Calculator Joins The Fight

180
Fri, Jun 21, 2013 - 12:52pm

Ruler, Sharpie and Compass have a new ally in The Battle. Today, Calculator joins The Fight against The Forces of Darkness.

Never fear. MathMan is here.

Let's start with gold. Below is a chart to which you can refer if you'd like to check MathMan's math:

MathMan believes that this current "bull market" in gold began in January of 2001, with gold at $275/ounce. Using that as a basis, gold then rallied for over seven years, finally peaking at $1033 in March of 2008. That is a move of $758.

A Fibonacci 38.2% retracement of that move would have been:

$758 x .382 = $290

$1033 - $290 = $743

Thus, $743 was a likely target for the inevitable "correction". When it came during The Great Financial Crisis of 2008, it should not be surprising that price overshot just a bit. In those crazy days of fear and illiquidity, simple technical targets were easily overrun. It should be noted, though, that the final bottom was just a shade lower, at $683, in October of 2008. Then, in creating a bottom, price made a low of $700 in November 2008 and $742 in December of 2008 before resuming the bull market rally in January of 2009. Therefore, MathMan concludes that the 38.2% number is significant for measuring future corrections within the gold bull market.

Let's also look at the correction on absolute terms. Again, price peaked in March of 2008 at $1033 and then fell to $683 in October of 2008.

$1033 - $683 = $350

350 ÷ 1033 = 33.88%

OK, here comes the interesting part. Using the same math, gold began it's rally in January of 2001 at $275. It peaked in September of 2011 at $1920. That is a move of $1645.

$1645 x .382 = $628

$1920 - $628 = $1292

Thus, a reasonable target for this current correction is something similar to what took place in 2008. Though $1292 is a full 38.2% correction, could price overshoot again? Of course.

Let's also use the same absolute comparison to 2008. Again, back then, price fell 33.88% from its highs before reversing and resuming the bull market.

$1920 x .3388 = $651

$1920 - $651 = $1269

Ultimately, the questions you have to ask yourself are these:

  • Do you believe that the bull market for gold is still intact?
  • If so, under what conditions could this current correction be "worse" than that of 2008?
  • Does it even matter? (Not really. I just keep buying. They'll pry MathMan's gold from his cold, dead fingers.)

Now let's look at silver. Here's a chart for your reference:

In the immortal words of Mister Miyagi, "numbers different, but same".

The first thing we have to consider is that silver is likely tracing out a full, 100% retracement of the move that began in August of 2010. Back then, our infamous BoS (Buyer(s) of Size) appeared and silver rallied from $18 to $49 in just 8 months. Giving it all back would take us back to $18. As I mentioned in the podcast yesterday, this is the most likely scenario for a price bottom.

However, MathMan would like to take a stab at silver, too, just for fun.

The bull market in silver began with a low of $4.04 in November of 2001. It then rallied to a high $21.35 in March of 2008. That's $17.31. It then fell to a low of $8.80 in November of 2008. before bottoming and resuming the rally that ultimately took it to $49.75 in late April of 2011.

OK, from March 2008 to November of 2008, silver price fell from $21.35 to $8.80.

$21.35 - $8.80 = $12.55

12.55 ÷ 21.35 = 58.78%

Using an absolute 58.78% drop versus the high of $49.75 leads to this:

$49.75 x .5878 = $29.24

$49.75 - $29.24 = $20.51

Hmmm. MathMan thinks that's pretty interesting. Now let's go back to those Fibo levels again only let's use the entire bull market as our basis and see what we get.

$49.75 (4/11 high) - $4.04 (11/01 low) = $45.71

$45.71 x .618 = $28.25

$49.75 - $28.25 = $21.50

However, using this same fibo for the correction of 2008 yields this:

$17.31 x .618 (fibo level) = $10.70

$21.35 - $10.70 = $10.65

Obviously silver overshot by quite a bit back then and it will likely do the same here. By spiking down to $8.80, silver actually retraced 72.5% of the $17.31 move from 11/01 to 3/08. A similar 72.5% spike low retracement of the entire move of $45.71 is this:

45.71 x .725 = $33.14

$49.75 - $33.14 = $16.61 (yikes!)

Again, so what's the point? MathMan has no idea. He's banged out so many numbers now that he's feeling a bit punchy.

At the end of the day, it's all about how you answer these questions:

  1. Will the paper derivative method of pricing precious metal will continue?
  2. If it continues, is the precious metal bull market that began back in 2001 still intact?
  3. If not, which of the fundamental conditions that prompted the bull market have changed?
  4. If the fundamentals haven't changed, is this just a correction similar to 2008?

TF

About the Author

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

  180 Comments

pbfurn
Jun 21, 2013 - 12:54pm

Second!

