The Impenetrable 1750
This is the first of two posts today as I try to get caught up from yesterday. The metals have rallied nicely while The Pig has fallen but, of course, the question is: What happens next?
Our buddy, "Ranting Andy" has ranted for years about the predictable nature of The Cartel's beatdowns, noting that they often occur at the same time, nearly every day. Earlier this week, we saw blatant, unhidden manipulation on the LBMA at precisely 3:00 am EST. Today, for whatever reason, the 3:00 am attack wasn't quite as sharp so the responsibility fell to their brethren on the Comex. As you can see below, the monkeys barely misses a beat.
As often stated here, I don't really care if you agree or disagree with me regarding the manipulation of PM prices. If you choose to remain in NormalcyBiasLand, hoping and praying in the illusion of "free markets", knock yourself out. I'm just here to tell you what I believe and, to me, it is very clear that the precious metals are actively manipulated and suppressed on a daily basis.
Does this mean that gold is going straight down from here? Of course not! The fundamentals remain extraordinarily strong. The Cartel simply fights to keep prices "under control" for a variety of reasons.
This brings us back to the title of this post. Why is $1750 being defended so vigorously? Well, it serves two purposes:
- Perhaps by holding the line at 1750, The Cartel can discourage enough spec long buying that gold will eventually roll over and get trapped in a box roughly bounded by 1700 and 1750.
- However, since this is unlikely, the main purpose is to suck up buying pressure at 1750 so that those funds are unavailable for use at 1800.
You see, $1800 is the real deal, The Battle Royale. When gold finally breaches that level again, on a daily and weekly basis, it will be cleared for a run back to the old highs of 1900+. Of course, The Cartel will be ready and waiting there to attempt to paint a double top but they'd rather not fight that fight. From their perspective, it would far preferable to instead hold gold below 1800. So, here's what I expect: I think gold will continue to struggle with 1750 for a while, maybe even another week or so. It will then break higher and through 1750 and 1760 and begin its run toward 1800. $1800 will be a Battle Royale.
Again, as discussed here ad nauseam, much will depend upon short-term changes in the POSX. Having fallen through its two-week floor yesterday, it will be interesting to see if the 78.80 (March) level will act as resistance today. I suspect it will and I'm looking for The Pig to fall toward 78 before the next level of support emerges.
Silver continues to look the best of all. It now appears to be building a base above $34, which is exactly what you would hope it would do following a successful breakout through resistance. Watch the level between 34.40 and 34.50 as a clean break through there will mean that the move is on to $35+. I would advise you against getting sucked in at this point, though. Silver is going to encounter very stiff, EE resistance between 35 and 35.50. That area will be Battle Royale I for silver. Battle Royale II will be the down-sloping trendline off of the April and September highs. That line currently resides around $37. The moral of the story is: The quick, easy money in paper silver is just about over. We'll need silver to fight and win the two Battles Royale before we can go aggressively long again.
Finally, just some cleanup of some headlines from yesterday and today. First up, there's this headline from RanSquawk that I saw earlier today on ZH:
"Iran and China to discuss alternatives to the USD; to discuss alternative currency oil trades according to the MEHR news agency"
Hmmm. Any chance that the headline above is related to this:
Lest you think there's actual hope for austerity and fiscal sanity in the U.S., I give you this:
And one last note about the ridiculously fabricated BLSBS numbers from last Friday. Our buddy, Jim Quinn, chimes in below:
OK, that's all for now. Give me a few hours and check back for that post on the miners that I've been promising you. Have a fun day! TF