Updated Big 4

Wed, Jun 22, 2011 - 10:13am

I'm going to be out most of the day today so I thought I'd give you a comprehensive update on our Big 4 - gold, silver, the POSX and crude.

Let's start with the world's reserve currency (for now). We discussed last week the likelihood that the POSX would run into stiff resistance near 76.50 and, in fact, it did. Having since rolled over, The Pig is now seemingly caught in a pennant formation that looks to contain it for the next 4-6 weeks. IF this plays out, it's not necessarily a bad thing. A rangebound PO$ essentially neutralizes it in its effect on the PMs.


Now let's look at crude. I had hoped for a quick bounceback to above $96 but I don't think we're going to get it. Monday's rally appears now to be just a snap back from oversold conditions. Watch the $93 level very closely today and tomorrow as a downward breach of that level would confirm that a test of the lows of last Friday are in the offing. At this point, I'm expecting new lows near or just below $90. Then, another rally back up toward $93. A retest of the $91.50 level would then give us a reverse H&S bottom from which crude might finally mount a successful rally back above $96 and toward $100. This whole process could easily take the entire month of July to play out so don't get impatient and move too soon.


If crude plays out as I've described above, it would certainly fit the pattern I see in silver. Again, I agree with Trader Dan that silver will need an inflationary environment to once again outperform gold. An inflationary environment will be signaled by rising crude and crude looks like it might not be rising again for 4-6 weeks. So, does silver look that way, too? It sure does. Though I'm very happy to see it moving higher, it looks to run into considerable resistance near $38. Note the confluence of the old trendline (marked in dashes) and the current trendline. It will be extremely difficult for silver to move through there. For now, I'm essentially out. I still have my July $40 calls which are, for all intents and purposes, worthless and I'm not buying any more. Like crude, it may be August before silver begins to look interesting again.


I've saved, however, the best and most fun chart for last. I mentioned yesterday that I'd moved back into some gold options and, right now, I'm glad I did. This chart looks great. The double-top that was so expertly painted earlier this month has now been completely violated and upside momentum is strong. The only question now is: What dirty tricks will The Cartel implore this time as they try to keep gold from making a new all-time closing high?

1) A margin hike? Unlikely as they just lowered margins last week.

2) Aggressive creation of new paper gold? Doubtful. Global demand is so high that new shorting would just exacerbate the already tenuous short position that The Cartel must maintain.

3) Rumors of central bank or IMF selling? Maybe. The IMF rumor could get legs as people would believe it as it pertains to raising cash to fund the PIIGS.

Hmmm. Let's go with #3. Watch for that headline later today or tomorrow. In the meantime, if nothing is done to stop the advance, gold looks certain to take out the old closing high of $1558.40 set back on May 2. From there, it will set its sights on the intraday highs of $1577.70, set on the same day, oh so long ago.


In August gold, I have a last of $1554.30 after a high trade of $1559.20. It's going to be a very exciting and fun day. Sit back and enjoy the show. I'll have more for you and a recap by later this afternoon. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 22, 2011 - 10:18am

We have ourselves a rodeo

We have ourselves a rodeo once again.

Strap on.

Eric Original
Jun 22, 2011 - 10:20am

Record London Fix

Today's London PM Fix of 1552.50 is a new all-time high. :D

Gold is my hero.

Jun 22, 2011 - 10:20am


 I'm sorry but I had to delete that photo. Nasty.

Jun 22, 2011 - 10:21am

Turd Ferguson, Niall Ferguson. It must be in the name.

Niall Ferguson is always worth a listen!!!

Interview: Prof. Niall Ferguson at the Caesarea Forum
Dr G
Jun 22, 2011 - 10:21am

Wow, NY pushing the POS/POG

Wow, NY pushing the POS/POG upward on opening for two straight days (I have 1555.20 and 36.54!) . Something is certainly afoot.

Turd, why no mention of the fed meeting today/yesterday and the Bernank speaking today? We will undoubtedly get some action in the foreign markets as a result of that.

Jun 22, 2011 - 10:23am

Fist again

Kate Moss in Gold. Life is good. nuff said 

Eric Original
Jun 22, 2011 - 10:23am

Nice Deletion Turd!!

Let's keep it clean.

Jun 22, 2011 - 10:24am
Jun 22, 2011 - 10:24am

Gold pills

SORRY TURD, how about gold pills?

