Shake A Stick At This

Wed, Sep 26, 2012 - 12:31pm

Here you go. More charts than you can shake a stick at. (Whatever that means.)

Let's start today with crude because I just think it's messed up. Price rallies from late June to mid-September with never once seeing more than 3 days in a row of declines. In fact, it barely did that earlier in September. You could just as easily say that it never had more than two, straight down days. And then, just as QE∞ was announced AND tensions ramped even higher in the MENA, price collapses? And it's now down for 7 of the past 8 days? We'll talk in a minute about how much of this corresponds with the surprise POSX rally over the past week but come on...7 of 8 days down for a cumulative 10+% move?? This seems very fishy, particularly when gasoline was just reaching $4/gallon in the U.S. and the presidential election is just 6 weeks away. Very fishy, indeed.

But getting back to The Pig...The question is: What the heck is going on here? Why on earth would The Pig rally immediately following the announcement of QE∞? I've spent some time thinking about this and this is the best answer I can come up with:

Remember that the POSX is an index against all other, major fiat currency. Even though it is quite clear that unlimited QE will eventually make The Pig relatively worthless versus hard assets, in the short term, the global flow of funds is actually toward the dollar and treasuries as The Bernank has effectively assured perennially-nervous international investors that there will be no default, at least not in non-inflation adjusted dollars. Against this backdrop and in the very short term, QE∞ is judged to be dollar positive. Seriously. I know that sounds crazy...and it is...but that seems to be what has happened over the past two weeks. The good news is that the POSX is finally reaching the end of the raid for this bounce as the area around 80 will once again serve as resistance. I would now expect a few weeks of volatile, sideways action before The Pig resumes its downtrend.

So, in the context of The Pig apparently being the driver of short-term events in the commodities sector (where gold and silver are incorrectly relegated for now), any gyration by The Pig seems to flow immediately into buy or sell orders for the metals. We saw an exaggeration of this earlier today. The POSX began to rally at 5:35 EDT this morning and immediately the metals began to roll over. WOPRs, programmed for profit by actual human beings, began to build up sell orders for the Comex open and....WHAMMO!....the open is ugly and short-term technical damage ensues.

So, now that both metals appear to be in short-term corrective phases, where do they go from here and where might they bottom? Before we go there I want to reiterate again: QE∞ ASSURES THAT METALS ARE GOING MUCH, MUCH HIGHER. THERE WILL ALWAYS BE, HOWEVER, BRIEF PROFIT-TAKING CORRECTIONS WITHIN THE PRIMARY TREND.

The charts below spell it out quite plainly. Let's look at gold first. Tremendous physical demand makes further downward action unlikely but I can't help but think a weak-hand clearing plunge toward $1725 is coming. Note that this type of move would also have a very pleasant impact on the short term RSI.

Silver is clearly in a corrective phase, too. Though it is holding in there quite nicely today and though it, too, is seeing considerable physical demand, the 12-hour chart sure looks like a brief drop below $33 is in the cards. I'd love to see it as I'm sitting on a little cash that is burning a hole in my pocket as I type.

Just a couple of other items to consider today. First, there's this article I found linked at the GATA site. Nothing earth-shattering, but it's a reasonably competent summary of how things may eventually play out.

And I have another book recommendation for you. You've likely seen me mention before that "The Big Short" by Michael Lewis is a real eye-opener. Lewis puts the entire "2008 Financial Crisis" in easy-to-understand terms and everyone here should read it.

Lewis' new book is a follow-up called Boomerang. It's not as good as "The Big Short" but very, very interesting nonetheless. Please read it. One of the chapters describes California as Italy or Spain as they relate to The Pig and The Euro, respectively. Along those lines, look at his headline from ZH.

OK, that's all for now. It has taken me quite a while to type this up and now I see that the metals have rallied smartly during the interim. That's great. Glad to see it. This does not, necessarily, make this post obsolete, however. Stay on guard and look for another dip.


About the Author

turd [at] tfmetalsreport [dot] com ()


Sep 26, 2012 - 12:55pm

Great work

Great work Turds and Turdites

Sep 26, 2012 - 12:55pm

End of 3rd QTR selling

I have no doubt most all markets are manipulated but I also think its possible the end of the quarter is causing lots of sales as money managers lock in gains for the qtr. Next week should tell us if this was the case. If so, I would expect commodities, including gold and oil to be bought back again.

For now, BTFD.

Sep 26, 2012 - 12:57pm

btw, corn sucks

Looks now like at least a 50% retracement, if not more.

In fact, 62% would take it down toward $6.60, which would fill the final gap on the chart from the summer rally.

I know that farmers are selling the new crop forward in order to lock in price but SHEESH, crop down at least 25% versus last year and 50-55% poor to very poor nationally should NOT lead to a 62% correction.

Sep 26, 2012 - 12:59pm

Way to go, E O !

Enjoy your dip in the bacon-off pools!

And for newer visitors to the site, probably wondering why being "First" is pursued with such zeal around here... well, perhaps a refresher course from 'the olden times' is in order:

Sep 26, 2012 - 1:00pm


Quite a down day in the grains, led by corn. Russia announcing that they will not import anymore GMO corn (read US corn) may be behind this. More poison for us to feed our livestock, make into sweetener, or brew in our beer.

Edit: added link

Sep 26, 2012 - 1:01pm

Nov Election


We all know that the fall in Oil & who knows Gold & Silver is being orchestrated to hold the shit just long enough for the elections to be over before it hits the fan.Just wanna know about your perspective about the short term effect on price of gold & silver.October has traditionally been a weak month for Gold.

Sep 26, 2012 - 1:02pm

gold painted triple top?

Looking at the 1 yr it looks like the EE could be trying to paint a triple top.

It will be interesting to see if we "break out" in the start of the 4th Qtr.

