There He Goes Again

485
Mon, Oct 24, 2011 - 7:55pm

At some point, I guess I've got to stop and decide whether or not it's just wishful thinking.

About two weeks ago, I gave you this:

https://www.tfmetalsreport.com/blog/2658/rally-cometh

I'd been itching for a gold rally but, until now, it hasn't developed. In the post above, I called for a rally in the HUI to 560-580 and it made it to 560 before falling back to 500 last week. A sharp rally has it back to 538 tonight and it still looks like 580-600 is in the cards. That would be about a 10% rally from here.

But what's got me really worked up is the latest CoT survey. Remember how I always say that the only consistent way to make money trading the metals is to sell when all looks rosy and buy when all looks dreary? The tough part is to get yourself to actually follow that discipline as it goes against basic human nature. Put a different way, history has shown that you want to buy with the banks when the specs are selling. Additionally, you should sell when the specs are strongly buying. Now, back to that CoT survey. Note these week-over-week changes:

Large Specs long: -3901 contracts

Large Specs short: +3623 contracts

Small Specs short: +1878 contracts

The speculators (those consistently wrong) continue to rotate away from long to short.

Commercials (banks) long: +2592 contracts

Commercials short: -6733 contracts

The commercials (those consistently right) are covering shorts to and some are even going long.

Now, chew on this for a moment. The dreaded and evil BoA puts out a report that warns of further U.S. credit downgrades before year-end.

https://latimesblogs.latimes.com/money_co/2011/10/us-credit-rating-debt-downgrade-warning-merrill-sp-moodys-fitch.html

Hmmm. Do you recall what happened from 8/7 to 9/6? How about a $250 gold rally, primarily caused by massive bank short-covering, all of it following the initial U.S. downgrade from S&P. Think of that CoT survey again. Could the banks be trying to front-run the next downgrade?

So, let's just go ahead and put it on the record: I'm expecting a 10% rally in gold before 12/1/11. This gives us a minimum target area of 1780-1840. Let's split the difference and call it 1810 or about 10% UP from where we stand this evening. That type of rally corresponds with where we are on the charts, too:

Soon, we will burst through the tough resistance around 1700 and begin mounting this assault on the backs of continued bank buying as well as the short-covering of the misguided specs. If December plays out similar to Decembers past, gold will then finish the year somewhere between 1750 and 1800, continuing the trend of 20-25% annual returns.

I wish I could be as enthusiastic about silver but I'm not. Though I still expect a stellar 2012, the remainder of 2011 will find silver continuing to struggle with high margins and a pit bully named JPM that doesn't appear ready to begin covering its massive short position just yet.

So, there you go. Once gold closes above 1705, my confidence in this forecast will grow considerably. At that point, I'll look to buy some Dec11 calls. Maybe buy some outright or spread some 1700s vs some 1800s. We'll see. I'll keep you posted.

TF

9:50 am EDT UPDATE:

WOPR is in charge this morning as the PMs are being sold because of this headline:

https://www.zerohedge.com/news/ecofin-meeting-cancelled

Down goes euro. Up goes dollar. WOPR sees dollar up. WOPR sells gold and silver. Yawn.

Perhaps some human buying will emerge soon. At around 1630-35, the hourly chart holds the promise of a little reverse H&S bottom of off last week's test of support near 1600.

Hang in there and enjoy the ride. More later. TF

About the Author

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

  485 Comments

TheGoodDoctor
Oct 24, 2011 - 7:59pm

First?

First?

Vincent
Oct 24, 2011 - 8:01pm

Thanks TF!

Thanks TF!

ferretflat
Oct 24, 2011 - 8:05pm

Sounds Like

Sounds like we shoulod just keep stacking the physical

Kumanari
Oct 24, 2011 - 8:07pm

mahalo

mahalo burning food..... gotta go

Stoxxman
Oct 24, 2011 - 8:11pm

Silver ...

Sure wish I could make my nifty gold chart work here


https://pennystockjournal.blogspot.com/

(And a special thanks to those who post for no reason at all ... Pfffft)

Tesla
Oct 24, 2011 - 8:11pm

Gold OI ( -1,684 total contracts) spot up $26

Daily Settlements for Gold Futures (FINAL)

