The Impending Bottom in Gold and Silver

371
121
Tue, Mar 6, 2012 - 10:11pm

What a difference a week makes! Just last Tuesday, this site was aflutter with expectation and hope. Silver appeared to have won its "Battle Royale" and was threatening to take gold along with it through stout Cartel resistance. Ehhh....not so much. So here we are, one short week later, and despair reigns supreme, replete with frustration and fears that our precious precious metals are about to swoon to levels not seen since 2010. I'm here to tell you that that is complete nonsense.

First of all, a little something I've got to get off my chest. Since this little endeavor began 17 months ago, I have never been anything but upfront and honest with you. In one of my very first posts, I explained the reason why my version of technical analysis works. Namely, because the PM "markets" are so grossly manipulated, basic TA can direct you to buy signals and sell signals, resistance zones and support levels. So simple, even a Turd can do it.

https://tfmetalsreport.blogspot.com/2010/11/turds-crystal-ball.html

Lately, however, its become fashionable to ridicule technical analysis. All the cool kids seem to be saying: "Charts are worthless. TA never works in a manipulated market". Hmmm. Isn't it interesting that that seems to be 100% opposite of what I've always claimed? Interesting, too, how these comments seem to multiply during periods of price weakness. But I digress. All I can tell you is that I fully believe in the value of my "abilities". Am I going to be 100% correct? Of course not! I don't work for Goldman Sachs. However, as long as The Cartels continue to dominate the paper markets for precious metal, price forecasting using basic technical analysis will continue to work.

Ultimately the question is, do you still want to play? Your #1 best option is still to stack and hold physical precious metal. Always has been, always will be. In the meantime, if you'd like to fiddle around trading, attempting to cobble together extra fiat with which you can acquire even more physical, I will continue to provide analysis, hoping to be right more often than not.

Back in December, there was reason to think that the paper game was ending. The ugly demise of MFingGlobal had frightened many traders and, more importantly, many Departments of Compliance. As you'll recall, it was very difficult to get excited about buying the late December dip because no one could be certain at the time that the "market" for precious metal would ever be the same. What if traders and investors exited the Comex altogether? Would we see total open interest in gold decline through 400,000 contracts and head toward 300,000? Maybe even 200,000? With these doubts, the entire idea of TA was dubious at best. How can you technically analyze a "market" if the "market" in question is ceasing to exist?

I believe we got our answer in January and February. Instead of collapsing, The Comex rebounded. Trading volume and open interest slowly returned. Not to the levels of mid-2011, mind you, but enough that I no longer have any doubt as to the continued viability of the Comex paper metal platform. (Let me put that in English. Instead of abandoning the Comex, large spec money returned en masse once the metals began to generate some upside momentum. Those specs are currently being fleeced again by The Cartels but, as sure as spring follows winter, they will return again once price bottoms.)

So, now that I've made it clear to you that I continue to fully believe in my technical analysis ability and now that we know that, fundamentally, nothing has really changed post-MFG, it's time to start looking for a tradable bottom to this latest Cartel-induced fiasco.

Before we get to the charts, I urge you to click the link below. The post to which you'll be directed is a little something I cooked up back in early January, the last time we went bottom-searching. Please re-read it now as a sort of primer for what I'll present to you next.

https://www.tfmetalsreport.com/blog/3246/other-technical-indicators

Look, I'll cut to the chase: Gold and silver will soon reach a bottom for this manufactured "correction". Of this, you can be certain. Silver is not going to $20 and gold is not going to $1250. They're just not. The awareness level is now too great for that to happen. Global investors and central banks see what is coming. They know that The Great Keynesian Experiment is ending and, with it, our reliance upon unlimited fiat money. At a certain price, physical demand will always appear and paper price will bottom and trend higher. Period. All of the never-ending, deflationist nonsense has nothing to do with the long-term price of silver and gold. We know that The Fed and the ECB will stop at nothing when it comes to printing their way out of this morass. This continuing fiat devaluation will only serve to make physical metal more valuable, not less. Dips will be bought and price will continue to trend higher. And you can forget about The Cartels rigging price down to zero, too. As long as physical demand remains strong, paper price must be allowed to rise in tandem with physical price, otherwise The Comex and LBMA will sink into irrelevance. Since this cannot be allowed to happen either, we're left with "markets" that will bottom and will resume trading higher. Eventually.

