Squeeze Play

Fri, Jun 29, 2012 - 10:34am

It's hard to tell just who got squeezed first and the hardest. The equity shorts? The crude shorts? The gold shorts? Nope, those short the Euro are the ones really getting squeezed today.

Take a look at this chart of the $/Euro. Yes, that's 2.5 points (2+%) in about 10 hours overnight, while the U.S. slept.

And once the ball got rolling, it was only a matter of time until it smashed into everything dollar-priced. As I type, crude is up $4.21 to $81.90. The S&P 500 is up 23 points to 1352. And, of course, our precious precious have jumped higher, as well.

And just in time, too! Yesterday in silver was pretty scary. Price hung on the edge of support for most of the day. Had the area between 26 and 26.25 failed to hold, silver would have fallen very quickly. There is still the possibility that a stop-clearing, vomit-inducing drop may materialize if the coming days but it doesn't necessarily have to. Just pay attention and don't panic IF it does.

This next chart shows you how tight things are getting in silver. There is a tendency among chartreaders to see "descending triangles" and think that they will lead to breakdowns in price. I've always thought it was a sort of optical illusion. The downward-sloping line simply has more "eye appeal" and makes you think that the downtrend will carry the day. Look, however, at the strength and duration of the horizontal base. It's much longer than the horizontal line and therefore more likely to win the day. We'll see.

One more silver chart. Here's a 12-hour which shows you the current $27-29 range. Yes, there was a foray above and the recent drop below but, for all intents and purposes, silver has been stuck in this range and basing for almost 2 months.

Gold continues in a similar, basing pattern between 1530 and 1630. If you look closely, the support for gold consistently comes in between 1530 and 1550 and yesterday was no exception. Considerable physical demand below 1550 is the key to this support level.

And just for fun, here are the 5-minute charts for gold and silver. Note two things:

  1. The initial caps for the day have been set. Gold just above 1600 near 1602 and silver near $28. Further note the significance of $28 on the daily silver chart posted back up this page.
  2. Rather than acting in tandem, silver peaked a full 20 minutes before gold. Interesting.

That's all for now. The rallies continue and isn't that fun?! Nice to end the week on a happy note for once. Again, this week's CoT will be quite interesting so please check back after 3:30 EDT as I'll be adding some comments then. Also, I recorded a very interesting podcast with John Williams of ShadowStats yesterday. I'll be posting it later today, too.

Thanks again for a great week. It has been stressful but fun. TurdTalksMetals is getting all of its kinks worked out and the initial reviews are positive so I want to thank everyone who is participating. Have a great weekend!


About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 29, 2012 - 10:38am

yada yupper


and a good Friday to bee 2nd thank Turd for all the great help

offf to thr pool!

Jun 29, 2012 - 10:39am


I'm all in

Jun 29, 2012 - 10:41am

Great Stuff

Thanks Turd.

Interestingly, Standard and Poor’s downgraded the United States’ credit rating for the first time ever last year. Yesterday, Egan-Jones credit ratings agency downgraded Germany by one notch from AA- to A+ with a negative watch. The effort to reevaluate the meaning of “zero risk” appears to be long overdue.

While we do not expect the proposal to make gold prices skyrocket overnight if approved, as gold bullion positions will be hedged, it does aid the recognition that gold is an important financial asset that lacks counterparty and downgrade risk, making it the ideal safe-haven. Some of the world’s largest and most powerful organizations have already realized this. The Bank for International Settlements, which is basically an international central bank looking over other central banks, recently released its latest annual report. It showed that the BIS reported a profit of Special Drawing Rights 758.9 million. However, about 15 percent of that profit came from the sale of physical gold and the repayment of gold loans. Apparently, gold is not as lifeless as some may think...


John Galt
Jun 29, 2012 - 10:45am

Thanks Turd

Enjoy your weekend!

Jun 29, 2012 - 10:53am

First, though I know some of you hate this sort of thing

…It's nice to be first on an up day. At least that's how it's starting out. So rare anymore. Hope we get more of them with increasing frequency.

In the meantime, here's some eye-candy to make the top spot a little more interesting:

And not to be outdone:

Jun 29, 2012 - 10:56am


Interesting to watch Gold hit that wall (ceiling) at $1600 and then hold/hover. To me it underscores the control that is in place on this market (of course, this is simply my anecdotal view). Whether it's Algo driven or psychological (or a bit of both), the Cartel still maintains a strong grip. A line is drawn in the sand and that line is held.

Good gosh - I wonder what would happen if that "control" were released.

The Springbok
Jun 29, 2012 - 10:58am

I have a question...

Turd, how does Sprott get his physical silver for his funds? Is it via London? If the point of the comex is to shake so many leaves off the silver tree that barely anyone takes delivery after first notice day, could Sprott, with their deep pockets, stand for delivery (especially in this July month). Harvey Organ is suggesting that after today there could be nearly 6000 contracts standing for delivery. Wouldn't that be enough to clear out the so called comex inventory in just this one month?

Or Am I completely way off the mark here....

Short Stack
Jun 29, 2012 - 10:59am

Oh what a new day brings...

Sat up this morning and immediately felt ill from memory of yesterdays SCOTUS ruling.

After sipping on some java and trying to keep my oatmeal down, I took a gander at the PM spot prices and suddenly felt like I could hold down something better for breakfast.

Regarding the SC decision, any federal tax, must begin in the House of Representatives. As I recall, the Obama Care Bill began in the Senate. A tax bill must be a tax bill, not a Commerce Bill.

As for the PM going up, well, let's just say I'm not the only one who woke up feeling ill.

Jun 29, 2012 - 11:00am


Miners continue their sorry performance. So far Gold up 2.6%, miners (supposedly leveraged to gold) up a paltry 2.5%. With all the pair trades it is very hard for both miners and gold to go up at the same time. Plus gold never leads, which makes me think we will have a sizeable retrace before any real move up. Miners have to lead.

Silver is money
Jun 29, 2012 - 11:01am

Bear rallies are generally sharp and intense

Bull market rallies are not.

From another board:

"I have described typical bear market rallies as having certain characteristics.
Simply put, they happen quickly, they are sharp, they feel good but bury you
quickly... after many investors are sucked in.


Cries of a new bull market were heard across the land but to no avail.
The market would not cooperate. These occurrences have happened in past bear
markets. It is very tough to ignore these rallies. During these times,
investors who have lost money are wanting to make it back any way, shape or
form...usually jumping the gun."

Is this the real deal? Maybe. But this is our THIRD $50+ move in gold bottom to top (24 hr period) in the past 7 months (Jan 25, June 1 are the others). Is this time different?

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

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Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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