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

Shill
Aug 31, 2011 - 2:00pm

1:58p BREAKING Gold ends 0.1%

  1. 1:58p

    BREAKING

    Gold ends 0.1% higher at $1,831.70 an ounce

OC15
Aug 31, 2011 - 2:00pm
Shill
Aug 31, 2011 - 2:01pm

HUD gives Chicago $30.5M for development

https://www.marketwatch.com/story/hud-gives-chicago-305m-for-development...

CHICAGO (MarketWatch) -- U.S. Housing and Urban Development (HUD) will award Chicago $30.5 million to redevelop the Woodlawn neighborhood on the city's south side. The grant is part of HUD's Choice Neighborhoods Initiative, a plan to bring affordable housing, safer streets and better schools to distressed neighborhoods. Under the program, Boston, New Orleans, San Francisco, Seattle and Chicago have received a total of $122 million.

Tesla
Aug 31, 2011 - 2:01pm

@Trublu11

You answered your own question ... 1:30p it is.

Cant wait to see the published numbers for todays action: probably a lot of longs rolled out of September, todays published #s will be only be partially usefully as tomorrows report is THE 'final word' on todays action and the total contracts standing for Sept delivery. I'm always hoping it's more than they have!

(I know you know this, just saying in case anyone else is wondering =)

mespe
Aug 31, 2011 - 2:01pm

OI vs POS chart

Here's your chart sir,,,

Mikey argent rampant
Aug 31, 2011 - 2:03pm

@Better and better, This link

@Better and better,

This link will show you when all of the info is due to come out and has an explanation of what it means for the currency involved.

https://www.forexfactory.com/calendar.php

flc333
Aug 31, 2011 - 2:04pm

GLD Sep Options alert

Not sure if this is significant at all but just noticed that the volume for GLD Sep 165 options @ .69 is 14,470. I think thats a little over $1,000,000. I remember another poster posted similar numbers just before the 3 day raid last week. Careful all.

TruBlu11 Tesla
Aug 31, 2011 - 2:04pm

Thanks Tesla

I should know the answer to the Comex question but I don't. It also occurs to me that the Wynter Benton posting today is designed to coincide with month-end options expiration. If the number that remains standing for delivery is low, I would discount any further WB posts. If the number is high, I will continue to be interested. Although, I could do without the morbid body bag references. Also, if the number standing is high, it will "leak" and you will see the short covering rally come in at the end of the day. Perhaps starting soon.

TruBlu11

Dr G argent rampant
Aug 31, 2011 - 2:05pm

@better and better

BLSBS report is the first Friday of each month. The ADP jobs report (which is used as a precursor of the NFP report although it isn't a great predictor of the NFP report) is usually released a couple of days before that (say Tuesday or Wednesday).

The ADP report is showing +91,000 jobs for August. Therefore, the BLSBS will probably inflate to +120,000 jobs.

You will recall that the report last month listed +114,000 jobs. That whas been revised down to +109,000.

I'll say it one final time (until I say it again Friday!): the BLSBS numbers are are just that. BS. There is ZERO way to accurately track this stuff. They can come up with whatever numbers they wish and treat them as hard evidence. It's all a sham.

OC15
Aug 31, 2011 - 2:06pm

@ScottJ

Did metals also get hammered last Sept 1, Jan 3, Apr 1?

Can you find that info?

Comicus
Aug 31, 2011 - 2:08pm

New source for QE3 without congressional approval

Check out

The Fed's Plan - Rumors of News

https://www.zerohedge.com/contributed/feds-plan-rumors-news

Seems like a highly likely way these criminals will obfuscate the ongoing destruction of the dollar.

argent rampant
Aug 31, 2011 - 2:08pm

@Mikey

Thanks!

Shill
Aug 31, 2011 - 2:08pm

There will be QE3 but not

There will be QE3 but not through printing of money and not for Wall Street.

