There. That feels better.
Seriously, though, since I'm not pimping a newsletter or trying to sell you something, it's pretty easy to publicly discuss my faults. I don't have to try to convince you that I'm some all-knowing guru with a tried and true method for predicting market moves. No on is and no one can. If I was right all the time, why wouldn't I be sitting on a beach somewhere instead of spending my time typing this blog?
That said, I do think I've got a better handle on this stuff than most folks so, even though there will continue to be periods like the one we are currently experiencing, I'm going to keep trudging forward confident in the fundamentals and eagerly awaiting the day when true price discovery is finally allowed in the precious metals.
What gets really frustrating for me is my occasional reluctance to trust my own instincts. I'm sure you feel this way, too. Whether it's interpersonal relationships, your dealings in your career or with your family or your financial decisions, we all suffer from doubt. Though we may instinctively know the correct answer, we doubt ourselves to the point where we search for outside opinions in an attempt to confirm or deny our beliefs. Occasionally, those outside opinions sway us away from our original plan/thought/idea. Sometimes this is a good thing. Sometimes this is a bad thing and, when it's bad and you've been influenced away from your correct, original interpretation, you end up "kicking yourself" for being gullible/insecure/foolish etc.
And, so, here I sit this morning. Correct and wrong at the same time. Instead of sticking with my original ideas, I've now gotten myself so twisted up that you, my dear reader, probably have no idea where I'm coming from these days. I kind of wonder, too. So, in an attempt to bring back some clarity, I must try to lay it all out through my favorite method, the black dot chronology!
- First and foremost, none of the fundamentals for owning precious metal have changed. In fact, they've only gotten stronger. LTRO, ZIRP, negative real interest rates and a U.S. government debt that continues to grow at $100B+/month confirm this.
- After being drastically oversold at the end of December, the metals staged a dramatic rally through January and February. This rally was on the back of renewed interest in Comex paper trading as total open interest grew by about 15% in both metals.
- I began writing about a pending "Battle Royale" in late January. The "Battle Royale" lines were going to be difficult to cross as The Cartels would be forced to defend them. I knew they would be defended fiercely because, if price were to be allowed through those lines, enough new money would be brought into the PMs that price would begin to rapidly accelerate.
- It was at that time that the idea began to form in my head that gold would be allowed trade to 1800 and silver to 36 before a smashdown would take place that would drive price back toward 1600 and 30.
- But, then, February happens and I once again begin to fall prey to bullishness. The metals move toward the Battle Royale lines much quicker than I'd anticipated and, because of this, I begin to feel that maybe momentum will surge the metals through Cartel defenses and we will win.
- And then February 29 comes.
- On that day, silver surges through 36 and even 37. The new money that The EE feared would flood the pit is, indeed, flooding the pit. Normally, I would have seen this for what it was...an intentional, last-minute suck-in of the longs before the planned beatdown. Instead, once again, I fell prey to bullishness. Why? See the next bullet point.
- The morning of the 29th was when I first found out about the new silver exchange in China that Ned, Andy et al hope to build and operate by summer. "Perhaps this rally is in anticipation of that", I thought. "Maybe demand is forcing the EE's hand", I hoped. "True price discovery may be right around the corner", I dreamed.
- So, instead of sticking with my original plan/idea from late January, I got sucked into the dream again.
- Now it's back to reality. Obviously, The Cartels intended to defend 1800 and 36 all along. Obviously, the sucked in all kinds of new HFT algo money just in time to fleece them through the same old, manipulative process they've used for years. Eventually, the "Mississippi Leg Hounds" will have finished their business and physical spot buying will turn the ship. Just like in September. Just like in December.
So what does this all mean for price? Well, lease rates are not signaling that there are declines ahead so that helps:
Total open interest has fallen back but it is still about 5% above the levels we saw in January. The means that The Cartels still have some WOPR sheep left to skin so we must expect some additional downside.
And the charts confirm this, too. In fact, if I had printed a chart back in early February and drawn "future price action" onto it, I would have likely drawn something that would look remarkably similar to the actual daily charts below. Price did indeed move up to the Battle Royale lines. Then there came a blistering, manipulative Cartel event. And now we are moving down toward a reverse head-and-shoulder bottom that will inspire aggressive physical buying and provide us a bottom if the next 5-10 days.
OK, lets' wrap this up. What do we know?
- I must fight the temptation to doubt myself just as much as much as anyone else.
- I must stick to my convictions.
- If I allow myself to vacillate, I become just as worthless as countless other newsletter Carnacs.
- The last two weeks of PM price action is simply another Cartel-manufactured robbery of WOPR and trader wealth.
- This "correction" will end at a price where physical buying stems the paper selling flood.
- Gold will bottom somewhere between 1650 and 1600. Last week I mentioned "splitting the difference" and calling it 1625. I'll stick with that.
- Silver will bottom somewhere between 32 and 31 with an outside shot at a sharp, brief plunge toward 30. For analysis of both, I refer you back to this post from last Tuesday: https://www.tfmetalsreport.com/blog/3488/impending-bottom-gold-and-silver
- Prices will then reverse and turn higher. Gold will move back through 1680 and then 1725. Silver will trade back above 33 and 34.50.
- At those points, you'll know that Battle Royale II is right around the corner.
- Let's look for a bottom in the next 5-10 days for both metals. Let's look for Battle Royale II before the end of April.
That's all for today. The Turd has plenty of springtime yardwork and preparation to do so I'm hitting the "SAVE" button and walking away. Please keep the faith and trust your instincts. Your eyes and your brain do not deceive you, the media and The Cartels do. Don't let them. Be patient. Be strong. Physical precious metal is your only protection against this ongoing financial disaster. Don't let anyone talk you out of it.