Gold Is Going To $800

184
Thu, May 30, 2013 - 11:28am

(The reverse psychology test from yesterday is working so well, I thought I'd better keep it going!)

Well, isn't this nice? A genuine, bona fide rally! What's the deal? I imagine that much of this is being driven by new long interest in gold...well, not that new. As we approach June13 contract expiration, we have seen a bunch of contract holders sell but not immediately roll into August. In fact, total open interest in gold fell by 24,000 contracts on Tuesday alone as June contracts were sold and/or covered.

So today, with price rallying, those longs who sold Tuesday or late last week and didn't immediately roll because they had hoped for lower prices before getting back in, are suddenly rushing back in and we're up over $20 as I type. Hey, whatever...we'll take it. So now, what?

Take a look at these charts. On the daily chart, notice the undeniably pretty double bottom at $1350. All along, Andy has been reporting very heavy buying interest and huge pending orders at and below $1350. Well, it certainly looks like he was accurate because every time the paper bears tried to break price down below that level, price almost immediately reversed and moved higher, no doubt on the back of bullion bank buying which hoped to keep those orders from filling. Now, not only does the daily chart look compelling, look at the shorter 4-hour chart, too. We had that spike high of $1413.30 last Wednesday as The Bernank's prepared remarks were released. You'll recall that price then collapsed amidst all the nonsense talk of "tapering". Well, lookyhere. We are right up against that level as I type. A move through and close above would be very bullish and would set the table for a move back toward the early-May highs just below $1500.

To bring all of this in line with yesterday's post...Part of the move today can be traced back to some lousy jobless claims and other data released earlier today. Yesterday's post carried the theme that the data was about to turn worse and all the talk of tapering was going to fade away. What I postulated yesterday was the possibility that price could be shaken out one more time before the BLSBS next Friday. It could still happen but, obviously, today's action makes it less likely.

Turning to silver, it too is rallying today, though not as aggressively as gold. This is also likely due to expiration as silver didn't/doesn't have as much "dry powder" on the sidelines at this moment. Regardless, look at these charts. First, note that $22 silver is very much like $1350 gold...a very solid floor. Outside of the nonsense shenanigans of two Sundays ago, $22 has held very well. Now, can it get up and go to the upside? Well, like gold, let's watch the spike high from last Wednesday for clues. IF silver can move decisively through the $23.30 area, fresh shorts will begin to cover more aggressively and we'll see a quick move toward $24. From there, the next target is the $24.84 high of 4/26.

Getting back to the open interest numbers, tomorrow's CoT is going to be a doozy. Tuesday was CoT survey day but it was also option expiration for the June13 which goes off the board on tomorrow. As mentioned above, almost all of the paper traders are currently liquidating June positions and rolling them into August and beyond. So, for the reporting week, though the price of gold was up a whopping $1.30, the total Comex open interest fell by almost 8% or 35,000 contracts. That's a lot. I'm very much looking forward to seeing who was buying/covering and who was selling. The silver CoT will be fun, too, as price fell by 25¢ but total OI also fell by about 3,500. Again, who was selling/covering/buying? We'll see. Only have to wait another 28 hours. Grrrr...

Finally, LOTS of interesting stuff emanating from the MENA again today. Just a few days ago, Russia pledged to send S-300 anti-aircraft missiles to Syria and, from the looks of things, they're already there: https://www.zerohedge.com/news/2013-05-30/first-shipment-russian-s-300-rockets-arrives-syria but debka claims that they're not: https://www.debka.com/article/23002/Israeli-intelligence-denies-first-Russian-S-300s-arrive-in-Syria---contrary-to-Assad’s-claim-. Either way, this entire situation is getting stickier by the hour. Now, you may ask what this has to do with a PM-related website but I can assure you, if things get out of control in the MENA, there ain't gonna be any imminent QE tapering, that's for sure. So we're going to continue to watch this closely. One "tell" will be the price of crude. It has magically stayed below the trendline drawn on this chart since the QE∞ announcement last September. If/when is busts through, you'll know something is up, whether or not Syria is "fixed".

And all this talk about World War III has me thinking this morning about a book I read six or seven years ago. It's one of those novels that try to intertwine current events into a fictional format. This one dealt with war in the MENA and looked at it through the prism of The Old Testament prophecies of Ezekiel. Look, it's not for everybody and I certainly don't mean to turn this thread into a religious debate...but I get asked for book recommendations all the time and this is a fun and timely read. You should pick it up before heading out for vacation or to the beach.

