So Many Charts, So Little Time

225
Tue, Oct 16, 2012 - 11:40am

We're holding support and bouncing on a Happy Tuesday. I hope you're ready to buy the dip!

Again, as discussed yesterday, I should have seen this mini-correction coming. As a recognizer of patterns, I should have anticipated that the market action post-QE∞ would resemble the market action post-QE2. I mean, why wouldn't it? The metals are still manipulated by the same scoundrels that were in charge back in late 2010 and they are still being controlled within their "managed ascent".

Recall that gold rallied from 1320 to 1430 in the weeks following QE2. Then, in early January, Cartel capping caused momentum to fail and price began to pull back. Over three excruciating weeks, price was pressed lower, all the way to...wait for it...1320. In fact, at the bottom, it actually touched 1308. From there, it went on a 7-month tear courtesy of sloshing liquidity and a downgrade of the U.S by Standard & Poor's, finally reaching 1920 in late August of 2011. That's a gain of nearly 50%!

Silver performed almost identically. After peaking in early January 2011 at 31.20, it fell over the next three weeks to a low of 26.50. Again, where was silver trading during the week prior to the formal announcement of QE2? Near 26.50. Like gold, once the gains post-QE2 were erased and clawed back, silver went crazy and rose all the way to $49 in just 90 days. That, my friends, is over 80%!

Once this mini-correction runs its course, are the metals set up for similar gains? It's possible, perhaps even likely. Maybe even probable. Many of the same conditions that prevailed in 2011 will exist again in 2013.

  • The Fed, currently executing $40B/month in non-sterilized QE, will almost certainly increase that number toward $85B/month once Operation Twist ends later this year. Remember that QE2 was nearly the same amount at just under $100B/month.
  • The U.S. government again stands at the edge of a fiscal cliff with "Taxmageddon" coming in 1/1/13 and another debate to raise the debt ceiling just around the corner. Could more U.S. debt downgrades be on the way soon, too?
  • And don't ignore the ongoing significance of this chart:

Anyway, at this point, it's reasonable to assume that, once this correction is finished, the metals will surge dramatically higher. Prices will finally eclipse the Cartel-enforced caps at $1800 and $36. I fully expect new alltime highs in gold by early 2013 and, shortly thereafter, a move through the $2000 level. In silver, JPM resistance at $36 will also fail in the days ahead and silver will begin a charge toward $44. Above there, the old alltime highs near $50 await.

(Just for fun, let's say that things get "disorderly" for the Cartels again and prices rise in 2013 at the same clip that they did in 2011. This would put gold near $2500 and silver would approach $60.)

So, given that the long-term picture is extraordinarily bullish, what are you waiting for? Buy the dip!! Of course, if you're like me, you may be trying to wait for the absolute bottom so that you can feel real smart. This is a pretty stupid strategy but I do it for fun and because my ego gets in the way. Regardless, I think that so far today we are seeing some short-covering related to CoT-painting by The Cartels and I expect another run at breaking price lower either tomorrow or Thursday. We may see new lows for the week but we might also not see them. Let's just see. Since I haven't sold any of my December calls, I'm still positioned to participate in the rebound, Right now, I'm just simply looking to add. I may even move out to March, just to give myself more time. I'll keep you posted and update you if and when I decide to move.

For now, here's what I'm looking at. Gold has retraced it's gains post-QE∞ and has found support right where I'd expect near the lows of late September. This is a very good sign. Another good sign is the complete washout of momentum as indicated by the RSI. Note that this index is now at levels not seen since last summer!

Silver, too, has retraced its gains from mid-September and is poised to resume its rally. A source in London has informed me that The Cartel is very reluctant to fill some very large orders for physical that currently reside near $32.50. IF this is the case, it is unlikely that paper silver will fall much below there. (Note that the low yesterday was $32.57.) There is still the possibility, though, that the momo-junkies and smaller commercials will attempt to jam price lower again but significant chart support lies between 32 and 32.50 and well as the 50-day moving average.

Just a couple of other things. Yesterday I posted this link ( https://tfmetalsreport.blogspot.com/2011/01/1600-gold-by-june-10-2011.html) It's fun to go back and review this post for a number of reason but I want to highlight something. Read this:

"Speaking of the dollar, lets start there. It looks terrible. What will TPTB come up with this time to rescue it from 78.47 on the March contract? Who knows but it looks more and more like 77-77.50 is coming very soon."

Again, that was typed on 1/21/11 when gold was near $1320. This points out the fallacy and deliberate deception of "The Dollar Index". This index is often cited as a measurement of strength or weakness of the dollar. Again, though, it only measures the dollar against other fiat currency. Over the past 22 months, the index leaves the uninitiated with the impression that the dollar has been stable. We know, however, that it is only "stable" against other, similarly-worthless fiat. Against gold, it has devalued by more than one third!! Do you ever hear that reported on CNBS or in the MSM?? Heck, no! To do so would expose the lies and theft of expansive monetary policy, fractional reserve banking and Keynesianism.

