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

Silverman
Oct 25, 2011 - 11:56am

Never ignore daily and weekly

Never ignore daily and weekly indicators. Hourly charts will fool you.

johnboatcat
Oct 25, 2011 - 11:59am

Very nice Erick!

Now go type some more and see if you can do it again!

Tom L
Oct 25, 2011 - 12:00pm

DrJ

You may be right that today's action is not indicative of relationship change. But, OTOH, these are important days. WTIC just broke above its 288 and 144 EMA yesterday. It's piling on today.

Here's the ratio chart tell me what you see:

https://stockcharts.com/h-sc/ui?s=$TYX&p=15&yr=0&mn=0&dy=6&id=p73198402868

I see a coiling pattern that is due to break to the upside at some point soon. Everything is in lock-step until it isn't.

Ta,

Hammer
Oct 25, 2011 - 12:01pm

This comment would be funny

This comment would be funny if it wasn't so childlike.

Raising the retirement age is one of the key economic reforms demanded by the country's EU partners as a condition for supporting Italy's bonds.

But Mr Bossi dismissed the idea, saying: "I'm not touching our pensions, which are fine, to bring up the age to 67 just to please the Germans."

I am still cautious on the numbers personally. It will be interesting to see if today's gains hold in the coming period.

OC15
Oct 25, 2011 - 12:03pm

@Shill

Why are you so bitter about Ivars calls?

Bay of Pigs
Oct 25, 2011 - 12:04pm

Cando

Look at the move in gold in the Loonie today. Bank of Canada slashed it's growth projections. Interest rates will likely remain at 1% for all of 2012.

$1730.60 +63.91 +3.83%


Oct 25, 2011 - 12:05pm

Turd vs Blythe's Monkey

Nice call Turd! "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. "

Gold at 1700... now through the resistance

Who's your daddy.MPG
Eric Original
Oct 25, 2011 - 12:06pm

thanks guys

Thanks for the comments and pm's about that post.

Goes to show there's more to me than bacon, beer, and British Sovereigns! Bwa ha ha ha!

Need to log off and get busy on some chores now. Catch you later.

¤
Oct 25, 2011 - 12:07pm

USO calls

Might be a good day to check my trading account and see how they're doing.

I have about 80 of them out into Jan.12' that I've been holding.

Maybe I'll wait a bit until the news behind it actually breaks. I'm pretty sure what it's going to be all about.

JackPutter
Oct 25, 2011 - 12:07pm

I'm generally cautious about

Alex Jones, but dang, the police state is something we have to work against.

https://rt.com/usa/news/civil-liberties-national-security/

Louie Two Gun Tobin
Oct 25, 2011 - 12:09pm

Modern Day Prospector

Dear Two-Gun-Tobin,

Must you torture us so? It is bad enough that you won the hat and we didn’t but you have to post all of the cool pictures of your hat having so much fun. Reloading on your Dillion Press, prospecting, and cool fishing pictures too! Its, its, just more than I can bear!

The great bounce in silver today will have to be my consolidation!

tpbeta
Oct 25, 2011 - 12:10pm

Very interesting

I would have thought that the possibility of a credit event would be $ positive and PM negative. I can only conclude that either:

(a) it's going to play out differently to 2008 and this time go straight to QE expectations, and skip the PM collapse stage.

or

(b) this isn't the main event.

Shill
Oct 25, 2011 - 12:13pm

MO Nov call  $28 strike,

MO Nov call $28 strike, before earnings. maybe we can get another pay day here.

Best of luck.

(Excuse me that was November call. )

Shill
Oct 25, 2011 - 12:18pm

Why are you so bitter about

Why are you so bitter about Ivars calls?

I blame the green Apple I just ate, it always leaves me on the bitter side.

FriedEggs
Oct 25, 2011 - 12:22pm

1700

.

Fried(e)

Lightning
Oct 25, 2011 - 12:23pm

QE3 Leak?

This thing is moving like a QE3 leak. We haven't seen a spike up like this in a very long time. Love it.

silver foil hat
Oct 25, 2011 - 12:25pm

I smell TPTB painting a double top from April's high

under the cover of a debt downgrade soon.

With all due respect to Turd, the charts are manipulated, so look to the options in addition.

I think that they will paint the chart for a double top.... then depending on who emerges as the front-runner around April / May next year will help determine where PMs go from there.

BWTFDIK?

Shill
Oct 25, 2011 - 12:25pm

Philly Fed: The Federal

Philly Fed:

The Federal Reserve bank of Philadelphia has released the coincident indexes for the 50 states fo r September 2011. In the past month, the indexes increased in 30 states, decreased in 13, and remained unchanged in seven for a one-month diffusion index of 34. Over the past three months, the indexes increased in 30 states, decreased in 16, and remained unchanged in four (Kentucky, Maryland, Mississippi, and New Mexico) for a three-month diffusion index of 28.
atarangi
Oct 25, 2011 - 12:27pm
paulindoon
Oct 25, 2011 - 12:30pm
RedRover
Oct 25, 2011 - 12:33pm

First Objective Achieved [ 33.01 @ 12:30 (EST)10/25 ]

Success, Turd!

First Milestone Objective of Silver @ 33 bid price, achieved [33.01 @ 12:30 (EST)10/25]

beardeus
Oct 25, 2011 - 12:33pm

I'm kind of turned on right

I'm kind of turned on right now.

backseatdriver
Oct 25, 2011 - 12:35pm

beardeus

Thank you for that huge belly laugh I just had. Too freaking funny.

