There He Goes Again

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:

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.

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.


9:50 am EDT UPDATE:

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

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

turd [at] tfmetalsreport [dot] com ()


Oct 25, 2011 - 3:28pm

Flu vaccine...

Flu has a segmented RNA genome which can mix between strains. It replicates the genome with a sloppy RNA dependent RNA polymerase.

Because the flu is so fluid in terms of genome and because much of its seasonality and migrations is poorly understood, the flu vaccine is a guess of what the seasonal flu will look like. This isn't Jenner's small pox vaccine (which was discovered anecdotally!).

While malnutrition was common around the severe flu epidemics after WWI, it isn't today.

The idea that you need all the extra crap from mercury to adjuvants injected into your kids to protect them from flu is big pharma propaganda desperately trying to recoup poorly used R&D funds.

Oct 25, 2011 - 3:21pm

Yeah, Farming


Definatly try the farming. I let out some farmland parcels this week to bidders, land that I purchased in the late 1990s after I got out of bank stocks. #1. anual rent of $340/acre... purchased @ 2651/acre = 12.8% return.

#2 rent of $300/acre..Purchased @ $3000/acre = 10% return

#3 rent of $215/acre....Purchased @ $740/acre = 29% return

Ironically, the poorer the farm land the higher the return. Why? Because of federally subsidized crop insurance. You plop down about $100/acre for insurance that guarantees a $1100/acre payout. Crop inputs are about $600/acre plus the rent. This results in a very low probability of loss and a very high probability of profit per acre. Farming is a bit like banking, the more you screw it up, the more government bailout you get.

A shame, really.

Oct 25, 2011 - 3:19pm

Rick rule on king world news

Rick Rule - Gold & Silver Surging as Takeover Mania to Begin

Go to King worldnews--so he does say he thought we would see more of a spike in silver

Oct 25, 2011 - 3:17pm

Ezero union financial dead countries walking

Let the holloweenie zombie western bankstering carnage begin. Debt gone wild dominoes to fiat zeroooooooooooooo worthlessness. Who couldn't see this cluster flocking, corrupt global paper chasing, greedy rat bastard vampire squids, coming to an end in ashes has got to be part of the corruption, dead, or just entering the handicapped school of the financially blind. dead head fed goons better have air force one warming up on the tarmac headed for destinations unknown. Lots O angry people will be looking for blood and not any of this occupy wall street powder puffing when bankster failures are daily occurances. Hope all have debanked and packed those economic life boats. Bout to to launch.

Oct 25, 2011 - 3:15pm

Recession 2012-Q1Powered by

Recession 2012-Q1

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From our friend Goldman and Company.

Oct 25, 2011 - 3:11pm
Chicken Little
Oct 25, 2011 - 3:10pm
Oct 25, 2011 - 3:09pm

Euro: Game Over. PMs: Game On

The only thing that can hold PMs back now is even more forceful manipulation and the relative strength of the dollar against the Euro as the EFSF implodes. Neither are sustainable, and I doubt they can withstand the momentum that is gathering. Why is there more momentum now? The political/economic game is nearly over, and here's why:

1. Any expansion of the bailout for Greece must be approved not only by Merkel and Sarkozy but by a majority of their respective legislatures, not to mention the legislatures of other Euro members. The odds that these cats can be herded in the current environment are almost nil. I'm sure these leaders took note that the Slovakian government was sacked over the last vote on the EFSF.

2. The current attempt is to re-cast the problem as a bailout of each country's national banks, rather than a bailout of Greece. Opposition parties will expose this for the fraud that it is in short order, and will gain traction in at least a few Eurozone countries.

3. People will begin to see that the bailouts won't work, and cant' work. Greece is exposing the truth about how much money this will really take. Even if voters don't deeply analyze the issues, they'll see Spain, Italy and Portugal looming, and they will make it clear they're not on board.

4. Politicians read polls, and those polls, along with riots in the streets, will give them clear direction. They are going to bail.

5. The resulting loss of political stability and control in the Eurozone will start to drive the Euro toward its appropriate value, far less than 1:1 with the dollar. Massive downgrading of sovereign and bank debt will take place.

6. Treasuries will fly off the shelves (at first) and so will gold and silver. The demand will be more than mere speculation, and will overwhelm any and all attempts at manipulation.

7. As defaults begin to occur (first, in Greece), we'll figure out how much counterparty risk U.S. banks really have. It may be enough, for instance, to bring down BofA. Perhaps the Fed already knows this is coming, hence its tacit blessing of moving this risk into position to be backstopped by BofA deposits, and ultimately the FDIC.

8. No one knows the extent to which the "contagion" of Euro debt will impact U.S. banks. European banks will be in shambles, and each country will have to decide whether they are willing to go "all in" to bail them out - putting their own sovereign debt ratings at risk - or cut bait. Either way, the Euro will sink like a stone. If more Euros are printed to try to recapitalize the banks, immediate hyperinflation.

9. If Eurozone governments cut bait, this will accelerate the demise of financial institutions holding the bag on CDSs. At this point, everyone will be at risk, including U.S. financial institutions. How much risk? Who knows.

All of these predictions are relatively uninformed, mind you. I don't profess to be an expert on European politics, or the financial condition of any particular country or institution. But I have a feeling that if you listen to experts telling you that Europe is, or will be, solved, you stand to loose a Sh*&tload of money. I know I'm preaching to the choir on this site - just feeding our confirmation bias, so someone - tell me why this isn't about to happen? How does Europe kick the can down the road again?

Oct 25, 2011 - 3:07pm

Netflix sinks

Shares of Netflix Inc. (NFLX-Q75.91-42.93-36.12%) plunged by about 35 per cent today following the company's disastrous report on subscribers in the third quarter.

read more

Tom L
Oct 25, 2011 - 3:06pm


Oil of Oregano is a very good anti-bacterial. We have it in the house along with Grapefruit Seed Extract, which is an antibiotic.


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5/11 12:00 ET Goon Bostic speech
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5/13 8:30 ET PPI
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5/14 8:30 ET Initial jobless claims and import prices
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Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
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Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
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Key Economic Events Week of 3/9

(as if these actually matter)
3/11 8:30 ET CPI
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3/13 8:30 ET Import Price Index

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