The next target will be real estate and expansion of bank credit using Fannie Mae and Freddie Mac:

https://www.zerohedge.com/contributed/feds-plan-rumors-news

terri5125
Aug 31, 2011 - 2:08pm

Eric-  I was looking at

Eric- I was looking at buying some AUQ options and looked to see them falling in price. Would you be buying out to 2012. I know last you mentioned you were in but felt you should have waited to buy. Is anything looking good to you here?

stingbee30
Aug 31, 2011 - 2:09pm

Short-term traders and Day-traders: part of the blaming game

It makes me laugh when i see certain post who always put the blame on the dark forces and ehance their sentiments with phrases like "EE Smack down". Some will put a colorful tone with phrases like "the Dark Forces" or "evil" or a monster behind the smack down. Well, there is no argument that part of the problem is due to manipulation (by shorts, and paper traders, or the likes of JPM). But, this manipulation is coming to end or has less negative results going forward. This can be attributed to the fact that most longs are trading Silver with less leverage (don't want to repeat what happened in May with speculative leveraged long positions). The likes of JPM or those with concentrated positions seems to be dwindling. This doesn't mean that they will try to take advantage of weakness by manipulating the market.

The other problem lies with daytraders, and short-term traders. It is always easy to play blaming game on one entity. But, if you read the continous postings on this thread, you will see that many have their own agenda or greedy takes. Why not put the blaming game on some of you who trade back and forth just to make a few cents on your dollar. We have many here who think they can gauge the market with chart readings and numbers. Market timing doesn't work for many traders, and this is why most daytraders go broke and lose money.

With all due respect to Mr. Turd, we all know that his predications don't come to fruition as always (yes, he does disclose his takes and what to expect without any guarantees). I keep seeing postings like ''here comes the EE takedown'', or watch-out we are bracing for "another smack-down" or "raid". This reminds me of the BS game played during the Bush Administration when they used fear-mongering as a tactic, and came-up with their genius weather like reporting with the Terrorist Threat level. The point is (once again with all due respect), none of you can predict the timely fashion of the market with certainty. There is too many players and too many things that could move the market up and down. Stocks go up and down on the daily basis, and so will silver and Gold. The day silver is down is not just because the EE or Dark Forces came into the picture. It goes down because traders close their positions, daytraders try to close their penny penching gains, and the weak hands who get caught in the middle.

To suffice, we need some of you to come clean and say that part of the blaming game lies on our own greedy intentions. We trade, and make some profits, and than hope for it to go down so we can make some more money. Once we make the money, we will wait for another entry point. At that time, we might post warnings and numbers that seem to echo our own selfish trading agenda for seeing lower prices.

Next time, if you are going to post another weather-like warning thread, than it would be greatly appreciated if you disclose your trading objectives and your real intentions.

Stop the blaming game on one entity. You are part of the problem when the prices go down. Thank you.

agauinvest
Aug 31, 2011 - 2:12pm

@Trublu11

I'm not sure if you are right that they would be standing for delivery. Didn't she mention $40 or below being where they would stand for delivery? Maybe I'm mixing that up with the busting the Comex part.

Also, would love your input on my post at the WB thread if you have any thoughts on it.

Dr G OC15
Aug 31, 2011 - 2:15pm

@OC15

Using London PM silver fix data:

August 29 2010: $19

August 31 2010: $18.80

Sept 1 2010: $19.50

Dec 29 2010: $30.50

Dec 31 2010: $30.65

Jan 4 2011: $30.85

March 29 2011: $36.30

March 31 2011: $37.90

April 1 2011: $ 37.80

So, no, using the London PM fix the data does not support the theory of them getting hammered. Could be a different story using NY pit trading close, or NY Globex close, I suppose, especially since the PM fix happens in the middle of Crimex trading.

Tesla
Aug 31, 2011 - 2:16pm

@TruBlu11

Whats wrong with body bags?

The Vet terri5125
Aug 31, 2011 - 2:18pm

SVM options... terri5125

Provided you have an account that allows it, you can finance the call purchase by selling a naked put at a lower strike and same expiry. This is a low risk trade unless the stock really crashes.

Currently your Dec $13 strike call is 0.95. If you sell a Dec $9 put for $2.20 you will have your call for free and $1.25 cash in hand as well. There will be some margin required to cover the naked put but that is partly offset by the extra $1.25 cash in your account. If SVM closes under $9.00 in December then you could be assigned the stock, but as long as it is not lower than $7.75 you will still make a profit.

