Read This Now

620
184
Tue, Aug 30, 2011 - 4:21pm

No catchy title to this update. I just want you to read and ponder this post. Then, plan your trades accordingly.

Let's start with silver where the technical picture is more clear, at least in the traditional sense. Take a look at the chart below:

I've shown this chart several times in the past week so it should look familiar. Something new caught my eye today. Have you seen the new OI numbers? Our friend, "Tesla" has taken it upon himself to update the comments section with the latest numbers each afternoon. (Thanks, Tesla!) Keep in mind that the OI numbers are always basis the close yesterday. So, today's numbers show us the OI from Monday. That said, the number is once again amazingly low at 112,795 contracts. Again, as a reference, the OI in late April was approaching 150,000. Fully 20-25% more! Now stick with me on this. Maybe I should lay this out chronologically to make it easy to follow? OK, here goes:

1) Since silver bottomed around $34 in early July, the channel I've drawn has contained price.

2) Note that on two occasions, 7/13 and 8/19 (points 1 and 2 on the chart), silver decisively broke through the mid-line and proceeded to move sharply toward the top line.

3) Total OI on 7/13 was about 113,000 contracts. By the peak on 8/5, it had risen to about 119,000.

4) Total OI on 8/19 was nearly 116,000 contracts. At least week's peak, it had risen to nearly 122,000.

5) Today's OI is all the way back down below 113,000.

6) Look closely. Price once again sits poised to burst through the mid-line, which is near $42.

Conclusion: Watch price and OI very closely for the next 48 hours. IF silver accelerates through $42 on rising open interest, there is a very high likelihood that it is once again making a move toward the top of the channel. A move that corresponds in magnitude to the previous two would take silver to 45.50-46.00, perhaps as early as next week.

Now let's move on to gold. When I say it's not as "traditional" technically, it's because I'm using this crazy, reverse pennant as a forecasting tool. I'm not sure you're going to find the "reverse pennant" in any books about TA but I'm quite sure that none of those books ever anticipated the end of the dollar, either.

Similar to silver, gold currently sits very close to the midline of the pattern. Note that the previous two occasions when gold broke through the midline (mid July and early August), gold proceeded to ride the upper trendline for about two weeks before falling back. IF gold can once again break through the midline, it will likely charge toward the top line again. This would take the price to near $2000. The OI numbers in gold are similar to silver, too. After peaking at 532,000 last Monday, total OI as of yesterday is all the way back to 501,000. A drop of almost 6% in one week!

Conclusion: We may be on on the verge of another massive rally in gold. Your signal will first be a move through yesterday's high of 1841.50 and then a burst through the midline, currently in the area around 1850. Should gold move conclusively through 1850, it should move to new highs in relatively short order and then continue to make new highs through mid-September.

WARNING: Don't go getting overly excited and carried away at this moment. Nothing is pending until the metals break through those midlines. The open interest numbers suggest that the breakthroughs will come in the next 24-48 hours. They may not. If they don't, I will continue to monitor these charts until they do.

I feel that this is pretty important info so I plan to leave it up all night as the lead, above-the-fold story. I will probably leave it up tomorrow, too. Be sure to refresh the homepage from time to time if you're looking for updates as they will be attached as addenda to this post. TF

9:15 EDT UPDATE:

Sort of a bland trade this morning. The metals tried to rally overnight but they were beaten back at the regular, appointed hour of 3:00 am EDT. It appears, at this moment, that the metals will struggle to trade higher today. 1841.50 is still acting as a resistance point for gold and silver has yet to reach 42, yet alone 42.30. Let's just sit back and watch and see what the day brings us.

A couple of other things...First, this silver update from GoldCore via ZH is worth your time:

https://www.zerohedge.com/news/silver-ready-breakout-technicals-and-fundamentals-suggest-50oz-early-autumn

Second, a friendly reader sent me this chart of the open interest in silver since March. I have neither the time, inclination or technical know-how to superimpose the actual price of silver onto this chart. However, it would probably be a rather insightful thing to do. Anyone want to take a stab at it?

That's all for now. TF

10:50 EDT UPDATE:

This is certainly something to watch over the next hour or so.

About the Author

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turd [at] tfmetalsreport [dot] com ()

  620 Comments

¤
Aug 30, 2011 - 9:15pm

Farrell

Yeah, I hear ya' CA. He's entertaining to read to see how far he pushes it.

He's like a mad (pissed-off) scientist who uses apocalyptic words and phraseology in mini rants through out his articles.

At times though, he does make some valid points but then he kind of tends to go a bit farther then necessary with the mumbo jumbo change of pace wording. jmho

He's a reflection of the times.

I'm hearing more and more MSM types say things and react in ways that seem a bit off cue on TV. It's starting to get a bit heated and some of the MSM types are done holding it in I think. Momentary spurts of serious questions and frustration bubbling out is what I'm starting to observe.

maravich44
Aug 30, 2011 - 9:17pm

@ onewileyz.

Relax. Barry & Joe are focused on *Job Creation*. You are in good hands. And a jobless recovery builds confidence.

Shill
Aug 30, 2011 - 9:18pm

Thanks Turd

Thanks Turd

Turdle GG
Aug 30, 2011 - 9:20pm

tyberios

Great. The whackos have arrived again to hijack Turd's comment's section. Time for me to tune out.

This is TFMetals Report. Metals, as in gold and silver.

Anonymous
Aug 30, 2011 - 9:26pm

Removed comment

Removed comment.

kingboo
Aug 30, 2011 - 9:28pm

NY Daily News gold ads

My wife gets the Daily News delivered everyday, whenever i get a chance i thumb through the sports section....over the last 7 or 8 months there has been a whole 2 page spread ad for "we buy gold/silver" In the ad, they map out 5-6 locations in the tri-state area where you can bring your gold for "top dollar" (yeah right). I see these 2 page full spread ads in the Daily News 2 or 3 times a week! I asked my wife if she noticed them, she said "no". Do you have any idea what it costs to run a 2 page spread in the Daily News? Two times a week? Me neither, but im sure its a frickin fortune. Which brings me to the question........who has the money to buy all this gold (even at discount)? Keep in mind the size of the audience....we're talking the whole tri-state area. It takes deep pockets to finance the ads, the purchasing of the gold and silver......and to top it off, it takes staying power to realize the return on investment, these boys gotta wait on their payday......or so i suspect. Who is backstopping this whole show? And i'm sure NY is not the only city scamming the locals out of their gold/silver. I worry that while i'm waitin on dips/bargains......the banks are buying direct from mines and slowly siphoning gold and silver off the publics hands............all while im busy worrying about spot price and charts. The race has already started and i'm tying my shoelaces....

maravich44
Aug 30, 2011 - 9:29pm

@ TurdleGG.

...and Spaceman, which you turned me on to (Thank You). Let it grow.

Shill
Aug 30, 2011 - 9:30pm
¤
Aug 30, 2011 - 9:30pm

Turdle

I'm not sure but I think he means the $1780-1800 area. Thats roughly where we have been bouncing around and through for awhile.

He could mean $1700 but I think he is referring to the average choppy price. If that makes any sense. He is so vague and talks Jim Speak as someone here has put it.

I'm guessing he's referring to his $1764 number. I think that was the number not too long ago. Boy, time and the gold price has been almost hard to keep track of.

edit: JS is not vague but very precise in a minimal way yet he leaves room for interpretation...sometimes. Not complaining, just wanting to now exactly what he means.

Turdle GG
Aug 30, 2011 - 9:32pm

Pining, DPH, maravich44

Thank you all.

maravich44: what's that you say about Spaceman and letting it grow? You've lost me.

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