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

Strongsidejedi
Aug 10, 2011 - 1:47am

Some parting comments

So, what's with all my comments on WAMU and Countrywide tonight?

It's because if you blow up all the contracts, you end up with a stronger dollar.

Someone (Reggie Middleton?) total all those worthless bonds (RMBS and Commercial Mortgage Backed Securities).

How many trillions of dollars is it? 1.5 or 2 ? My guess is 2 Trillion USD's.

Anyways, if you evaporate the value of those bonds by "mark to market", you'd end up correcting this fiscal situation alot faster.

In fact, such a move, may also be sufficient to block the hyperinflationary pressure. By evaporating the stock markets in the last week, four trillion USD was removed in valuation from world markets.

TheGoodDoctor Strongsidejedi
Aug 10, 2011 - 2:01am

@Strongsidejedi If JPM was

@Strongsidejedi

If JPM was selling them to institutions that is the bad thing here. How can those be unwound?

I think it worse for the pensions. Not only in the US but globally. Not only underfunded but filled with crap.

Reminds me of the "guarantee on the box" clip from Tommy Boy. Well if you want me to take a dump in a box.....

Strongsidejedi
Aug 10, 2011 - 2:01am

BAC

@Maravich and @Good Doctor

The situation with BAC is, in my opinion, analogous to WAMU in 2008.

For those unfamiliar with the WAMU debacle, check : https://en.wikipedia.org/wiki/Washington_Mutual

QUOTING WIKI:

"All assets, but only some liabilities (including deposits, covered bonds, and other secured debt) of Washington Mutual Bank's liabilities were assumed by JPMorgan Chase.[41] Under the deal, JPMorgan Chase acquired all the banking operations of WaMu, including $307 billion in assets and $188 billion in deposits for only $1.9 billion from the FDIC.[42] Unsecured senior debt obligations of the bank were not assumed by the FDIC, leaving holders of those obligations with little meaningful source of recovery.[41] On Friday, Sep. 26, 2008, Washington Mutual Bank customers were informed that Deposits held by Washington Mutual became now liabilities of JPMorgan Chase.[43]"

WAMU was down around $2 or $3 per share when it failed in September 2008. WAMU stock fell to $4 range in the summer of 2008 as BAC was buying Countrywide.

A BAC failure would result in FDIC taking over BAC. The Assets would be eaten by JPM Chase and then balance any losses experienced by Staley's team over the past few years. The Countrywide detritus would then be eaten by the FDIC.

Since Fannie Mae and Freddie Mac are already suing BAC, the BAC holding corporation would have to settle the law suits. Meanwhile, the "good assets" would ride with the acquiring bank (in this case JPM Chase in my subjective conjecture).

TheGoodDoctor
Aug 10, 2011 - 2:09am

@Strongsidejedi So, just to

@Strongsidejedi So, just to clarify JPM got WAMU assets but just the good ones?

Next, that is interesting. So, JPM could blow up one of two ways. Either the scenario you put forth, or Wynter Benton's group via silver. It seems that she is trying to make them choose which way to slit their own throats. And on top of that says if $36 is breached to the downside they blow up the COMEX.

Yeah the whole suicide banker/GIABO thing cracks me up on Max's site. His rants can be epic. I love this photo.

maravich44 Strongsidejedi
Aug 10, 2011 - 2:09am

@Strongsidedi c.c. The Good Doctor.

O. K. subjective conjecture does not compute. What are you saying?

Strongsidejedi
Aug 10, 2011 - 2:12am

RBMS holdings..

Good doctor-
I have not been able to figure out who actually is holding RMBS and CMBS bond risk.

The whole financial system is so intermingled and conflicted that there does not seem to be any transparent way to evaluate the holdings of any particular fund or company. We're stuck reading a prospectus that does not show actual holding.

I am fairly certain that JPM Chase was NOT the only bank with people running around selling those bonds. In fact, I distinctly recall CNBS's Mark Faber doing a program ("House of Cards" might have been it) where Faber interviews a mayor in Finland who got suckered by European Citibank representatives who sold American Bonds to the European city's fund manager as "AAA". The city lost alot of money.

I can not help but view the Wynter Benton postings in the context of angry European oligarchs and aristocrats who are demanding compensation for the fraud. Well, they got that compensation through TARP and a variety of other vehicles.

My current view is that I need to insulate my own family and friends from this dirty rotten game.

Figuring how is the hard part.

TheGoodDoctor
Aug 10, 2011 - 2:14am

@Strongsidejedi Ok now that

@Strongsidejedi Ok now that we have all of this sorted out, back to your scenario of Jes Staley selling the AA+ rated securities in their "conservative" investment.

Who would be buying? At what price?

Isn't this kind of like robbing Peter to pay Paul?

Then what do they buy? Treasuries? Hmmmm, maybe that is it...........

TheGoodDoctor
Aug 10, 2011 - 2:15am

@maravich44 specifically what

@maravich44 specifically what bro?

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