Captain Phelps
Jun 22, 2011 - 10:26am

Reverend George speaks from the grave

This says it all. Thanks for telling the truth long before it was fashionable.

George Carlin ~ The American Dream
Jun 22, 2011 - 10:26am

Sounds good to me

I like silver at the 36.50 to 38 dollar range, for 6 weeks more. Time for me to stack more of it.

 Thank you, Turd for the site

Jun 22, 2011 - 10:26am


deleted. .... Niall Ferguson is IMHO the smartest man on the planet when it comes to money. Listen to him.

Jun 22, 2011 - 10:34am


  1. 10:30a

    U.S. distillate supply up 1.2 mln brls: EIA

  2. 10:30a

    U.S. gasoline supply down 500,000 brls: EIA

  3. 10:30a

    U.S. crude supply down 1.7 mln brls last week: EIA

Bay of Pigs
Jun 22, 2011 - 10:56am

Light this candle

We get another couple of days above $1550, and $1600+ comes into view quickly. Gold breakout at hand... 

Gene Arensberg has a couple of nice charts here. Miners look ready to blast off. Apologies if it has already been posted. 


Kryptonite for Bankers D0C
Jun 22, 2011 - 11:03am

Niall Ferguson

"Niall Ferguson is IMHO the smartest man on the planet when it comes to money. Listen to him."

Niall Ferguson is a mouthpiece for the Rothschilds.

Jun 22, 2011 - 11:13am

Jumping Back In

I was seeing a head and shoulders pattern forming in the GDX since early February and was sure it was going to be beat down to at least the 46 area so I decided to stay out. (Thanks in large part to the hedgies knocking it down and the GDX following the SP500 in sympathy.) However... based on comments by Stewart Thompson mentioning that the hedgies could find themselves in the short squeeze. Along with Santa mentioning the PM summer doldrums might not apply this time around, I had to reconsider my position.

Looking at how GDX snapped back from a low of 51.98 to yesterday's close of 54.01, maybe buyers are coming back into the market. So I thought maybe GDX is oversold. Sure enough, GDX hasn't been this low since late August of last year when G0ld was $300 lower than it is today. Is GDX undervalued or what?! Also considering the daily close hasn't been this far below the 200DMA since the crash of '08, I thought it's high time to get back into GDX.

After being stomped on trying to short SPX, I'm dipping my toe back in the market with GDX call options. Let's see how this turns out.


Jun 22, 2011 - 11:15am

phase three set of by themselves/posted inLe Cafe

To all; the recent notification from FOREX that Gold and Silver OTC trading for individuals will become illegal after July 15 is a real shocker. Tyler Durden at Zerohedge commented on this yesterday

https://www.zerohedge.com/article/trading-over-counter-gold-and-silver-be-illegal-beginning-july-15 . I have a couple of brief observations, first off this is a real shocker to me but maybe the real reason behind it is to prevent investors from making a "cash call" because the vaults are just about empty. Secondly, as others have observed this may backfire because this demand may simply shift to cash and carry and actually create more of a physical drain.

But here is where the real rub may end up, buyers of futures contracts do so for the leverage, they want bang for their buck and as much as they can for as little capital up front. So where do these traders turn to?...maybe they step up and buy Gold and Silver mining shares on margin? They get operating leverage from the mining entities and financial leverage through the use of margin. Of course they can use options on these stocks but that's just a kicker and a story for another day. The point is this, if FOREX is diverting demand because the physical cannot be delivered I think they have now inadvertently kicked off the phase we all have been anticipating, namely the 'mania phase"!

Let's see what happens here but all I can say is "WOW what a setup!". The hedge funds have set up shop by shorting mining stocks until the cows came home and now the "authorities" have possibly inadvertently diverted demand that will roll over these shorts like a freight train! This by no means is a "lock trade" and I would like to watch for signs that this in fact has been set in motion but I certainly can see the possibilities here. After all these years of making money in the miners but always feeling like THE move got aborted and the rug pulled out from under us, THIS really has the potential to be that "little extra wind" behind our sails that could create havoc. Can you imagine a physical market where sellers are scarce and a share market where shorts (both legal and illegal) must compete with entities trying to enter because they cannot get leverage elsewhere? Sounds like rocket fuel that's too good to be true? Maybe it is, maybe it isn't! Regards, Bill H.

Jun 22, 2011 - 11:18am

Silver will tag along.

