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

MIDDIE
Aug 30, 2011 - 5:31pm

Phil Streible

Traders, what do you make of Phil Streible's comments that the "gold market is not looking that good right now"? He says we need a close above $1840 to see higher or we'll see a drop back to $1791 or maybe as low as $1705. Sort of relates to Turd's $1841.50 midline analysis, so if we don't see that $1841.50 close, are you thinking prices will drop back that far? Thanks for any thoughts.

Maryann
Aug 30, 2011 - 5:36pm

Happy Dance

Did the mail happy dance today...something about getting the real thing in the mail just dissolves any small anxieties about mining stocks or options!! So yes, good advice about sticking with physical if you are unsure what to do...

Thanks so much for your excellent thinking Turd!!

beinki
Aug 30, 2011 - 5:39pm

a Dream come true

Just a few more posts and a lifelong dream to become a "Stomachlobber" on the TF Metals Report!

Bstone Dark Matter
Aug 30, 2011 - 5:39pm

Patience

Dark Matter,

I was once told that I was like a swimmer with a tuna fish suit on, swimming among sharks. I did not take that comment lightly and it made me become more aware of my surroundings. The key to winning in this game is to study, study, study and read everything you can (such as this site) and learn from others mistakes so you don't make them.

It is never too late to buy in on GLD or SLV, just don't buy when the chart shows it going up, you want to buy when you see $40 dips or higher, or if Gold and Silver are poised to go higher buy when you see the smaller dips or chart is going sidways (never buy when it is going up or down) because you never know when it will stop, regardless of the data you have.

I study charts all day and just my two cents is this: tomorrow should be a good buying opportunity, Gold will travel up and sideways for another day or so and then take off within a week or two, think about that.

Sure it would have been nice to buy like some of us at 1750 but your not far off at 1840 when Gold is primed to hit 2000 by December, and on top of that people and the EE will be raiding so another dip around 1800 is very likely over the next week or two.

Hope that helps or at least answered one of your questions.

Iowegian
Aug 30, 2011 - 5:40pm

@ ScottJ

I always read your posts and respect your opinions. More than that, it is good to read a well thought out contrarian point of view.

I am inclined to go with Turd on this for the two following reasons:

1. I do not believe the EE will be able to cover up the very likely upcoming dismal payroll report. More than that, even if the numbers are somehow spun as positive, are they credible at this juncture after all the revisionist forms of history they have done on past data?

2. The seasonal component of metals is upon us. The market is looking for reasons to go higher, not lower. Positively spun payroll data could hurt the metals more in the summer doldrums, but not as much now.

Keeping some powder dry in the event you are right.

Thanks greatly again for your posts and charts!

Jewsus Dark Matter
Aug 30, 2011 - 5:44pm

He is not psychic

He gives guidance and what he feels things will do. He is not psychic and does not "know" when and how markets are going to move. He is just a guy like lots of other guys, but one that really seems to know his stuff.

You should make trades when you are comfortable doing so. Anyway I am sure there will be plenty of opportunities in the volatile market, but if you sit on the sidelines trying to time it you will have a very hard time finding success, especially if you are new.

cwavec
Aug 30, 2011 - 5:45pm

Reverse pennant

A lurker gone bad here! First post.

Turd,

I looked it up and find your "Reverse Pennant" or Megaphone gets an extensive

discussion in Edwards & Magee. In my 8th edition it's in Chapter Ten "Other Reversal Phenomena"

under the sub-head "The Broadening Formation". Most of the examples are more horizontal than

yours but at least one (Figure 92) is sharply rising. There are other discussions under "Wedge Formations".

I haven't gone back and read this yet but, since you think it so important, I probably must.

In case you don't have immediate access to E&M, I could possibly pdf a few pages and email them

to you (Turd only, not a general offer).

underwaterfrog
Aug 30, 2011 - 5:46pm

Nadler/Kitco

Nobody can be this fucking stupid and unknowledgeable in regards to a market that you supposedly cover exclusively for your livelihood. So what is his agenda? Does he think anybody takes him seriously?

I read his column occasionally for a laugh; the gold market was going to crash 5 years ago, last year, last month, yesterday, adnauseum.

Today was more laughable and preposterous than most. Quoting EW theory he states that it's in some sort of fucking wave that will breach 1650 then undo the last 10 years of the bull market.

Next paragraph however, if gold happens to go up, EW means jackshit. Also comes to the defense of the CME. Is he that well compensated by TPTB to peddle this garbage daily? He'd have to been clinically insane to not realize what a dipshit he is.

Titus Andronicus
Aug 30, 2011 - 5:46pm

New post from 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

taken from: https://www.jsmineset.com/

Hard Rain
Aug 30, 2011 - 5:47pm

I have to admit...

......it drives me insane when people like Dark Matter posts that kind of drivel.

This is the second time in the last week, he has done so. Maybe Turd should accompany him to the bathroom....as he seems to need someone else to do his business for him.

Rain

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