As we watch the metals rally this evening (Thursday) and many of you wonder again whether Turd might be a witch, a soothsayer or a psychic, I thought it best to update you with this rare, evening post as tomorrow promises to be a day of significance.
Where to begin? Let's start with the present. Earlier today, as gold was struggling to gain a toe-hold above $1300 and silver was still capped below $20.40, I added this comment to the "Coiled & Ticking" thread:
Well let's just see what happens...
Submitted by Turd Ferguson on February 13, 2014 - 12:19pm.
IF I'm correct in assuming that JPM is "letting things run" a bit, then maybe just maybe we'll get our pop through 1300 and 20.40 on the Globex this afternoon.
Well, as you know by now, price did rally on The Globex and silver actually traded over $20.50 and gold got to $1302. The next milestone was going to come from Asia. Would prices rally there? So far, we have our answer as I have a last for gold at $1304 and silver at $20.79. Frankly, I was already planning this evening update but, when I saw the spike in silver, I knew I had to get it done.
First of all, the spike in silver through $20.60 is not The Spike or The Squeeze. Don't get me wrong, moving through $20.60 clearly engendered some buying but this isn't all short-squeezing. The real Spike and Squeeze will come tomorrow at the Comex open IF...AND THAT'S A HUGE IF...price can stay above $20.60 all the way to 8:25 EST. There are obviously still some who would prefer to see silver stay down as long as possible and you can be certain that they will try to drive price back down over the next 12 hours. Will they be successful, though? That is question #1.
Gold is rallying, too, and moving away from $1300. I mentioned several times earlier today that I did not expect "round number resistance" at $1300 and, as expected, we didn't see it. So, with price tonight at $1304, can gold build on this early momentum and rally into the Comex open? Will The London Monkeys try to beat it back or will they continue to stand down? Those are important questions but here's the biggest and most important: Can gold rally again on Friday and then close above the critical 200-day moving average, which is currently near $1310 for spot and $1312 for the Apr14? That is question #2.
And then there are the mining shares. At this point, I need you to do me a favor. Please click this link. Go through this post from 1/23/14 and review all of the charts, making note of where prices stand this evening. https://www.tfmetalsreport.com/blog/5411/miner-possession
OK, now that you're back, I have another question for you:
Are you convinced yet that I really am a witch? Do you feel that this is the best $10/month you've ever spent? Sorry...The question is: Can the miners rally and extend tomorrow? Because IF the HUI can extend and close past 240 and IF the individual shares you just reviewed can continue to rally through the resistance points so many are approaching, what will that say about the likelihood of metals prices gaining even more momentum next week? How the miners behave tomorrow is extremely important. Will they continue rallying tomorrow? That is question #3.
So here are some charts to study. I've marked them up a little differently this evening as I've only drawn resistance lines. The red lines are where I expect price to encounter difficulty. Let's start with silver because there's a whole lot of them.
Let's take them one by one. First, $20.60 is HUGE because it represents the top of the latest three-month, double-bottoming range. Breaking through there tomorrow morning will set off a whole host of buy-stops from foolish shorts who thought silver would stay down forever. Though there's horizontal resistance at $21, the next major hurdle will be the 200-day MA for the Mar14 contract, currently near $21.20. Now here's where tonight's action really matters. Let's presume that a decent squeeze at the Comex open is good for 50¢ or so. Well, if price can hold near $20.80 until then, the 200-day will get violated at the open, setting off even more stops and propelling silver toward $22. (Do you see now why I wrote this back on Wednesday? https://www.tfmetalsreport.com/blog/5481/still-looking-good)
The next major resistance for silver will be $22. Why? That is the point at which price finally bottomed in the wee hours of April 16, after the massive 2-day beatdown scheme was over. Getting above there will prove to just about every remaining skeptic that The Bottom is in...something Turdites have known for months. From there, $23 will be tough but $24 shouldn't be. $25 will be a major challenge but it will pale in comparison to The Major Battle of $26.
Now let's look at gold. Here's the chart:
Let's start with the aforementioned 200-day MA. Closing above $1312 tomorrow would be huge. Closing above $1320 would be enormous. Can gold do it? Yes. Will it?
Regardless, if not tomorrow then likely next week. Why? Because even though $1320 has been a consistent resistance/support area for years and, like $22 silver, it marks the low from 4/16/13, I've come to the conclusion that that's not where the next major fight will be. Just like how I didn't expect $1300 to be a big deal, IF gold can get through and close above the 200-day MA, then $1320 won't be that great of an obstacle.
The real battle and resistance will emerge instead near $1350 and the confluence of both horizontal resistance and the down-sloping trendline that connects the highs of late April and late August of last year. IF/WHEN gold breaks that trendline, the reaction from gold bears will be identical to the reaction in silver bears to seeing silver above $22. "UH-OH!!" And it's possible that gold will reach $1350 and silver $22 at about the same time, too. Coincidence?
And then here's the HUI. Recall that we started paying attention when it broke through 210. When it broke its 50-day, I perked up and the immediate assault on the 100-day was impressive. Now, IF IT CAN CLOSE ABOVE THE 200-DAY AGAIN TOMORROW, it will be primed to run to about 255 next and, once above there, 285.
Again, I must caution you...These shares have come a long way in a short period of time. Therefore, they will be subject to sharp corrections and pullbacks just like yesterday. And think about it, the HUI was at 190 just two months ago. A move to 285 would constitute a 50% rally. WOW! So now is not the time to jump in with both feet. As I recommended a month ago, now is the time to accumulate, a little at a time. make some fiat and convert your gains to physical.
Additionally, even if you don't own a single share, you must watch the HUI as an important guage of sentiment. IF it can continue to rally, the metals will rally, too. A HUI at 285 looks to equate to about $1450 gold so, if the miners keep going...
Here is a 3-month HUI chart and a 12-month HUI chart. The squiggly line is the 200-day MA and the red lines are likely resistance levels:
So there you go. Get ready for a very interesting and important Friday. To recap, there are three vital questions:
- Can silver hold tonight's gains and head into The Comex open already well above $20.60?
- Can gold close on Friday above the critical 200-day moving average, currently near $1312 in the Apr14?
- Can the miners hold and extend today's gains and, if so, can the HUI put in a weekly close above it's 200-day near 235?
Good night and good luck.