No, the title isn't intended for those who lacked courage/conviction to hold and buy over the past few weeks. It's simply a reference to where I had breakfast this morning. Just great stuff. Not a better breakfast to be had anywhere on the planet.
Well, we finally got our silver short squeeze today. Very nice to see. As you know, I've been telling you for a while that the spec shorts were being drawn in and set up for a massive short squeeze. Maybe $100 in gold and $3 in silver doesn't yet count as "massive" but it's gratifying, nonetheless. Enough of that, though, the key question now is: Where do we go from here?
From a technical standpoint, gold is ahead of silver as it has been for almost all of 2012. Recall that gold WON its first Battle Royale in late January. From there, it proceeded to rally another $100 before The Forces of Evil stepped in and drove it back down. In classic technical fashion, gold "rode" the Battle Royale line down until it intersected with long-term horizontal support near 1525. Now, having found and solidified a bottom, gold is rolling. It should continue to do so, in stages, until it reaches the line I've called "Battle Royale II", which connects the Labor Day highs of last year with the Leap Day highs of this year. As you can see, BR2 is currently around 1720 but by the time gold catches up to it, it will likely be on the 1700-1710 range.
Even with today's action, silver continues to lag gold. Recall that silver never did win Battle Royale1 back in late February. The Evil Empire allowed for one day of hope on 2/28 before they slammed the door on 2/29. This means that the battle for silver will be two-fold. First, silver must best Battle Royale1. I believe it will do this with much less resistance than it encountered earlier this year. Reason being, the real test will now be Battle Royale II. This line connects the highs of late April 2011 with the Leap Day highs of this year. Battle Royale II currently resides around $34 and will likely be near the always-important $33-level when silver finally encounters it. Once we win Battle Royale II, I will be buying with extreme confidence, every day and on every dip.
So, anyway, this has been a very positive day for the metals. I've been mentioning all week that today would be important as it was the first day back for London after the 4-day weekend. Today's fixes were the first since Friday at 10:00 EDT and it is telling that, even after such a strong paper run-up, demand has been very strong. This has provided the impetus for today's surge higher. Things are looking good here and we should all be encouraged. In the short-term, DO NOT be surprised by a dip/profit-taking that could pull the metals back to 1630 and 29. This would be perfectly natural and set them both up for the next extension toward 1670 and 31.
I'll try to construct a new post later that discusses some of the important events and headlines of the day so please keep checking back.