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

paper_6-23pmgold.jpgpaper_6-23pmsilv.jpg

About the Author

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

  254 Comments

Monedas
Jun 25, 2011 - 1:37pm

Pre-nupcial questionaire !

Are you better looking than Whoopi Goldberg ? (Choose one) 1. Yes ! 2. See #1 3. See #1 Monedas 2011 I'll go away for awhile ! Sniff ! Sniff ! broken heart

ginger
Jun 25, 2011 - 2:39pm

Nah.. Monedas.. you don't

Nah.. Monedas.. you don't have to leave.. ......just trying to figure out at this point if you are simply someone with a good sense of humor .......or an internet stalker axe-murderer. surprise lol. laugh

As for your questionairre ...I don't have a problem with Ms. Goldberg's looks... ...it's her POLITICS I take issue with! indecision

No harm done here. .....That is unless you really are an internet axe-murderer stalker type. ...Then I'm skeered and must go underground. :D

LOL Eric. ......re: the way back post. :D:D ......You've become like a big brother to me. ....I say BIG BROTHER because I'm just certain that you are at LEAST a year or so older than me. ;) ......Have fun with the daughter's swim meet big bro... hope she takes the gold ....uh.. but not your gold of course :D .... wink

Ack. There's been a new post for awhile. Why didn't somebody tell me. ....been prattling on and on. .......Thought it was kinda quiet in here. "/

TheGoodDoctor
Jun 25, 2011 - 2:55pm

@Eric Original Yeah no doubt

@Eric Original

Yeah no doubt on the miners. I am bummed that I could probably have twice the shares of Nova Gold and Silvercorp that I bought back then. But then again, they were already 20% to 33% off all time highs. Who would have thunk they would go down a full 50% or more! But when it comes down to it, the quality miners will always rebound quicker. So, no worries. And currently we all know they are all undervalued.

SVM is buying shares back

and NG is having a feasibility study released soon on I think it was Galore Creek.

So, could be a rebound with a rubber band! smiley

Just wish I had more powder.

Pete
Jun 25, 2011 - 3:07pm

@littlestars

You are correct about the ma support. 

These ma supports typically work best within the context of a specific impulse wave. Out of 2008, Alf would say we've been in w.1 of THREE (Major Wave Three of the bull market). The 150ema has been "descriptive". But now, if we've entered w.2 of THREE, the % correction should be larger what we've seen so far in w.1 (from 2008 l0w), and that ma support is likely to no longer hold the market.

Alf saw 5 waves up in this w.1, and the 5th wave was itself extended. EWP says that extended waves correct back to the start of the extension (at least), and are always "retraced twice"--meaning we will revisit the highs of w.1. The start of the extension was on July 30, 2010 from 1159.30 in ZG (futures), and when price took out the prior peak at 1266.50 we could say the extension was confirmed. That range, from 1266.50 to 1159.30, could be a zone of support according to EWP.

If you take the midpoint of Alf's predicted decline %, or 19%, off the peak PM fix of 1552.50, you get 1257.50. This is in the zone, which by its agreement enhances the probability of it being a true target area. (FYI, Alf came up with the prediction of 16-22% based on wave degree (its size in the whole picture), not this specific w.1. Meaning, he didn't fit his predicted decline % based on the last two year's price action.)

With this other way of seeing the market, you won't be shocked IF the market does decline below the 1440 area. Very probably the market will find support there, at least for a while. A break below the ma would tend to confirm Alf's outlook and could provide rationale for a defensive (hedge) or short position in the market.

daveyboy
Jun 26, 2011 - 9:01am

With the exception of I am

With the exception of I am sure a few, on average mining shares have massively under performed against the physical, so why the need/desire to go into miners?

ginger
Jun 26, 2011 - 9:33am

For myself daveyboy ...it is

For myself daveyboy ...it is because I don't think the miners can continue to underperform indefinitely. As gold and silver go up ..at some point I believe those shorting the miners will have a good sized problem on their hands. Most of the respected/trusted sources I read believe the day of reckoning is approaching. The miners are simply on a very good sale at the moment. There is potential for well chosen silver & gold mining stocks to outperform the physical at some point in time. Your guess as to when is as good as mine but I do believe it is coming ..thus my accumulate and hold stance on the miners mirrors my accumulate and hold stance on the physical!

