Silver to $44

460
129
Tue, Aug 9, 2011 - 9:53pm

In the past 24 hours, we can now count four, separate attempts at the 1770 level by the December11 gold contract. We can also count four, immediate Cartel actions to hammer price back down. However, the lows are getting higher and the pressure is mounting. Will the Forces of Evil be able to contain gold through the night and into tomorrow or will they again be forced to retreat to higher ground? I suspect we will know very soon.

Take a look at these three December gold charts. I've tried to draw the same trendline on each. Note the savagery of the beatdowns as gold eclipses 1770. Santa warned us weeks ago that The Cartel also knows that 1764 is a very significant level and will thus defend it vigorously. They have and they are. Will they be successful? You'll know by following the trendline I've drawn and watching the triangle close. If I had to guess, our Asian friends also see this chart pattern and they will make a run at putting the EE into a submission hold later tonight. We'll see. It will be great theater.

Now, what I really wanted to talk about this evening is silver. I've scoured the internet for the most reliable and accurate analysis of today's events. I of course found it at Trader Dan's site. Please take a moment to read it and then come back. Go ahead, I'll wait.

https://traderdannorcini.blogspot.com/2011/08/s-500-update-us-dollar-sacrificed.html

Ahh, glad you're back. OK, where was I? Oh yea...silver. I've lifted the most important chart that Dan posted and re-printed it below. (Thanks, Dan!)

Notice that the CCI has averaged one big drop per month for the past five months. Each drop has lasted from 4-7 trading days and has been followed by a rather significant rally. The current drop just finished its fifth day and, with all of the hubbub from The Fed today, is almost assuredly going to bottom tomorrow if it didn't already bottom today. Anyway, my point is...we're about to see another 2-4 week rally in all of the commodities. Yes, copper, crude and the grains are going to rally. More importantly, I think we can feel very confident that silver is not going much lower, if at all. In fact, I bet we saw the lows today, in the beatdown on the Globex. So, from here, what can we expect? Given that silver rallied almost 25% in July, during the last CCI rally, I think a reasonable target for silver is $44 before Labor Day.

Adding to the ammunition are the utterly amazing OI numbers in silver. The latest numbers are basis Monday and show a total open interest of just over 114,000 contracts. We almost certainly lost a few more today. For perspective, the last time OI was this low was late June...right about the time the CCI bottomed!

So, there you go. I may look like a complete fool by this time tomorrow. Rigged and manipulated markets can do that to you. But, I'm sticking with it. $44 silver by Labor Day.

Have a great evening!! TF

10:05 am EDT UPDATE:

I do not have a new post this morning for two reasons:

1) I want to leave this current post as the "main story" for most of the day.

2) I'm busy watching an epic and breathtaking battle in the Dec11 gold contract.

As I type, our side is winning but just barely. Watch the 1780 level very, very closely. Above there, The Cartel will be forced to give up and retreat to safer ground. It looks almost certain that this is going to happen. As I watch the order flow, the bids are very strong and unrelenting. The chart looks like it's about to squeeze them, too.

I've got a last of 1777. Stay close and keep your fingers crossed! TF

11:50 EDT UPDATE:

The global stampede of investors rushing into the safety of a 6000-year old currency has completely overrun The Cartel's defensive positions between 1770 and 1780. I have a last of 1789 in the Dec11. If headlines don't change in the next six hours, expect explosive gains in the overnight Asian trade, too. Personally, I'm darn glad I took off my spreads yesterday and went "open-ended". Looks like lots of gains to come!

Speaking of which, isn't it great to see silver participating...FINALLY! The chart below was printed before the recent surge through $39. Keep the faith. Silver looks great!

More as conditions dictate. TF

1:05 EDT UPDATE:

30 minutes to go on this historic day. Gold is $20 off its highs but I'm not at all concerned. In fact, the chart below might be one of my all-time favorites. All of the smarty-pant shorts who had faith that their evil Cartel buddies could hold the line at 1780 just got smoked! HAHAHA! Rather predictably, the "market" has given back the $20 it added on the back of the short's pain and that's OK. Nothing has fundamentally changed and its looking more and more likely that we'll head into the overnight session with " a lotta mo", just like Mr T!

