Read This Now

620
184
Tue, Aug 30, 2011 - 4:21pm

No catchy title to this update. I just want you to read and ponder this post. Then, plan your trades accordingly.

Let's start with silver where the technical picture is more clear, at least in the traditional sense. Take a look at the chart below:

I've shown this chart several times in the past week so it should look familiar. Something new caught my eye today. Have you seen the new OI numbers? Our friend, "Tesla" has taken it upon himself to update the comments section with the latest numbers each afternoon. (Thanks, Tesla!) Keep in mind that the OI numbers are always basis the close yesterday. So, today's numbers show us the OI from Monday. That said, the number is once again amazingly low at 112,795 contracts. Again, as a reference, the OI in late April was approaching 150,000. Fully 20-25% more! Now stick with me on this. Maybe I should lay this out chronologically to make it easy to follow? OK, here goes:

1) Since silver bottomed around $34 in early July, the channel I've drawn has contained price.

2) Note that on two occasions, 7/13 and 8/19 (points 1 and 2 on the chart), silver decisively broke through the mid-line and proceeded to move sharply toward the top line.

3) Total OI on 7/13 was about 113,000 contracts. By the peak on 8/5, it had risen to about 119,000.

4) Total OI on 8/19 was nearly 116,000 contracts. At least week's peak, it had risen to nearly 122,000.

5) Today's OI is all the way back down below 113,000.

6) Look closely. Price once again sits poised to burst through the mid-line, which is near $42.

Conclusion: Watch price and OI very closely for the next 48 hours. IF silver accelerates through $42 on rising open interest, there is a very high likelihood that it is once again making a move toward the top of the channel. A move that corresponds in magnitude to the previous two would take silver to 45.50-46.00, perhaps as early as next week.

Now let's move on to gold. When I say it's not as "traditional" technically, it's because I'm using this crazy, reverse pennant as a forecasting tool. I'm not sure you're going to find the "reverse pennant" in any books about TA but I'm quite sure that none of those books ever anticipated the end of the dollar, either.

Similar to silver, gold currently sits very close to the midline of the pattern. Note that the previous two occasions when gold broke through the midline (mid July and early August), gold proceeded to ride the upper trendline for about two weeks before falling back. IF gold can once again break through the midline, it will likely charge toward the top line again. This would take the price to near $2000. The OI numbers in gold are similar to silver, too. After peaking at 532,000 last Monday, total OI as of yesterday is all the way back to 501,000. A drop of almost 6% in one week!

Conclusion: We may be on on the verge of another massive rally in gold. Your signal will first be a move through yesterday's high of 1841.50 and then a burst through the midline, currently in the area around 1850. Should gold move conclusively through 1850, it should move to new highs in relatively short order and then continue to make new highs through mid-September.

WARNING: Don't go getting overly excited and carried away at this moment. Nothing is pending until the metals break through those midlines. The open interest numbers suggest that the breakthroughs will come in the next 24-48 hours. They may not. If they don't, I will continue to monitor these charts until they do.

I feel that this is pretty important info so I plan to leave it up all night as the lead, above-the-fold story. I will probably leave it up tomorrow, too. Be sure to refresh the homepage from time to time if you're looking for updates as they will be attached as addenda to this post. TF

9:15 EDT UPDATE:

Sort of a bland trade this morning. The metals tried to rally overnight but they were beaten back at the regular, appointed hour of 3:00 am EDT. It appears, at this moment, that the metals will struggle to trade higher today. 1841.50 is still acting as a resistance point for gold and silver has yet to reach 42, yet alone 42.30. Let's just sit back and watch and see what the day brings us.

A couple of other things...First, this silver update from GoldCore via ZH is worth your time:

https://www.zerohedge.com/news/silver-ready-breakout-technicals-and-fundamentals-suggest-50oz-early-autumn

Second, a friendly reader sent me this chart of the open interest in silver since March. I have neither the time, inclination or technical know-how to superimpose the actual price of silver onto this chart. However, it would probably be a rather insightful thing to do. Anyone want to take a stab at it?

That's all for now. TF

10:50 EDT UPDATE:

This is certainly something to watch over the next hour or so.

About the Author

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

  620 Comments

Ferd Torgerson
Aug 30, 2011 - 7:13pm

@ Titus Andronicus

Excellent. My favorite all-time Monty Python skit.

Not at all silly.

That one is definitely a "goer". (Wink, wink, nudge, nudge).

