What Now?

Thu, Jun 23, 2011 - 4:28pm

What an interesting seven weeks it's been. From the jubilation of late April to the frustration of early May to the despair of today, we've certainly ridden the trader rollercoaster.

I've tried to lead the way through the darkness but this sorcerer/soothsayer stuff is pretty challenging, particularly when you're dealing with a criminal enterprise on the other side of your trades. Regardless, let's recap so that we can begin to decide where to go from here.

First, back on May 18th I gave you what some began to call a "roadmap". Here's a link:


I'll be the first to admit that the silver prediction for June came up short. I was looking for a rebound to $42-43 based upon the same fundos that had driven silver since August. The fundos are undoubtedly still there but the buyers aren't. All of the C/C/C shenanigans have scared them away for now. Silver made it to 38.84 on 5/26 and 38.76 on 5/31 but that was it. The gold prediction turned out pretty well, however. I was looking for a June peak between 1560 and 1580 and we made it to 1559.30 yesterday. Here, then, are the salient points going forward:

"5) Having accomplished all of this by the end of June, the metals will enter their typical summer doldrums. Silver will have painted a double top on our "white out" chart. Gold will have a near perfect double top on its actual chart. The PMs will selloff through July and into August, just like they did in July and August of 2010 and then January and into February of this year. Gold will likely retrace all the way to $1450 or so. Silver will trade back down to this 33-35 area.

6) By this point in late summer, all will seem lost. Every two-bit technician and topcaller will be proclaiming the end of "The Great PM Rally", just like they did back in late January. But it won't be the end, it will be the start of a new beginning.

7) The metals will rally from late summer into December. Gold will trade to a peak near $1750. Silver will again trade near $50, this time for real."

Then, there's this, which I wrote on June 8:


In this post, we discussed how a rallying POSX might be the final nail-in-the-coffin for the gold rally from January. I hoped that it wouldn't be but I feared that it was. (Against my own advice, I bought those August gold calls Tuesday. Turd dumdum. "Walk in middle of road. Get squished like grape.") From this post, here is the most important point:

"The dollar rally has added to what was already a rather tenuous position for gold. Take a look at the chart below. If we again use the white-out to wipeout the blowoff from early May, we get a chart that made a top about five weeks ago, corrected down, moved back up and now has made an attempt at a "new high". Failing the new high, it instead has rolled over and is now pointing lower. I hope I'm wrong but it looks like we have found our range for the summer. It looks now like gold will trade between 1470 and 1550 for the foreseeable future. Do not despair, this pattern of four months UP and two months sideways has been going on for years in this bull market. This new range would just be a continuance of the pattern and it certainly is consistent with the "roadmap" I posted several weeks ago. I still believe that, by late summer, gold will finally break higher and rally toward a December high between 1700 and 1780."

So, how does this relate to today? To me, today's action was the final, crushing blow to the 5-month rally in gold and the hoped-for recovery in silver. I now have no doubt that Santa, Turk et al will be proven wrong over the summer. There will be no "explosive" summer rally that will "confound the experts" and "make contrarians money". The PMs will simply be in another 8-week consolidation phase as they prepare for the next 18-week rally, which should begin by late August/early September. Until then, my advice to you is to not play. If anything, take advantage of dips toward the lower end of the described ranges by adding and stacking your physical. You'll have several opportunities over the next 8 weeks or so to buy some physical on "sale". If greed convinces you to trade paper on the Comex, you will only find yourself in the end with less fiat than you started with and you're going to want as much fiat as possible in your warchest when the next major UP move begins.

I leave you for now with these words of wisdom that Santa emailed out earlier today. Relax. Be happy. Enjoy the summer. Be ready for fall. TF

Dear Friends,

Economic statistics are taking a hard fall.

Without QE who will buy US treasury issues?
Without QE where is the basis of world equity markets?
Without QE what do you think the chart of unemployment will look like?
Without QE how do you think the camouflage of the insolvent balance sheets of the financial industry will fare?
Without QE where is mortgage money coming from?
Without QE what do you think home prices will do?
Without QE how will the present Administration and the legislative be re-elected?
Without QE how will the States of the United States of America finance themselves?

Be prepared for a reversal of the decision to curtail QE at the end of June.
Be prepared for a snap back at a greater percentage of QE with a different name.
Be prepared for covert QE between July 1st and late August when stimulation goes wild.
Be prepared for gold to take out $1650 on the upside as magnets at $12,544 come into play.
Be prepared for the Inflationary Depression of all time.

Stand firm on your gold positions.
Stand firm on your discipline of NO margin.
Stand strong in your Swiss Franc and Canadian dollar positions.

Survive the MOPE and market manipulation that is so obvious today.