OK, that's all for now. As I close I see that the metals are still hanging in there at $1415 and $23. Keep your fingers crossed.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  184 Comments

NonoverlappingMagicCereal
May 30, 2013 - 12:30pm

Doubt

As I close I see that the metals are still hanging in there at $1415 and $23. Keep your fingers crossed.
Why would a PM bug convinced of the ultimate failure of fiat currency and steep rise of metals want prices to rise immediately? If you were utterly convinced, then shouldn't you want prices to drop hard and often so that you can buy at a discount? To be fair, I have seen this sentiment expressed, but not nearly as often as celebration on the upside and despondence on the downside. Correct me if I'm wrong, but the only explanation I can conceive of for this mentality is doubt. If you doubt your own understanding of the macroeconomic future, then price rises are comforting and validating, which is apparently worth more emotionally than the opportunity to add to the stack at 'bargain' prices. If so, it's odd that when doubt is expressed here explicitly it is so vilified, when it clearly already exists in the minds of almost everyone including the host.
Sad-descent
May 30, 2013 - 12:31pm

Ag complex

I just took a quick peek, and the agriculture complex looked weak. Anyone have an opinion on what that might mean for the metals if anything in the next few trading days.

Sad-descent NonoverlappingMagicCereal
May 30, 2013 - 12:41pm

Re: Doubt

"Why would a PM bug convinced of the ultimate failure of fiat currency and steep rise of metals want prices to rise immediately? "

I think some may be over-leveraged, or impatient for the "end" to get here. I find that if I am upset at the price action it tends to be because of opportunity costs that arise from keeping a portion of assets in something that is a store of value rather than what I would consider an investment. I usually calm down pretty quick because there just isn't much in the way of investments price attractively because of the zero interest rate environment.

¤
May 30, 2013 - 12:41pm

NOLMC

I only need to see the title line to know that you're only here to spread skepticism on the site and tarnish the host at any opportunity or cause a derailment.....as usual. Whatever. If that aspect of yourself 'still' hasn't been recognized at this point then it is what'll be. Haze...out

The Watchman
May 30, 2013 - 12:42pm

Interesting-


Source: StockCharts

delacroix
May 30, 2013 - 12:43pm

southern

southern cross define biblical truth

Bugzy
May 30, 2013 - 12:44pm

Some stuff

I see you are still with us nonoverlap! The paper price is manipulated. The thought here is that sooner or later the manipulation will have to end, as the physical stuff will be in short supply. This will see TRUTH happening. We may be seeing truth today. DO YOU HAVE A PROBLEM WITH THAT? Our belief is that metals will indeed go up one day, a lot.

They go up and you come to gripe, AGAIN! Well how do you like those apples? Tosser!

Southern Cross. For 'heavens' sake, give the religious stuff a rest. I find it nauseating.

My life has meaning and richness thank you very much.

meegoreng1
May 30, 2013 - 12:45pm

Too much religion in here..

I thought this was a metals site. Take your religion and non-metal crap to the forums ...please.

BTW, Turd, please keep making negative comments about PMs, not just on your headlines but in the content too.

Looking forward to your next negative write up.

Reverse Psychology at its best!

NonoverlappingMagicCereal
May 30, 2013 - 12:47pm

"Correct me if I'm wrong"

OK. You are exactly 100% wrong.

The reason I look and search for bottoms is to provide hope and dissuade doubt and fear. Most of us here understand the inevitability of the future course of events but there are far larger numbers of folks who are easily frightened by price manipulation, SPIN and MOPE.

Let me state this again for you: I AM 100% CONFIDENT THAT I AM CORRECT ABOUT WHERE THIS IS ALL HEADED.

Look, CerealMan, you're usual path from here is to parse these comments and then ask further questions in the hope of catching me in some king of contradiction. No such luck today. Maybe some else can help you. I'll be busy the rest of the day.

ballyale Louie
May 30, 2013 - 12:47pm

Can someone please explain to me why

Hezbollah and Al Qaeda killing each other in Syria is a bad thing?

It's the utter disregard of the Commandment of "Thou shalt not kill" over the ages by all Western religions and gov'ts', which essentially make them liars, etc.

More importantly, is the similarity to the 30 Years war which was waged principally in Germany in the 17th Century between the Protestants and the remnants of the Catholic Holy Roman Empire. It wasn't until 200 years later that Germany was unified under Bismark.

Imo, this is exactly what is happening in the MENA area. The complexity of the power struggles are beyond even the CIA etc. to monitor, let alone control.

Nobody knows how long this schism between Sunni and Shiite and Alawites will continue, but it ain't going to end soon. Islam lives in "interesting times."

Bally

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