In short if SVM closes at the expiry date above $7.75 you are in profit on the trade. Between $9 and $13 you have made $1.25 and over $13 it will be $1.25 + how much over $13 it ends up. You have the $1.25 cash from the moment you make the trade and no actual cash outlay is required. There will be some margin required to cover the short put (depends on your account and brokers rates). You should have sufficient margin to cover the purchase of the stock at $9 in the unlikely event that you are assigned.

Ideally the trade should be placed as a single two legged combo trade for a net credit. You will actually get a better price. I would use a limit combo order combining both legs for a net credit of $1.50 and that would have a good chance of a fill. (That's at the moment on the figures I used for the example - the prices may change).

You do not have to wait until expiry. The positions can be closed at any time and you take your profit then.

These numbers do not allow for commissions on the trade so there is some slippage.

WYO Silver
Aug 31, 2011 - 2:19pm

Another Fresh Set of Comments From Wynter_Benton

"Our main purpose is to defend $36 and detonate the derivative bomb that will send silver well over $80 by the end of the year. Perhaps even to $120 before all is said and done.

And just to make sure silver doesnt go below $36, we will be holding contracts for delivery throughout september and will hold these contracts as hostages in case The Morgue decides to get cute with the price.

I.e., if silver is under $40 then we will demand physical delivery and not take the cash premiums that is so generously offered. If silver is above $50, then of course we would be happy to sell these same contracts for a hefty profit (plus those hefty premiums as a cherry on top). It's your call, Blythe, but either way....

You're going home in a body bag, do da, do da......"

https://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_J/threadview?m=te&bn=10073&tid=403274&mid=403274&tof=3&frt=2#403274

flc333
Aug 31, 2011 - 2:20pm

I meant to write GLD Sep 165

I meant to write GLD Sep 165 PUT options @ .69 is 14,470. someone is making a $1 million dollar bet on the downside.

TheGoodDoctor thesandbox
Aug 31, 2011 - 2:21pm

@thesandbox EXK I wouldn't

@thesandbox EXK I wouldn't sell EXK until maybe after earnings. My gut tells me that with some silver miners finally get respect (SVM) that it really depends on earnings. I have a feeling this one could be like First Majestic and could go on a run toward $20. The last few quarters have been great. And they have had talks about a divvy.

MetalMike margaritatime
Aug 31, 2011 - 2:22pm

@margaritatime, @Pining, et

@margaritatime, @Pining, et al.

Thank you all for a very interesting and well thought out discussion on a topic that is of interest to most of us.

While not intending to divert the conversation in any way, I would add that any discussion of the future value of an investment in any asset would be lacking without considering the tax implications on an implied gain in the asset value. If the paper gain is as a result of currency debasement and not a real gain in value, any capital gain tax on the asset reduces it's future value. Said another way, if I buy $10,000 in gold today and sell in ten years for $100,000 I have a fiat/paper gain of $90,000. Using todays tax rates I will owe a tax of $28,200 on this gain. If the $100,000 does not buy me any more in 2021 than $10,000 did in 2011 I have experienced a real loss of 28% of the purchasing power over that period. This same gold would have to increase in value to $38888.88 over its nominal value in 2021 in order for me to pay the .28% tax and have $100,000 in purchasing power left over.

For this reason I believe a capital gains tax that does not take real inflation into consideration is an immoral theft of real asset value. But I guess that is the whole point.

-- MetalMike

Cucamonga
Aug 31, 2011 - 2:29pm

The Harder They Come...

Couldn't help thinking of the PM's when I hear this song.

Jimmy Cliff - The Harder They Come
TruBlu11 agauinvest
Aug 31, 2011 - 2:35pm

@agauinvest

Anyone intending to stand for delivery in September had to file a notice to do so by 1:30 pm today. I am only looking to see if there are a large number standing for delivery in September, which might give some credence to the WB claims. If WB exists, then it has outlined the terms under which it will stands for delivery vs. being bought out under the table -- under $40 then it stands for delivery and takes the physical and potentially causes a Comex silver shortage or default, over $40 then it is happy to be bought out because it is a good investment at that price for WB. That is the simple version as there are some more price points in there, like $36 and $50 as I understand their demand. I'm not sure where the WB thread you referenced is located.