So, the question is: How much farther can we expect price to fall in this current "correction". The answer is: A little farther. Let's begin our chart parade with daily gold and silver that also have their MACDs on them. Note that both of these charts, while beginning to look oversold, are clearly not there yet. A little more weakness in both metals ought to do the trick.

Next, let's examine the daily gold and silver charts with RSI measurements on them. Again and, as you can see, an RSI of 70 is generally considered an indicator of a short-term top while an RSI of 30 seems to indicate a bottom. Note that both of these charts seem to imply that further weakness may be needed before we get can confidently predict a bottom.

So now let's look at just a plain, old price chart. Do we see evidence that further declines are imminent? You bet! Take a look for yourself. Once gold broke 1690, it indicated a minimum further drop to around 1650. I'd say its at least heading there and probably heading as low as 1625 or even 1600. You should be asking yourself: Would a further drop of that magnitude move both the MACD and RSI into oversold (bottom) territory? The answer is: YES!

Silver, same deal. By taking out 32.80 today, the chart now indicates a further drop to at least 32, maybe even 31. Heck, if The EE really hits the gas and gets a little headline "help" out of Europe, $30 silver isn't out of the question. Again, would a drop toward $31 bring the MACD and RSI into the "buy zone"? Yep.

I could go on but it's late, I'm tired and I have to go pick up LT#1 from ballet class. Let's just leave it at this:

What we are currently experiencing is nothing more than another Cartel-manufactured fleecing of the momentum-chasing, WOPR-oriented spec longs that flooded into gold and silver in the 2nd half of February. The Cartel was forced to act when price reached the critical "Battle Royale" zone on the price charts, documented here days and weeks in advance. Price will soon bottom and begin to recover. Therefore, do not let your heart be troubled. Owning physical precious metal is your only protection against the financial calamity and reset that is coming. Please do let let anyone, on this board or elsewhere, convince you otherwise.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  371 Comments

ivars
Mar 8, 2012 - 4:34am

Victor

Thumbs up for very interesting information within a well structured theory.

However, can You just explain one point that bothers e.g. stackers as well- why do You mention e.g 1000 USD/oz as a price where something will happen in the system? Why would in the period of moving away from USD as reserve and inevitable ( in my thinking) US default (at least partial) USD gain value relative to gold so significantly?

Or have I misunderstood something in the prices You mention?

Thanks for Your time if You will reply.

tanjr364
Mar 8, 2012 - 4:39am

1702 n 34.05

is the storm in a tea cup correction finally over?

achmachat
Mar 8, 2012 - 4:40am

@50sQuiff

I admit that I haven't read Victor's entire story-line here yet, so I don't exactly know what you're referring to when you talk about buying gold in European banks. Nevertheless, I want to add that in many European countries, for example the one I live in, the banks are the safest place to go to buy (and sell!) gold coins! (maples, kruger rands, etc.)

and, it's all tax free.

edit: I suppose it's tax free because they kind of admit that it's real money? It can't be just because it's legal tender from various countries, because the silver bullion coins (even from EU countries like Austria) are taxed; even though just 7% instead of the usual 19%.

Stardust
Mar 8, 2012 - 4:54am

Thanks Turd

This is absolutely the best thread I've ever read ;

Of coarse, I thought that yesterdays was the best, and so it goes.

I'm leaning on Silver for now and when the time is right I will switch to all Gold.

Learning about the GSR to use it for my advantage...

This site is truly amazing. I'll keep learning and keep stacking.

Thank you all...

Ircsum
Mar 8, 2012 - 5:33am

Victor

I'd like to echo the appreciation a number of people here have expressed for your recent input. You're clearly well versed in economics and write with flair & clarity. I've looked at your site and have seen a number of articles I intend to read. Your input here has generated much valuable debate. We all need a good shake on occasion lest we become too entrenched in our views. If I were more learned I'd probably disagree with some of what you've said but I hope you'll continue your input here as we're all the richer for it.

