What Now?

254
187
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:

https://tfmetalsreport.blogspot.com/2011/05/its-finally-over-now-what.html

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:

https://tfmetalsreport.blogspot.com/2011/06/hoping-to-be-wrong.html

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

Founder
turd [at] tfmetalsreport [dot] com ()

  254 Comments

FriedEggs
Jun 23, 2011 - 8:47pm

Fellow Disgruntled

Fellow Disgruntled Turdites...

Nothing has changed. All the factors since the start that are causing PMs to go higher - are WORSE today for 'them' then they were yesterday. Period.

Was the US National Debt erased? No. Was it worse today then yesterday? Yes.

PIIGS financial troubles wiped out? No. Was it worse today then yesterday? Yes.

Volatile MENA area improving? No. Was it worse today then yesterday? Yes.

Etc...

You need to think from a different angle in order to ease the financial sliver in your brain on markets like today...

Think more logically then emotionally.

Fried(e)

Jun 23, 2011 - 9:17pm

THIS IS EXACTLY RIGHT!

And what I've consistently said. Hmmm...do you think Vanity Fair would ever quote me??

Right now, thanks in large part to Federal Reserve policy, Uncle Sam can borrow at an average cost of just 2.5 percent. The average borrowing cost over the last three decades was 5.7 percent. Our debt is now $14 trillion and scheduled to grow to $25 trillion by the end of the decade. If interest rates normalize over that period the added interest costs in 2021 alone will be $800 billion—more than 20 times the mere $37 billion in budget cuts that tore up Congress in March. It would take virtually all of the cuts in the Ryan budget just to cover that added interest, much less to start bringing down the national debt. Unfortunately, the Fed is now in a fiscal box. A normalization of interest rates would break the Treasury. Hence, a normalization of rates really can't happen—we're stuck in a world in which the Fed must keep rates artificially low in order to prevent a budget disaster.

- Lawrence Lindsey writing in the Weekly Standard June 13, 2001

Eric Original
Jun 23, 2011 - 9:23pm

Thanh

My favorites are British Sovereigns ( they DO look cool!), and old U.S. Double Eagles ($20 gold pieces) just because they are so big, beautiful, and bodacious!

TheGoodDoctor
Jun 23, 2011 - 9:23pm

@Turd Damned if we do, damned

@Turd Damned if we do, damned if we don't. Just like Santa says it is QE(n). It's the only bullet they have left. Unless they devalue the currency by revaluing gold. Really those are the two choices.

Gramp
Jun 23, 2011 - 9:26pm

Perception...      Jumped on

Perception...

Jumped on and read the Latest Blog Entry from Turd before even opening the charts. ( Been w/o access to markets all day) Man, from the 'tone' of the post, I thought the sky was falling, though after opening the charts, things looked acceptable for my comfort level. No big surprise really.

I know, I know, Hind sight is 20/20.

Well, that sucks if you get Stuck on those calls Turd.

The EE is skilled at PP manipulation... :0 ( Price, and Perception)

Keep driving the price down you Fockers... I will stack even more...

OldGlory
Jun 23, 2011 - 9:29pm

silver tree

Amen brother/sister... A song down memory lane puts it into perspective," don't stop believen'' = faith...in my humble opinion. Best post of the year! COL Turd

Darth Smoker Big Buffalo
Jun 23, 2011 - 9:39pm

Thanh

re: Golden State Mint 1/2 oz round. Beautiful Medallion.

I was afraid they would be rough, but were finely struck and finished.

Eric Original
Jun 23, 2011 - 9:42pm

Ginger re:options

Just did a little checking for you. Looks like Jan '12 NGD calls are pretty active. Available in strikes of 10, 11, or 12.50. Look cheap to me. Stock currently 9.98. I'd take a hard look at those.

ginger
Jun 23, 2011 - 9:53pm

kumanari, Thank you as

kumanari, Thank you as always. I'm so glad when you can pull yourself away from those gorgeous beaches and post! ...Your words are always wise. I always re-read you. You have solid advice I need. .........Trade you a NC beach for a HI beach.

zman, yes it would be great if we had an options forum. I would just like to brainstorm some good plays. I think the message I got from kumanari though was that the best little gems might be the oft overlooked gems that maybe not everyone has jumped on yet en masse. That's good advice. We need to be able to seek out the path less traveled perhaps to find the biggest gains. Once a play is overbought and overused.... well.. stands to reason that it would cease to be the BEST play. Much like SLV became. ...SLV might still be a good long term buy but everyone and their brother does that one. I get kumanari's point (At least I hope I do!) ......still, it would be great if TF would give us an options forum so that we could avoid the groupthink together.. ...wait...

monedas, NO!... you are not a 2nd hand afrum!! ...Afrum was/is very unique and so are you (That's a compliment). Your posts are witty and engaging and sometimes I have to re-read to absorb what you said. Same way with afrum. Go back to TF's old blog and do a search for afrum and you will see what I mean. ....A few of us really didn't get afrum at first but he is someone who grows on you. He was very poetic and had a way of making his point while making you smile and yet his posts are sharp as a two-edged sword. I haven't seen him on the new blog here but maybe I just haven't crossed paths with him. I sure hope he isn't gone for good. We would all miss out. ...Glad you are here too. ..And as far as the winky faces are concerned, just look at the thin little tool bar directly on top of the comment box when you are making a post. If you click that smiley face it brings down a whole menu of other facey-expressioned little guys. HTH!

Eric-O, thank you! I was poking around after my post awhile ago and researched NGD actually and a whole bunch of other solid miners. ....Not sure now is the time to be going long these miners.. ...........scratch that.. I'm pretty sure NOW IS THE TIME to be going long these miners!

Eric Original
Jun 23, 2011 - 10:01pm

Mark Fisher oil comments

Mark Fisher is one of the smartest guys around, especially in the oil trading pits. His views are generally sympathetic to those of us here in Turd Town. He was on CNBC today. He comes on at about 3:40 into the video.

https://video.cnbc.com/gallery/?video=3000029360

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