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 - 2:46pm
Tesla
Aug 31, 2011 - 2:47pm

Gold OI (+8,441 total contracts) +13 SEPT*

Daily Settlements for Gold Futures (PRELIMINARY)

Trade Date: 08/31/2011

Month

Open

High

Low

Last

Change

Settle

Estimated

Volume

Prior Day

Open Interest

SEP 11

1830.6

1837.9

1811.4

-

+1.8

1828.5

283

1,807

OCT 11

1835.6

1840.3

1811.4

-

+1.8

1829.3

5,709

35,024

NOV 11

1826.7

1840.8

1824.2

-

-

1830.3

240

-

DEC 11

1837.6

1842.7

1813.6

1829.0

+1.9

1831.7

139,971

340,477

FEB 12

1839.7

1842.9

1815.9

-

+2.0

1833.3

1,087

30,788

APR 12

1836.3

1845.5

1818.8

-

+2.0

1834.8

386

7,346

JUN 12

1838.2

1842.1

1820.3

-

+2.0

1836.5

104

16,863

AUG 12

1833.8

1843.7

1833.8

-

+2.0

1838.1

113

6,215

OCT 12

-

-

-

-

+2.0

1840.1

1

4,281

DEC 12

1844.4

1848.4

1834.5

-

+2.0

1842.0

40

13,660

FEB 13

-

-

-

-

+2.0

1843.9

10

3,105

APR 13

-

-

-

-

+2.0

1846.0

-

335

JUN 13

-

-

-

-

+2.0

1848.5

1

11,992

DEC 13

1858.2

1860.2

1858.2

-

+2.1

1859.3

20

12,750

JUN 14

-

-

-

-

+1.8

1872.8

-

4,512

DEC 14

-

-

-

-

+2.5

1887.3

-

10,475

JUN 15

-

-

-

-

+1.6

1907.2

-

4,930

DEC 15

1950.0

1950.0

1935.2

-

+.7

1929.7

10

3,564

JUN 16

-

-

-

-

+.7

1953.6

-

26

DEC 16

-

-

-

-

+.7

1981.2

-

1,165

JUN 17

-

-

-

-

+.7

2012.5

-

10

Total

147,975

509,325

Last Updated 08/31/2011 01:32 PM

agauinvest
Aug 31, 2011 - 2:48pm

@TruBlu11

That makes more sense, so the $40 has to do with actually requiring physical delivery and refusing the buy-out premium.

The thread (perhaps appropriately) is under the conspiracy theory forum listing.

Shill
Aug 31, 2011 - 2:52pm

Something is going on as the

Something is going on as the dollar is in rocket mode.

sevin
Aug 31, 2011 - 2:54pm

Main gold is getting a 15

Main gold is getting a 15 minute hype on CNBS right now. Talking about HSBC and all of the Gold in the GLD. Is that Tungsten?

cbeleo
Aug 31, 2011 - 2:57pm

Gold’s Triangle Scenario

Triangle scenario this Week Ahead of the US Non-Farm Payroll Data

Shill
Aug 31, 2011 - 2:57pm
Shill
Aug 31, 2011 - 3:02pm

I expected profit taking to

I expected profit taking to happen on Thursday. Turns out it's one day sooner than expected.

Remember folks this is a long weekend coming up. Hold or fold.

Me I am core, so all good.

rotbrador
Aug 31, 2011 - 3:04pm

no rally today

we're going to postpone the gold rally temporarily.

tburk stingbee30
Aug 31, 2011 - 3:04pm

Amen

Stingbee30...Amen. Take a position, ride out the volatility, decide on an exit point, and quit crying. Is it always manipulation when the PMs go down, and not when they go up? Just the usual noise. The trend is up as the currency degrades. Stop with the daily watching. I note that my core positions-held for some time-are all in the green by a wide margin. Get some perspective.

Tesla
Aug 31, 2011 - 3:04pm

Re Open Interest...

Silver OI for Sept currently calculates to 15.97 million oz (about half COMEX registered inventory of 32 mil oz) Tomorrows #'s are the final score on todays price action and Sept longs... I'd like to see Sept #s go up but its NOT likely - if they do it will mean something very significant!

OI of 112k in SI is amazingly low - but does not reflect any of the action today... OI numbers declining while price runs upward says 'short covering' to me. I like seeing that and lower open interest as well... sweet!

Gold OI increased 13 contracts - I'm guessing that the shorts were already getting out 3-4 trading days ago by looking at the numbers and the corresponding price action from last week until yesterday. The drop in OI is probably over but need to see another days worth of numbers to be certain

TechTrade The Vet
Aug 31, 2011 - 3:08pm

Interesting Idea

I just got filled on the trade at 1.85 credit, probably trading between -1.85 and -1.95. Silver's going into a short term sell mode, perhaps foreshadowing a pullback tomorrow (following the ES?). May get some more on at a higher credit. The calls are at 0.60-0.75, while the puts are at 2.45 - 2.70.

exiledbear
Aug 31, 2011 - 3:10pm

It does feel like gold is waiting for something before deciding

Not sure if it's a triangle we're in or not. I suppose if I was a short term trader or an options banger, I'd put up some sort of position to catch the move once it did figure out where it was going in the short run.

