An Interesting Next Two Weeks

Sun, Jun 19, 2011 - 9:08pm

Hi, welcome back. I hope that everyone had a great weekend.

Just a quick post here on Father's Day in the U.S. Back on Friday, I promised you some interesting charts and they are shown down below. As you know, a debate is raging as to whether this summer will bring the usual "doldrums", where the PMs languish and drift lower or whether current geopolitical and economic events will drive a "flight to safety" trade that will, instead, lift the PMS higher.

While the contrarian trade has benefited me greatly over the years, I'm not ready to rill with this one just yet. The pattern from the Fed's initiation of quantitative easing is quite clear and ongoing. It's roughly four months of rally followed by two months of consolidation. You can plainly see it in this weekly chart.


For those of you who think that QE is over and kaput, this chart says otherwise. If this trend ever breaks to the downside, then maybe you can begin to think that QE has ended. Until then, the chart suggests business as usual. To that end, I have a very hard time seeing gold get up and away before autumn. I won't mind being wrong but I'm pretty sure I'm right.

Now, here's where I think the next two weeks are quite significant for gold and for those who expect a summer rally instead of doldrums. Take a look at this daily chart. The trend from Turd's Bottom is still clearly in place but the next couple of weeks will leave gold with very little downside wiggle room. It's going to need to get rolling higher and break through 1550 once and for all or it risks a significant break of the trend and, if that happens, we can be quite confident that the winner of the debate will be doldrum over rally.


The weekly silver chart is very interesting, too. Note that for all the wailing and grinding of teeth, the trendline from the breakout last August is still firmly in place. However it, too, needs a good couple of weeks or it risks breaking its trend and falling into the doldrums. We'll see but I'm not giving up just yet. It could skip away, back toward 40 and give itself plenty of breathing room.

Like gold, crude remains in the uptrend that it started back in March of 2009. That's a long, flippin time so I suspect quite a bit of buying support should crude continue to trade lower and begin to approach $90.

The proverbial "fly-in-the-ointment" in the CRB. It does not look pretty at all and, if you're a deflationist, no more QE guy, this is the chart upon which you hang your hat. The lows from early May had better hold because, if they don't, the index looks like it could fall to 590 or even 550. Personally, I have a hard time seeing it as the grains are so fundamentally sound and crude has already come so far down but you never know. This must be watched closely.

OK, that's it for now. It's been a great week and I can't tell you how thrilled I am at the overwhelmingly positive reaction to the new site. As we go forward, I encourage everyone to visit and peruse the forums...this is where the real action is! If you are only stopping to read my blog posts, you are doing yourself a tremendous disservice. You can get to the forums by simply clicking on the "Forums" tab in the main navigation bar at the top of this page. There are forums for gold, silver, miners, crude, grains...just about everything we regularly discuss here. You have to sign up as a member to post and interact but everyone can read the pages and give "hat tips". No registration is required. Be sure to check them out!

Have a great night. See you bright and early Monday! TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 19, 2011 - 9:17pm

Most complete post in the new

Thanks for the insight Mr. Turd! Have been eagerly waiting for your update. smiley

By the way, the addition of a forex forum would be great.

Jun 19, 2011 - 9:23pm

More interesting than the

More interesting than the next two weeks will be the four that come after that, as that is when the deliveries will happen, or equally as likely not happen. Taken together, these are probably the most important 6 weeks in the PM bull market to date, as now we have a real, strong possibility of a public COMEX default.

I can't emphasize this enough--get out of paper and into physical. I expect to see paper break down and head toward zero, slowly at first, then in a waterfall that culminates in a total default on the COMEX, even as physical supplies get tighter, and tighter, and tighter, such that premiums either rise drastically, holding the current price, or rising above it, or seeing the shiny stuff disappear. Either way, you don't want to be caught without.

If you want to play in paper, fine, but I would keep in mind that any money you take in is like money taken into a casino--one with smoke billowing out of the top, and that is self insured. You must be prepared to lose EVERYTHING.

Jun 19, 2011 - 9:25pm

Just a feeling...

I think metals are going up this summer, just a couple of dollars slow and steady. Just a feeling that's all.