Trade Date: 10/24/2011

Month

Open

High

Low

Last

Change

Settle

Estimated

Volume

Prior Day

Open Interest

OCT 11

1646.2

1657.8

1638.8A

1650.4

+16.4

1651.5

313

645

NOV 11

1639.6

1662.0

1638.7

1654.0

+16.0

1651.6

239

744

DEC 11

1643.0

1663.3

1636.6

1651.4

+16.2

1652.3

109,518

259,314

FEB 12

1643.2

1664.3

1639.0

1656.0

+16.3

1654.3

2,084

53,029

APR 12

1649.0

1666.4

1643.1

1660.7

+16.3

1655.9

421

15,421

JUN 12

1650.0

1662.0

1642.7

1660.0

+16.2

1657.4

457

18,731

AUG 12

1664.1

1664.6

1658.1

1658.6

+16.3

1659.1

204

7,561

OCT 12

1654.5

1669.4

1654.5

1663.6

+16.3

1660.9

79

5,954

DEC 12

1654.9

1668.3

1654.9

1666.3

+16.3

1663.1

1,087

14,988

FEB 13

-

-

-

-

+16.3

1665.3

-

3,393

APR 13

1668.9

1668.9

1668.9

1668.9

+16.3

1667.7

1

281

JUN 13

-

-

-

-

+16.4

1670.8

2,010

11,029

AUG 13

-

-

-

-

+16.5

1673.8

-

45

DEC 13

1684.2

1684.2

1684.2

1684.2

+16.7

1680.4

1,261

12,260

JUN 14

-

-

-

-

+17.0

1693.8

-

7,672

DEC 14

-

-

-

-

+17.4

1708.5

170

9,057

JUN 15

-

-

-

-

+17.8

1727.7

-

6,015

DEC 15

-

-

-

-

+18.2

1749.2

178

6,888

JUN 16

-

-

-

-

+18.6

1771.0

-

54

DEC 16

-

-

-

-

+19.0

1795.0

70

2,462

JUN 17

-

-

-

-

+19.6

1822.7

-

112

Total

118,092

435,655

Last Updated 10/24/2011 06:00 PM

TheGoodDoctor
Oct 24, 2011 - 8:12pm

That was my first, first.

That was my first, first. Anywho, Turd or someone else, would you be so kind as to explain how the heavy blue line on the 8 hour Dec. gold chart became support after it was originally resistance? I'm a little confused by that. Is that because of where the two lines intersect? Like because you are on the other side of the original pennant formation?

Admittedly, I am not that great with the charts yet. Thanks in advance.

Tesla
Oct 24, 2011 - 8:12pm

Silver OI (-1,125 total contracts) spot up $0.93

Daily Settlements for Silver Futures (FINAL)

Trade Date: 10/24/2011

Month

Open

High

Low

Last

Change

Settle

Estimated

Volume

Prior Day

Open Interest

OCT 11

31.355

32.000

31.355

32.000

+.447

31.620

5

4

NOV 11

31.560

31.605B

31.560

31.560

+.448

31.630

88

84

DEC 11

31.390

32.040

31.230

31.750

+.451

31.644

28,891

60,070

JAN 12

31.360

31.910

31.360

31.750

+.451

31.660

249

203

MAR 12

31.475

32.035

31.360

31.695

+.453

31.684

2,201

13,071

MAY 12

-

-

-

-

+.453

31.700

1,011

2,971

JLY 12

31.680

31.775

31.565

31.775

+.452

31.708

97

2,711

SEP 12

31.980

31.980

31.730

31.730

+.452

31.708

15

1,340

DEC 12

31.530

32.095

31.530

31.650

+.451

31.703

128

11,404

JAN 13

-

-

-

-

+.444

31.676

-

1

MAR 13

-

-

-

-

+.453

31.641

35

752

MAY 13

-

-

-

-

+.454

31.599

-

141

JLY 13

-

-

-

-

+.455

31.546

60

2,307

DEC 13

-

-

-

-

+.452

31.474

-

7,912

JLY 14

-

-

-

-

+.452

31.291

-

267

DEC 14

-

-

-

-

+.452

31.194

-

1,312

JLY 15

-

-

-

-

+.452

30.939

-

185

DEC 15

-

-

-

-

+.452

30.804

-

558

JLY 16

-

-

-

-

+.452

30.579

-

27

Total

32,780

105,320

Last Updated 10/24/2011 06:00 PM

¤
Oct 24, 2011 - 8:15pm

Doc

fwiw...that was my first time seeing your first, first.

So that's another first....just saying

¤
Oct 24, 2011 - 8:19pm

Thanks for the updates

I'm feeling the bullishness also. Oil is telegraphing something going forward and fairly soon.

The EU gets it's business within order in a week, maybe two.

And the Fed. does likewise in some small measure or a obvious backdoor manner that isn't so small.

That's my guess going forward short term.

No charts all over the place saying so either.

Zing! (not directed at the big guy btw )

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Key Economic Events Week of 1/27

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Key Economic Events Week of 12/2

12/2 9:45 ET Markit Manu PMI
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12/4 9:45 ET Markit Services PMI
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11/27 8:30 ET Q3 GDP 2nd guess
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11/27 10:00 ET Core inflation
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Key Economic Events Week of 11/18

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Key Economic Events Week of 11/11

11/12 Three Fed Goon speeches
11/13 8:30 ET CPI
11/13 11:00 ET CGP on Capitol Hill
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11/14 10:00 ET CGP on Capitol Hill
11/15 8:30 ET Retail Sales
11/15 8:30 ET Empire State Manu Index
11/15 9:15 ET Cap Ute and Ind Prod
11/15 10:00 ET Business Inventories

Key Economic Events Week of 11/4

11/4 10:00 ET Factory Orders
11/5 9:45 ET Markit Services PMI
11/5 10:00 ET ISM Services PMI
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