Just another base to cover in the name of preparing accordingly.

Eric Original
Jun 26, 2011 - 9:37am

daveyboy

You might be right. Maybe the world has changed and all us old gray haired old resource sector investors have failed to adapt. And I'm not being facetious! Maybe things really have changed!

BUT, for a long long time before the last few years, miners routinely provided approx triple leverage to the metals. If we are bullish on gold and silver, then miners have always been a way to leverage that. And also provide the potential of the occasional home run.

But not lately. Will they return to form? That is the question!

daveyboy
Jun 26, 2011 - 10:54am

  I wasn't trying to play

I wasn't trying to play dumb, it's a genuine question, because for a short period, maybe earlier this year, there was a buzz about acquiring mining stocks, seemingly it was the equivalent of the holy grail but I have tried to detach myself as best I can anyway, from the excitement and have recently seen some graphs which plot the course of mining performance against physical performance for the past decade and the obvious thing to note is that miners have been a poor man's physical. I am not saying that people are wrong to go into this but it does seem slightly perplexing given the volatility within the miners makes the physical which has in itself been very volatile at times, seem almost calm by comparison.

Eric Original
Jun 26, 2011 - 12:25pm

Daveyboy

No no! I was in no way trying to denigrate your question. You have a valid concern.

I myself have about about triple the money in physical metals as compared to miners. Some have postulated that the advent of ETF's have provided a much easier way to play physical, and get leverage if desired, and that this is what has basically taken over the market niche that the miners used to fill. They may be right.

But I still like some miners....

Mr. M
Jun 27, 2011 - 12:42am

Propaganda.

A lot of Propaganda floating around, lots of secrecy, false information, blatant lies and cover-ups. Throughout history, when a superpower reverts to such unevolved greedy immaturity, it is because they are desperate, and they are scared. Their strategy is to outwit the masses. Can't say that they have the hardest job in the world, either. But, jokes aside, people are also afraid, the masses are in a vulnerable state. It is now up to, history serves, for someone to throw the next punch. To resist their advances would mean a collaborative, strategic 'hit' on the cartel. Power in numbers is real, unless the people whom can do something, don't. That is why the SilverDocs and myself began The Silver Viral Project. Because we believe that tangibility, in the physical realm, is much more sensical than faith in corporate banksters who serve their best interests, and other Elite. Games are fun, sometimes you win, sometimes you lose. Their comes a point when the game is just so convoluted that, fight it all you want, sorry Charlie, there's no winning. What is one to do? Lose? No. You just puts the old, tired out flaw of another economic structure to rest. You stop playing the game, and advise others do the same. You join grassroots movements, like Silver Viral Project, SLA, WeAreChange, etc. and you gift the UCs (what the SVP Ag-ents call Uninformed Civilians) with your knowledge. Our mission: Make Silver Viral. Why? Three part answer. 1.) Stupid question. 2.) Read anything on silver. Its pretty confident. 3.) Because we can. Our strategies: Propagandize: use their tricks against em'. Cove Ops: Collaborative, behind-the-scenes flash mob style info-raids. Flexibility: SVP will adapt. Bring it bannksters. Join not only to preserve your wealth, and of others, join because of how proud your mom will be, you revolutionary you. :) Visit: www.SilverDoctors.com Click on Silver Viral Project, and sign up @ the Home Base forum.

Shill
Jun 27, 2011 - 9:37am

good luck today

OPX day...stay vigilant.

Shill
Jun 27, 2011 - 9:41am
argent rampant ginger
Aug 11, 2011 - 11:20am

options, options, options

Hey, Ginger!

It's me (the old oldNavy). New handle emphasizes the future, not the past. :) I've been lurking here for the past few weeks and flat in the market, "sharpening the ax" and getting ready to jump back in around Labor Day.

I have not looked at UXG, but thanks for the tip. I agree with you about buying OTM options in the out months. Too much volativity to buy short time frames. I am still looking at SLV calls, but nothing earlier than NOV. As far as the miners go, yes their day is certainly approaching. I suspect that "spread trade" is still keeping them suppressed, but that will flip in a heartbeat - who knows exactly when - and when it does those dogs will wake up and jump up!

Cheers!!

rtyecript
Aug 25, 2011 - 12:33am

Try article

I really liked the article, and the very cool blog

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