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

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  485 Comments

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Bobbejaan¤
Oct 25, 2011 - 8:45pm

Angela Merkel expects tiny growth prospects

Angela Merkel, pictured with EC president Jose Manual Barroso & some other hypodermics, at the weekend's eurozone summit, where Angela Merkel appears to be discussing the size of the male members ... um ... Growth Prospects .................. Photo: EPA (Extreme Penis Anxiety).

¤
Oct 25, 2011 - 8:45pm

Syrian news / SANA (Govt. controlled media outlook)

(DPH: I tried finding some Russian news and the same thing. Very sterile/emotionless imo)

Nasrallah: Syria Partner in Resistance Victories… President al-Assad Believes in Reforms


BEIRUT, (SANA)-Hezbollah Secretary General Hassan Nasrallah underlined that Syria is a partner in the victories of resistance movements in Lebanon, Palestine...Read more

Arab Figures Express Solidarity with Syria in Face of Foreign Conspiracies

DAMASCUS, BEIRUT, (SANA)-Participants in the meeting of the Executive Council and Secretariat-General of the Arab Vocational Federation for Municipality and Tourism Workers voiced support to Syria in face of the foreign conspiracy targeting its national and pan-Arab stances in support of the Arab causes and resistance...Read more

Kulaib: Weakening Syria's Role Serves Israel

DAMASCUS, (SANA)-Lebanese Strategic Researcher Sami Kulaib stressed that the Western project which aims at directing a blow against Syria and weakening its key role was blocked by the power and steadfastness of the Syrian diplomacy, limited demonstrations and ...Read more

Five Terrorists Confess to Smuggling Weapons, Working among Armed Groups and Committing Criminal Acts in Jisr al-Shughour, Lattakia and Abu Kamal


DAMASCUS, (SANA) - Terrorists Ala'a Ahmad Nanna and Walid Ahmad Nanna and confessed to joining armed terrorist groups in attacking the Military Security Detachment in Jisr al-Shughour in the northern province of and killing its personnel, in addition to smuggling firearms and ammo from Turkey...Read
Four Security Forces Martyrs Laid to Rest
DAMASCUS/ HOMS, (SANA)- Four security forces martyrs on Tuesday were escorted from Tishreen and Homs Military Hospitals to their final resting place in their villages and cities after they were targeted by the armed terrorist groups in Daraa and HomsRead more
https://www.sana.sy/index_eng.html
RufanufShill
Oct 25, 2011 - 8:45pm

@Shill

No....you didn't. Or if that's what you mean it's not how its being received, hence the Hat Tips being received by those trying to point it out to you. Let people post their ideas HOWEVER they want to present them, and don't suggest the "suppression of opinions." regarding the future path of PM prices is without value, just becuase it is what YOU personally have decided. What would be a good idea is to suppress the posting of endless music posts....I don't think its what most readers come here for.

redwood
Oct 25, 2011 - 8:43pm

I appreciate Ivars' postings

I appreciate Ivars' postings but attention to this is beginning to border on the obsessional. Let's just read him in peace, and let those who don't want to, to move on. Surely this can't be that hard...

My suggestion to those who find his work interesting is to visit him on his blog as well. There he gives a fuller account of the reasoning that support his numerical representation of these ideas (yes, mathematical equations that are transformed into charts). His work is his about his ideas, the charts are just nice lines that depict them.

I'm sure if highschool math teachers ever described this subject matter in this way, we would have many more students stronger in this subject. Numbers are the mathematical equivalent to letters in a word. They are only symbolic representations, nothing else.

Shill
Oct 25, 2011 - 8:36pm

  Oct 20 (Reuters) - The

Oct 20 (Reuters) - The Russian central bank will continue raising the share of gold in its gold and foreign exchange reserves, the central bank First Deputy Chairman Alexei Ulyukayev said on Thursday. "We are not planning to step away from this path. We are acquiring huge volumes (of gold)," Ulyukayev told the parliament.

Housing Continues Its Death Spiral

This is a great Article.

¤
Oct 25, 2011 - 8:34pm
Shill
Oct 25, 2011 - 8:31pm

Personally Ivars, I think

Personally Ivars, I think providing your opinions (however you decide to present them) on TFs blog is useful and acceptable, as useful and acceptable as Shill's, Tesla's et al. Whtas not useful is mindless "No thinks not here" attitudes just becuase someone doesnt find something of interest. Its the collective knowledge on this blog that is most likely to help individuals make well researched decisions.

Funny I thought I said this as well, but your version is better than mine.