Clubber Lang - Best Scenes! (From Rocky III, Mr. T)

Full update soon. TF

About the Author

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  460 Comments

stingbee30 bbdgoco
Aug 10, 2011 - 1:16pm

Love that idea

Rick is the only guy who makes sense at CNBC...Dylan Ratigan is the man...Ron Paul a true politicians who is not stuck in the close-mined games of the current Republican party.

DeltaCharlie
Aug 10, 2011 - 1:17pm

Gartman Cuts Gold Positions by Half

Really dislike this Fartman... and on days like these, it makes me happy to know he made a bad call (and help those who ever listen to him). On CNBS, he said some taxi driver told him that gold is good... Fartman said this was a sign gold was in a bubble. I would say the Taxi driver is smarter than him on this occassion.

https://www.cnbc.com/id/44034332

Independent investor Dennis Gartman on Friday said a bearish technical reversal and market preference for cash over riskier assets prompted him to cut his gold positions by half.

Gartman, who has long been bullish on gold priced in non-U.S. currencies, also cited unprecedented bullish gold investor sentiment, growing public speculation, and the metal's decline across all currencies on Thursday.

Thursday's record could mark bullion's highest level "for quite some long while," as prices ended at its lows and below the previous session's intraday lows, he said.

"In the past, this has always marked any number of various market highs and certainly we do not think that gold is any different. We are cutting our positions then by half this morning," Gartman said in his daily investment letter on Friday.

Spot gold recoiled from a record $1,681.67 an ounce in heavy volume on Thursday, as mounting recession fears fed a global stock market maelstrom that forced investors to liquidate bullion profits to cover losses elsewhere.

"Given the circumstances prevailing in a world that shall put a premium high upon liquidity, we think it is wise to liquidate our gold holdings ahead of everyone else," Gartman said.

Bullion rose 0.5 percent to around $1,660 an ounce on Friday, as investors jittery about a gloomy economic outlook sought a safe haven despite a better-than-expected U.S. payrolls report.

Gartman has been buying gold in non-U.S. currencies since mid 2009, when gold was still trading below $1,000 an ounce. He said that a growing public perception that gold is a safe investment also prompted him to lighten his gold investment.

"Gold is a fine trade, but gold is hardly 'safe.' Safety to use means a price that is stable, and gold is anything other than stable these days," he said.

treefrog
Aug 10, 2011 - 1:20pm

tom l

"papa needs a new barn?"

ever thought about building one out of shipping containers?

i-10 east to i-295, take a left. a half mile north, look on your right. there's a zillion of 'em! betcha you could get them cheap! cheap enough to use them like kiddies' building blocks.

robreke
Aug 10, 2011 - 1:20pm

Beware a broken parabola.

I like gold shooting up like this....but we thought we were impervious as silver shot toward $ 50.

This gold bull is due a correction....maybe soon....maybe in a few weeks. But I'm wary of a broken parabola happening in gold and an intermediate correction......just like we got in silver. Or.....do you think it will just form a nice base here for a while with no real correction? Are we in a "new paradigm"? ( I hate using that phrase.....famous last words and all )

Thoughts?

maravich44 OliverTwist
Aug 10, 2011 - 1:20pm

@ Oliver Twist.

You are welcome. Please get your thoughts out.

Ned Braden DeltaCharlie
Aug 10, 2011 - 1:22pm

Have often wondered if Gartman

is being "told" to talk this book publicly ?

His track record as contrarian is tough to beat

Tesla
Aug 10, 2011 - 1:22pm

@SilverWealth - and All

AMEN Bro!

If that POS (Rick Perry) becomes the President ...

Yooper Rick
Aug 10, 2011 - 1:29pm

When the Republic turns to

When the Republic turns to Tyranny,

I still get to vote!