Enjoy your weekend and GLTA!!

wouldyoubelieve...
Jun 21, 2013 - 12:54pm

2nd

missed it by that much

Bugzy
Jun 21, 2013 - 12:55pm

seems quiet

Helloooooo

firstsilver
Jun 21, 2013 - 12:55pm

Here's hoping ......

that calculator fares better than the non-digital tools

wouldyoubelieve...
Jun 21, 2013 - 1:04pm

at $16.61

premium would bring it to $18-19 generic and $20-21 on ASE and Maples would be my guess, but I wouldn't count on getting it the same day, probably a wait on delivery

Howard Roark
Jun 21, 2013 - 1:05pm

NIce try

at math.

Beyond that, it´s the convictions. The basic values we share regarding the Truth of real, sound money.

Salut,

HR

p.s. - Knavechild, achmachat, rationalmind & QE did you guys read the message in the last thread?

(Edit) - nice dancin´Bollocks!!!

Save_America1st
Jun 21, 2013 - 1:07pm

16.61 plus???

How high will the premiums be at that point? plus 5, 10, 20, ???

SilverSurfers
Jun 21, 2013 - 1:11pm

10th

Alright top tenner!!! This is no challenge. Saw 9th, just posted quick, for the score!!

Challenge Accepted, meh, kicked booty, with 9th posted. Fast, super fast.

Meh, did we top tenner, share the glory today, Glorihallaloah!!

Midnight Stacker
Jun 21, 2013 - 1:13pm

Thanks Turd

Many thanks to all the thoughtful comments, data and perspectives.

I'm remaining steadfast and will continue to hold steady and calm.

TF golfs, I garden.

Have a great weekend with your Loved Ones.

All the best to all of you.

Peace out.

ps.....ASE's @ ITMtrading quoted at 24.28 usd

tyberious
Jun 21, 2013 - 1:13pm

And now a little willie

Jim Willie (Hat Trick Letter)

DEMAND FOR PHYSICAL METAL IS EXTRAORDINARY. IF NOT THE STRONG DEMAND, THEN THE THREAT TO BANK ACCOUNTS WILL LIFT THE GOLD PRICE.

Gold expert James Turk and founder of GoldMoney is not worried about the recent sell-off in the deeply corrupt COMEX, which purports to be a precious metals market. It is more a gathering of corrupt contract fraud kings, with black ink that bears the same letters as gold. Turk is supremely confident of a much higher Gold & Silver price in the coming months. He adds how banks will undermine citizen confidence, as depositors depart the corrupt banking system, later to seek true safety. Turk said, "At this level, we have probably gone as low as we possibly can. The paper traders and the derivative traders have pushed it about as far as they can, but the demand for physical metal is extraordinary down here at these levels. Within 12 months, Gold is going to make a new record high over $2000 an ounce, and Silver is going to double. It could happen sooner depending on how events unfold. It is inevitable you are going to see bail-ins [from bank failures] as we go forward from here, because the capital just does not exist. The problems we have been confronting the past several years have not gone away. Governments have been trying to buy time, but they are not coming up with any solutions." See the Before Its News article (CLICK HERE), which includes a video interview. It has been a constant Jackass point made that the bankers are not even attempting to bring solutions to the table. They work to preserve power, to tap into government largesse, and to redeem their toxic bonds. The bankers will not liquidate the problem banks, where their power lies and their syndicate manages the whirligig.

SHANGHAI WILL SLASH GOLD & SILVER MARGIN NEARLY IN HALF! THE RECENT GOLD AMBUSH IS LIKELY TO CUT GOLD PRODUCTION BY 10% OR MORE, AS FIRMS FACE A HOST OF CHALLENGES. GIVEN THE BIG PROPERTY SNAFUS, EXPECT A 20% DECLINE ON A GLOBAL BASIS. DEMAND CONTINUES WHILE SUPPLY WILL ENTER DECLINE. THE BANKERS ARE SO SCREWED!!

In the first week of June, the Shanghai Futures Exchange announced a surprise cut its Gold & Silver margin requirements. It goes directly against the corrupt COMEX, which abuses margin to manage the price suppression. The Chinese bourse will reduce margin requirements for the precious metals futures contract to 4% from 7%. The change will go into effect on June 25th. Global demand has been a house afire since the illicit paper ambush in mid-April. On the other side of the price equation, the supply of gold from mine output should decline substantially. The factors are aligned in several negative ways for mining firms. When prices plunged in the 2007 to 2008 period, gold production fell by 9.4% globally. The present conditions for mining firms are much worse today. Expect gold production to fall by 20% this time around in a shocker that will NOT be expected.

Balance sheets across the gold mining sector are much worse than five years ago. Production cutbacks from the major producers are being announced, from simple economics of closing down unprofitable mine projects. These factors are at work to reduce mine output, apart from worker strikes, mine accidents, legal challenges on ownership, and nationalization by grubby governments. The Gold metal price will be supported on a long-term basis by the supply cutbacks, as shortages will remain acute. The global demand will continue as long as central banks wreck the currencies via debasement and wreck the economies from cost increase indirect responses. No stimulus exists anywhere, not from monetary policy and surely not from austerity programs. The pressure is staggering for the Gold price to rise, corrupt market or not. See the Silver Doctors article (CLICK HERE).

Subscribe to Hat Trick Letter for full article.

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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