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.

paper_10-24hui.jpg

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:

paper_10-24gold8.jpg

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.

paper_10-24silv.jpg

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.

paper_10-25amgold.jpg

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

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  485 Comments

RedRover
Oct 24, 2011 - 10:19pm

30 day & 6 mo. silver symmetry w/ kitco app, iphone & a mirror.

Built this photography idea off a comment, several weeks ago,
discussing a desire to see inverse charts to gain insight/perspective.
Here's a possible solution, many of us can use. Cheers!






+ 6 month Silver:



dumpstergourmet
Oct 24, 2011 - 10:22pm

POS Calvin

1. Is the POS calvin falling off a cliff relative to the other fiat currencies? Sure looks imminent.

2. If so, why? Is it because the dollar is about to be printed to finance over-100% refinancing of upside down mortgages per O'bummer? Or is it propelled by the PAGE establishing higher prices for PMs in competing currencies relative to the artificially suppressed prices in dollars? Or both? What else? Help me out here, I'm just a babe in the woods.

¤
Oct 24, 2011 - 10:29pm

Go deep inside / Exploring Gold Lead Silver Mine in Nevada

Exploring Gold Lead Silver Mine in Nevada
Bay of Pigs
Oct 24, 2011 - 10:34pm

ivars silver chart

Anything above $35 blows that chart out too. $38-40 would come quickly above that level. Looks like an air pocket on the way down. Hardly what you would call "resistance".

stoneeh
Oct 24, 2011 - 10:37pm

I've now repeatedly heard

I've now repeatedly heard people state that silver margins are too high and the assumption that the CME will lower them. They will not. Of course at some point they will lure the trend chasers into silver again to punish them again, but I think that will be via price rises which will eventually need to happen, not via margin decreases. But the silver price rises will make the contract price to margin price ratio more attractive. Overall though I believe right now and for the foreseeable future they will need to continue cooling investor interest into silver, since hardly any investors are interested in silver right now and we're still above 30$.. if the paper investors come back in we would move through 50$ like nothing (which would be a price rise so small it would only be remotely of interest to anyone who knows the true supply and demand of silver, but very very damaging to the EE's management of perception programs).

The Vet
Oct 24, 2011 - 10:53pm

LAX Sucks -- donnojackshit

Only 5 hours? That's almost a record of efficiency!!!!

Earlier this year, a member of my family, who had traveled many times to the US on the same Australian passport had to transit in LAX on route to a professional conference in Las Vegas. After a 16 hour flight, when she presented her passport and papers to the immigration officer, she was marched off and put in detention for almost 24 hours without any explanation or excuse. When she eventually managed to get someone to tell her the reason for this, she was accused of traveling on a stolen passport. Eventually she allowed to contact the Australian embassy and then after several more hours, her passport was handed back and she was told she was free to go. Of course she missed her connections, her baggage had been lost and she missed the first two days of the conference she had paid big bucks to attend!

When she asked why she was detained, she was told it was a "clerical error". No apology of any sort and no offer to assist in any way... I understand that this sort of mistreatment is not unusual.

aurum argentum
Oct 24, 2011 - 11:06pm

DPH

am i the only one seeing an exclamation point instead of DPH's videos?

Turdle GG
Oct 24, 2011 - 11:08pm

The problems mints having keeping up with demand

Not sure if anyone cares to know all the detail, but here you will find an article with a link to an Australian website called Silver Stackers.

https://goldchat.blogspot.com/2011/10/why-are-there-shortages-at-mint.html

In the linked part of Silver Stackers you will find, starting on page 4, a detailed conversation between Bron Suchecki (who works at Perth Mint) and various people regarding all the issues behind the recent difficulties that Perth Mint has had in supplying silver bars.

In summary, it's no simple thing for a mint to just ramp up production whenever demand increases.

This part was interesting:

"Sales of PMs are usually related to the metal price. The normal relationship is if the price is up, demand is up because people are optimistic and think prices will continue to rise. However, this recent increase in demand coincided with a fall in the silver price. Point is, forecasting is not easy because it requires forecasting metal prices, and I don't see any guru who gets that right all the time. [Not even Turd!]

