This is certainly a better start to the week than many had expected.
If you read the previous post, though I expected the rebound to begin this week, I figured the weakness from Friday would spill over into today. Instead, after the predictable drop at the Globex open last evening, prices turned within the first half hour and look at it now! Gold has reclaimed and held its 50-day and silver is attempting to do the same.
And those 50-day MAs will be the key levels this week. Much energy was spent attempting to pierce them last week, particularly in silver, and if prices simply rebound back above them, those shorts will be squeezed into covering rather quickly.
Then it gets interesting. The 50-day MA in silver is $32.59 but the 5-day is just a shade higher at $32.71. If enough new buying or short squeezing develops and price rises, not only through the 50-day but the 5-day, too, the silver rally will really begin to get legs as the momo-chasers flip to the long side. Silver will then surge toward 33.30 and 33.60. That is our primary goal for now.
Gold, having held above $1723, can sets its sights upon its 5-day near $1740. Above there, it will head toward $1755 before taking a breather and perhaps forming a reverse head-and-should bottom on the hourly chart.
All Turdites know that I'm a big believer in physical demand and the idea that this overwhelming desire to exchange fiat for metal is underpinning the paper markets and prohibiting The Bad Guys from causing another crash like 4/11 or 9/11. Physical demand for metal right now is so great and consistent that, just like January 2011, this "correction" will soon end.
So, now wrap your head around this...I spoke with our pal Andrew this morning and he provided this little nugget: Central Bank and other sovereign demand is currently so strong in London that, this morning, the bullion banks themselves were observed to be seeking allocation and buying metal. Think about that. You're a bullion bank. You're supposed to have literally tonnes of metal on hand in order to fulfill orders on the LBMA. Instead, because the demand is overwhelming and requesting fully-allocated physical, you're left buying on the open market and competing for metal just like everyone else.
This is a signal of a complete divergence between the bullion banks on one hand and the non-delivery (short) Comex commercials and specs on the other. If this is, in fact, the case (and I have no reason to doubt Andy and his sources), then we are set up for a potentially explosive bout of short-covering and prices could rebound very quickly from these levels. Therefore, be on the lookout for the breakage of resistance and MA levels discussed above.
A couple of other items for you on this fine Monday morning. First, another great piece from Jim Quinn. Please read it when you have a few minutes: https://www.theburningplatform.com/?p=41873
And then there's this. Do you recall the guy that left Goldman Sachs last spring and, upon his exit, wrote a damning op-ed in the NY Times? Well, now he has a book to pimp and, in the process, he showed up on "60 Minutes" last night. There are no earth-shattering allegations of fraud or anything like that but the interview will certainly leave you shaking your head at the utter lack of integrity and honesty shown by The Squid. Please take the time to watch this segment:
OK, that's it for now. I see that, despite continued pressure, the metals are holding firm. Keep your fingers crossed and lets see if we can turn the tables on them.
Have a great day!