Step One Completed

264
Wed, Oct 31, 2012 - 11:51am

The first step in confirming a bottom is finding one. We found one last week and the action today looks to confirm it.

In the previous post, I asked you to watch for a break out and UP today and we've gotten it. First things first, however. Remember, any gains made while the metals are closed or on holiday are almost always clawed back once trading resumes. Almost always. And we saw this again today. The good news is that, once again, the old adage is holding...namely, "what was resistance becomes support and vice versa".

So, now what? Again, I must caution you against expecting too much, too soon. Though we have been base-building for over a week, we still need to overcome some additional resistance before the bottom is clear to everyone and the shorts begin to aggressively cover. Silver is still slightly ahead in this process and should continued to be watched for clues. For now, as you can see below, silver has clearly broken through the downtrend lines on both the 4-hour and 12-hour charts. This is undeniable and an obvious sign of the bottom to this correction/pullback. Closing above $32.25 is our first goal, followed by a close above $32.60 or so. Once that happens, the mealy-mouth, panty-waste spec shorts will begin to cover and price will extend toward the area around $33.35, where they will make their next defense.

The gold chart also shows a clear base and breakout on the 4-hour chart. It shows this on the 12-hour chart, too, but a case could still be made gold needs to clear $1720 first. OK, that's fine. $1720 is our pivotal level, anyway, so watch that area closely. A close above there and gold will jump toward $1730. The area between $1730 and $1740 might present some challenges but, ultimately, besting $1755 will become our next main goal.

I only wish to discuss one "news" item today and it's something that I don't think is getting enough press. Our old pal, KosherDakota made a speech yesterday that is being overlooked.

I began to ridicule this knucklehead a few years ago as it seemed he was trotted out to give the "hawkish" or "dovish" monetary policy view every time a little additional MOPE and SPIN seemed necessary. Here are a couple of samples. First, from August of 2010, three months before the announcement of QE2: https://www.minneapolisfed.org/news_events/pres/speech_display.cfm?id=4525. Before you know it, ole KosherDakota was all in favor of "bond buying" by The Fed: https://blogs.wsj.com/economics/2010/11/30/feds-kocherlakota-wants-inflation-expectations-increase/

But then, by the end of QE2, he was trotted out to assure the markets that QE could be bad and was perhaps gone for good. There might even be a rate hike just around the corner, maybe as soon as late 2011: https://www.minnpost.com/business/2011/05/fed-president-sees-possible-rate-hike-2011-economy-slowly-improves. And here we was in late June of 2011, dissenting at the FOMC and calling "stronger easing measures" the "wrong approach": https://wtbx.com/news/articles/2011/jun/27/tax-code-hurts-stability-feds-kocherlakota/

So, what happened yesterday? Chuklehead The Clown was back in the news! He was speaking in Duluth and he openly stated that:

"The U.S. economy is recovering from the largest adverse shock in 80 years–and a historically unprecedented shock should lead to a historically unprecedented monetary-policy response".

He went on to add that:

“Given how high unemployment is expected to remain over the next few years, these inflation forecasts suggest that monetary policy is, if anything, too tight, not too easy".

You can read all about it here: https://blogs.wsj.com/economics/2012/10/30/feds-kocherlakota-fed-may-not-be-providing-enough-stimulus/.

Even the left-leaning and progressive (Keynesian) website Slate has an article about it today: https://www.slate.com/blogs/moneybox/2012/10/31/narayana_kocherlakota_s_duluth_speech_a_masterpiece_of_intellectual_rigor.html

Intellectual rigor my ass. This guy just flips and twists in the wind. For now, he is simply being trotted out yet again to foreshadow the next direction of Fed policy. We should now fully expect a formalized increase in the projected 2013 QE∞ plan when the FOMC next meets in December, regardless of the SPIN and MOPE that comes out on BLSBS day or from O'Bomney.

