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

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

  620 Comments

survivalwstyle
Aug 30, 2011 - 8:24pm

news from a socal coinshop

damn it was busy. did not get a chance to sit down aLL day. Ag flying out of the shop today. sold a 1/2 bag and not 15 minutes later another dOOd came in and bought us out of 90%. sold over 200 ag rounds. have 6 left. did purchase 20 ASE this afternOOn. bought at spot but seLLing at 48 if you want them. do have about 6 tubes of these laying around. i did purchase a 5 oz libertad for myself that came acroSS the counter today. first 1 of those i have sEEn. what a beaut. sold to me at spot, which is why i work this as my 2nd job in the afternOOns for .50 90% an hour. had to niBBle. there is a 50 peso that has my name on it, but am waiting for payday on that one...

¤
Aug 30, 2011 - 8:29pm

After the coming global collapse — the big wake-up call

Paul B. Farrell Archives | Email alerts

Aug. 30, 2011, 12:01 a.m. EDT

A 20-rule manifesto for New No-Growth Economics

Commentary: Classical economics is fatally flawed

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, a New Economics. With new rules. Why? Classical economics is fatally flawed. So investors better learn the new rules that will win in the New Economy. Delay, deny, you’ll lose.

After the coming global collapse — the big wake-up call — classical economics will be exposed as a fraud sabotaging investors, destroying America.

Yes, new rules. Why? Because everything you know about economics is wrong. Everything. The old economics is a rigged game in a Wall Street casino. The cards are stacked in favor of the banks and their co-conspirators, political lobbyists, corporate CEOs and the Super Rich. The house always wins. You always lose. Worse, America is losing.

Here’s why: All classical economic ideas derive from one central idea. Not a scientific theory, merely an unproven hypothesis. Worse, all economic conclusions are based on this illusion, a fantasy, myth, wishful thinking. Consequently, all economic conclusions are speculations.

This central hypothesis of today’s economists — from Ben Bernanke’s Fed staff, economists in the World Bank, IMF, CBO and White House economic advisers, to economists at Wall Street banks, think tank and academic economists — is the unquestioned acceptance of the dogma of “Eternal Growth.”

Get it? All economic thought evolves from one unproven and fatally flawed hypothesis: The unscientific assumption that the global economy will continue growing indefinitely … that the world’s economies will be able support global population growth indefinitely … and that all necessary commodities and essential natural resources will be available indefinitely to sustain the world’s relentless economic and demographic growth....cont.

https://www.marketwatch.com/story/a-20-rule-manifesto-for-new-no-growth-economics-2011-08-30?link=home_carousel

SilverWealth
Aug 30, 2011 - 8:32pm

give the guy a break people

Dark Matter is just trying to learn and is confused I think.

I strongly recommend a mentor. Without one you are roadkill in the metal's market. You need someone who has 20 to 30 years experience trading commodities and metals and who is conservative. You do not need promises or the advice of internet sites regardless of how well meaning and at times accurate the advice may be.

I am therefore contradicting myself. But I would go directly to Morris Hubbart and watch how he trades and also checkout Stewart Thompson and his site. Google both of them. Learn via daily mentorship. Otherwise you will be whipsawwed all over the place by all kinds of opinions and end up completely confused and frustrated.

Incidentally the S&Pee has been going up on light volume into a Holiday. Thats a big red flag. I think when the boyz come back from their summer in the Hamptons chasing Ukrainian hookers that they will sell this market down hard and I think it will then take miners down with them. Sad to say. I will continue to sell into strength and wait for what I feel is coming. We have had a nice bounce in GDX and GDXJ but these are not ordained by the Pope and pigs get slaughtered. Just my opinion. I think the equities market crashes bigtime next week, whether it double bottoms off the last low or slices right thru is anyone's guess. What happens to gold and silver then is anyone's guess. I cannot think that far ahead.

Turdle GG
Aug 30, 2011 - 8:33pm

Help me interpret Santa

Dear Extended Family,

Gold corrects $212.50, rises $50, drops $50 and today is trying to rise another $50.

That is a range of roughly $275 in just a few days. That is certainly what I call a hard chop, this time with a penchant to break out to new highs. That is exactly what I expect.

Kenny Adams points out that he feels 15 to 18 days from the first break is the fastest that this chop can resolve itself to a new high.

I have told my family, outside of myself, that there are two people who would protect them in these outrageous world markets. It would be Monty Guild for investments and Kenny Adams for speculation. Both match uncommon skill with absolute ethics.

Regards,
Jim

Does "15 to 18 days from the first break" mean 15 to 18 days from the day we bottomed at near 1,700?

hauzit
Aug 30, 2011 - 8:34pm

Scott J

I've been hearing a lot of "Noise" and hype regarding gold and the play upward. Because of what happened last with SLV, my inner voice is saying that GLD should be going down to 1700's and maybe 1600. Your view counter to Turd, gives some logical reasoning to validating some of my inner voice. Keeping my "puts" on for now.

maravich44 survivalwstyle
Aug 30, 2011 - 8:39pm

s UR iVALL wTHi #sTY leS A N d s H ia lE b Au f.

