Well, we almost got there. Gold overnight got to $1346 and silver breached $22 again before we were set upon by Monkeys. The correction we expected is now underway and will likely be with us for at leat a few days.
This, of course, will present late-comers with another buying opportunity. Personally, I hope to add to both my gold and silver stacks. It's just a bummer that I wasn't able to get out of my April $1350 call. Things happened so fast overnight unfortunately that I never saw $1350 during Comex hours. Nuts.
Sparking all of this was the turn in GOFO rates that we saw this morning in London. Note the move over the past three days. They're still quite a ways from positive but, with Feb gold deliveries now finished, I suspect that they are trending that way. Again, this shows that there is gold shaking free and The Banks use this gold to issue fresh shorts and slam price. We discussed this in yesterday's podcast. You should listen to it if you haven't already.
21-Feb-14 -0.05400 -0.03600 -0.01000 0.03400 0.11200
24-Feb-14 -0.05000 -0.03400 -0.01200 0.03200 0.11200
25-Feb-14 -0.04600 -0.03000 -0.01200 0.03400 0.11400
26-Feb-14 -0.03800 -0.02400 -0.00600 0.03200 0.11400
I've also been warning you this week that you had to expect volatility, especially with silver. We are approaching March contract expiration tomorrow and there are still an unusually high number of March contracts open. Anytime you see that, you know that The EE is going to slam price in attempt to "dissuade" longs from standing. And so they have.
So here we are, having our first major waterfall down day in quite some time. Is that it? Is it over? Are new lows ahead? Oh I'm sure that the usual suspects will be out in force these next few days to frighten as many as possible. Don't buy it. This is just a mini-correction, early in the resumption of the bull market.
What? You expect price to rally every single day? You expect the banks to just roll over? If so, you haven't been a Turdite very long and you clearly haven't been paying attention to ole Turd. How many times have I told you that:
- Silver was going to have major trouble with $22.
- It took nine months for prices to come down and bottom. Therefore, it will likely take another nine months before The Bottom is clearly recognizable.
- Gold is going to hit a major roadblock between $1350-1360 as The Cartel attempts to connect this rally with the failed rallies of May 2013 and August 2013.
- You must have patience!
- Continue to stack and buy the dip. If Provident or JMB is willing to send you an ounce of gold for $1300+, take them up on it. While you can!
My point in all of this is: NOTHING HAS CHANGED FROM YESTERDAY. This is all expected/anticipated. Stick with me and you'll be fine. I'll lead you out of here. Panic and you'll be lost.
IF I had been able to sell my April $1350 call and was sitting on cash, here's what I'd be looking for next. Just a 3% correction in gold will drop it back to the 200-day MA near $1307, where it found support last week and will find it again. Frankly, as you can see in the chart below, it may not even get that far. It's possible we may only see an intraday low near $1315. Only a decisive break of the 200-day followed by a break of the 100-day near $1275 and chart support near $1280 would be cause for serious alarm.
In silver, expect support first near the 200-day MA at $21.13. If the 200-day is broken, look for a bounce from below $21. On the charts below, you can see what I'm talking about. Note the blue circles.
And the miners are going to pull back, too. Again, things don't go straight UP! Expect the HUI to fall back to, maybe even slightly below, it's 200-day near 233. Let the RSI drop and the MACD lines cross. Give it a week or two and look for a new entry point. We'll cover this in much more detail in the days ahead.
So, there you have it. All of this is right on schedule and 100% expected. Please don't get all freaked out and panicky. Recognize it for what it is and understand that market moves are always a two-steps-forward-one-step-back process.
More in the podcast later today.