GoldMania3000
Mar 8, 2012 - 5:35am
GoldMania3000
Mar 8, 2012 - 5:46am

The Impending Bottom of the United States of America

https://www.breitbart.com/Breitbart-TV/2012/03/07/Shocking%20Defense%20S...

Our country will see revolution soon. The USA is so messed up at this time due to the nature of our governement-the constitution has been thrown out the window.

koan
Mar 8, 2012 - 5:55am

Victor, hope you can help...

I think I grasp the store wealth in gold/something else as medium of exchange - so essentially the only difference with now is that no government in the world taxes gold, they just leave it to do it's thang, right?

If so then I need help understanding some of the practical matters (if not then I need way more help!):

1. How 'free' is this free gold - i.e. who holds, stores, buys/sells this and what of the costs of all this and how are these costs recouped? I imagine it'll be the same players (LCS, bullion vaults, etc) as now and to store your gold (apart from the bottom of a lake of course) and move your wealth in/out of gold will have quite the overhead so its power of retaining value is somewhat eroded, no? Don't see it being much different to now (e.g. UK doesn't tax for sovereigns etc) so I'd only choose to store my wealth in gold if I have enough wealth to make it worth my while and don't intend to have to cash out often.

2. Most pertinent (FOFOA mentions this model being in the interests of countries too so they won't stand in the way) - but unless I'm mistaken, the real power in this world cares not for the puppets on thrones/in government of bits of land so how will this ever be allowed to come to pass? This moves away from the centralisation of power/control it appears is their intent so barring a revolution beyond which we've yet to see in all history (would have to involve some quick smart education of the masses or we'd just usher in the same ol' same ol' with a different face) I don't seeing it happening (but reserve the right to hope).

As an aside (WARNING: mere humble opinion alert) - don't you think FOFOA and the community over there are a bit, well, bordering on religious zealots (reminds me of Jesus and his disciples)? They hold this as dear as dogma and, from what I've seen, woe betide any who dare to disagree (appears all too often any dissenters are dismissed with a 'you clearly don't understand like us enlightened ones my poor child').

(More opinion) It's touted over there as some utopia/panacea for all ills but until we all take responsibility for our own actions and live honorable, impeccable lives gold, free or not, will matter little.

boatman
Mar 8, 2012 - 5:56am

usual 3AM LME beatdown..........

oh..........wait...........nevermind............

boatman
Mar 8, 2012 - 6:18am

and victor is right

we will not get a gold backed system because the sheeple will not demand it....i know some of them

they will want instant candy even more than now.

we may will get leaders worse than we have now on that promise.

gold/silver the best way to hold/increase asset value til '18 anyway.

ClinkinKY
Mar 8, 2012 - 6:20am

Morning Toons...but first, a TFMR PSA...



There’s a reason they’re called Morning Toons. It’s because they are posted between 6:00 and 7:00 A.M. (EST), before all the “serious” stuff gets going, i.e. Turd’s new posts, charts and discussions of the day by various people regarding the “meat and potatoes” of why we are here.

If you prefer to wake up to “all serious, all the time”: those of you on the West Coast should be fine, those of you on the East Coast just “sleep in” for an extra hour and those of you “across the pond”, well, you’re just going to have to change your sleeping patterns:) Or, you could, as has been suggested before, just “scroll on by” or use your “ignore” feature to avoid the “stupid sh*t”.


(Insert sappy NBC music here)

ClinkinKY
Mar 8, 2012 - 6:24am
ClinkinKY
Mar 8, 2012 - 6:26am
ClinkinKY
Mar 8, 2012 - 6:28am
Be Prepared
Mar 8, 2012 - 6:42am
Be Prepared
Mar 8, 2012 - 6:45am

Hug a Billionaire....

It's the only way this guy's ever going to get one.....

Be Prepared
Mar 8, 2012 - 6:48am
TREACHEROUS CRETINS
Mar 8, 2012 - 6:48am

Franklin Saunders Speech

I've followed the Gold/Silver commentary of Franklin for a long time. Here's a sincere speech of wider perspective - politics, localism,anti GM/factory agriculture and more.........