Grigeo ¤
Aug 10, 2011 - 1:31pm

Hecla

"When the shorts come flying off I think it will go straight past $15 towards $20 and quickly."

Agreed, and that would indeed make me a very happy person. They sure like to short this Miner.

Frontal Labottleme
Aug 10, 2011 - 1:33pm

The MSM blues

Awesome commentary Turd - thanks!

One thing that really gets me about the MSM is this whole QE discussion. It always revolves around how the economy needs more stimulus vs. how QE1 and 2 were a complete failure and we're sliding into another recession blah blah blah.

Meanwhile the reality is that we will either default (not), or resort to QE and inflate the living daylights out of our debt at the expense of the economy and at the expense of everybody that holds US dollars worldwide.

Awesome! We get to ride high on the hog a few more years and to large extent at the expense of the chinese etc. and once inflation kicks in, at the expense of every family that survives day to day on the bare minimum. Boy, are they gonna love that.

stingbee30 R man J
Aug 10, 2011 - 1:35pm

The Delusional game of Politics and our current financial system

I just watched the Dylan Ratigan piece, and it pretty much echoes my feelings and the feelings of Americans who are sick of political ideologies that don't makes sense and corrupt leadership. The President of United States (if he had any balls) would come out and tell the truth. Our system was hijacked years ago by lobbyist, and special interest groups. The only thing left for Obama is to come and tell the truth. He will atleast gain some of the respect back, and he might lose the election either way. However, if i was the president, i would come on national television and speak the truth. We keep saying that the President of the United States is "The most powerful Person in the World". Well, it is no longer the case. The American delusional case is that we keep spitting this inflated ego. Our balance sheet looks like a bleeding corporation. Our leaders have forgotten what is good for the common people, and good for the country. I would stop putting billions of our dollars to support Israel. I would stop spending in expensive military toys and weapons, and Wars that are not justified or meaningless. I will put regulations to make sure that OIL Futures are only for those who in the business of Oil. I will make sure that our priority should be to bring back those jobs lost to overseas markets, and tax the Shit those stinking corporations who hardly pay taxes and have taken jobs to overseas markets. Most people don't get it. LOOK at the EFFECTIVE Rate, not the Tax-bracket. We have to understand that the government has to take the power away from the FED, and bring the idea of sound money. We have to fix our stinking Tax codes. It is all about loopholes and those who know how to beat the system. We have forgotten to support small businesses, but we are far more worried about funding those corporations who are responsible for this demise. Starbucks, the Walmarts, Home Depots have killed many small businesses who were competing against them. The backbone of a healthy US is always been the small businesses because they usually employ about 70% of our labor force.

2.9 million jobs created in overseas market by these Multinational Corporations (we call them American Companies) at the expense of cutting 2.4 million jobs in the US. These stinking CEO keep spitting the same spin and bullshit that there is not enough incentive to invest in America. Well, the case is that we worry to much about the Shareholders of a company. Corporations have cut their biggest expense (which is payroll) in the US, and transferred them to overseas market where they buy cheap labor. As you know, majority of Americans are only invested in the Stock market via their 401k or 403(b) or other retirement accounts. 90% of the Stock market is owned by just the few. Our current economic system is not working because we have allowed bankers to leverage themselves. We have created Big Banks and Corporations who keep stealing money from the system. Our politicians have forgotten that it is the American people that counts, not the money coming from Goldman Sux, or other major corporations and banks who buy them. When your currency is starts falling, and there is a dysfunctional government, you are doomed. History is full of documentation of what happens to nations when their currency starts falling and their is no unity in the government or politicians. As a country, we have failed. We have 50 million Americans on Food Stamp, 25% or so unemployed or underemployed. We don't have the means to support small businesses. They have a hard time getting a loan. We have millions of Americans stuck with mortgages without the equity. Our wages have been stagnant for decades, and while inflation has gone-up, but the government never speaks about the truth. The CEOs of major corporations still walk away with millions in incentives and while the other employees live paycheck to paycheck. If this is what you guys call Call Capitalism, then i give it my Big Middle Finger. Through Capitalism, we have created mega-corporations and banks who actually run our country, and other countries. It is the ones who have access to money (at hardly no cost), or have access to the capital markets have been winning. The average JOE who wants to start a business is out of luck. Capitalism is only working for the Capitalist because have money and can always find ways to get more money.

