Expecting A Bounce

238
Thu, Aug 2, 2012 - 3:55pm

Well this week has certainly played out as expected, hasn't it? The question now is: Will tomorrow be the final piece of the puzzle? Will price rally off of a lousy BLSBS report? I'm quite sure that it will. Come on in and I'll explain why.

At the risk of seeming to beat a dead horse, regular readers of TFMR (and subscribers to TTM) know that this week is playing out almost entirely as expected. Last Friday, I had hoped that his week would be an UP week but I put the chances at just 25%. The more likely outcome was an early-week rally, followed by a mid-week beatdown, followed by a Friday rally that leaves the week virtually unchanged. If you haven't yet, you can read all about it here (complete with the obligatory images of the spec sheep being sheared).

https://www.tfmetalsreport.com/blog/4053/get-ready-next-week

So what do we have so far? The early week gold rally never quite materialized as prices mainly attempted to consolidate last week's gains. Silver rallied though, rising by 54c back on Monday. But the rally toward the top of the ranges never happened because the HFTs decided to front-run the Fed and they began to sell in earnest Tuesday afternoon. From there, the gold price fell over $30 from Tuesday high to Wednesday trough and the selling has continued today. After a brief, Draghi-induced rise toward $1615 this morning, The Gold Cartel was able to smash price and even succeeded, by around noon or so, to drop price back through the 50-day MA, which is currently near $1593. Further HFT/algo selling ensued and, before you know it, price dropped all the way to $1583. With the HFTs and assorted other specs sufficiently short, price has reversed and stabilized just below $1590.

So, why do I expect a rally tomorrow?

  • Well, first of all, why not?? So far, the week has played out almost exactly as forecast so why wouldn't it continue? Seriously. The BLSBS will likely drive price back UP through the 50-day MA...which will inspire short-covering...which will push price back above $1600...which will inspire even more short-covering...and so on and so on.
  • Physical demand in London remains robust sub-$1600 in gold and near $27 in silver. This demand continues to put a floor under the paper price and will soon cause another rebound, as well.
  • And look at these charts. The correlation is undeniable. Note that, over the past month, every single time the RSI drops below 40 on these 6-hour charts, price almost instantly rebounds. The average short-term bounce in silver is around 85c and the average bounce in gold is around $30.

The final part of the "prediction" from last Friday was that, in the end, price would finish roughly unchanged for the week. (Upon further review, I'd expect The Cartels to step in late in the day with the intention of assuring a slightly down week and a red candle on the weekly chart.) Last Friday, the Oct12 gold closed at $1618. An "average" rally tomorrow would push it back to...drum roll, please... $1618. Last Friday, the Sep12 silver closed at $27.50. An "average" rally would push it back toward $27.75, up on the week but still below the early week highs near $28.30.

Of course, how would I have any idea what the NFP number will be tomorrow? I'm not a Fed governor or sleazeball, WallSt banker with inside info. I'm simply stating that, because the metals markets are so grossly manipulated on a daily basis, sometimes it's rather easy to predict what will happen next. We'll see.

Of course, if tomorrow does, in fact, play out almost exactly as forecast above, I will graciously accept all platitudes and honoraria. If it doesn't...well, I'll simply delete this post and pretend that I never typed it.

Have a great evening! TF

5:00 pm EDT UPDATE:

​I can't confirm it yet but it appears that silver margins are being reduced on Monday. Keep checking the comments of this thread for updates and/or confirmation.

Also, I just came across this GoldMoney podcast. Alasdair Macleod interviews John Butler. I haven't had a chance to listen to it yet but I'm supremely confident that is is well worth your time.

Death of the dollar: John Butler talks to Alasdair Macleod

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  238 Comments

Jan Roos
Aug 2, 2012 - 3:56pm

First?

Bam

question
Aug 2, 2012 - 3:58pm

Closest I'll Ever Be

Not again, I promise.

Byzantium
Aug 2, 2012 - 4:01pm

Explosive summer?

Right,

these rumours of an historic and explosive summer for the metals, if valid, are nonetheless toying with our emotions so far, so I just wanted to check with the group what we know about the root basis for these rumours. Remember, we are not concerned here with the countless theories and opinions of when the market ought to take off, but instead with supposed insider info. Please feel free to correct me or add to what we know.

