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

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  485 Comments

Dr Durden
Oct 25, 2011 - 10:55am

Standing ovation

Goes to Green L. You may have woken up on the wrong side of the bed, but you, my friend, are indeed awake. I love how there's this brief opening in the storm clouds and everyone starts to get all chipper like the power and mAgnatude of the storm has died. It makes me feel better to witness this to know I'm right with my positons and intermediate goals than at $300 surge in gold and a $30 jump in silver. If u want to be a successful stacker/investor, you have to understand the feeble nature of the human mind.

Harald
Oct 25, 2011 - 10:55am

Being on the same side as

Being on the same side as Gartmann is troubling to say the least.

SilverWealth
Oct 25, 2011 - 10:55am

charting

short term charting is quite unimportant at this juncture.

Price is gyrating wildly in accordance with each new managed news blurb around the Euro-Trash.

KISS

Mickey
Oct 25, 2011 - 10:59am

Mickey

getting ready for London Close-its a toss up as to which way PM will move right now.

Shill
Oct 25, 2011 - 11:00am
MollyRatchet
Oct 25, 2011 - 11:03am

@ Ivars ..

Ok my good man .. what are you seeing ??

MR

¤
Oct 25, 2011 - 11:06am

I would like to see short term charts....

...that include all of the "what if's" that were are presently going through or the one's we might go through in the next week or even tomorrow. Maybe even by the end of the day.

A chart for if MENA explodes, or one if the EU does nothing and the IMF bails them out or if they bail them selves out or if the EU splits apart or if Germany says screw it all or if Italy falls apart or if the Treasury statement on China prompts a retaliatory Chinese bond sell off or....

A wait and see blank chart might be the most interesting one of them all.

ewc58
Oct 25, 2011 - 11:07am

What does that mean Ivars?

Fyi, you've already given many of us PGDN finger cramps with some of your epic charts. Can you lighten up with the lengthy charts you're dropping into Town? Feel free to just give us the link to the ones you want us to see, with a description of what you're showing on that chart. This way, each of us can decide if we want to click to see it.

In other words, keep giving us your opinions, etc. here, with the option to view the chart in question via a link. Is that a fair approach?

Thank you

ivarsLaMachinna
Oct 25, 2011 - 11:08am

@LaMachinna

Well, this was predicted . HERE:

Well this was my short term prediction from September 27th, based on charts -but with a margin for error bigger than 1 pixel i manage to draw on the screen:

https://www.tfmetalsreport.com/comment/36189#comment-36189

It said about these topics:

Gold 1800:

2) Gold, on the contrary, seems to be posed for relatively steady growth till 1800 in November, around which level it should fluctuate for few months (+- 50 ?) .

Silver 40:

1) Silver may fluctuate around 30 USD (+- 3?) for 1 month or so, then move up sharply about 5 USD to 35-40 and drop again, now to little higher level of 33-35 +-5, and not change much anymore this year. So the bottom will be kind of close from time to time during October.

The immediate reason, as we see now, is Greece's coming default . The reaction will be overdone, since, when the Greece will disappear from Eurozone's problem list and banks will be disclosing whatever they have to, the blip will end.

In Silver and Gold, , it will take till January 1, 2012 for it to drop back from elevated levels (max 40, may be some spikes) to 33+-3 USD.

exiledbear
Oct 25, 2011 - 11:08am

Boooooiiiiiinnnngggg

What happen? Did someone set us up the bomb? Main screen turn on.

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