Turd, thanks for the spell check.

Prize Fighter
Jun 19, 2011 - 9:25pm

Happy Father's Day Turd 

Happy Father's Day Turd yes

Thanks for your thoughts, wish we could see the new charts but honestly I stare at yours so much I know the pattern by heart.

Jun 19, 2011 - 9:27pm

"News Flash"

Since I have little faith in what the MSM reports, I haven't read a Time magazine in years. So this cover picture which I copied from caught me by surprise:

Me thinks the MSM is finally catching on to what the man on the street has known for at least two years now. Again a day late (more like two years) and a Federal Reserve Note short.


PS Thanks for the update Turd, I was "jonsing" for an update!

Jun 19, 2011 - 9:30pm

Trendline Since August 2010

Sorry for the trouble posting the charts. From what you describe I think a the Silver trendline from August 2010 to now would be something like this? (just guessing)

Jun 19, 2011 - 9:30pm

Ready to RILL

I like it. A new Turdism is born.

Jun 19, 2011 - 9:36pm

who knows

Well I can't say I agree much at this juncture. Patterns are made to be broken as we learned a couple of weeks back right? But no matter. If trendlines 'breakdown' in Gold it will only present good buying opportunities as it goes lower, no sense in even wishing or hoping for a chart outcome in an atmosphere where every single day you have War news, Euro news, tireless chart-painting and Fed market rigging. It is a quantum world out there with lots of glorious chaos and I don't believe the chart anticipates all of it now. People are very bearish on PMs and expecting doledrums which could just tend therefore to create some surprises. Either way I'll try my best to respond to price, north or south.

Warren Peace
Jun 19, 2011 - 9:38pm

I have to agree

I think tmosley is right. If you don't have physical, then by all means get some now. If the comex does not default now, it will default soon. Vehicles like SLV, and GLD will likely fold quickly in a comex event....along with their leveraged derivatives. With the new regulation squeezing all small investors out of the OTC metals market, the last option to preserve wealth for us after the comex, SLV, GLD default is physical. No doubt further regulation will make it impossible for small investors to purchase physical in the future. I would not wait until it's too late.

Paper trading is indeed a very dangerous proposition at this time in history.... You are playing the greater fool game, and playing it very late in the game. We know comex, SLV, and GLD don't have enough phys backing, much less the OTC derivatives. So play if you want, but don't be surprised if you are the greatest fool.

Jun 19, 2011 - 9:47pm

greece gets contingent bailout

all wknd zerohedge was doing it's usual scare the shit out of everyone routine by spreading rumors of greek default. bloomberg has a story on their site where the jackasses who wrote it failed to include the information from an earlier bloomberg article that greece was getting a partial bailout, with austerity conditions.

still zerohedge is in denial, for some reason, that the euro ministers wouldn't sacrifice their precious vacations and deal with this clusterfuck rather than kicking the can down the road.

on friday when i saw zero hedge was top calling, i knew it was time to go long! i will be shorting at the right moment, not going off some trumped up cnbc last minute crisis that's been around for years. all this shit is time so they can get you to sell and then take your money one last time.

here's the original bloomberg piece that greece will get half its bailout:

and the links to the screwed up bloomberg piece and the reuters account:

Jun 19, 2011 - 9:50pm

Coin shop experience

So, I went down to a coin shop to see what kind of silver is in stock. The poor sales clerk was a teenaged kid who was helping his mother. He pulls out a small box with a few 1 ounce rounds and bars, a couple of ten ounce bars (J-M's), and a few US eagles (about ten). I burst out laughing because there are no supplies of eagles in the store even though the premium is down and the price per ounce is down.

I then see some US Gold coins. The premium is up but very little moving and a high inventory compared to 2 months ago when you couldn't find the gold coins at all.

Who cares what the Comex Silver price shows when I can't buy the ASE's in the coin shops at all now!

Jun 19, 2011 - 9:51pm

ha...and cue roasting or eur/usd shorts

so the lesson i'm taking from this is never get all your news from zerohedge or you'll get roasted.