Jim-M
Aug 30, 2011 - 7:14pm

@ Dark Matter & Other Newbies

I agree with most every reply you've received so far. The missing item, I think, is that what's driving you is likely fear of missing out. What others are warning you of is the other fear, the one that grabs you by the privates, makes you sweat bullets in a refrigerated room, and makes you breath as fast as a 16 yr old boy with his first girl... the fear that grips you when your trade turns south at a $3-5 clip in about 15 minutes.

Okay, so what to do? Basically, you don't sound like you have the experience to read the charts real-time. Turd isn't online in a chat session telling you when to buy or sell. YOU gotta figure it out. But how? Ah, Turd has an answer for you, but it's not the one you think.

Over in Pailin's trading corner (owned and sponsored by Turd), SilverWealth is preaching to you. BTFD, but do it a little at a time. The overall trend is up, so if you wait and buy the HUGE dips which come at least 2-3 times a month, you can hold until you make a nice, tidy profit. Then sell and wait for the next dip. BUT START SMALL. Can't be stressed enough.

In any case, you really don't want to be all-in at any given time as a newbie. A better idea is to put some small change in play and trade correctly first, then increasing as you get the emotions mastered. Even if you only trade $200-$500, a newbie's heart will race as the price jitters all over the place. What you need to do is learn your emotions and do the right thing under that stress BEFORE you have a lot of money in play. I've figured out the perfect time to buy - it's when I think I'm going to throw up. Works every time (for me). You need to find your buy trigger.

In my next email later tonight, I'll throw out an idea I have for "day workers" that I think might have decent potential. It's a variation on SilverWealth's strategy that moves slower, kind of a cross between SW and Pailin's ultra-patient trading. Idea is to scale in on major dips using AGQ and UGL and, for more advanced folks, call options 3-6 months out. But more on that later.

In any case, you HAVE to nibble first. Just keep the mistakes small to start. Trend is up, but dip a toe in. You don't want to dive in and find out it wasn't the deep end of the pool.

- Jim M.

Tom L
Aug 30, 2011 - 7:19pm

@DPH

I really don't think the tape painting does much good in the end. For the day traders it matters and for those on extreme margin, obviously. Beyond that you can't affect the trend but you can affect in-the-moment sentiment. So, they painted the tape on the HUI and gold a bit at the close to slow down sentiment coming into the Asian markets. Whoop-de-do-Bob!

Gold is still going to do what it wants to do. The trend can only be shifted in slope, but not in direction.

Ta,

Irene
Aug 30, 2011 - 7:20pm

@InBetweenIsPain

"Our country has many flaws and is terribly self righteous, but if you dare to criticize it in a crowd you're likely to get punched in the mouth."

Oh, please. Come to New York City. (Or Los Angeles. Or San Francisco.) And criticize away all you please. As a matter of fact, I can't remember the last time I heard something good about the USA in NYC. So, do tell. Where exactly do you live? Under a rock?

And woe is me. Our country has flaws. Whose doesn't?

Jake
Aug 30, 2011 - 7:20pm

Titus Said:

@Jake,

That video is great. Anyone trying to trade commodities should watch that video. (Been there, done that.) It is kind of like showing my nephews the various "gun idiot" videos on youtube when I was teaching them firearms safety.

Yes---Gun-Idiots---LOLOLOL!

Monty Python - Upper-Class Twit of the Year
¤
Aug 30, 2011 - 7:21pm

Tale of the tape/painted

TF's previous thread about the tape /chart painting was on display all day but right at the end of the day around 3:50 p.m. or so was what I noticed.

It couldn't have been any more obvious with a small attack or sell right before the close on both PM's. I wonder what technical levels they were trying to hit or miss.

TF or anyone have any thoughts on how a small but obvious move right at the end of the day effects the next days trading or whatever it is they are trying to accomplish? Is it purely a algo momentum thing they are trying to set up?

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Upon further review, I took another look at those PM charts and I was off about a hour and was looking at 5 pm instead of 4:00. I was wrong.

A small sell occurred in silver just before 4 pm but nothing of consequence. Lots of jagged buying/selling in both PM's after 4:00 today. I wonder if that's indicative of anything.

ReachWest
Aug 30, 2011 - 7:29pm

When Everyone Wants In ...

@ California Laywer:

I agree with your observations about those vendors that want to purchase Gold in the mall and the plethora of useless gadgetry and silliness that is on sale in most shops .. when the public euphoria for the PM's kicks in, those vendors will certainly have a "Sell" sign out and the premiums will be massive.