Some other suggestions:

Reset the credit score system. We have over 50% of America who have bad credit. In the last few years, many have defaulted because they lost their jobs, and don't make enough money to pay their obligations. We have millions who are foreclosing because they are setting on a property that has no equity (it was inflated from the time they purchased the property). Many Americans will not be able to get some of the jobs because of their bad credit score. At the end of the day, it is feeding your family and paying the things you need to survive.

We have to nationalize some of these banks, split them so small banks. No more big banks. Many decades ago, many of the loans originated in this country was done at small bank or regional bank. During those days of rational mind, the bank required that you have to put a decent amount of down-payment, but they kept the loans. The loans were serviced by the original bank. Today, you don't even know where is your loan, and your servicer has a different agenda versus where your original bank.

We have need to put a cap on our education system. We cannot allow our education system to be about profits and dollars. We are making it very hard for many students to get loans, and afford a higher education.

We have to take care of our teachers and make sure we have the incentives to make them better. Our high schools are falling apart in many states.

Our health care system is run for profits and for shareholders. Anyone who thinks this makes sense than good luck to you: at the end of the day, we need to make sure that we are compassionate and don't associate health care with dollars and signs. At the rate the health care system is going, we are not going to have that many left who can pay for it. It is as inflated as those CDOs market.

We need to put rental caps in markets like San Francisco (the city does), NY, and other city. In the Bay Area (surrounding cities), they have increased the rental rates across the board where many families have a hard time paying for this type of increase. We cannot allow this when you have a huge unemployment rate in California and many who have a hard time paying for their bills.

In summary, our current system is not making sense, and it has lost it's moral ground. At the end of the day, if only a few make money, and the rest are struggling, we will see a revolt. This has happened in history, and we are seeing it across Middle East, Israel, and now UK. People are sick of their government, and they have lost trust in their currency and financial system.

Good luck to everyone...

Shill
Aug 10, 2011 - 1:36pm

Yooper Rick

I agree and I am fortified to act accordingly myself, but who are we turning our weapons on too? Certainly not other fellow Americans I hope.

Cool heads prevail. But protection is a must.

With that GDX is fuking on fire!

Shill
Aug 10, 2011 - 1:39pm
The Vet Ned Braden
Aug 10, 2011 - 1:40pm

Gartman has been hot and cold on gold

for as long as I can remember and as you correctly point out he is a great contrarian indicator. I think he has missed every major move up, and sold too late on every dip.... Why people even bother reading his" newsletter" except as comedy, beats me...

TheGoodDoctor Larry
Aug 10, 2011 - 1:41pm

@Larry BoA sells to Fannie!

@Larry BoA sells to Fannie! BULLSHIT!!!!!!!!!!!!!!!!! (meaning I don't like it at all)

Jasper Puddlemaker DeltaCharlie
Aug 10, 2011 - 1:45pm

@ DeltaCharlie (Gartman)

It really makes me ill when Gartman is paraded out as a "gold expert." He isn't a gold expert; he is a trader who tries to trade gold, and charges other people a fortune to read how smart he is. I suppose he is considered an "expert" because he charges so much for his newsletter (naturally you would only pay that much if the writer was an "expert," right?) (ya, circular reasoning).

I am constantly amazed that Gartman, Nadler, and Goldfields Mineral Services are considered by anyone as being authorities on gold. Oh, Jeff Christian too. We have 10 years of price history, and their forecasts, behind us that tells me those guys are far from experts. People like Eric Sprott, John Embry, James Turk, Jim Sinclair, Bill Murphy, and others have outshined them a hundredfold during this entire move from $250 to $1790.

maravich44 TheGoodDoctor
Aug 10, 2011 - 1:48pm

BOFA

we(taxpayers) just acquired some off-balance "Non-Performing Assets".