Edward G
Sep 26, 2012 - 1:05pm

Well written post from TF

Not surprising really that at this stage of things QE is not going to inspire so much exuberance.... having been done in the face of things looking more and more crappy, and so it is likely to continue to be... I would imagine the printers will be alarmed at the low impact of the latest rounds, what with Spain's bonds tumbling again, a worse outcome than too much euphoria really. Either they have got the can-kick just about right, or otherwise they will be thinking " sheesh we're gonna need a bigger boat"... I mean the numbers referred to by the German Court and then BB are kind of tentative even though they are of course humungous, but to continue the path they are set on, it looks likely that some serious doubling down is going to be required if they (BB) really wants to achieve what he claims to.

Mr. Fix
Sep 26, 2012 - 1:07pm

On charts..........

Hi folks, although I do enjoy looking at a good chart, I do not believe they are of any value whatsoever when it comes to predicting what will happen next. I had a self described chartist watching over my leveraged silver account on May 1, 2011, and I can tell you firsthand, he never saw that one coming. I'm not going down that road anymore. All I do now, is stack. With a strategy like that, the charts are meaningless. In what is clearly a highly manipulated marketplace, what ever happens, will be exactly what the central planners want to happen. I have for the past couple of years come to the conclusion that the insiders can predict the price down to the penny, because they are the ones setting it.

Sep 26, 2012 - 1:07pm

Turdy thinks its fishy?


There are no free markets, just interventions. Chris Powell, GATA

Trudy zero-ing in 32.50 Ag, so am I for about a week now, just does not seem to want to retest that level, confirming support. 33.40 the low on this move down, so far. Just may not see 32.50 again .... lets see. Dont go 32.50 before weekend close, may get back on the bull ride for another graceful retreat higher. Remember, the FED want bullion to rise, but in an orderly manner. Go with the flow. Hear Blue Fin should be good off baja just now.

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 7/22

7/22 8:30 ET Chicago activity index
7/23 10:00 ET Existing home sales
7/24 9:45 ET flash Markit PMIs
7/25 8:30 ET Durable Goods
7/26 8:30 ET Q2 GDP first guess

Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
7/16 8:30 ET Retail Sales and Import Price Index
7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
7/18 8:30 ET Philly Fed
7/19 10:00 ET Consumer Sentiment

Key Economic Events Week of 7/8

7/9 8:45 ET Fed Stress Conference, three Goon speeches
7/10 8:30 ET CGP Hump-Hawk prepared remarks
7/10 10:00 ET CGP Hump-Hawk House
7/10 10:00 ET Wholesale Inventories
7/10 2:00 ET June FOMC minutes
7/11 8:30 ET CPI
7/11 10:00 ET CGP Hump-Hawk Senate
7/11 12:30 ET Goon Williams
7/12 8:30 ET PPI

Key Economic Events Week of 7/1

7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 10:00 ET Construction Spending
7/2 6:35 ET Goon Williams
7/3 8:15 ET ADP June employment
7/3 8:30 ET Trade Deficit
7/3 9:45 ET Markit Services PMI
7/3 10:00 ET ISM Services PMI
7/3 10:00 ET Factory Orders
7/4 US Market Holiday
7/5 8:30 ET BLSBS

Key Economic Events Week of 6/24

6/25 10:00 ET New Home Sales
6/25 1:00 pm ET Chief Goon Powell
6/25 5:30 pm ET Goon Bullard
6/26 8:30 ET Durable Goods
6/27 8:30 ET Q1 GDP final guess
6/28 8:30 ET Personal Income and Consumer Spending
6/28 8:30 ET Core Inflation
6/28 9:45 ET Chicago PMI

Key Economic Events Week of 6/17

6/18 8:30 ET Housing Starts and Building Permits
6/19 2:00 ET FOMC Fedlines
6/19 2:30 ET CGP presser
6/20 8:30 ET Philly Fed
6/21 9:45 ET Markit flash June PMIs

Key Economic Events Week of 6/10

6/11 8:30 ET Producer Price Index
6/12 8:30 ET Consumer Price Index
6/13 8:30 ET Import Price Index
6/14 8:30 ET Retail Sales
6/14 9:15 ET Cap Ute and Ind Prod
6/14 10:00 ET Business Inventories

Key Economic Events Week of 6/3

6/4 All day Fed conference in Chicago
6/4 10:00 ET Factory Order
6/5 9:45 ET Markit Services PMI
6/5 10:00 ET ISM Services PMI
6/6 8:30 ET US Trace Deficit
6/7 8:30 ET BLSBS
6/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 5/28

5/28 10:00 ET Consumer Confidence
5/30 8:30 ET Q1 GDP 2nd guess
5/31 8:30 ET Personal Income and Consumer Spending
5/31 8:30 ET Core Inflation
5/31 9:45 ET Chicago PMI

Key Economic Events Week of 5/20

5/20 7:00 pm ET CGP speech
5/21 10:00 ET Existing Home Sales
5/22 2:00 ET FOMC minutes
5/23 9:45 ET Markit PMIs
5/24 8:30 ET Durable Goods

Recent Comments

by Lemming, 3 hours 53 min ago
by Blackwatersailor, Jul 21, 2019 - 10:48pm
by Angry Chef, Jul 21, 2019 - 8:19pm
by Blackwatersailor, Jul 21, 2019 - 8:07pm
by DAGEORGE42, Jul 21, 2019 - 7:37pm

Forum Discussion

by argentus maximus, 2 hours 11 min ago
by SteveW, 5 hours 1 min ago
by banman17, 5 hours 53 min ago
by NW VIEW, Jul 21, 2019 - 10:26pm
by zman, Jul 21, 2019 - 9:45pm
by Green Lantern, Jul 21, 2019 - 8:57pm