I recall seeing a photo someone posted in a Turd thread a couple of weeks ago - it was during the rioting in London and the looters were attacking a cell phone store for the latest electronic gadgetry - the adjacent store was a Pawn shop that had a big sign out front claiming "We Buy Gold" ... during the public clamor and euphoria for PM stage (when it comes) the looters won't stop at the cell phone store - they'll go right to the Pawn shop for the physical. (So far the general public remains oblivious).

BagOfGold Vincent
Aug 30, 2011 - 7:29pm

Vincent...

You're right!...Tinka is nice (it's on "the list")...however...Xtierra & Oremex...may be even nicer...here's why!!!...

https://www.caesarsreport.com/freereports/CaesarsReport_2011-06-26.pdf

Today...Xtierra...closed up4 cents (12.90%)...& Oremex Resources...closed up 3 cents (13.33%)...

There is lots of upside...for all 3 of these great penny silver miners!!!...

Bag Of Gold

Jasper
Aug 30, 2011 - 7:30pm

Re: I feel I must reply

Dark Matter, we've all been there! I shorted 30 yr treasuries because Bill Gross got out of US paper three months or so ago. Fortunately I bought call options. I shorted at 125 and purchased calls at 127 I finally blew everything out at 135. Did Bill lead me astray? Recently I saw a somewhat sheepish Bill admitting he was back into US treasuries a little. My investment decision was all mine. I also still think Bill is correct. I still can't figure out why people run like sheep into US t-bills. Bill is a visionary . He is ahead of his time. The mother of all financial destruction is ahead and will occur when the flight from US paper begins in earnest. Then you will see Gold and Silver fly beyond your wildest dreams.

I also dropped 200 plus K on futures contracts in the first week of May attempting to foolishly squeeze just a few more points from what were already massive gains. This experience during the 1st week of May might be a chapter in the book I'm writing, "how to go broke, while being long in a bull market". The writing was on the wall, but I was blinded by greed. I read TF, and he said, sometime during the 1st week of May things will top out, but I ignored the warnings, (from the previous Sunday night) didn't protect my gains and got a royal spanking. I don't blame Turd for one minute. He was right, it was during that week; right at the beginning of the week. It's my own foolishness, ignoring all the advice I have read, continuing to swing for that mega home run, forgetting that "slow and steady" wins the race. Stack physical! I am very appreciative of all the fantastic ideas and advice presented here and am grateful to our host for his facilitation of our discussion. Jake, I love that video. I showed it to my wife and she said, "that sounds just like you" lolo.

My experience tells me that trying to beat the EE at their own game trading paper is very much, fools play. I took my spanking and retreated to physical and conservative longer term futures positions. I like bull call spreads with time on my side. I own 35-45 Silver spreads for Dec 2013 which I bought in 2008. (I bought the $35.00 call and sold the $45.00 call, times 50) I recently bought March 2012 47-48s and 49-50s in Silver. I also took the opportunity to write some naked puts for Dec 2011 in Silver at a strike of $16.00 I sold them for $750.00 each during the May smack down. Yesterday went long one mini Dec Gold contract at $1,779.00 for each of the accounts I manage, based on what Turd said yesterday. Today I put stops in at $1,810.00 on those mini's and will likely get stopped out.

I appreciate all the helpful perspectives . . . and especially the contrary views presented here.

question
Aug 30, 2011 - 7:31pm

From Turd; try your local tarot card or palm reader

I did but she sent me to TF's Metals Report; said the prognostications were clearer. LOL

¤
Aug 30, 2011 - 7:32pm

Who Will Protect You In These Outrageous Markets (J.Sinclair)

August 30, 2011, at 2:43 pm Dear Extended Family,

Gold corrects $212.50, rises $50, drops $50 and today is trying to rise another $50.

That is a range of roughly $275 in just a few days. That is certainly what I call a hard chop, this time with a penchant to break out to new highs. That is exactly what I expect.

Kenny Adams points out that he feels 15 to 18 days from the first break is the fastest that this chop can resolve itself to a new high.

I have told my family, outside of myself, that there are two people who would protect them in these outrageous world markets. It would be Monty Guild for investments and Kenny Adams for speculation. Both match uncommon skill with absolute ethics.

Regards,
Jim

Biochar
Aug 30, 2011 - 7:33pm

agree with Turd on the breakout prices

but we've been getting lower highs all day on the peaks of silver...