Rebuilding Your Local Economy - Franklin Sanders.mp4
Big L
Mar 8, 2012 - 7:03am

Victor - what's the difference?

So what's the big difference in your system compared to our current system, other than gold being available in more locations?

People already store value in gold and use dollars for currency. Governments are creating fiat out of thin air and it is less valuable compared to gold. What's the big dif?

When you say.....

'No, I won't lend you gold. That's too precious because it has no counterparty risk. So why deliberately create such a risk? I will be happy to lend you US$. You will pay back in US$. Since you can buy your groceries for US$, you are fine with this. Since I can take the US$ interest you pay me to the coin store and save my earnings in gold, that's fine with me, too. No lending of gold needed.'

That's a huge, and wrong, assumption. The counter party risk would be compensated for by a higher interest rate, that's why people would be happy to lend gold. That's why people are willing to lend to Greece. Lending is basic to human nature, the only question is what and how much?

'In fact, debt denominated in gold is toxic and this is what made the gold standard fail.'

This is a totally unsupported statement. As such it's worthless, and according to history completely wrong.

Once again, Victor, you can't just spin the world around a couple times, get everybody dizzy, then your system will work. What you spinners always forget is the same forces will be at work then, as now. People aren't going to be any different under your system.

Your heart is probably in the right place, but your premise is deeply flawed, and your conclusions are wrong.

If you're not a troll, and if you have the ability to think critically, you should go back through your statements and examine them on a common sense level. Half the work has already been done for you here on these comments.

Big L

Groaner
Mar 8, 2012 - 7:12am

It figures, the metals make a big move up and I am out

I think I made more money when I didnt know anything about the how the markets work. Wait a minute I still dont.

All I know is the jobs report out tomorrow and its tradition for the metals to get hit today or tomorrow.

maybe a $5 drop in gold, watch out!

GoldMania3000
Mar 8, 2012 - 7:12am

Bart Chilton

ON cnbc complaining about oil prices and speculators driving it up. hmm. IRAN, FEDs...i wonder if that had something to do with it. I wonder if we should send Bart and email about dealing with the silver manipulation and address something successfully before taking on another task. Focus...Bart...Focus...show progress on one front before taking on another

Big L
Mar 8, 2012 - 7:32am

Lefties

Think they can control people. They think they can centrally plan, and slot people into neat little spots where we do what we're told and we all behave, because we're told what to do. All they have to do is design the system and poof all the problems are gone.

It's the basic flaw in their premise and it's why their systems always fail, because they don't take into account human nature. It seems terribly obvious, but once you figure that in, it's very clear people always find a way around the restrictions, they find a way to twist it, or form it, or adapt it to what fits their needs, and those in power will always take advantage. It's a human thing to do.

All systems ebb and flow, prosper and fail, that's the NATURE of a system. Just like NATURE they are born and die. It's NATURAL.

An artificial construct can't IMPROVE nature. I always wondered why lefties think they're superior to nature (but I digress...).

Natural forces create improvement, effortlessly, things that don't work fail and new things spring up like flowers in April to take their place.

Having said that.....

If we're to live together peacefully we DO need common morals and values to guide our interactions with each other. Internally generated and personal guide lines for peaceful living. So we control ourselves. And where do these morals and values come from?

OMG! Speaking of living and dying........

Darn it! Did I almost say that out loud!?

Big L

GS_PHYS ivars
Mar 8, 2012 - 7:36am

IVARS it is GRAMS !!!! not Oz

It is Grams !!! 1000 USD/Grams so he is saying it is 3215. May be looking at this price tab change your views on what he is advocating.


Mar 8, 2012 - 7:40am

Comments

@ cliff567 Its good to see a brother on the site. I teach now, but still carry a yellow ticket from LU640, worked mostly out west on big projects, PVNGS in the 80s and Intel in the 90s. Perhaps we have met? Is stacking getting popular in the trade?