To that end, I've received several emails wondering what I expect from the metals if Romney is elected. The answer is simple: MORE OF THE SAME. Those that fear a downturn in price because of a Romney-imposed austerity or firing of The Bernank are delusional. Let me state this very clearly as a reminder for all eternity:

QUANTITATIVE EASING CANNOT END. NOT THIS YEAR. NOT NEXT YEAR. NOT EVER. IN 2013, THE FED WILL PURCHASE OVER $1T OF NEWLY ISSUED AND REFUNDED U.S. GOVERNMENT DEBT. WITHOUT THE FED PURCHASING MBS FROM THE PRIMARY DEALERS, AUCTIONS WOULD FAIL AND INTEREST RATES WOULD RISE DRAMATICALLY. THIS WOULD RAPIDLY ACCELERATE THE DEMISE OF THE GREAT PONZI AND THIS CANNOT BE ALLOWED. THEREFORE, IT MATTERS NOT WHOM WILL BE THE NEXT PRESIDENT. QE WILL CONTINUE UNABATED, REGARDLESS. ALL OF THE TALK ABOUT THE BERNANK AND SPENDING CUTS IS SIMPLE POLITICAL SPIN TO GET VOTES, SIMILAR TO THE PHRASE "BORROW FROM THE CHINESE".

Lastly, I leave you with another great article from Jeff Nielson at BullionBullsCanada. https://www.bullionbullscanada.com/gold-commentary/26018-the-great-gold-scam

Have a great day!

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  264 Comments

Anonymous
Oct 31, 2012 - 11:57am

Removed comment

Removed comment.

pidgin
Oct 31, 2012 - 11:58am

Can someone explain to me why

Can someone explain to me why the f. is AGQ up so little today with silver even up more??? Supposed to be leveraged afaik

The Watchman
Oct 31, 2012 - 11:59am

From Ted Butler-$100/oz SILVER

The real reason I can get away with labeling JPMorgan as crooked and have the bank remain silent is because a 33% market share by one participant in any futures market is against every concept of commodity law and US antitrust policy intent. Do you remember past days of the discussion of position limits and how disappointing it was when the CFTC ignored thousands of public requests for a position limit of one percent (of either world production or total open interest) and established a formula instead calling for 2.5%? The agency further wimped out and sided with the CME in goosing the formula to as much as 5% for markets the size of COMEX silver (how convenient). Please think of those proposed numbers – 1%, 2.5% and 5% and compare them to the 33% that the crooks at JPMorgan now hold in silver. And just so I’m clear, without JPMorgan’s manipulative position in silver, the price would now be well over $100 right now. It is not possible to make that assertion in any other market. - Silver analyst Ted Butler...27 October 2012

Sal Gallo
Oct 31, 2012 - 12:00pm

This Post deserves an appropriate first comment

Hope I was able to accomplish that. I will take anywhere in the top ten, twenty or whatever. Keep up the good work in these uncertain times Turd we do appreciate it.

The Watchman
Oct 31, 2012 - 12:00pm
hammerman
Oct 31, 2012 - 12:03pm

turd or turkey ?

turd... startin to get the feeling you are dodging the question.. or i missed ur answer... what do you think will happen wif da PM 's short term wif romney/ryan in charge? they only propose to cut the rate of increase not the actual spending in DC...

Dr G
Oct 31, 2012 - 12:04pm

Yes, Happy Halloween to all.

Yes, Happy Halloween to all. Love this post. A comex close above 32.25 for silver would be a gem, but I don't know that it will happen today.

I'm glad Turd added a portion about the election. I fully agree. Where the metals go has ZERO to do with who the President is. So much would have to be cut to get the US to be fiscally sound that it is impossible. Not unlikely, but completely impossible. Not won't happen, but cannot happen.

murphy
Oct 31, 2012 - 12:04pm

OMG !! Dedicated to JPM and Blythe

#2 Turd

Wednesday 13 - Bad things Stickman Lyrics
Dr G
Oct 31, 2012 - 12:05pm

@hammerman: nothing. I'm not

@hammerman: nothing. I'm not Turd (duh!), but the answer is the same. Nothing. Short-term the metals will do what they do for a million factors. Buy the rumor, sell the news, whatever.

Dr G pidgin
Oct 31, 2012 - 12:07pm

Can someone explain to me why

Can someone explain to me why the f. is AGQ up so little today with silver even up more??? Supposed to be leveraged afaik

AGQ gives performance based on the London silver fix. Did the big move in silver happen after London fix? The answer is yes, so there is your answer.

AGQ does NOT track silver 1:1. It only tracks the London fix (and silver only has 1 of those), so it makes it an extremely poor vehicle for holding.

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