41.645 ~ 41.630 ~ 41.609 ~ 41.586 ~ 41.567 ~ and 41.376 about 10 minutes ago

maybe we'll bust through and hold above 41.50 tomorrow instead of tonight, who knows

rotbrador TF
Aug 30, 2011 - 7:35pm

cool heads must prevail

Gold is not a crazy market, it is a bull market that is finally breaking free from decades of central bank suppression ... thanks in part, to other non-western central banks, as these other central banks are now competing to acquire a bigger share of gold. These factors are throwing the grip the western central banks had have on the gold market loose.

Back in the days, BOE or other European central banks would announce gold sales from time to time throughout the year. Now, we don't even hear these announcements anymore.

Gold is actually in demand now as the masks have been removed from paper currencies, especially the US dollar -- they are worthless papers. Gold is being bought left and right.

redwood
Aug 30, 2011 - 7:35pm

Dark Matter

You've received many comments and I believe you didn't intended to offend anyone, the least of which Turd. But here is perhaps one more thing you might consider.

Like many complex tasks, often the skill is in pulling a lot of info together, sometimes immediately, sometimes over long periods of time. It takes a lot of knowledge, (that I don't have), a lot of artistry (that Turd has plenty of) and often a very good ability for pattern recognition (that not everyone has). So it is important to not take bits of info at a literal level, but rather as a guide to either support your existing ideas or to reject your existing ideas.

The point is, you must first develop your own map, and then decide at each juncture point whether to accept/reject incoming info. You must not hang on ANYBODY's word, because no one has a crystal ball. Yes, not even Turd! :)

Bstone silverbleve
Aug 30, 2011 - 7:37pm

SLV

I should have been more specific....options on SLV (i shares).......$400 + or - a few and your in. Good call though, so as to not confuse anyone.

The Death Ceiling
Aug 30, 2011 - 7:41pm

Apology

Respect for the apology to Turd Dark Matter, your head must have been spinning tonight.

Maybe take a few days out and have a good think about all the advice that has been given. The responses to your faux pas will have highlighted to many of us here the common pitfalls in trading and the danger of blindly following one person's opinions.

Seems to me we only truly learn through making mistakes and experiencing emotion, not by studying and listening to others.

Jake
Aug 30, 2011 - 7:42pm
¤
Aug 30, 2011 - 7:45pm

A little Vasoline

Stone Temple Pilots- Crackerman & Vasoline
exiledbear
Aug 30, 2011 - 7:50pm

I say whatever's going to happen

Will probably happen in September, maybe a week or two into it. Patience.

It's a bull market, you know.

CreditCrumbs
Aug 30, 2011 - 7:51pm

Trading vs. Investing Philosophy

I believe that most of us should not be day trading at all. Keep dollar cost averaging and holding for the long term. Determine multi-year trend, and then stick to it.

Day trading successfully is difficult. You may not have the right knowledge with so much noise and disinformation around you. Even if you have the right knowledge, do you have the right temperament? Do you have the nerve to hold your position when the market moves against you? Do you have the ability to admit your theory is mistaken and change your trading decision in time? Do you have the wisdom to avoid from being over-confident when you are correct? But finally, don't you have anything better to do with your time, say, something that improves your society and community?

Look at TBTF banks. They make profit from trading every day flawlessly, using market manipulation tools, the media, etc. If they are the winners, who are the losers? If they have perfect trading record, there are a lot more traders that have worse than average trading records. By definition, not everyone can do better than average. Be careful out there.

Rufanuf tmosley
Aug 30, 2011 - 7:51pm

Stop Trading

I dont comment often on TFs website....I do however read it every day and like Dark Matter have some faith in Turds predictions based on his track record. HOWEVER to criticise a board member for pointing out the obvious is a bit out of whack. I too closed out my positions based on my readings here with a view that gold would likely slide back to the mid or low 1700s (it still might) based on not just Turds analysis but simply as that has been a pattern of behaviour in gold for a long time. I didnt take Turd's bottom as gospel either...I had limit buys in just below 1795, then again at 1764, then again at 1750 and then again at Turds lates bottom call of 1725...and i have more below that too. I think the point poor Dark Matter is trying to make is that some kind of explanation why feelings have changed before moving on to suggesting Golds only going up from here might be useful? It may well be that indeed the raid hasnt come yet and this little bounce back to mid 1800s is exactly that a little bounce before the hammer falls...so like one other poster stated...caution is useful here.

Kumanari
Aug 30, 2011 - 7:52pm

We can see in both Jul 2007

We can see in both Jul 2007 and April 2011, that gold rocketed up after S&P had its first peak in those months. The correlation is very strongly noted.