JackEric Original
Oct 25, 2011 - 8:31pm

Primer on Financial Repression

Eric,

Thanks for the excellent post on Financial Repression. I have digested all the links except the Reinhart paper which I will work on over the next several days. It all makes sense and for me seems to better explain some of the "whys" for the confusing moves made by the powers that manipulate the market. Understanding of the nominal GDP seems to be key as you have stated. I am going to try to use these ideas as a basis for unraveling the meaning behind the moves of the major players globally as they are unfolding. I am hopeful that it will help me to think outside the box of conspiracy, dollar vs. gold, EE vs. loyal turdites, etc. that seem to flood us all from the posts on this site.

Also, I want to thank you for all your posts, which have helped me to move up the learning curve in this complex yet important game. I look forward to any posts you send whether on mainstreet or in the forums.

Hopefully, I can add more to the threads. I have some ideas I am putting into writing on cycles based on ideas from Howe and Strauss (The Fourth Turning), info. I have read from the GATA website, and other sources.

-Jack

redwood
Oct 25, 2011 - 8:31pm

.M. Kitco Metals Roundup:

.M. Kitco Metals Roundup: Comex Gold Ends Sharply Higher On Strong Safe-Haven Demand Amid Fresh EU Uncertainty

25 October 2011, 2:12 p.m.
By Jim Wyckoff
Of Kitco News
https://www.kitco.com/

(Kitco News) - Comex gold futures ended the U.S. day session sharply higher and hit a fresh four-week high. Strong safe-haven buying demand surfaced Tuesday as the market place quickly became disenchanted with the prospects of Wednesday's European Union leaders meeting producing any credible or concrete results on dealing with the EU debt and financial crisis. A suddenly canceled EU finance ministers meeting that was scheduled for Wednesday set off the fresh market place concerns. December gold last traded up $50.70 at $1,703.00 an ounce. Spot gold last traded up $48.40 an ounce at $1,702.25. December Comex silver last traded up $1.536 at $33.16 an ounce.

The market place at mid-morning turned from a “risk on” trading day to a “risk off” day when it was announced that the EU finance ministers meeting, scheduled for Wednesday, was cancelled. But gold benefitted on the sides of that equation—boosted by the generally rally in commodity markets early on and then boosted even more by the safe-haven demand when investor risk appetite soured on the fresh EU debt worries.

The EU summit meeting will still occur Wednesday, at which time many believe credible measures to deal with the crisis will still be implemented. We’ll see. Many market watchers are reading the situation with skepticism and rightfully so. The safe-haven gold market has and will likely continue to garner at least some underlying investment demand from the EU debt crisis, as we saw today.

Many market watchers perceive the EU bailout package and further measures to shore up the U.S. economy will amount to more quantitative easing by central banks (read that printing more money). This is one reason commodity markets, including precious metals, have seen price strength this week. When currency markets become over-inflated, hard assets like commodities come into more favor with investors.

The U.S. dollar index is traded firmer Tuesday, also on safe-haven buying. The dollar index remains in a short-term downtrend on the daily chart, however, and that’s an underlying bullish factor for the precious metals.

The London P.M. gold fixing was $1,656.00 versus the previous P.M. fixing of $1,652.00.

Technically, December gold futures prices closed nearer the session high Tuesday and hit a fresh four-week high. Bulls Tuesday gained fresh upside near-term technical momentum to re-establish a four-week-old uptrend on the daily bar chart. Prices also pushed right up to strong resistance at the August spike low of $1,705.40. A solid push above that level would likely set off fresh buy stop orders to push prices even higher. Bulls now have the near-term technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at $1,750.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,600.00. First resistance is seen at $1,705.40 and then at $1,725.00. First support is seen at $1,675.00 and then at $1,650.00. Wyckoff's Market Rating: 6.0.

December silver futures prices closed nearer the session high Tuesday and hit a fresh four-week high as the bulls also gained fresh upside near-term technical momentum to re-establish a five-week-old uptrend on the daily bar chart. The silver bulls now have the overall near-term technical advantage. Silver bulls' next upside price objective is producing a close above strong technical resistance at $33.585 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $29.935. First resistance is seen at Tuesday’s high of $33.335 and then at $33.585. Next support is seen at $32.50 and then at $32.00. Wyckoff's Market Rating: 6.0.

December N.Y. copper closed down 330 points 341.60 cents Tuesday. Prices closed nearer the session low and did hit a fresh four-week high early on. The key “outside markets” were mostly bearish for copper Tuesday, including a firmer U.S. dollar index and lower U.S. stock market. Still, a bullish double-bottom reversal pattern may be forming on the daily bar chart. Copper bears still have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 370.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support 320.00 cents. First resistance is seen at 345.00 cents and then at 350.00 cents. First support is seen at Tuesday’s low of 335.80 cents and then at 330.00 cents. Wyckoff's Market Rating: 3.0.

¤
Oct 25, 2011 - 8:26pm

The clock is ticking...

Despots Beware

Victor Ndula

Tick..tock...tick..tock.

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