Frontal Labottleme
Aug 10, 2011 - 1:48pm

Re Hecla

Thanks for the heads up! HL has been on my list for a while - better late than never. Just pulled the trigger on some March, 2012 9.0 calls - they seem like a pretty good deal at $0.91.

BagOfGold Jasper Puddlemaker
Aug 10, 2011 - 1:49pm

Jasper Puddlemaker...

Joe Dwek is going home in a body bag...do da...do da...do da!!!...

Bag Of Gold

Dr G
Aug 10, 2011 - 1:51pm

Nadler is a perma-prick. I've

Nadler is a perma-prick. I've never understood how Kitco, whose job it is to sell precious metals, could have somebody employed like Nadler, who constantly is talking down the metals. What are they thinking?

Tom L treefrog
Aug 10, 2011 - 1:51pm

@treefrog

Yes, we have, actually. And that plan may still happen. Right now, unemployed and trading for my dinner, all plans are on hold but if I can 'be right and sit tight' then I may indeed go that route for a barn.

Thanks for the suggestion. We were on it last winter and nearly started the process.

Ta,

Tom L Dr G
Aug 10, 2011 - 1:52pm

@DrG: Nadler

As Eric of the PatriotNewsHour has said for years, Kitco's pool accounts are nothing more than a paper gold scam and it's Nadler's job to talk their book to keep them from getting run. He's paid to do exactly what he does.

Ta,

stingbee30
Aug 10, 2011 - 1:54pm

Silver: looks like a break-out from depressed levels

Today appears like a real reversal for Silver. Mr. TF wrote a great analysis. I totally agree with Mr. TF that tonite in the ASIAN markets AU/AG will make another run. GOLD will be surpass the $1800 mark. As for Silver, it appears that tonite we could see the ASIANs pushing silver over the $40.50 mark causing more headaches for the Silver shorts and ZSL holders.

I wouldn't rule out another 2-3% increase by tomorrow on Silver by tomorrow.

Perhaps, by Friday, we could finally see a close above $42.50...Good luck to everyone. We might not agree on our political views or how we see the financial system, but one thing most of us agree upon is the sound investment in GOLD and Silver. Thank you Mr. TF for this site and your contributions.

Tesla
Aug 10, 2011 - 1:59pm

@Doc G

They make their big bucks off the unbacked pool accounts - think about it for a sec and you'll understand.

(EDIT) what Tom L said

Shill
Aug 10, 2011 - 2:03pm

GDX

Now that is how money is made...keep it going men!

Tesla
Aug 10, 2011 - 2:04pm

Looks Like Silver Is Forming a Inv H/S Bottom

Probably one more dip (and attempted EE raid to paint a breakdown on the chart) before we see a move up... IMHO

ginger
Aug 10, 2011 - 2:06pm

Shill, I wish you had told me

Shill, I wish you had told me to buy MORE of those gdx calls!

.....Gotta watch the greed though.... :)

¤
Aug 10, 2011 - 2:06pm

GDX

Hey shill...making you a bit crazy with it just skimming just under $60?

Maybe it finally inched over while I'm typing this.

My dad just called me and was pretty excited about his GDXJ up over $3 in 3 days

ginger
Aug 10, 2011 - 2:07pm

Mr. Labottleme

Mr. Labottleme, (warped sense of humor VERY bad joke which was formerly here has been deleted! ;) ....Anyway, I'll trade you those HL Jan12 9 calls for some severely underwater Aug11 9 calls. ........Just let me know if we have a deal.

¤
Aug 10, 2011 - 2:11pm

USO

Bought some pretty cheap USO calls this a.m. and just realized crude has been rallying this whole time.

OTM Jan 12 so I'm sitting tight for a bit. We'll see $90 by next week I think.

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