So, What's Next?

409
175
Mon, Aug 22, 2011 - 8:22pm

Sorry that I've been MIA most of the day. I've been spending a lot of time in thought, trying to decipher where we are going from here. This evening gold has charged through $1900 and silver has spent some time above $44. I feel I've got a decent handle on where we're headed, so, let's get started.

Let's begin with gold. It's moving almost straight UP and that is the type of momentum that is certain to garner the attention of our friends at the C/C/C. Many thought they were going to raise margins Friday. The specter of a margin hike kept gold in check all day near 1850. When Friday evening came and went without a hike, gold rallied today to make up for lost time. Since this afternoon has also failed to provide any emails from the C/C/C, gold is rolling again at present. However, don't be fooled. A margin hike is coming and the C/C/C will, undoubtedly, attempt to time it in order to get the biggest "bang" for their manipulative "buck". What better time than later this week?

Recall for a moment the pain and suffering from the late April and early May silver fiasco. The Forces of Darkness stood down and let silver run to a speculative "all-in" peak of almost $50...the psychologically significant, I might add, $50 level. Once everyone was sufficiently sucked in, the C/C/C dropped the hammer with 5 margin hikes in 9 days. As we all know, silver fell over 30% in the coming weeks.

Fast forward to present day gold. The C/C/C has already lobbed in one margin hike, just like they did in silver on Monday, April 25. They now appear to be letting gold run in order to, once again, suck in a lot of weak-handed, latecomers. And, just like silver in April, we are approaching an uber-significant psychological level...$2000. So, here's what I think happens next:

1) Gold, which is currently trading at $1912 as I type, is going to be allowed to run a little bit farther. It may slow a bit at Santa's next angel of $1936 but I think it may make it almost all the way to $2000. Maybe as soon as Wednesday or Thursday.

2) Then, the criminal C/C/C drops the hammer with a significant margin hike.

3) Gold sells off after the margin hike but hangs in there with a few speculators hoping and praying that The Fed will rescue them by announcing some new, dramatic quantitative easing program over the weekend.

4) The Fed "disappoints". No new overt QE. Instead, something like what is described in the link below will begin taking place behind the scenes. Still horribly inflationary but obscure enough to confuse the easily confusable.

https://www.financeandeconomics.org/Articles%20archive/2011.08.17%20Bank%20Credit%20Repo.htm

5) Gold sinks like a stone next week, conveniently taking silver with it for a while.

You know that I like empirical data and patterns to buttress my opinions. These two charts do the trick:

So, the next question is, what happens to silver? In the very short term, silver looks great. In fact, now that we've eclipsed 44, I think it could soon trade as high as 46. However, keep in mind that September options expire on Thursday. The EE will likely be forced to retreat from their positions around 44 but they will certainly regroup at a higher level. Look for some resistance near 45. IF silver can get through there, it should have a very hard time dealing with 46. So, I expect a peak there, either at 45 or 46, before the EE caps things once and for all ahead of option expiry. IF I'm right about the coming gold beatdown, silver will be taken along for the ride next week. I would not be surprised to see it pull all the way back to 42 before basing and beginning its final assault on the highs from April near $50. Keep in mind that, by attacking gold, the C/C/C is unwittingly shifting the leverage picture back in favor of silver. Maybe not fully in favor of silver but at least they'd be leveling the playing field. In Q4, this will have the effect of driving more speculative longs back into silver and consequently give silver the juice to finally eclipse $50.

So, there you have it. Jeezo pete, I must be some kind of masochist. I finally put silver to bed and I jump right back into the fire by trying to predict the future again. Oh well. My buddy "Turdle" told me when I started this nonsense back in November that my real value was always going to be in "calling it like I see it" and not "pulling punches". Well, there you go. No punches pulled on that one. Now, keep in mind two things:

1) I could be wrong.

2) If you're ready to get out and sell your trading positions now, then do it. Don't wait around for the final uptick. Remember, "pigs get slaughtered".

That's all for now. Stay nimble and enjoy the fireworks. Thanks for being a part of this growing "community". TF

8:40 am EDT UPDATE:

As I rubbed the sleep from my eyes an hour ago, my first thoughts were of despair. After some coffee and some consciousness, I feel better. Gold is only down about $10 from where it was when I went to bed and silver is only off 30c. Big deal. In fact, the only thing we've seen is a continuation of the pattern we identified yesterday at this time. Gold sells off at 3:00 am EDT and begins to rally back at around 9:00 or 10:00 am. Here's a reprint of the chart from yesterday morning:

And now, here's an updated hourly and a 3-minute chart that shows the raid commencing at exactly 3:00. (Like Mussolini, the Wicked Witch may be ruthless but at least she makes the trains run on time!)

Predictably, silver was dragged along for the ride. However, it has once again held what is now support near 42.50. It has since rebounded back above $43.

Hang in there today but have fun. More after the close. TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  409 Comments

Schwartz9546
Aug 22, 2011 - 8:28pm

1st

1st?