Respectfully, Santa

About the Author

turd [at] tfmetalsreport [dot] com ()


Jun 23, 2011 - 6:51pm

Why has everyone assumed that

Why has everyone assumed that the only way to play this is short term? Whether or not TF is right or Santa and Turk are right about the shorter term, they ALL seem to agree about the longer term out 6 months from now. ...I'm confused as to why we all aren't enthusiastic about long NTM calls in gold & silver. As my buddy kumanari has told me more than once 'Buy time right now...you won't regret it'.

With his words ringing in my ears the past several days I went long on some UXG Nov11 7.50 calls. I'm not sure this was long enough however and am thinking of going for some Jan12 or longer UXG.

Which brings me to my 2nd point here. Is there currently an ongoing discussion in any of the forums for options traders? I've looked around but haven't stumbled on it yet. I would really love to brainstorm some good potential miner call options. OldNavy spoke of this some weeks back in a discussion about what to buy when SLV call options no longer seemed to be a good bet. I haven't seen OldNavy around though (I miss him!). ......Anyone got any good ideas for silver/gold miner call options they want to share...or direct me to a forum thread? EGO? EXK? UXG? GPL? ....heck.. just about any of the good solid miners might be a good bet for calls.

Jun 23, 2011 - 6:53pm

Exergy said, "the game is to

Exergy said, "the game is to survive first, get wealthy second"

Worth a hat tip.

Jun 23, 2011 - 6:57pm

lol, looks like we have our

lol, looks like we have our first troll.

I'm surprised it took this long.

NCdirtdiggerRichard Booze
Jun 23, 2011 - 7:00pm

You're looking for 'Turdisms'

Check out the tabs across the top of the page, Home, About, Blog, Chat, Forums, Turdisms etc.

Turdisms is a collection of definitions of the acronyms.

Jun 23, 2011 - 7:01pm

I fear that larger events

could easily intervene during the same interval Turd. This cannot be overlooked. Things will not unwind in a predictable manner in the Summer of 11. Something big is going to break, or go boom. Somewhere, soon. Not a prediction, just a very unpleasant hunch. I think many feel something similar.

So yeah, buy phyzz. With some urgency.

Big Buffalo
Jun 23, 2011 - 7:11pm

Happy Days...

Sorry to those that didn't do well in today's market.

I, for one, am very happy. If the charts and Turd are correct and Gold is swinging 1470-1550...i'm a buyer of some gold coins under 1500. Personally, i just had a fantastic week in my business and made a crap load of frn's and i'm looking forward to getting some shiney's.

I think some American Buffalo's, a couple Eagles (kinda boring though), and bunch of British Sovereign (they just look cool).

Question for those holding physical:

What are some of your favorites for gold?

and Silver? Does anyone have Golden State Mint 1/2oz .999 Morgan BU Silver Rounds or the 1 oz .999 Buffalo BU Silver Rounds? How do you like them?

Jun 23, 2011 - 7:11pm

The manipulation

We cannot underestimate the effect of the games. Remebr this mornings SPR which took down the markets ESP commodities. The Ron Paul hearing (what happened) The debt ceiling walk out (political) You name it. How can TA work when the .pressure is put on? Remember, we cannot have qe next until the debt ceiling is increase because the treasury cannot issue new bonds due to current debt ceiling. But it can defer payments to say retirement plans or vendors, which is what states like Illinois have done with litle success. In a word, we are FUBAR, and it's better to protect yourself before the event than after the event.

Jun 23, 2011 - 7:14pm

Drink upsteam from the herd

As' how Ginger, never mind everyone else group think will get you everytime.

bought gdxj 40 nov calls mon sold yesterday for 35% bought back this am at -8% from original stiil holding 44,45 jan. plus 10,12.5 uxg jan Buy time . Plus doing calender spread oct 1475 put vs dec 1700 call. Go with the trend, long term bull, short term NO ONE knows I distill Santa, Turk, and Turd then USE MY BRAIN & BROKER. Sometimes it pays to pay. Remember Turd is very good but he has his distractions, he has a life, yogurt, kids, wife,gin,golf. Don't expect him to be as good as when he did this full time. When you watch this crap all day it can cloud your thought process, I appreciate his honesty in relating his confusion. I don't care how confused or confident he or anyone else is, all that matters is my state of mind and how I respond to price. With that in mind I go take my dad to the beach. A hui hou malama pono.

Jun 23, 2011 - 7:15pm

get a load of this...

Another crack in the armor of Keynesianism. Professor Robert Mundell is the world’s most distinguished Economist, fuck Krugman. He is a Nobel Economics Laureate and founder of the euro, and is urging gold convertibility for the Euro and the dollar. Read this article from Forbes about Mundell’s idea for a new Bretton Woods style “multilateral convertibility of currencies to gold”. Must read..



Jun 23, 2011 - 7:22pm

My favorite PHYZZ

Reply to thanh

Maples, ASE and Perth Mint(kinda expensive tho). 97% of my PHYZZ are official minted products. 92% are 1-oz coins. A few 5-oz rounds and 10-oz bars. Don't have nothing above 10-oz b/c of liquidity issues.

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