Max Q

308
Tue, Sep 27, 2011 - 7:00pm

Whoever told you that trading and stacking precious metals "wasn't rocket science" was lying. When watching the video below, be sure to note what happens at the 0:55 and 1:15 marks.

STS-133 Space Shuttle Launch

After a decline of epic and historic proportions, the PM charts tonight stand just below their points of Max Q. "Huh?", you ask. From Wikipedia:

"In aerospace engineering, the maximum dynamic pressure, often referred to as maximum Q or max Q, is the point at which aerodynamic stress on a vehicle in atmospheric flight is maximized. There will always be a point where the dynamic pressure is maximum. That point is max Q.
In other words, below max Q, the effect of the vehicle acceleration overcomes the decrease in air density so as to create more dynamic pressure (opposing kinetic energy) acting on the craft. Above max Q, the opposite is true. The dynamic pressure acting against the craft decreases as the air density decreases, ultimately reaching 0 when the air density becomes zero.
During a normal Space Shuttle launch, for example, max Q occurred at an altitude of approximately 11 km (35,000 ft).[1] The three Space Shuttle main engines were throttled back to about 70% of their rated thrust as the dynamic pressure approached max Q;[2] combined with the unthrottled solid rocket boosters, this reduced the total thrust by about 5%.
During a typical Apollo mission, max Q occurred between 13 and 14 km of altitude (43,000–46,000 ft).[3][4]
The point of max Q is a key milestone during a rocket launch, as it is the point at which the airframe undergoes maximum mechanical stress."

Got it? Me, neither. But that's not the point. In our example here, the PMs have rallied from deeply oversold territory. This part of the flight (the liftoff) was easy. Just light the fire and watch it go. However, any rally after such a steep selloff is inevitably going to reach a critical point on the charts where the rally either reaches escape velocity and continues on OR the gravity of the selling pressure becomes too great to overcome and things head back down. This is area on the charts is our Max Q. This is our point of maximum dynamic pressure.

On the charts below, I've outlined the clear areas of Max Q. In gold, it's 1670-1682 with a continuance of pressure all the way to 1705. In silver, it's the area between 32.35 and 33.85.

The thrill ride of the liftoff is over and the engines have been throttled back. We've reached the point of Max Q. Will we be able to clear Max Q? Will we hear the command "Go For Throttle Up" and continue the rally or will our mission end with a diversion to Diego Garcia? (Trust me. No one wants to be diverted to Diego Garcia.) We should have the answers to these questions very soon.

Here's some extra stuff to help you pass the time while you wait. First up, Eric King interviewed John Embry of Sprott Asset Management late yesterday and the entire interview can be found through the link below. It's brief but quite interesting. Equally interesting, in light if the beating it took today, is the intro ad for Santa's stock.

https://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/9/26_John_Embry.html

Next, Jeff Nielson has penned another interesting article:

https://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=22271:precious-metals-vs-us-treasuries&catid=48:gold-commentary&Itemid=131

This "Silver Summit" sure looks like fun. I can't attend but perhaps one of you would like to go and report back for all of us?

https://cambridgehouse.com/conference-details/the-silver-summit-2011/48

Lastly, the article below was brought to my attention this morning. I must admit that it is somewhat challenging to get your arms around but it is worth the time and effort to try. For me, the collapsing lease rates for gold are a clear and obvious signal of massive, direct Central Bank intervention in the gold markets. As the article states, without this intervention, gold would be in backwardation due to extremely high physical demand and, as you know, backwardation is a sure sign of an impending short squeeze. Of course, I could be wrong so I'm interested to hear everyone else's interpretation.

https://ftalphaville.ft.com/blog/2011/09/14/677021/why-gold-forward-rate-inversion-is-important/

Also note that the article was written on 9/14, fully one week before the latest massive beatdown. Hmmm. It would sure seem that someone or something leased a boatload of gold at extremely cheap rates to overwhelm the market and set prices tumbling. Was Wednesday night into Monday morning just a continuation of the central bank intervention we first noticed three weeks ago after the SNB devaluation of the franc?