OC15
Aug 22, 2011 - 8:30pm

Turd chew on this and tell me what you think

Talked to a guy at Miles Franklin today who told me he is hearing bullion banks are the ones buying tons of gold who are driving up the price. I said "what do you think of the prospect of margin hikes". His take was that bullion banks accumulating gold are not buying contracts on margin to make fiat. They buy to hold the gold. So margin hikes will do little to quell the precipitous rise, maybe momentarily. But it's not like silver that was speculated up quickly. People buying the amount of gold driving it up like that are paying cash and getting phyzz.

flaunt
Aug 22, 2011 - 8:31pm

Nice post Turd!  Always

Nice post Turd! Always appreciate you calling it like you see it.

Dave T
Aug 22, 2011 - 8:32pm

Margin Hike

Can (will) the C/C/C wait till "later" in the week for a margin hike, or will it come sooner? The higher it goes the harder it is to rein back in.

SilverFocker
Aug 22, 2011 - 8:34pm

hmmm

I like it.

Grigeo
Aug 22, 2011 - 8:36pm

Gold Pit Trader

"I would not be surprised to see it pull all the way back to 42 before basing" - Ha!! All the way back to $42! Sounds like a serious bull market in silver.

I read that a Gold pit trader just stated that gold is fast becoming a perceived currency.

The Gold Pit trader stated that traders are exiting paper ETF's, and are looking to take physical delivery.

Says if QE3 happens = instant $2000 gold happens.

And Baker of Hecla just bought(!) 33,000 shares of HL for $242,880, an average of $7.36 each!!! If that is not an indication of a big move in mining shares, I don't know what is.

DFCtomm
Aug 22, 2011 - 8:38pm

I don't know about your

I don't know about your analysis Turd. The stimulus is spent, and QE2 is over, and the economy is still in the tank. You can hear the doom and gloom every night, but are things that much worse than 2008, or are we just bumping along the bottom? I think they are playing up the terrible conditions to ram another stimulus through congress and they'll, to an extent, allow the PMs to run just to reinforce the feeling of impending doom. I don't think we'll see any major moves against the PMs till congress gives them what they want.

Save_America1st
Aug 22, 2011 - 8:47pm

Re-post from last one...

since we have a new thread...I'm just not sure if this is worth looking at comparatively or not, but will post it again just in case:

***************************************************************************************

check out this chart. I did it up on Netdania w/ Gold and the overlay of silver on the weekly chart w/ my lines drawn in. The candles are gold, the blue line is silver. The lines I've drawn on one bottom long-term, then July 2010 through January 2011. Then January 2011 through June 2011. Each about 6 month increments. You can see the "slices" as they have risen upwards. That's no biggee...we've been looking at those lines since July and seeing the upward trend channel as I have drawn in the top line as well.

But look at the similarities of the gold chart w/ the silver chart as it's compared to silver back in April when it made it's run up to 49. Identical. I know it's 2 different PM's and 2 different prices basically and all that. But what I'm seeing is that gold is being "allowed???" to jump up just like silver was "allowed???" to jump up in April.

And we all remember what happened in April as silver almost hit 50...boom...major beat-down!

So I'm just wondering if the EE is allowing gold to run up towards a psychological number of 2000 just so that they can do what they did to silver in May and boom! Rip the rug right out from under everybody and knock gold back down 200, 300, or 400 Bernankies. Taking silver right along with it. Like a Reverse Zabida when you didn't see it coming.

I mean, I think we all know it's bound to happen eventually, right? They still have to keep doing what they do or it's game over.

So does this look like the makings of an imminent beat-down to any of you???

I don't care either way, because I'm only phyzz...As phyzz stackers we should love to see a major beat down in both PM's again so that we can back up the truck and load up as usual.

But if I did trade the paper and was seeing this...especially after what happened to silver in May, I sure wouldn't want to take too many risks as gold closes in on 2000.

Just sayin'...

Thoughts???

Bro D
Aug 22, 2011 - 8:48pm

Best Analysis on the web!

Thanks again and again for such brilliant analysis! When my soon to option spreads expire, I'll remember to feed the Turd.

Sneed Hearn DFCtomm
Aug 22, 2011 - 8:49pm

Congress & QE3

@DFCtomm Congress has nothing to do with whether the Fed embarks on QE3 or some other fiasco. There is no congressional oversight, a oxymoron if ever there was one, and short of impeaching BB, and hold not your breath, Congress just waits around and provides sound bites - along with the usual unlimited supply of arrogance, corruption and stupidity.

Subscribe or login to read all comments.

Contribute

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 9/9

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

Key Economic Events Week of 7/8

7/9 8:45 ET Fed Stress Conference, three Goon speeches
7/10 8:30 ET CGP Hump-Hawk prepared remarks
7/10 10:00 ET CGP Hump-Hawk House
7/10 10:00 ET Wholesale Inventories
7/10 2:00 ET June FOMC minutes
7/11 8:30 ET CPI
7/11 10:00 ET CGP Hump-Hawk Senate
7/11 12:30 ET Goon Williams
7/12 8:30 ET PPI