  1. Bill Murphy of GATA; he is not party to the hows and whys, but his informant was described as one of the wealthiest people in Europe, who Bill has known for a long time and whose knowledge and integrity he trusts.
  2. Jim Willie; I can't remember whether he has publicly cited summer as blast-off, or whether his views reached us through an intermediary like Turd. If Jim is calling for summer, then it is not by deduction, but as with Bill, by a tip-off.
  3. Turd himself (who has numerous contacts, including Andrew Maguire, 'Winston,' and others) seems to be convinced by something that he cannot divulge, that blast off will be this summer. I am presuming that this is based on a concrete tip off rather than supposition, and that the root source of this loop is not 1 or 2 above.

In addition to the leaks, technicians such as Gene Arensberg and Turd, are saying that the COT report is historically favourable to an explosion upwards in prices, if there is something to ignite a rally. We just need that spark.

Finally, we need to be mindful that cartel mischief makers might be spreading disinformation, to exploit or expose those they suspect of leaking info (e.g. Bill's & Jim's sources, who I will presume are not the same individual, might be passing on info in good faith, but might have been duped themselves). It is clear from the behaviour of both the Bernank and Draghi, that misinformation and deceit is now their most prolific policy tool.

Lets face it, though a rally will be nice, half of us will only believe it when we see it, and I count myself as one of those. Too many false dawns, & now too wary of bull traps.

Can anybody update, clarify or add to this summary?

Aug 2, 2012 - 4:03pm

Just checked yesterday's OI #s

Probably should have included this in the post. Oh, well.

Absolutely amazing.

Silver OI still stuck between 121M and 124M, and has been since 6/28/12. It surged yesterday, though, by almost 1600 contracts. This while silver was falling 38c. No doubt, the specshortsheep being led into the shearing house.

Gold is really remarkable. August contracts have been sold but not rolled. Yesterday's total OI fell by 6700 (while price fell $7) and stood last night at just 396,778. This is the lowest total OI number since 4/24/12.

Between all the specs that are short and all the money on the sidelines, both metals are poised for a HUGE rally should they ever be able to generate some positive momentum and break out of their ranges. Stay tuned.

bluefish
Aug 2, 2012 - 4:07pm

4 hour up trend still intact

An up trend on spot silver started June 28 and visible on the 4 hour chart remains intact with around half a dozen touches to the floor of the trend including a nice one today.

Byzantium
Aug 2, 2012 - 4:10pm

Yes, I can

The "root sources" of my optimism are not Murphy or Willie, though it's certainly possible that they could have come in contact with some of my sources.

My intention in predicting a "hot, explosive and historic summer" (And remember, I was the one who began all this speculation. I'm on the record with this prediction way ahead of everyone else.) is not to "toy with your emotions".

Simply stated, I am supremely confident that both metals will soon begin a game-changing, fundamentally-based rally to new all-time highs and I'm trying to encourage Turdites to hold/add positions and not panic sell here at the bottom. The rationale I've shared with you has been deliberately opaque but, once things start cooking, you'll likely be able to discern why.

SE
Aug 2, 2012 - 4:10pm

Byzantium, I have always been

Byzantium,

I have always been of the opinion post-crash last year that silver would be range-bound between 20s and 30s until late this year, possibly early next year, and then finally reach the $50 range in May 2013, and that is a little optimistic of me. I feel that it's very possible that we might not hit $40 until early (or late) next year and not get over $50 until May of 2014. Yes, 2014. Take a look at the silver data of the last 12 years, and you'll see the pattern of peak-to-peak every 2-3 years. That has to do with manipulation over the long-term, and there is influence on an annual basis coming from India and holiday seasons elsewhere, and now China is coming into the picture with Ghost month being August.

I'd like to be proven wrong and see my black swans land so I can feed them.

philconn01
Aug 2, 2012 - 4:12pm

Bronze hat for third

The devastation continues – and the next support is 1580 if 1592 doesn’t hold. We have a double bottom there but that doesn’t mean anything. This is turning into a total washout. THE JOBS REPORT ON FRIDAY will probably not be good--- unless they fake it.

THE STOCK MARKET LOOKS TERRIBLE ALSO. Perhaps the major sell off due in August is already under way.

Nana
Aug 2, 2012 - 4:14pm

Bouncers

Waiting for a bounce, hoping for a bounce.

PS- would like to bounce the CONgress, SINate (misspelled for the drama), Federal Reserve, TPTB, well you get the point.

Dolomite
Aug 2, 2012 - 4:14pm

Turd, I loved reading those

Turd, I loved reading those words.

I'm remaining steadfast... and you have my continued trust and loyalty amigo

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