Regardless of resistance levels, or inflation. The Silver should surprise to the upside. Those areas of resistance will slow the rise, but with Gold now at historical high and sure to b/o to new high, Silver will push strongly ahead at least into the forties soon after Gold b/o. Which was btw a Turd prediction. I do understand the "industrial" inflation, market, connection with Silver.

Jun 22, 2011 - 11:19am


Big Ben's presser is at 2:15 EDT, I think they'll make a move before the close.

Jun 22, 2011 - 11:22am

Bernanke's Q&A

The Cartel and EE will make their daily obligatory PM raid during the Bernank's Q&A session as soon as any news deemed relevant to the market or interest rates gets mentioned by him.

It's almost too hard to imagine a day where the EE would leave the PM's price alone.

Otherwise, the normal daily raid happens between 12:30 and 1:15 pm just like any other day. 

Jun 22, 2011 - 11:33am


Nice rally in both Metals and Shares. Although shares are a little wobbly, the day looks good up until Benron speaks. Rate hike? I doubt it the Keynesian have much more pain in store for the middle class, were not starving and begging yet, so no rate hike.

Anecdotal of course.

Eric Original
Jun 22, 2011 - 11:33am

GDXJ @ 35+

Miners are rippin' again today. GDXJ is in the low 35's vs low 32's late last week. Seems like the miners bottom is in.

Jun 22, 2011 - 11:38am

IMF Selling

Turd, you mention IMF Gold selleing as a propaganda possibility and while I would not put it past the manipulators to put out a rumour of this nature, the fact is that the IMF has sold all of the gold that it can legitimately sell.

Virtually all of the gold 'Owned' by the IMF is actually just pledged from the IMF member countries as their 'Stake' in the organisation and is not actually available to the IMF to do anything with.

Recall that over the past 24 months the IMF sold off just over 403 tons of Gold which they had acquired (Looted) as part of their bailout operations following the Asian currency crash in the 1990's. That gold was the only part of their gold 'Reserves' that the IMF actually had ownership of, and now that it has been sold, the cupboard is bare.

If they want to sell any more gold, they first have to persuade one or more of the nations that have pledged the gold they want to sell to let them do so. That's not going to happen in the current environment.


Jun 22, 2011 - 12:18pm

I have just completed positioning for the Bernank appearance.

Air sickness bag w/in reach @ the viewing seat!

Jun 22, 2011 - 12:27pm

This Day in History

"06/22/1775 - Congress issues Continental currency. The Continental Congress issued $2 million in bills of credit on this day in 1775 to finance the Revolutionary War. The currency, known as "Continentals," was backed by the promise of "future tax revenues." Ultimately, the money had little value, sparking George Washington to note, "A wagonload of currency will hardly purchase a wagonload of provisions." The Continental failed, leaving the young nation with a massive war debt."

Nick Elway
Jun 22, 2011 - 12:27pm

It's a program for pillage before bankruptcy


"This is not a program to salvage the economy, it's a program for pillage before bankruptcy," ... Alexis Tsipras

FogHorn LegHorn
Jun 22, 2011 - 12:30pm

Upside potential for miners,New kids heads up, Got Gold Report

Bay of Pigs, Thank you for your post! I bookmarked Got Gold Report site. I followed Gene avidly,and somehow stopped.Thanks for the link,for obscure small and micro caps,this is the site to read.Gene has a system of buying through stink bids,(really low ball bids, during periods of downward pressure via market or news relating to small stock names).Buy low, Sell high.He provides an entry and exit strategy for his subscribers.I have not subscribed but might yet.Research and analysis are well done and well worth your time.I was always wondering when to exit a trade when I first started trading pm stocks,Gene's system provides a great starting point, when the value of your dollars invested in a stock doubles, a 100% increase in the stocks price,you sell half and recoupe your initial stake,to invest elsewhere.Now your playing with the house's money.A solid strategy for growing wealth,I wish someone told me this years ago,Simple as simple gets.Thanks Gene!!

Jun 22, 2011 - 12:33pm


  1. 12:28p


    Morgan Keegan to pay $200 mln to settle with SEC

  2. 12:27p

    Fed says recovery slower than expected

  3. 12:27p

    Fed says labor market weaker than expected

  4. 12:27p

    Fed to reinvest principal payments

Jun 22, 2011 - 12:53pm
Titus Andronicus
Jun 22, 2011 - 12:54pm
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