Revise and Extend

Fri, Dec 30, 2011 - 9:50am

Just wanted to take a moment and add a few thoughts to the previous post.

I wrote that post late Wednesday with the intention of keeping it up all day yesterday. I had a hunch that The Cartel would try to gun the PMs yesterday and they did. Is it a concern that they were able to smash gold through 1550? Of course. However, it's not the end of the world by any means.

Remember, I'm just working with a ruler and a sharpie here. I've been saying 1550 for a couple of months now based upon where I eyeballed the trendline from the 2008 lows. The key here is that 1550 was/is an approximation. Thankfully, several posters to the comments of the previous thread were able to define the trendline more exactly.

First up, "goldfinch" pointed out that Louise Yamada had been on KWN back on 12/6, basically giving the same numbers that we have been discussing here. As you know, Ms. Yamada is the only technical analyst for whom I have great respect. Her history and track record speak for itself. To discover yesterday that she is looking at the same charts as little ole me made me smile a bit. Maybe I have learned something over the years.

Just a few minutes later, "kazooclown" posted a more accurate representation of the weekly chart. I've reprinted it below so that you can see where he has drawn the trendline. As you can see, it's considerably below 1550.

Anyway, there are three important points I want you to take away from this thread:

  1. 1550 was not a hard and fast number. It was a projection and a guess. Therefore, failure at that exact level is not cause for extreme alarm and concern. That said, failure at 1500-1515 would, quite obviously, be a cause for extreme alarm and concern as both Yamada and "kazooclown" have shown us.
  2. Yesterday was not likely the bottom. It could have been but it probably wasn't. If 1500-1515 is, in fact, a better representation of the trendline, then we should all be prepared for gold to trade down close to there sometime early in 2012. This final move down in gold will likely also cause silver to move down close to its long-term trendline near 25.
  3. And this may be the most important point so I'll reprint it from the previous post: "So, here we are, caught in this strange new paradigm of extreme physical demand in the face of plummeting paper prices. In this environment, why on earth would we expect the gold price to suddenly stop and reverse exactly at some trendline on the chart? That makes no sense. The trendline is a reflection of market price history that simply has no bearing on today. Simply put, the trendline held in the past because investors still had some measure of faith and confidence in the current system. But this is the dawn of a new day. The Comex is dying. Soon, the spread between the price of paper and physical metal will diverge to such a point as to make the Comex an obsolete joke. But that day isn't here yet. It may still be weeks or months away. Until then, the imbalance between buyers and sellers will only increase so I expect the price of paper metal to decline even farther. All of this likely makes my little trendline as obsolete as a sliderule."

So far this week, open interest has held in there. In fact, its even expanded a little in silver. As long as total OI stabilizes above 400,000 in gold and above 100,000 in silver, we can consider the Comex to still be "alive". So, under those conditions, I have a high degree of confidence that the long-term trendlines will hold and will function as support as gold and silver finally find their bottoms from the manufactured declines of the final 4 months of 2011. The bottoms may have occurred yesterday but I think it's likely that we will see a final, capitulation event early in 2012 where gold drops into the 1500-1515 area and silver touches 25.

Lastly, as a pick-me-up, here's a fun little nugget I found while searching KWN for the Louise Yamada clip. It's an interview of the genuinely smart Egon von Greyerz of Matterhorn Asset Management in Switzerland. I think it will put a smile on your face and let me just say, I don't disagree with him...$3,000_-_$5,000_in_2012.html

OK, that's all for now. I plan to type up a kind of month-end and year-end summary later today or tomorrow so keep checking back. Have a great day. Smile and be happy. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Be Prepared
Dec 30, 2011 - 10:17am


My plan for 2012

Dec 30, 2011 - 10:18am

Looking for a touchstone

Let's see, we could be in a time when technical analysis doesn't work for precious metals.

I've read often that fundamentals don't necessarily work for the shiny stuff because they are a manipulated market.