1O gO TT it. m Uch OuS, Gr aCIas.!

Drut Dark Matter
Aug 30, 2011 - 8:41pm

wait for 13xx then and take

wait for 13xx then and take another long term step toward 20xx

¤
Aug 30, 2011 - 8:41pm

@DPH - That Reasoning is Flawed

I enjoy reading your many posts. This blog is a fantastic place because you share your thoughts and insights (and videos).

However, that nut job Farrell has gotten into the good stash, and his brain is addled. His reasoning is so utterly flawed as to be nothing more than mere wishes, from a utopian point of view.

Keep posting, though.

Potato
Aug 30, 2011 - 8:41pm

Need a litter help learning...

I read Turd, KWN, Trader Dan and all of you for few months, but I still play safe with longs (Sprott Physical and miners). I do not rely only on Turd; I try to make my mind out of all my readings, and I consider myself the only accountable for my mistakes... but so far so good thanks to everyone. I purchased SVM @ 7.75 few days ago many were recommending this company; good call.

But now I would like to learn about your play ground (PUT and CALL) so I plan to do is going through CBOE Learning Center tutorial someone here mentioned about (I do not remember exactly who).

Any help/orientation would be very appreciated about these points:

- Any other good tutorial about Put/Call. How to interpret OI tables like you are doing.

- Best stock info tool available (chart, options, shorts, etc) - I registered 30 days to StockWatch but is there any free or better tool ?

Also a suggestion, a kind of TurdWiki to learn how to trade, built and maintained by the community, would be a great addition to the site.

Thanks in advance.

porkyp
Aug 30, 2011 - 8:45pm

Front Page of the biggest English Language newspaper in HK

From today

China punters sway gold market

Bonnie Chen

Wednesday, August 31, 2011

Mainland punters have emerged as a formidable force in the international gold market and are one of the main reasons for the ongoing volatility in gold prices, say Hong Kong industry sources.

The spot price of gold has lurched between US$1,640 per ounce and US$1,900 in the past month.

From 7.30pm Hong Kong time yesterday the price went from US$1,785 to US$1,840 in a matter of hours in New York trade.

A source in the market saw 7,000 contracts being placed via electronic trading at the start of this period. Heavy volume of bullish bets placed on the gold price by mainland punters also pushed it higher, the source said.

Emperor Financial Services assistant vice president Sam Lee Chun-wai estimates the global trading volume of gold amounts to US$1 billion daily.

Mainland punters by themselves cannot move the market, he said. But Lee noted that an appreciation of the yuan amid continued economic boom in China has boosted the firepower of mainland players.

"Buying commodities with US dollars has proved to be an attractive investment for many mainlanders in the last few years," he said.

According to a report in Yangcheng Evening News last Wednesday, just one city in Guangdong province - Guangzhou - has 2,000 underground investment companies dealing in gold and foreign currencies.

Investors can leverage up to 100 times their principal with such black- market brokers, the daily said. The black market for gold in China sees up to 100 billion yuan (HK$122 billion) worth of trade every year, the report said.

Legal exchanges around the world have acted swiftly to curb volatility in the price of the precious metal.

The US-based CME Group raised trading margins of gold by the most in more than two and a half years last week, leading to a 4 percent drop in the spot price.

CME increased margin requirements on its gold futures contract by 27 percent, the second hike in a month, following similar moves by the Shanghai Gold Exchange and Hong Kong Mercantile Exchange earlier this month.

Mainland punters are taking advantage of the situation, sources say, by going both short and long on the metal.

End-of-month settlement for futures contract has also helped raise volatility, said traders, who also noted that the US$1 billion daily trading volume of the gold market is relatively thin compared with the oil market, which sees a much higher volume.

"Contrary to what many people think, it is not unthinkable that on certain days, mainland punters may emerge as a dominant factor on the international gold market," a source said.

Mainlanders have certainly emerged as the largest players in the Hong Kong gold market in recent years, traders confirm.

Local analysts estimate they now account for up to 70 percent of the daily trading volume on the Hong Kong open market.

The SAR also allows out-of-market gold trading and this is very attractive to mainlanders, traders said. Last night, spot gold was up 2 percent, reaching as high as US$1,822.50 an ounce in New York afternoon trade.

4form ginger
Aug 30, 2011 - 8:55pm

Ginger...Agreed...

Blogs like this are for learning and getting ADVICE...Advice is NOT marching orders...Everyone says to BTFD, but how the heck can anyone know when the dip is gonna stop dipping?...You don't...All you can know for sure is if the price you are buying at now is lower than the price you were thinking about buying at 5 minutes ago, or 5 hours ago, or 5 days ago...You get the point...Dark Matter, start small if you are a novice and get a feel for your ability to assimilate what you are reading and see if you are understanding what is happening in the markets...As you gain understanding and confidence in what you are learning and applying, increase your trade size...My hard learned advice is don't get gready and don't be afraid to pull the trigger when you have decided it is time to get into or out of a trade...Myself, I trade a little in the leveraged ETFs and I try to be a steady accumulator of physical metals...Today's price at its highest point is eventually going to be a dip in the days to come...A little here and a little there for the past 25 years and my worst entry points over the years are still way lower than today's lowest price...Be a deliberate man or woman and have some fun!!!...

kingboo
Aug 30, 2011 - 9:00pm

Lets move on

way way too much time being wasted on Dark Matters comment.....forget em. Move along, nothing to see here..