TruBlu11 Tesla
Aug 31, 2011 - 2:37pm

@Tesla

Nice!

Vypuero Hard Rain
Aug 31, 2011 - 2:43pm

Uncirculated ASE or worse - graded

complete rip-off, these are not numismatics. Not worth getting unless you want to collect a set each year, so NOT for investment purposes.

Swift Boat Vet ScottJ
Aug 31, 2011 - 2:44pm

Appreciate

Thanks buddy, after all the propaganda that's been thrown at me, I like to clarify exactly the "what, where, who, how and whens". Seems like our illustrious news reporters were never taught that in J-School.

I may not say much, but beware! I'm always lurking about on the best blog by far on PMs. Ol' Turd is one-in-a-million.

Vypuero Hard Rain
Aug 31, 2011 - 2:44pm

Bullion Sales

Just like a sale of something on eBay or buying from another state on the internet, you are supposed to declare the taxes. It relies on the honor system. Since congress and the government are so honorable, we must do our part.

Tesla
Aug 31, 2011 - 2:46pm

Silver OI (-1,535 total contracts) SEPT=3,194

Daily Settlements for Silver Futures (PRELIMINARY)

Trade Date: 08/31/2011

Month

Open

High

Low

Last

Change

Settle

Estimated

Volume

Prior Day

Open Interest

SEP 11

41.295

42.010

41.150

-

+.301

41.699

1,737

3,194

OCT 11

41.305

42.010

41.160

-

+.299

41.715

386

365

NOV 11

-

-

-

-

-

41.727

-

-

DEC 11

41.385

42.095

41.135

-

+.304

41.768

30,606

76,380

JAN 12

41.420

41.420

41.420

-

+.305

41.785

1

203

MAR 12

41.395

41.905

41.180A

-

+.307

41.790

487

7,621

MAY 12

41.350

41.650B

41.350

-

+.307

41.786

41

2,333

JLY 12

41.650

41.650

41.360

-

+.307

41.782

19

1,994

SEP 12

41.405

41.700

41.330

-

+.305

41.766

141

396

DEC 12

41.250

41.620

41.240

-

+.305

41.698

57

8,605

JAN 13

-

-

-

-

+.305

41.670

-

1

MAR 13

-

-

-

-

+.305

41.606

-

440

MAY 13

-

-

-

-

+.305

41.556

-

40

JLY 13

-

-

-

-

+.305

41.486

-

2,205

DEC 13

-

-

-

-

+.305

41.371

15

6,429

JLY 14

-

-

-

-

+.305

41.138

-

232

DEC 14

-

-

-

-

+.305

41.011

-

1,201

JLY 15

-

-

-

-

+.305

40.776

-

156

DEC 15

-

-

-

-

+.245

40.561

-

527

JLY 16

40.150

40.150

39.950

-

+.140

40.336

45

53

Total

33,535

112,375

Last Updated 08/31/2011 01:32 PM

Contribute

Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 4/22

4/22 10:00 ET Existing Home Sales
4/23 10:00 ET New Home Sales
4/25 8:30 ET Durable Goods
4/26 8:30 ET Q1 GDP first guess

Key Economic Events Week of 4/15

4/16 9:15 ET Cap Util and Ind Prod
4/17 8:30 ET Trade Deficit (Feb)
4/17 10:00 ET Wholesale Inventories
4/18 8:30 ET Retail Sales (March)
4/18 8:30 ET Philly Fed
4/18 10:00 ET Business Inventories (Feb)
4/19 8:30 ET Housing Starts and Building Permits

Key Economic Events Week of 4/1

4/1 8:30 ET Retail Sales (Feb)
4/1 9:45 ET Markit & ISM Manu PMIs
4/1 10:00 ET Construction Spending (Feb)
4/1 10:00 ET Business Inventories (Jan)
4/2 8:30 ET Durable Goods (Feb)
4/3 9:45 ET Markit & ISM Services PMIs
4/5 8:30 ET BLSBS

randomness