The key problem we have is estimating how long will this PM bull market continue? If it is 2 years vs 10 years then that makes a huge difference to how much money you spend on equipment. Keep in mind also that for a number of years after the tail end of the peak Mints can expect almost zero demand as sales back from sellers will exceed demand - dealers will buy little from us as they just resell what they buyback."

T
Oct 24, 2011 - 11:13pm

what I'm getting

what I'm getting from your signal hunch Turd, is that yes,another patern may be in the works here. you could very well be right. But the resonating feeling from this idea thats sticking with me, is the same concept I see in the analysis of other pundits as well, like Jeff Neilsen, who theorized that there must be some kind of geopolitical secret deal/agreement between China and the US,that china will sit on the sidelines for a while and not keep buying the dips and propelling the metals higher ....for now.... (my paraphrase,hope I'm not misconstruing that all up)...and what other pundits say about the market manipulation,really severe manipulation and suppression of the metals and miners. the grand theme I'm sensing here is that if the world is engaged in a global monetary/currency/economic crisis,like it is, and the precious metals (and miners) are an integral part of that whole process..... then Nothing Major will Happen in the metals and miners....Unless the Big Boyz/govt/PTB/ want it to happen....and the Timing will be When they want it to happen.... that it is under Their control...not anybody elses.

and that metals will go up if the Bankers are wanting to play it like this. It will go down if they want to fake everyone out . it will go down again IF they want it to go down. and All major movements in currencies, metals, oil, commodities, what else...bonds...everything.... government statistics, everything.... will be made to look whatever way they want it to look.

They paint the charts. They continue to do so. and while we're all waiting for QE3, The PTB know exactly what they plan to do.... and we are just left guessing all the time.

Before gold gets to 1780 ,there is strong resistance to overcome at 1720 area. I could easily see the metals get pushed up just like youre saying .

Youre saying the bankers did this thing a while back, and the set up looks the same for them to do it again.... ...but just as easily I could see another slam down from a resistance at 1720 whipsaw down to 1620.....and then the wave going up to 1780.

Even with insight into patterns like what you see so well... this whole rigged game remains nothing but a guessing game at best.

Right now, the numbers in the wave structure price points are S+P 1070 low....1170 key middle and targeting a 1270 top. why not. its nice easy math. my whole point is.....umm i have no point. thats my point. I have no point. there IS no point. there is only a rigged game.

I'd love to just know for certain that this is the next play the bankers have set it up and its on the launch pad now...and we can sit back and enjoy the ride up to 1780 nice and easy. But I fear a whipsaw and slam down at 1730. Ive been watching that resistance for months now. if not weeks.

The Vet Turdle GG
Oct 24, 2011 - 11:19pm

Mint supply and demand...

I would believe this if the silver was being used in industrial processes and never returned. However the discussion centers around investment silver. If the demand can't be met then why don't they increase their buy back price? All the mints and the dealers do is ratchet up their selling price and rarely increase their offers to buy. Just look at the Perth mint buy/sell spreads for the stock they do have. It is usury in every sense of the word!

This is because they still can't bring themselves to offer more for metal than the BS COMEX price even though nobody can buy actual metal and have it delivered at that price.

Turdle GG
Oct 24, 2011 - 11:21pm

Copper on the way up again

Up nearly 2%, all of the move in the last 30 minutes

exiledbear
Oct 24, 2011 - 11:30pm

Europe makes our leaders look competent in comparison

Is europe trying to destroy confidence in their system? Do they really hate their feet so much, they'd shoot them off intentionally?

At this point, I get it - they're a bunch of spineless idiot wankers who can't make a decision to save their own asses.

All I really want to know at this point - is when do things start blowing up in their faces due to inaction? There are hard deadlines in amongst the muck - bond coupons have to be honored, for instance or bad things happen, right? Anyone have any clue as to when the hard deadlines are, where things start going BOOM because of a missed payment?

exiledbear
Oct 24, 2011 - 11:35pm

As far as bottom calling goes

It's still not obvious we've hit bottom. It is encouraging that each test made (and I count three of them) since that hammer candle - made higher lows.