OK, that's all for today. TF out.

9:00 am EDT UPDATE:

I don't a lot to add this morning other than to point out that the overnight spikes died as price entered the MaxQ zone and as the LBMA opened. That certainly shouldn't surprise anyone.

For today, watch the lows from before the spike. Those levels are around $30.75 in the Dec silver and $1635 or so in the Dec gold. Let's look (hope) for some support there should selling intensify.

Believe me now and hear me later, you should definitely take time to read this:

https://www.zerohedge.com/news/step-aside-bbc-trader-head-unicredit-securities-predicts-imminent-end-eurozone-and-global-finan

Perhaps, though, you should watch this first. It might help with the Hungarian translation:

https://www.hulu.com/watch/276401/saturday-night-live-hans-and-franz

TF

About the Author

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  308 Comments

Vincent
Sep 27, 2011 - 7:03pm

Thanks TF!

Thanks TF!

Matt Foley
Sep 27, 2011 - 7:07pm

hmmm Second?

hmmm Second?

¤
Sep 27, 2011 - 7:14pm
silver foil hat
Sep 27, 2011 - 7:16pm

and negative dynamic stability...

in aeronautical terms occurs when an aircraft's stable flight path gets upset by an outside force, and the resulting oscillations get more and more removed from the original stable flight path.

¤
Sep 27, 2011 - 7:19pm
crackor
Sep 27, 2011 - 7:22pm

OH OH

I guess I missed it.......please fill me in!!

Ok got it!!!!!!

¤
Sep 27, 2011 - 7:23pm
Blue Sky
Sep 27, 2011 - 7:26pm

Sinclair

I do believe that Sinclair is a man of integrity and I respect his knowledge of the stock market and patterns in gold. He has done amazing things for the people of Tanzania who work for him. However he has been stymied in his efforts to find a workable gold mine. There have been so many possibilities starting with Itemia then Luhala thenKigosi and every time something seems to get in the way. He and the people who work for him seem to fund the company by buying and selling stock on a regular basis. they don`t seem to go to the market for placements but I don`t really know because I don`t own shares anymore but I did for a long time and got a good start with Tan Range. At the time they were predicting $60.00 a share. He may strike it rich with the latest venture but with the volitility that we are experiencing and the way the stock seems to swoon when the market goes down investors are tired and they have decided not to wait. When something with known resources is on sale why would you leave your money with just a promise.

I don`t think there is anything shady about the company but I think it was Mac Ewen or Embry who said that for the thousands of explorers out there only less than 1% ever come to the mining stage. (I just posted this on the last thread not realizing we had a new one.)

awninja47
Sep 27, 2011 - 7:26pm

Reminds me of Ron Paul having a one-way conversation with Ben

Nigel Farage: Wake up to the misery you're inflicting on millions!
DaddyO
Sep 27, 2011 - 7:26pm

Great analogy! I worked on

Great analogy!

I worked on the shuttle from STS2 through STS26 on the flight side of the house and then transfered over to the R&D side until 1995. Let me help with this example of max Q, you head over the the local big box wholesaler and pick up your new mattress. After ringing it up and heading out to the parking lot, you realize the mattress is 2x bigger than the roof of your Jetta. Well you make the decision to throw the mattress on the roof, get some twine and tie 'er down. You head out onto the highway and everything is going fine until you hit 45mph and feel a thud. You look out your side window and realize the mattress is now bent in two and your steering wheel feels like the front tires are no longer touching the ground, you've just reached mattress max Q.

What the PM market and the global economy is going to look like at max Q is anybody's guess, just suffice it to say it ain't going to be pretty. The great Keynesian crack up will dwarf the image of Challenger so indelibly etched in our consciousness, I'm quite sure!

Will we see economy parts scattered all over Wall St?

DaddyO

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

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Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

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