Still Churning

97
Tue, Nov 27, 2012 - 11:04am

Big surprise, huh? And I wouldn't expect much excitement the rest of this week either. Next month, though?...

For this week, however, we are stuck. Stuck with options expiration. Stuck with First Notice Day. Stuck in a moment and you can't get out of it. At least until next week.

For today, the algos are in charge and The Cartels are ensuring that price gets pegged where they want/need it for option expiration and the CoT survey. I don't expect any substantial rallies but I don't expect any major selloffs, either. The charts below are provided in order to show you where I would expect buying support to kick in should a selloff accidentally generate some downside momentum.

Now, as we head into the rest of the week and First Notice Day on Friday, expect a general tone of weakness and and more of this current sluggishness. Why? More sellers than buyers.

  • First, The Cartels want to "dissuade" as many as possible from standing for delivery. They, the Comex and the CME simply want everyone to roll into the next delivery months and continue on with the (very profitable) paper games.
  • More significantly is the impact of human nature. If you have a trading position of 100 Dec12 gold contracts and you have no intention of taking delivery, you're going to have to sell those babies before the close on Friday. You'll most likely want to roll all 100 into the Feb13...but...do you do that all at once? Maybe, instead, you buy 50 Feb13s on Friday and then you hold off on buying the other 50 until next week, hoping to get a better price and a lower overall basis? In this example, there's 100 contracts of selling pressure but only 50 contracts of immediate buying pressure. Down goes price (a little) and down goes Open Interest (a little) until the other 50 contracts are put back on.

Between these two influences, we're likely stuck with a weak metals market until next week.

But then the fun begins! All the fiscal cliff BS will really kick in in December. There will be plenty of talk about:

  • U.S. debt downgrades
  • Debt ceiling breaches and treasury defaults
  • $1T+ deficits ad infinitum
  • More "unsterilized" QE as Operation Twist ends on 12/31

All of this will propel gold and silver through the nasty and brutal, year-long caps of $1800 and $36. The stage will then be set for a remarkable, crazy, wild and...yes...historic 2013.

Therefore, keep the faith and hang in there. Take the next few days to step away from your computer for a while and do some Xmas shopping. Maybe, instead of another worthless, run-of-the-mill gift, you should instead hand out ASEs or Maples to all of your friends and family this year. I still have the first tube of ASEs to ever make it into my safe (at the bottom of an undisclosed lake). My brother gave them to me as a Christmas gift 7 or 8 years ago. Must have cost him about $100 back then. Worth about $700 now. Beats the crap out of the other gifts I received that year, none of which I can even recall today. I'm sure that the HAA, Provident or JMBullion will be happy to help you with all of your holiday shopping needs! smiley

Have a great day!

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  97 Comments

silver66 · Nov 27, 2012 - 11:21pm

lost in space

I don't speak hebrew, do you know those subtitles are accurate??

Silver66

old tradesman · Nov 28, 2012 - 12:28am

big news from israel

wow its disturbing enough but what was that irs commercial meant to scare me. did anyone else get the irs commercial

edit watched it again and it ran gold commercials.. there goes my oldzimers again

thatguy007 lostinspace · Nov 28, 2012 - 6:04am

@lostinspace

Yes the Jews rule half of the world... and are in a constant battle with New Zealand who rules the other half :|

billwilson · Nov 28, 2012 - 8:29am

us OPEN

Good thing we have free markets (LOL). That is about as blatant a takedown as we have seen in a while. $20 on the open with gold, 30-40 cents on silver. The shorts are obviously getting a bit nervous .... Let us see if they try to buy back and cover.

Hawk · Nov 28, 2012 - 9:09am

Usual behavior here around

Usual behavior here around first notice, lets shake the tree and get some weak handed option holders out, EG allow them to exercise above $33.50/$34 and $1740/50 and then smash price down to cause a panic and liquidation lower, before buying back. This is a very clear buy to me here. Depending on how much momentum they can generate selling likely stops by $1690 (but to be honest I expect it stops above $1700) indeed the low could already be in, but that is a big call considering the conviction behind the selling. 

HAWK

Ntombi SRSrocco · Nov 28, 2012 - 9:21am

@ SRSrocco - Natural Gas

Thanks for your regular contributions. Very interesting! To introduce a non-USA angle, may I suggest you read a recent interview with Chris Cook entitled: "The Petrodollar is Either Dead or Dying"? You will find it at: GoldSwitzerland.com. Look forward to read your reaction. 

thatguy007 · Nov 28, 2012 - 10:01am

has it got another $20 fall still left in it

Are we aiming for the magical $50 down day

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