Higher highs + higher lows = bull market

And combine that with the CoT data and the OI data, and I agree - I think it's reasonable the chance we're past the bottom is - maybe not high, but significant.

Breaking through that 1680 resistance will be the key though. Gotta punch through 1680 to get a new first down to use a football analogy :)

bern
Oct 24, 2011 - 11:46pm

@The Vet

I was going to say basically the same thing. Turd is looking at trading charts - that's like the part of the iceberg that floats above water. If the physical market for 100oz silver bars is any indication, supplies are getting scarce.

Two Gun Tobin
Oct 25, 2011 - 12:09am

The Big Yellow Hat looks for Gold!

Here's a modern day prospector working a placer claim in the Sierra Nevada mountains outside of Placerville Ca.

He's got all the right gear, his pan, metal detector, and A BIG YELLOW HAT.. Thanks TF, its one hardworking hat.

Big Yellow Hat goes prospecting

donnojackshit The Vet
Oct 25, 2011 - 12:13am

@The Vet

The unaccountability of Government leads to tyranny! Government motherfuckers will perpetuate any sort of crime in the service of their job so that they don't affect the perks of their job-compartmentalising the morality of their actions much like the 300 steps completed by 300 workers performed by the nazis to murder people in the ovens- "I only extracted the gold from his teeth fillings". The Government employees should be accountable in a court of law (unfortunately the separation of the Judiciary from the Government has long since died), but more importantly the ethos should be to atone for their fuck ups. An experience like your family member suffered is so wrong - the media should be shaming the TSA. Of course this will never happen. The World is so fucked up and I blame mindless Government bureaucrats for most of it.

C F
Oct 25, 2011 - 12:21am

Way, way off topic...but has

Way, way off topic...but has anyone been watching Netflix stock? It just got completely obliterated in after hours trading (down like 30%) If it stays in freefall mode I may just pick up a few shares for the hell of it.

donnojackshit
Oct 25, 2011 - 12:23am

@TurdleGG

Not much sympathy for the Mints from me Turdle. Look at the year on year growth of the bullion business for the last 10 years and match your production accordingly would not be too demanding a task. Safely assume that the trend is going to continue for the next 10 years at least, or do they know something we don't, like "Oh I dunno, maybe future nationalisation, so we better not invest too much in production capability?!" Let's see, what else? Are they running shifts around the clock? Why not? Do they build inventory to cater for the cycles? Why not? Blatant gouging on buy/sell spreads? Why?

LaMachinna
Oct 25, 2011 - 12:26am

Just....

BARFFFFFFF! no

They have all gone freakin' nuts and evil..... (I mean, I know they're evil, but it gets worse???)

Machinna stepping of her freakin' barfin soapbox...

LaMachinna
Oct 25, 2011 - 12:29am

Tesla...

we need a barf pic.......or maybe an evil pic....or maybe the pope as the biggest craze bag of them all pic. Really?

grrrrrrrrrrrrrr

Turdle GG
Oct 25, 2011 - 12:40am

@donno

You're asking the wrong person. Why don't you ask Bron Suchecki.

SilverWealth
Oct 25, 2011 - 12:42am

thanks

Its interesting to look with a forensic perspective on banks longing gold ahead of another downgrade that is now anticipated. Who knows? Its a possible pattern but its a guess.

Certainly if Gold really does rally, Silver will follow and then if the gold rally is substantial Silver will overtake towards the end and exceed gold with its momentum. The two trade together. Saying that Gold will rally and Silver will remain sluggish because the chart looks sluggish now misses the mark I think. Silver always surprises wildly both to the downside and the upside.