@ katie rose With your farm, you have what many of us are aiming for. My stacking is a means to outfit a farm. If you have sufficient silver to jump-start you into a new economy, then I recommend using your available fiat to prepare the farm more fully. I see good sense in improving your well. The solar/wind system has merit, It will run more than just your well. I see it as a sound investment with or without a local power company. You could end your dependence on their electricity with a well designed system. A hand pump is much cheaper. Perhaps you could build a small pump house?

I am enjoying the Victor debate.

opticsguy
Mar 8, 2012 - 7:50am

gold and retirement

My goal when I started buying in 2005 was to have one oz of gold for every month my wife and I plan to be retired (per person). CEF holdings are a bonus. Silver is an investment, as I see it to be severly undervalued. The miners were an investment until last year, and now they're like losing on red at the craps table 4 times in a row. Double down and bet on red again until you get even.

worldend666
Mar 8, 2012 - 7:55am

Why are people calling victor

Why are people calling victor a troll?

Troll (Internet) - Wikipedia, the free encyclopedia

en.wikipedia.org/wiki/Troll_(Internet) - Cached

In Internet slang, a troll is someone who posts inflammatory, extraneous, or off-topic messages in an online community

He's just saying what he thinks here like everyone else. He's certainly not here to spoil anyone's mojo and he doesn't begrudge anyone their opinion from what I have seen.

I have read a bit of FOFOA and all the dissenting points I have seen above have already been brought up ad nauseam over there. There are answers to all these questions and many more. That's not to say FOFOA has all the answers, but he's certainly thought about it from more angles than most.

Let's clear up one thing. That silver is a store of value is not in question. That it is a great investment is not in question. That it has lots of industrial uses is not in question. That there is not enough investment silver to deliver on futures contracts is not in question. The ONLY thing that is in question is whether silver is a suitable form of money in modern times. For various reasons relating to volatility in supply and stock it might not be.

ivars GS_PHYS
Mar 8, 2012 - 7:57am

@GS_PHYS Thanks

Thanks, I was not reading carefully enough...

So its 31103 USD/oz. That is fine, almost 3 times above my 2017 collapse target (and who can know that one with any certainty?) , but at least not below.

Thanks again.

Gold Dog
Mar 8, 2012 - 7:59am

Katey Rose

I read somewhere, I think it may have been FerFal's site, that during a fiat meltdown/barter system all gold is treated as 14 caret.

With this thought in mind I bought some gold on EBay. It does not just have to be rings. On a recent trip to Europe I took two heavy men's gold bracelets with a combined value of $5,500 in case the balloon went up while I was there.(Also took a pretty big wad of US fiat.)

Gold necklaces are also good and I purchased quite a few of those as well. A couple of links and/or inches can be cut off for purchases, bribes etc. to make the correct weight.

If you go this route don't bid on anything that has stones in it and steer clear of the "ribbon" type of stuff, the fabric that holds them together adds to the weight.

My wife and daughter wear some of the pieces on a regular basis so you can pay the same price, usually, for used jewelry that serves the same purpose.

Google up the percentages of 24 caret in the various other caret grades and get a scale and acid test kit,($40.00), so you can test your buys as they arrive.

Coins and bars, unless it is junk silver, will be for bigger stuff after the currency re-sets.

Dog

PS- Make sure you do everything in Grams. A troy ounce = 31.1035 grams.

GS_PHYS ivars
Mar 8, 2012 - 8:10am

IVARS it is GRAMS !!!! not Oz

To be precise 1 Oz= 3.215 Grams. So it is going to be 3215 USD/Oz.

Senseosensei
Mar 8, 2012 - 8:10am

Farms and agenda 21

Wonder if people are aware of agenda 21?

Yeah, here we go again, another tinfoil hat plot.

But one that deserves the attention of anyone dreaming of getting old on their own farm in the US.

The positive explanation of the plan is that the environment will be protected from pollution by mankind. What can be wrong about that you ask.

But the negative aspects of it are in full sight now. Areas being completely shut off from the public. People being driven off their properties for the greater good. Incentives to drive people into big cities. In short, agenda 21 openly targets private property.

https://www.theblaze.com/stories/is-the-soros-sponsored-agenda-21-a-hidden-plan-for-world-government-yes-only-it-is-not-hidden/

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