Anonymous margaritatime
Aug 30, 2011 - 9:01pm

Removed comment

Removed comment.

Lonerangersilver
Aug 30, 2011 - 9:04pm

Living through a currency devaluation and how to cope

I was managing an American subsidiary of a successful large US Company in Mexico. It had been a financial turnaround for our team. Cash flow had accumulated in our bank in Mexico and corporate didn’t want the money repatriated to the US. Although we had already paid a 35% income tax to the Mexican government, we would have to pay an additional 30% exit tax to repatriate the money. In addition, we would have to pay high fees for the peso/dollar exchange, in order to make the transfer. The company wanted to expand our successful business and so we decided to keep the money in Mexican pesos to be used for further expansion.

One morning, as my wife and I were on a trip driving on the highway, we heard a national message from the President of Mexico in 1976, Luis Echevarria, one of the most corrupt presidents in Mexican history. “It is a lie that we are going to devalue the peso,” he said.

Read more

https://lonerangersilver.wordpress.com/2011/08/13/living-through-a-curre...

¤
Aug 30, 2011 - 9:06pm

Bits and pieces on the EU and ECB and DAX

So far, the ECB's efforts to push down yields have been unsuccessful. When the central bank began buying bonds on May 10, 2010 – buying around 16.5 billion euros of government bonds to bolster Greece – the yield on Greece's 10-year debt fell more than 4.5 percentage points to 7.77%. Ten weeks later, with the ECB still spending 176 million euros, Greek bond yields hit 10.43%. Today… Greek 10-year debt yields 18.18%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Expect Italy to default. However, we're more troubled by the recent weakness in Germany – the European Union's financial lynchpin. Last Friday, the German blue-chip index (DAX) fell 4.6%, hitting a 21-month low. For better or worse, large institutional investors don't want to hold equities… and they're fleeing into the perceived safety of bunds (German bonds), gold, and cash. Liquidity and safety, rather than returns, are their biggest concern right now.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The ECB has monetized 120.3 billion euros of government debt (another reason for German weakness). And how did ECB President Jean-Claude Trichet defend his actions? By announcing to the world that the ECB "is not the Fed." Yes, the head of the European Central Bank's only defense to his actions is that his area's balance sheet is not as big as the U.S… pathetic.

Anonymous TF
Aug 30, 2011 - 9:10pm

Removed comment

Removed comment.

Las Vegas Dave
Aug 30, 2011 - 9:11pm

Great info Turd

Nice analysis.

Sure beats a Supertramp video or a huckleberry pie recipe.

Caradoc
Aug 30, 2011 - 9:12pm

@ underwaterfrog (re: Nadler/ Kitco)

Like you, I used to read Nadler's commentaries for laughs, probably because his obvious anti-gold bias sort of appealed to my weird sense of humor. That stopped some time ago when he blithely referred to gold being on an "excursion" above $1000. The nasty assumptions inherent in his choice of "excursion" ticked me off and I haven't read him since.

Caradoc

tyberious
Aug 30, 2011 - 9:13pm

911 truth!

https://www.progressiveradionetwork.com/progressive-commentary-hour/

Progressive Commentary Hour - 08/29/11

August 29, 2011

Guest: Susan Lindauer

Susan Lindauer is a former U.S. Intelligence Asset who covered anti-terrorism at the Iraqi Embassy in New York from 1996 up to the invasion. Independent sources have confirmed that she gave advance warning about the 9/11 attack. She also started talks for the Lockerbie Trial with Libyan diplomats. Shortly after requesting to testify before Congress about successful elements of Pre-War Intelligence, Susan became one of the first non-Arab Americans arrested on the Patriot Act as an “Iraqi Agent.” She was accused of warning her second cousin, White House Chief of Staff Andrew Card and Secretary of State Colin Powell that War with Iraq would have catastrophic consequences. Gratis of the Patriot Act, her indictment was loaded with “secret charges” and “secret evidence.” She was subjected to one year in prison on Carswell Air Force Base in Fort Worth, Texas without a trial or hearing, and threatened with indefinite detention and forcible drugging to shut her up. After five years of indictment without a conviction or guilty plea, the Justice Department dismissed all charges five days before President Obama’s inauguration.

Turdle GG
Aug 30, 2011 - 9:14pm

Hey Turdle- Kenny Adams Mystery

First, as I'm sure you know Kenny Adams is some sort of technical analyst (Santa calls him a 'master technician' in an older article he quotes him in). I cannot find any more specific information on the web or Santa's site.

This is what gave me a chuckle, though- the JSMineset search bot is currently being overwhelmed by Turdites trying to answer your question for you- searches for Kenny Adams, gold, speculation, trading, etc all linked to the name Kenny Adams are suddenly all the top "investor searches" listings at the site. So Turd nation is giving quite an effort to help you out!

Love this site, and the people here.

¤
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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Key Economic Events Week of 3/25

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