I guess techies feel now that since GDX held some sort of a bottom that that means its going to the top of its channel again now. What is behind this crazy sort of short term momentum reasoning is beyond me. Couldn't it just fail half-way? Is there something written in stone here that decrees that it goes to the top of the range? I don't get it. Makes no sense to me. The miners at the first sign of equity weakness will sell down hard again.

still trying to understand the mind of the momentum trader. Oh well....

The Vet SilverWealth
Oct 25, 2011 - 1:00am

SilverWealth - It's not the momentum trader any more

it's the algorithms in the HFT traders computers which have these turn points and trading range programmed in, regardless of any fundamentals. When HFT traders are creating 60% + of the volume and all of it in 100 share trades, then momentum is created artificially, and with their ability to cancel and switch in microseconds at no cost, the average guy can't compete. Any attempt to trade normally in those issues results in getting 100 share fills and huge commissions from most brokerages.

The HFT scam, (and it is a scam IMO) could be stopped immediately by charging a fee for every canceled order. A penny or so per order canceled regardless of size, would do it nicely. It wouldn't worry the retail investor or the big funds, but the HTF operator scalping fractions by his high speed front running and ducking by equally high speed cancels would find his activities a lot harder to make money on.

exiledbear
Oct 25, 2011 - 1:32am
European American ¤
Oct 25, 2011 - 2:32am

"World power swings back to America" posted by DPH

Total propaganda BS. Only reason the so called "power" is swinging back to America is that everyone else just happens to be nearing the bottom of the canyon in free fall, faster. Whereas the U.S. of A. is off the cliff, picking up speed on its way down, and like the rest, without a chute, will meet the same fate; an up-close, personal view of the high intensity, catastrophic mess. "Postponement of the inevitable" is the illusory, perceived Power, mindless America will temporarily enjoy.

That's about the time when having these stacks will finally pay off and be well worth the wait. Rest assured though, it's not going to be a picnic. Austerity Measures are still on the menu.

Keep your silver close, but your Gold even closer. We live in a War Zone.

T
Oct 25, 2011 - 2:38am

Dan Norcini's blog

He says it all today in his blog. very simple and to the point.

www.traderdannorcini.blogspot.com

austrian12874
Oct 25, 2011 - 3:39am

Actually...

Correct me if I"m wrong...but

I think what Ivar's charts say is that up to 1800 gold will be stable. So Ivar's never said that gold won't reach 1800, but rather that it will reach 1800 and remain relatively flat at those levels.

Also, his charts say that silver will go up to 40 and trace back down.

So please take the time to actually look and analyze his charts before stating incorrect facts.

His charts also say that EUR/USD will reach 1.40 and trace back down again. He also called for 100 oil.

So far so good ivars.

Hammer
Oct 25, 2011 - 3:51am

Wow. Just wow. Making money

Crippling debt burden

BBC Radio 4's File on 4 has discovered that some hedge funds are planning to cash in on the crisis by buying Greek debt in the form of Greek government bonds.

Their strategy depends on the troika persuading banks to agree to what is called a "haircut" in the value of their holdings of such bonds.

Only by reducing Greece's now crippling debt burden, the troika insists, can a continued crisis be avoided.

It is because this write-down would be voluntary on the part of bondholders that hedge funds have found an opportunity. Having bought the bonds, they can then refuse to agree to the voluntary haircut and demand payment in full when the bonds mature.

Christopher de Vrieze, who writes on sovereign debt for the specialist news service Debtwire, says some hedge funds are targeting short-term Greek bonds due to mature in March next year.

If the troika does persuade banks to agree to a voluntary write-down, Christopher de Vrieze says "Greece will be financed for another couple of years, and will be most likely to be able to pay its shorter-dated bonds.

Rui
Oct 25, 2011 - 4:15am

Cooked one Dow/Gold chart using DIA and GLD

I was using the formula of (DIA / GLD) X 10 on closing price. Notice a few things on the chart:

  • The ratio follows a nice pattern of down then retest previous support now resistance then down again then retest again ...
  • We went down to 6 level in August.
  • Looks like we are retesting the zone of 7.3 to 7.8, the previous support but now resistance.

Tesla
Oct 25, 2011 - 4:28am
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