BSD

Timer
Oct 25, 2011 - 12:36pm

Word from the conspiracy

Word from the conspiracy world is that the computer market rigging programs that have controlled the gold and silver markets since they were invented by Alan Greenspan in the 1970's... HAVE BEEN TURNED OFF! This is coming from Benjamin Fulford and others but if it is true we are about to see the REAL Fair Market Value of gold and silver for the first time in 40 years! Buckle up for massive volatility never before seen in our electronic, computer based virtual world of PHANTOM ASSETS. I will be releasing Part 2 of my Silver Summit speech that deals with the origins of computer market rigging and silver derivatives sometime this week...NICE TIMING :-) Stay strong....Stay in Physical in your possession. Our little Road is about to get very BUMPY. Bix Weir

www.RoadtoRoota.com

Rowley
Oct 25, 2011 - 12:38pm

New Silver Trading Stocks

I don't know if this has been posted yet, I haven't seen it, but if it was, I apologize.

For you silver traders out there that don't want to mess with options, there's two new 3x ETFs:

USLV - 3X bull (up 15% today!)

DSLV - 3X bear

As you can imagine, both are extremely volatile, so please do your own diligence. They are however a nice alternative to options that won't expire.

Sim exiledbear
Oct 25, 2011 - 12:38pm

Precious Metals

Hey..the rally since 20 Oct is just in line with the festival season in India. Tommorow ( 26 Oct ) is the main festival " Diwali". From 2 days prior Diwali to upto Diwali there's lots of Gold and silver buying in India. Which is why the rally is happening. Enjoy a long position till tommorow if you have one , else you could build up a short one just before closing tommorow.

Sim

https://mcx-advisory.blogspot.com

T
Oct 25, 2011 - 12:38pm

Spot prices versus a real drill hole

Just random thoughts....... If we know that the powers are manipulating spot prices, and currencies, and the price of oil, and the dollar, and whatever else they want to manipulate in this market....thats one thing to consider....is Any move,up or down, is it real or is it not real. Is it based on a real store of value? like we know what constitutes a value....Silver being mined from the ground is in short supply versus demand....its value should reflect that...but the manipulated price is more dominant in the market.

While a billion Chinese are oriented to buying silver ,(as well as East Indians) .... the spot price just languishes.

But then, almost without rhyme or reason, on any given day, we see prices go up, or down, a little or alot... we see charts being painted to look like a pattern. we hear official explanations for whatever moves happen in the markets.... its hard to know what movement is real or not real. Is it a real breakout? or is it market management of some sort.

I dont know.

But I do know, that if a miner makes a great drill hole discovery....Thats Real. If a cancer research biotech makes a great breakthrough in their studies or tests...Thats Real.

and thats worthy of investing in.

Buying (or selling) Netflix ?? thats very strange,and seems like a casino guessing game.

At least we can see what a bubble stock looks like. Look at netflix chart and remember what it looks like.

Ive been 'investing ' for 3 years now..... and I think I'm getting jaded and uneasy about it.

I never go gambling at casinos. Never. I hate Vegas. Hate all the neon and the whole scene. I have the responsibility of managing our life savings (our Dads inheritance we got) ....and This is where its all sitting ?! in a rigged market casino ?!

Netflix? green mountain bubble coffee? what else now....should I get back into Home Depot? or maybe its not too late to buy Microsoft? no, I guess I missed microsoft.

Bonds?? I sold all my bonds last year . to just invest in the miners and metals. Real estate....REITS...?? are you kidding?

Brazil investments....last year and 2009 I was desperately wanting to invest in Brazil. everything Brazil...and still I do.... but the shine has been wearing off in the 'emerging' markets this year. When will be the right time to invest in Brazil?

Infrastructure. 2 years ago my newsletter guy picked up on the theme of agriculture and food and water as a 'store of value' .... a good idea. I went with it....bought some Hyflux....supposedly a great company , water systems , Singapore, going to strike it rich with China, etc.... that stock has gone Absolutely sideways for the last 3 years. in fact sideways and down.

3 years ago , when we fired our financial investment manager for losing us 200 thousand during the 2008 crash...... his last advise to us was to get iinto Municipal Bonds.....LOL I rest my case.

tpbeta
Oct 25, 2011 - 12:40pm

wtf is going on?

What is causing this? Someone knows something we don't.

Tyler
Oct 25, 2011 - 12:41pm

Rowley

Man, I can barely handle the swings in AGQ. Of course I'll probably be tempted into USLV

Hammer
Oct 25, 2011 - 12:41pm

The FTSE retreated today as

The FTSE retreated today as risk aversion crept in ahead of tomorrow’s crucial European Union summit with some investors just positioning themselves in case of the worst case scenario.

​from The Telegraph

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 6/10

6/11 8:30 ET Producer Price Index
6/12 8:30 ET Consumer Price Index
6/13 8:30 ET Import Price Index
6/14 8:30 ET Retail Sales
6/14 9:15 ET Cap Ute and Ind Prod
6/14 10:00 ET Business Inventories

Key Economic Events Week of 6/3

6/4 All day Fed conference in Chicago
6/4 10:00 ET Factory Order
6/5 9:45 ET Markit Services PMI
6/5 10:00 ET ISM Services PMI
6/6 8:30 ET US Trace Deficit
6/7 8:30 ET BLSBS
6/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 5/28

5/28 10:00 ET Consumer Confidence
5/30 8:30 ET Q1 GDP 2nd guess
5/31 8:30 ET Personal Income and Consumer Spending
5/31 8:30 ET Core Inflation
5/31 9:45 ET Chicago PMI