Which leads us to your reading assignment today. Actually, I posted this into the comments of yesterday's thread so, if you've already read it, just move on. Everyone else should take 5-10 minutes to read it. Lew Lehrman has long been a champion of sound money and, in this piece, he lays out a simple and easily-understood rationale for a return to a global, gold-backed monetary system. (Again, my feeling is that this is going to happen and it won't be a voluntary decision for The West.) If you've ever wondered how and why a gold standard could be re-implemented, please take the time to read this article.

https://spectator.org/archives/2012/09/14/a-road-to-prosperity/

OK, that's it for now. I've been working on this for a couple of hours and, as I close, I see that prices have rebounded some but have not yet crossed back above the important levels drawn on the charts above. Therefore, be on the lookout for some more weakness and another attempt to break price lower after the close today and into tomorrow and Thursday. Do not despair, however, my friend. Time and fundamentals are on our side and we shall be victorious and vindicated. Soon.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  225 Comments

silver66
Oct 16, 2012 - 11:40am

First holy crap!!!

First

holy crap!!!

murphy
Oct 16, 2012 - 11:44am

I'm back to Thurd

I'm back to Thurd

BoarderX
Oct 16, 2012 - 11:45am

5th

Jesus said, come forth and recieve eternal life. I came in fifth and won a toaster.

achmachat
Oct 16, 2012 - 11:46am

i liked this part:

"soon"

Turd Ferguson, 10/16/2012

my mothers keeper
Oct 16, 2012 - 11:46am

the future of the USD

an interesting perspective on the motive of the fed for qe3 just before the election...

https://www.gold-eagle.com/editorials_12/amerman100212.html
The Federal Reserve is indeed using QE3 to attack the problem of unemployment - but not through the method stated.

The cover story is that QE3 will be used to increase the money available for lending and to lower interest rates. It is a credit to Mr. Bernanke that he was able to read this statement with a straight face, for the assertion that the economy is being held down by too high of interest rates and tight money is ludicrous. Interest rates are already at historic lows, and banks are awash in available cash. Moreover, QE3 is likely to have very little effect when it comes to expanding corporate lending, just as QE2 had very little effect - because that was never the intended route to rebooting employment in the United States.

As described in detail in my article "Bullets In The Back: How Boomers & Retirees Will Become Bailout, Stimulus & Currency War Casualties" (linked below) the United States has a structural problem with unemployment that is essentially unsolvable so long as the dollar remains high in value relative to other global currencies. This problem was exacerbated by the rise in the US dollar caused by the Euro crisis - and it is no coincidence that the unemployment crisis in the United States is now getting rapidly worse even as the dollar soared this past spring and summer.

The Federal Reserve is, of course, well aware that the unemployment situation is far, far worse than what is being captured in the official headline unemployment rate of 8.1%. The government knows full well that the true unemployment rate, once workforce participation rate manipulations are netted out, is closer to 19% - and getting worse, as explored in detail in my article linked below, "Making 9 Million Jobless "Vanish": How The Government Manipulates Unemployment Statistics".

This building crisis of a strengthening dollar and rising unemployment called for emergency action, and that is exactly what Bernanke is doing. He is effectively calling in a B-52 strike on the US dollar, monetizing for the world to see, and pledging to monetize for as long as it takes - until the US dollar is driven down to a level where American workers can once again be globally competitive
.

hammerman
Oct 16, 2012 - 11:47am

bobby buy da dip

my brother bobby wakey up and buy da dip... great job turd

Silverman
Oct 16, 2012 - 11:47am
Hoping to learn
Oct 16, 2012 - 11:49am

Are you ready to buy ?

I'm heading to the LCS, so get ready for a drop in price later today or tomorrow.

Good luck to all.

I've been watching that new show "Revolution" and I can't stop thinking that it might actually get to that point in the not to distant future. The great thing about it , is that it gave me chance to explain the barter system and the importance of silver etc. to my 15 yr. old.

We even covered china's hoarding of physical and mines and my prediction of a gold back currency soon from them to replace the failing US dollar.

HTL

SilverDog66
Oct 16, 2012 - 11:51am

2nd!!

According to my girlfriend officially a TurdGeek for posting 2nd!

jamato31
Oct 16, 2012 - 11:52am

are we there yet?

i lost a bunch of october money holding through this, but im figuring (hoping) my contracts through the rest of the winter will hold up and make up forthe losses. every pm related index just touched the bottom of the price channel extending back to the beginning of this move in midsummer, so at this point, either the correction is over, or were screwed and heading significantly lower. i dont think the market will allow a hard move to the downside (pretty oversold on some short-term indicators now).

i just picked up some gdxj feb 23 today. we'll see how that one rides out over the next few weeks. im shooting for 29 by the end of december.

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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