Gold peaked and started its initial crash in March 2008, as the S&P made its second bottom at the 200 wma. Which means gold is near its peak now and will begin initial crash by no later than Sept 9, 2011. We already got the first part of that crash last week, so I think gold already peaked and will not make a higher high until next year. Gold didn't stop dropping until end of April 2008, as the S&P peaked at the 50 wma, which projects to Oct 7, 2011 and $1585 price.

After Oct 7, 2011, gold will rise for 2 weeks to about $1850, while the S&P is crashing down to below its 200 wma to $1030.

On Oct 24, gold will start its worst crash to go down below the 50 wma within about 2 weeks, which is currently at $1470 and rising about $50 per month, so should be at $1560 by then, but gold will go as much as -12% below that, or $1370.

I use this man as counter balance, I overlook his extreme religious views as I appreciate his phenomenal brain he is not one to be ignored. Shelby Moore

https://goldwetrust.up-with.com/t33p330-silver-as-an-investment#4542

South swell overhead mackin from La Perouse - Lahaina to west side, we come go stay churf........

E hele ana au i ke kahakai e he'enalu!

BillAuAg FFF
Aug 30, 2011 - 7:52pm

For those of you thinking HUGE...

85 lbs Ag Ingot off of the Atocha - lots of pictures ATOCHA Treasure, Silver Ingot Bar 85 Pounds, AUTHENTIC
¤
Aug 30, 2011 - 7:53pm

Trippin' on a hole in a paper heart

trippin' on a hole in a paper heart live at rolling rock
Ranch
Aug 30, 2011 - 8:11pm

Labor Daty Concern?

Is anyone still concerned about a magin hike that was warned about a few days ago. It wouldn't shock me if the EE lets it run up again for the rest of the week then hits us with a hike over the weekend. I'm trying to save my dry powder till Monday but it may be at $46 by then. Any thoughts or suggestions???

Hoping to learn
Aug 30, 2011 - 8:11pm

Any suggestions as to why?

If / when the SHTF, I would like to thank everyone here for enlightening me on the upcoming disaster. I know I am late to the PM game and I am limited to how fast I can play catch-up but I am doing my best. If it is as bad as some suggest, my family will be somewhat protected or at least buffered from what I have learned here. I thank you all and wish for tremendous returns for each and everyone except Blythe..........Thank you. H2L

I have always believed in the rising tide theory and realize that it is not 100 % but most all of my silver holdings have risen ( and sank )as the price of silver fluctuated except for these three which have stayed down or sank while others rose. Any thoughts from those far wiser than I (that pretty much includes all )

Arian- ASLRF

Silverbull Resources-SVBL

Great Panther-GPL

¤
Aug 30, 2011 - 8:12pm

Who doesn't like a Wicked Garden?

Stone Temple Pilots - Wicked Garden (Official Video)
Lane Meyers TF
Aug 30, 2011 - 8:13pm

Charge these idiots something!

Turd-

Great site!

I have been a fan only recently and only been following silver for about a year. I am a seasoned investor and follow and only pay for solid sites. I would pay for your site. I think even if you charged $10 a year, you would eliminate the idiots. How anyone can type some of the stuff they do is just annoying. Anyway, and it would clean up the site. Thanks for the calls. They have been thought provoking. I am still a student of silver. You are helping me. It does look like the miners are about to take flight btw. $10 isnt a suggestion, I pay as little as $10 per month and as high as $30.

Rich

Timber Tim Dark Matter
Aug 30, 2011 - 8:16pm

Come on Dark matter your

Come on Dark matter your kidding right.Your not really looking and seeing the world and the people in it, that way.The one thing Turd has never done is Duped anybody.I don't think I have seen anyone on this site dupping anybody.No strike that beiki duped me at the second loo roll with his bug out bag video.Come on man nothing in life is accurate,especially calling PM markets.Look from Novice to Novice you need to step back from your post and take a look at what you are saying.This will help your trading the most.As for free things are only free if we choose to ignore are responsibility to contribute to them.

@jake

Thanks man for the links.I need all the help i can get.My cat has let me down lately,he is not calling it like he used to.I think it's a protest because I changed his food.Anyway he has scratched up my ipad,so I need some alternative reliable avenues of imput.I am indebted to you for the source.

Thanks Turd for your thoughts.

redwood
Aug 30, 2011 - 8:20pm

Hoping to learn

Don't know if you are aware, but if you click on the "forum" section, top left, it will take you to a silver miner section, that has excellent info.

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