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.
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