That leaves us with?????? Hold, hope and pray???? Avoid at all costs and break out the canned bacon??????? Retreat to the cave with the stacks of precious metals and plenty of lead, for keeping said stacks??????

Dec 30, 2011 - 10:19am

Ten Consequences of "Tax the Rich"

We all know the US is broke. The only way to remedy the situation is to stop spending. The US has a spending problem, not a revenue problem. Taxing the rich won't get us out of this one.

Ten Consequences of "Tax the Rich"

Be Prepared
Dec 30, 2011 - 10:23am

@LaMachinna - Patience, Understanding and Flexibility

Thanks for your thoughts on my previous post!

Medicine Needed:

Patience: You have to remember it takes a great will to hold your line when no one is standing with you.

Understanding: You know why you invested in Miners and its that understanding that will eventually pay off.

Flexibility: Be Nimble enough to move your miner investments as required, because the picture is changing all the time.

Be Prepared
Dec 30, 2011 - 10:27am

@Shill - Mayan 1-year Bonds?

Shill - I must not be getting it..... Do you have a link? I must be slow today. :-{

Eric Original
Dec 30, 2011 - 10:27am

I always hat tip any post

I always hat tip any post that mentions "canned bacon". Yum.....................

Have a great weekend everyone! The Rose Bowl should be awesome! Go Badgers!!!

Be Prepared
Dec 30, 2011 - 10:34am

@Eric O I always hat tip when you mention your bacon passion

I share your bacon passion and I am sure it starts when you are young!

Dec 30, 2011 - 10:36am

International Bacon Day is TODAY!

International Bacon Day or Bacon Day is an unofficial observance, often celebrated on December 30th.

Bacon day celebrations typically include social gatherings during which participants create and consume dishes containing bacon, including bacon-themed breakfasts, lunches, dinners, desserts, and drinks. Bacon Day gatherings may also include the consumption of soy bacon or turkey bacon.

Bacon Day was conceived in Massachusetts in 2000 by the residents of the Crag, and was supplemented in 2004 by a group of CU Boulder (Colorado) graduate students. Bacon Day in Manchester UK is celebrated by several students on the 14th January, prior to January examinations as a distraction from revision. Bucknell students are also known for their bacon day celebrations, calling themselves "Meatheads", and gorging on as much bacon as possible.

Eric Original
Dec 30, 2011 - 10:43am

International Bacon Day??

OMG, that's awesome!!!! Gonna have to add that in with RamaHanuKwanzMas! "Happy Holidays" takes on a whole new meaning for me now.

Dec 30, 2011 - 10:45am

Good morning all....

I think we saw our gold/silver low's for awhile. That's what the charts seem to be saying since pre-market yesterday. It's been upwards since. And for what real tangible reason?

It's the end of the year and the sell off for tax purposes and fund repositioning has been completed. The situation in the EU has much to do with all of this obviously. I don't see us going below $1500 or $25 unless some huge war breaks out or the Euro collapses in a very sudden and ugly way.

In hindsight, it would have made no sense to do a QE or whatever just before years end in Nov. or Dec 11'. Not enough time before this year ends due to tax positioning/ mutual ( and hedge) fund repositioning for the big boys to fully take advantage of any new monetary easing. My guess is it happens in the January FOMC at months end. Or at least the hint or language to propel interest back into the commodities sector. There is so much money on the sidelines that at some point they will entice a portion of it back into the marketplace so they can fleece it slowly.

The bait to get money back in will be some form of easing whether it's implied or actually instituted. Whether it's in the form of silent massive swaps with the Fed or something else we don't entirely understand at this point is another matter.

Were in uncharted territory so the obvious might be unrecognizable, for now. I believe they have something in place that's made all the recent EU hand wringing and rhetoric fade away.

Think about it. I hear silence for the most part since that last EU meeting in Brussels.

Here's your daily virtual news...(if anyone is interested)

Thanks for the new thread TF.

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