pressing on a spring.

I expect silver to hold the lows of last week near 37.50. If it doesn't, there should be strong support near 37. I'm a buyer. The Wicked Witch may be able to suppress price for another day, another week or another month. I don't know how long she can last and I don't really care. The fundos are overwhelmingly positive and will, eventually, win the day. Of that, you can be certain.

That's all for now. Today should be particularly exciting so hang in there and try not to let your emotions get the better of you. TF


Gold found a bottom this morning right about where I'd hoped it would. You can see it on the chart below. Gold bounced twice at 1722.50. Very nice. From here, watch this current range very closely. A move up through 1750 would signal a move back toward the overnight highs. A move down through 1735 will signal a retest of 1720. Silver continues to struggle from a lack of buyers. It just sucks. A move back up through 38.60 may lead to some short-covering, however, and that may be enough to generate come excitement and drive it back toward 39.50.

More later, after we hear from The Bernank and his minions. TF

p.s. I should add that I no longer have any spreads on. I am open-ended and long Sept $42 silver calls, Oct $1800 gold calls and Dec $1800 gold calls. I expect that either outcome from The Bernank is gold bullish. Fed announces some QE: gold goes up. Fed announces nothing unusual: market goes down, gold goes up.

About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 9, 2011 - 10:48am

Boy did I miss this site!

Turd, thanks for the great post. Great to be back here and I love the new site but I don't think I can get caught up with the thousands of posts I seem to have missed!

I sold my positions and took some time off- cottage is great in the summer! (hence my dissapearance). I have no positions in AG at the moment and I didn't plan on being back here so soon either to be frank but the events of the last few days have aroused me from my slumber. It doesn't take a rocket scientist to figgure out there is alot of sidelined cash at the moment - countless investors who "sold in May and went away".

Silver isn't rocketing to the moon because of 08 in my opinion. It is inherently more volatile than gold and neither performed well heading into the recession in 08 although both recovered quickly. I would imagine the same thing applies here which is why cash isn't fleeing into Silver and is heading into gold instead.

Once investors feel selling has abated I think we will likely see the sidelined money come in to scoop up some cheap silver. I also would expect those who flew for the safety of gold to reposition somewhat into silver for the next run. I think both factors especially when combined with QE3 will make for some tremendously healthy gains over the next 6 months but all that sidelined money is simply waiting gor a good entry point and there may still be some selling to come. By the way, nice to see all the old names still around here. Congrats on the new site Turd!

Aug 9, 2011 - 10:50am
Aug 9, 2011 - 10:52am


The Silver market is small and relatively easy to manipulate. So the Empire compresses price here for the time being which is also a method of attempting to compress Gold price. Patience is all. The volatility from here on will be huge and buying dips on a regular basis will be the harrowing but profitable trade with patience each time imo.

Regarding the GDX and GDXJ. They have to be taken off their meds. One more thrust up by Gold should do the trick, that or a healthy,wild bounce in the Equity markets which I am looking for today. Who knows?

Aug 9, 2011 - 10:54am

TURD !!!!!!!!!

Great JOB KEEP IT UP !!!!!!!

Aug 9, 2011 - 10:55am

Finviz chart 8-9-11

So, here we are on 8-9-11

Makes you wonder what 8-11-11 will bring.

They do like to play with numbers and dates, don't they.

Aug 9, 2011 - 10:58am

re: cancelled speech

I imagined it more like this:

Advisor blocking doorway, grasping doorjambs pleading with Zero, "No! No more speeches. Do you know how much your effin' speech cost me yesterday??!! STFU you idiot!"

Aug 9, 2011 - 10:58am


So @ 11k the buying goes sideways no real movement, lol what a joke.

matthenue Tesla
Aug 9, 2011 - 10:58am

There's a chat room?!

Didn't realise! jack pot!

Aug 9, 2011 - 11:00am
WineGuy Strongsidejedi
Aug 9, 2011 - 11:04am



My son and I watched "Battle of Los Angeles" last night. If you like aliens and war stuff it was a decent flick. Of note, in the movie the aliens invaded the earth on 8/11/11. As a side note, the movie was released on 3/11/11. Cheers

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

Key Economic Events Week of 8/5

8/5 9:45 ET Markit services PMI
8/5 10:00 ET ISM services PMI
8/6 10:00 ET Job Openings
8/8 10:00 ET Wholesale Inventories
8/9 8:30 ET Producer Price Index

Key Economic Events Week of 7/29

7/30 8:30 ET Personal Inc/Spending & Core Inflation
7/30 10:00 ET Consumer Confidence
7/31 8:15 ET ADP employment
7/31 2:00 pm ET FOMC Fedlines
7/31 2:30 pm ET CGP presser
8/1 9:45 ET Markit Manu PMI
8/1 10:00 ET ISM Manu PMI
8/2 8:30 ET BLSBS
8/2 10:00 ET Factory Orders

Key Economic Events Week of 7/22

7/23 10:00 ET Existing home sales
7/23 10:00 ET Richmond Fed Manu Idx
7/24 9:45 ET flash Markit PMIs
7/25 8:00 ET Count Draghi/ECB policy meeting
7/25 8:30 ET Durable Goods
7/25 8:30 ET Wholesale Inventories
7/26 8:30 ET Q2 GDP first guess

Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
7/16 8:30 ET Retail Sales and Import Price Index
7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
7/18 8:30 ET Philly Fed
7/19 10:00 ET Consumer Sentiment

Recent Comments

by Bard the Bowman, 6 hours 6 min ago
by stingbee, Sep 22, 2019 - 10:46pm
by AgstAger, Sep 22, 2019 - 10:25pm

Forum Discussion

by NW VIEW, Sep 22, 2019 - 9:01pm
by SteveW, Sep 22, 2019 - 11:58am
by sierra skier, Sep 22, 2019 - 10:55am
by atarangi, Sep 22, 2019 - 4:09am
by atarangi, Sep 22, 2019 - 3:03am
by atarangi, Sep 22, 2019 - 2:33am