Jun 19, 2011 - 9:58pm

Thank you for the Sunday

Thank you for the Sunday update and Happy Father's Day to Turd & all the other dads out there!

Chicken Little
Jun 19, 2011 - 9:58pm

The Next Two Weeks

The German /French ECB plan to bail out Greece has collapsed.

Also, the ECB is withholding half of already committed $ in an effort to increase leverage on Greece to introduce even tighter austerity measures.

Buckle up boys and girls. The ride to infinite debt and beyond is about to get even rougher.

Hang on to your physical.

Warren Peace
Jun 19, 2011 - 10:09pm

A matter of time

Greece will default eventually, and drop out of the euro along with other piigs. The northern euros are not ready for this event yet, so they continue to drag out these so called bail outs.

The USD/EUR may go back and forth a few more times for you that are traders. But just like all things fiat these days... it's musical chairs on the titanic and the small investors will no doubt have the least reliable information as to when the music stops. Something has to distract us while the banking/political elites are making off with the life boats..... imagine the chaos!

So It Goes
Jun 19, 2011 - 10:18pm

I think I see something - Gold

I hope this might be helpful even though I am not a technical analyst.

I have been following the spot price of ​GOLD.

1. I have noticed that the bottom line of the trend channel in gold is increasing in slope.

2. If you connect the bottoms from mid April 09 to end of July 10 you get a bottom of the gold channel for past two years.

3. If you connect the bottoms from the end of July 10 to mid Jan 11 you get a second bottom channel (rising slope) for last one year.

​GOLD​ would have to break below ​1500 on July 1, 11 to break its current one year bottom trend line. Given world events - that is accelerating slow motion SHTF, I expect that the slope of the bottom of the channel will only increase - that is a corresponding slow motion rising slope along a parabola. Currently gold is approaching the bottom of its one year trend line and things are not getting better.

4. Therefore my conclusion is that Sinclair is right, the surprise for gold this summer will be to the upside. :-) 

Chicken Little
Jun 19, 2011 - 10:30pm

Greek Default

The default of Greece may be a lot closer at hand than you think. Greek 2 and 3 year paper is already trading north of 25%. Watch out for a "US" stealth loan of freshly printed fiat. TPTB are desperate to stop any contagion.

The "northern euro" is paving the way to cut Greece loose.

Jun 19, 2011 - 10:51pm
Captain Silver
Jun 19, 2011 - 10:53pm

Defaulted Already

Greece has already defaulted, on it's own citizens. All the remaining life support is just to get select bondholders out with their profits before it's cut loose. As long as the bailout money can be efficiently funneled into bankster profits, Greece will get it's fiat fix.

Jun 19, 2011 - 11:02pm

You better call Kenny

You better call Kenny Loggins, cuz you're in the Danger Zone

Daedalus Mugged
Jun 19, 2011 - 11:12pm

To QE3 or not to QE3...

To QE3 or not to QE3...that is not really the question. I am with Turd and most others here that it is as inevitable as it is inevitable that they don't call QE3 by the name QE3.

The interesting question is when. Turd and many seem to think imminent, that QE2 rolls straight into QE3, or at least promptly. I am of a different opinion. I believe they will try to suspend their monetary stimulus, and only institute QE3 when they think they 'need' to avoid another melt down. I think we have a period without monetary stimulus (at least of anything like the magnitude and rate we have had for months), treasury interest rates start to rise quickly, with a significant drop in auction participation, maybe even something close to a failed auction. Then the Feds step in to print the dollars the gov't borrows. Because we know balancing revenues and expenditures is preposterous. I think we see the start of a deflation, before the Fed steps in and unleashes real inflation.

I think it comes down to whether you believe the Fed is full of liars (knowingly spreading falsehoods) or full of fools (who really believe their nonsense). If you believe QE3 starts as soon as QE2 ends (my understanding of Turd's position), the Fed is chock full of liars. They know they are going to do it, but are publicly announcing that they won't. While I believe they are immoral enough to be capable of that, I think they really believe their magic worked. They believe they gave the dope fiend economy just enough heroin, and they can just stop now. They think when they stop, there will not be a shock. After all, everyone knew they were going to stop. They told the world they were going to stop, why would the market expect it to continue, why would the dope fiend want one more hit? I think the Fed will be genuinely surprised how quickly things change without their continuous bid on all risk free assets. I think they are fools who believe their own press releases. They will be surprised that the treasury rates start steadily creeping up, and the stock market grinds lower. 

