Expecting A Bounce

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).


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

About the Author

turd [at] tfmetalsreport [dot] com ()


Aug 2, 2012 - 4:14pm

Bitcoins have the $10 handle!


And gold is doing what? Sitting there. Yeah, free markets, my ass. Give me communism any day than this communism-that-looks-like-capitalism.

When the suppression field on the gold price goes down, there's going to be a fireworks show like you've never seen before.

And I'll be quietly sitting on a hill a safe distance away, munching on popcorn...

Aug 2, 2012 - 4:15pm

@ philcoon01

Do you have your swan caller handy? I think my black swans seem to be lost. They're hungry. I need to feed them.

Short Stack
Aug 2, 2012 - 4:15pm

TF Please...

Don't delete this Thread. Some of us are working on hat tips as I speak.

Speaking of Hat Tips, shouldn't last months Leader board be reset ?

Aug 2, 2012 - 4:17pm


BTC is up today as the metals move sideways and every which way. Looking to September for these metals which have been controlled forever! Nonetheless, the price doesn't matters! What matters is that we breakoutta dollah paradimed.


Loud Noises
Aug 2, 2012 - 4:21pm

Not sure if this has already been shared

But Goldmart is having a really good looking Re-opening sale for the next few weeks. I am so tempted to make a big buy here. I just got a line of credit at 0% until the end of 2013 and I'm thinking about deploying my dry powder without even using the real funds. Cash flow the purchase over the next 12 months and keep my actual dry powder the entire time.

So tempting.... using this credit system against itself.

Big Buffalo
Aug 2, 2012 - 4:22pm

Buffalo's Daily thoughts...

Knight Capital was $11/share just two days ago. It's current at $2.09. This makes Silver's drop from $49 to $26 look like child's play. Not that most of us care about the company, but maybe the event is fairly important.

Facebook: "hahahahahahahaha"

Smith and Wesson: Damn, I missed reentry at $9.00 by 3 cents.

Silver: Good news= I bought some more today, Bad News= I bought some more today at 8:30 am.

Gold: See silver above

TFMetals: I learned today that if you rub and sniff and it stinks, it's a good thing. (very contrary to my high school experience)

Aug 2, 2012 - 4:23pm

Thanks for the clarification

Hi Turd,

I wasn't suggesting that you were toying with our emotions. Rather, the idea or prospect of a rocket launch, and the reasons for it, are doing that.

Basically though, if I understand you correctly, then the only sources citing inside knowledge therefore (rather than citing the conclusions of one's own analysis), that the cartel are going to retreat and allow prices to substantially rise this summer, are Bill Murphy, and maybe Jim Willie, and I am still not sure whether Jim Willie is saying that.

I am just trying to summarise and classify the various strands of bullish sentiment, and am particularly interested in supposed leaks from insiders, to make sure that I / we haven't misunderstood the tea leaves.

Aug 2, 2012 - 4:23pm

Jim Willie on hot August action

"Internal word from the Monaco source who spoke with Murphy indicates that a repeat of August 2010 is soon to occur. JPMorgan is out of time, and their illegal devices will be halted. The event for release of the Gold & Silver prices could occur again in August. The actual enforcement is not clear. But be assured that forces pitted against evil are involved. The JPMorgan machinery might be stalled in ways unclear even to those informed within the gold community. Confirmation of the Murphy source has come from a highly reliable Jackass source. An exciting move is coming for the precious metals markets. Any delay to the revelations of criminal action in the gold market by JPMorgan will be a result of threats and intimidation by the big bank against the whistle blowers. My main hope is that as the price rises, the exposure of corrupt controls is also made more available for public view. The people must see what has occurred to both the gold market and the currency market. The potential energy is growing to incredible levels, as a corrupt lid has been placed on the true money of the world for seveal millenia, gold. The conflict and pressure will grow until the pressure spills over."


Thanks for the continued consistency, Turd.

Admiral Ag Bar
Aug 2, 2012 - 4:25pm

Thanks Turd

It is reassuring to hear Turd double, and triple down on his ballzy call. I can respect that.

I am most certainly ready for the take-off because I am underwater as all-get-out even with aggressive buying on this multi-month long protracted dip. And... my wife is taking great pleasure in torturing me every time she sees me reading TFMR with "so...this is the week silver takes off, huh?" with a big sh*t eating grin.

I am holding fast.

Aug 2, 2012 - 4:28pm


Thank you Cleburne61 for that important clarification.

Stressing that there may well be excellent reason to expect a rally in PMs (and long overdue I might add), we are nonetheless down to only one source from the inside who is saying that.

I didn't know that before this thread, so all power to this forum!

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