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

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turd [at] tfmetalsreport [dot] com ()

  409 Comments

Vernon Wormer
Aug 22, 2011 - 10:25pm

Coin shop

Repost from last thread

@silvermonkey

There are three shops I have done business with. The guy 5 minutes from the house is a dick and I will never go back. The guy 1/2 and hour away is dirty and I can do better at Provident with a credit card and shipping. The guy an hour from the house is fantastic (of course). I can get silver for about spot +1 and gold for about spot +5%. Last weekend there were tons of people selling gold and even more people buying silver. It was crazy.

Just today, Mrs. Wormer had a small gold necklace that was beat to hell and wanted to take it to a "we buy gold" place to see what she could get. We went to the local jeweler. While the Mrs. was taking care of her business, I asked the owner if people were coming in with gold coins. He rolled his eyes and said he had too many. People were coming in all day every day with these one ounce coins. I played dumb and asked what he was talking about. He came from the back with a very large handful of gold coins. He told me that he sends them to a guy in LA who melts them down and then the gold gets used in jewelry. I said that it sounded like a pain and he agreed. Spot at that moment was at $1911(I peeked at my phone). He said that he had a really old coin and showed me a 1908 $20 double eagle. I asked him what he would sell it to me for right then. He kind of shrugged and said $50 over spot. I asked him what spot was and he said very matter of fact that it was $1880 and I could have the coin for $1930. I shit my pants, went home and changed my drawers, stopped at the bank and am now the proud owner of a $20 double eagle.

I think I have a new coin guy.

FogHorn LegHorn
Aug 22, 2011 - 10:25pm

TF feeding time

TF, I hope to feed the Turd real soon. I hope No one thinks, I was being too immodest, with My last post, I just had a feeling that this is the way the setup will play out. I am in no way able to call events like " Our fearless Leader." just average, Foggy :)

Shill
Aug 22, 2011 - 10:27pm

Think I'll call 66.22 in the

Think I'll call 66.22 in the green on the GDX tomorrow. As Turd noted the EE is lurking.

Great post Turd thanks for all you do.

Mr. Hyde
Aug 22, 2011 - 10:29pm

Turd is The Man!!

For whatever it is worth...I'm right on board with Turd. I see some further run up in the next day or two, but watch out for Thursday/Friday. And a shout out to Turd...I made a shitload of fiat this spring, gave a shitload back the first week of May thinking the next day things would bounce back, after days of that kind of thinking, I lost 40g. I was sick, ready to bail on PMs. With patience and Turd's wisdom...is it really possible for a Turd to have wisdom? As of todays close I am all the way back, all 40g, plus a little. Taking caution and wanting to lock in my gains after the harsh lessons learned in early May, I sold half of my positions in AGQ and UGL on today's close. I plan on selling the rest tomorrow or Wednesday on any further advances, sit on the sidelines, smile, thank the Turd, and get back in on the pullback.

FogHorn LegHorn
Aug 22, 2011 - 10:30pm

@ginger fall options

Hi ginger, exiting fall options how far out are they?

lostinspace Waffen
Aug 22, 2011 - 10:31pm

I don't think the EE can

I don't think the EE can manufacture another raid like the May 1 massacre. Most of the weak hands have been shaken out already. Wouldn't mind being wrong, another sale would be greatly appreciated!

llaettner
Aug 22, 2011 - 10:32pm

Monetizing the deficit

Indeed, the Fed will create demand for US Treasurys for as long as they can through direct purchase using newly printed dollars (QE2) and creating swap agreements with other central banks who would effectively purchase US Treasurys and in exchange for this service, the Fed would sell x quantity of the purchaser's currency (aiding exports etc via weakening of the purchaser's currency . . ) all in effect to artificially create perceived demand for US debt.

sk
Aug 22, 2011 - 10:33pm

Holding the line

It feels to me like someone is trying hard to hold 1900 and 43.50. We've bounced off these and been beaten back down to these a lot in the last day or so.

Titus Andronicus
Aug 22, 2011 - 10:40pm

RE: margin hikes

The chart that Save_America1st posted above is very good. It shows a clear correlation between the price action of silver prior to May 1st and today's gold price action.

But there are some obvious and important differences between the May 1st margin hike massacre and gold today:

1) Gold is a much larger market than silver.

2) We did not have a raging bank crisis on May 1st.

3) We were not in the middle of a market crash on May 1st.

4) Gold is GOLD -- the queen of financial uncertainty.

I'm not saying that we won't have a correction. But I'm saying that I don't think we will have anything like the correction we had in early May for silver. The situation is different.

Just a guess.

Having said that, I did lighten up a bit on my gold/silver comex positions.

(I don't mean to detract from the value of the Save_America1st's post. It is very good. Thanks!)

Save_America1st
Aug 22, 2011 - 10:44pm

@Vernon Wormer

Congrats man! I just got a 1924 Double Eagle today...first one! Hope yours is as kick ass as I hope mine is (when it gets delivered!) lol

You def. got yours cheaper than I got mine, but hey, at this point even though we know once gold gets close to 2000 there's gonna be a beat-down, it's still gonna rebound back way up above 2000 and we're in the clear!

Congrats again man!

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