From a monetary theory perspective, the Fed is big believers in stock theory. They announced how much and when they were going to buy. Market efficiency should immediately price that amount, and only that amount, into expectations. It is the announcement, not the execution that matters. I am more a believer in flow (although I believe both matter). Their constant bid changed auction rates and participation. They drove risk free yields negative on a real basis. The money was made by buying at the auction and flipping to the Fed a week later. If the stock theory is correct, the next two dozen treasury auctions will look a lot like the last two dozen. Everyone already knew which ones would have POMO support and which would not, it should be already priced in, on both sides of the QE expiration date. If the flow theory is correct the next two dozen auctions will look a lot different from the last two dozen. It will be pretty interesting to is very unusual to have such relatively clean economic experiments in the real world. Kind of a shame they are betting the prosperity of the world on an unproven theory, but it is exciting!

Jun 19, 2011 - 11:13pm

Market call

Anyone got an chart leading up to the 08 Burp, I think this should not be overlooked with QE2 soon to come to an end, who really knows how the markets will act out. I have been holding some FRN's back just in case we get a real good buying opportunity here, if it happens I think it will be the last time before PM's take off...The masses will awaken.

I know that many will say it will not end even for a month or 2, I think it will play out in this form giving Big Ben a get out of jail free card from the "beggars" ie' bankers.

Dave T
Jun 19, 2011 - 11:17pm

A long shot

I think it’s a bit of a long shot that the government would totally regulate or legislate the small investor out of physical metal. To do so would crush the coin and bullion industry which means loss of tax revenue and longer unemployment lines – neither of which the government can afford.

Strongsidejedi Marcus
Jun 19, 2011 - 11:30pm

COT report interpretation

I am a newbie at this type of graph.
What is your interpretation of the bar chart?

Here's my guess:

1. Small specs haven't changed much in their behavior over the past six months.

2. Large specs have reduced long positions since end of April.

3. Commercials closed short positions rapidly during early May, but are holding their relative position since end of May.

4. Open Interest is down over the past month.

Strongsidejedi Dave T
Jun 19, 2011 - 11:35pm

Admin policy on Unemployment

I am not so convinced that short-term unemployment rates are a consideration in the "big picture".

In fact, I am thinking that that the federal reserve bank is willing to sacrifice short-term unemployment rates for certain regions of the country. Meanwhile, other regions will be targetted by FRB-FOMC policy for injection of liquidity. These will be the FRB regions which are politically helpful to the FOMC action and have their state policies aligned with FRBNY.

Having short term progression of unemployment in the South/SE states (FL, GA, MI, LA, AL, TX) might help the FRBNY and improve the political strength of the current administration too.

As an example, the end of the manned space program can be directly linked to this President's space policy. It's going to put tens of thousands out of work in Florida and destroy the Eastern "space coast" economy for the time being. This is analogous to the "stand down" between ASTP/Skylab missions in 1976 and STS-1 in 1981.

Jun 19, 2011 - 11:42pm
SilverFocker TF
Jun 19, 2011 - 11:54pm

Intresting weeks ahead

Will this be another attempted shakeout or are the PTB getting ready for a full frontal assault on those little guys trying to play the game.........the next 3-4 weeks seems to be heading in the fun-zone. Time to go long on popcorn.

Captain Silver
Jun 19, 2011 - 11:54pm

Watch for assault

This may give the EE a chance to do some serious damage if they can orchestrate an abnormally low volume environment.

Silver Monkey
Jun 19, 2011 - 11:58pm

This is just another kick the

This is just another kick the can down the road, ill conceived idea. All they will accomplish is lower prices so that we can buy more physical! 

Jun 20, 2011 - 12:10am

Finding this interesting

I can see a possibility where it could go either way

Less volume = more volatility -or- less price discovery = less volatility

I am confident however, this will have unforeseen consequences.

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