September awaits! And keep in mind that the yearly gold cycle is past its bottom now. From here on out gold usually gains strength, as the early bird Indians start preparing for Diwali and the wedding season and early bird westerners start thinking about decorating their wives with jewelry for Xmas.

The joker in the deck this year is the mainland Chinese - as they grow ever more antsy about the dollars that they hold, and want to preserve the wealth they have taken.

TechTrade exiledbear
Aug 31, 2011 - 3:11pm

How Much Jewelry

At these prices, gotta wonder how much jewelry is going to be bought this year....

Shill
Aug 31, 2011 - 3:11pm

Nice trolling for stops, so

Nice trolling for stops, so who got knocked out? Anyone.

rotbrador
Aug 31, 2011 - 3:12pm

Jewelry

same amount, less curries at the weddings...

piranha82
Aug 31, 2011 - 3:16pm
TruBlu11 agauinvest
Aug 31, 2011 - 3:21pm

@agauinvest

I read the entire TFmetals report/ conspiracy theory/ Wynter Benton thread and it is fascinating. Thank you for pointing me to it. Looks like some more good reading on the conspiracy theory thread that I will have to go back and read when I have more time. I appreciate your analysis on the Wynter Benton thread as your points are all correct and add to the discussion.

I might add a 6th point that has bothered me and goes to your comment about the Wynter Benton postings not being of the quality that an educated, knowledgeable group would post. My additional point is that people as educated as the Wynter Benton group supposedly is, would not make the elementary mistake of directing the "going home in a body bag" reference to a specific high profile individual at a high profile company. This appears to be a direct threat that might be grounds for a subpoena to reveal the poster's information. It is a grey area but why dance with it if you can avoid it and don't need it to make your point. Not smart, IMO.

silverjedi
Aug 31, 2011 - 3:23pm

@ ScottJ

First of all I tip my hat for your enthusiasm for Ron Paul and the like. You have a good mind and are obviously hungry for knowledge. I have been a Paul supporter for many years and believe he is our last good chance at changing the direction of this country. We are on the same page.

When it comes to investing you have to be careful giving advise from your soap box. You are a rookie, in your early 20's, who has no clue. I think your comments would be better worded as questions rather than advice. There is no way you know what you are talking about if you have been in the metals/investing for a year.

I am not trying to knock you down, and you may be correct sometimes, but you are not Turd or Atlee, whom both obviously know what they are talking about. I have been trading metals since 2001 and am up %3000 but I am still learning everyday. I am far from qualified to give investment advice and as such, I mostly lurk and learn on this site (from the veteran traders).

I have been here with Turd and company since the beginning and I am very grateful. As I said above, I agree with most of the content in your political/spiritual posts. But every time I read your investment posts I think "what the hell does this kid know"?

Probably gonna get a few negative posts for this but I had to say it......been thinking this way for awhile now.

Keep up the good fight. This was not meant to knock you down, but other readers may think you have actually been trading for more than a year.

Shill
Aug 31, 2011 - 3:23pm

Markets are open, doing the

Markets are open, doing the OPEX shuffle.

rotbrador
Aug 31, 2011 - 3:27pm

Sinclair from Monday

There Is No Bubble in Gold

August 29, 2011, at 8:26 pm by Jim Sinclair in the category General Editorial | Print This Post | Email This Post

Dear Extended Family,

As the volatility of gold rises, a two day $200 reaction should not be considered anything out of the ordinary.

A hard sideways chop is the present scenario.

There is no top in gold. There is no bubble in gold.

Truth be known, what will vault the price of gold is good for equities as well.

Regards,
Jim

Chicken Little
Aug 31, 2011 - 3:28pm

Interesting

We have long been told that one of the conditions for a blast off in PM prices is "public participation"

Have a look at this. (From a national survey)

And also, I find it amazing when you look at how the number of reads of Turd's blog have increased from a daily average of about 1500 a few months ago to (nearly) 20 000 today. The public is waking up.

Regards, Chicken

flc333
Aug 31, 2011 - 3:39pm

GLD Sep 165 PUT update

Volume buys jumped to 17,979 @ .73, thats $1,312,467.

Vincent
Aug 31, 2011 - 3:41pm

Real Time

LOL

Nick Elway
Aug 31, 2011 - 3:43pm

Can one demand physical by "standing for delivery" on the COMEX?

This cftc rule since 2005 suggests a gold etf is just fine for settlement of the gold contract. Base rule is CFTC Exchange Rule 104.36

https://www.cftc.gov/files/submissions/rules/selfcertifications/2005/rul...

____________________________________________

Harvey Organ picked up the Max Keiser interview with JS Kim

https://harveyorgan.blogspot.com/2011/06/massive-drain-of-comex-silveralmost-all.html

Kim asserts that (on a given period)... The gold settlements have been as follows: 1. cash .01% 2. physical settlements only .27% 3. 78.22% Exchange for Physical receipts. 4. 21.5% Exchange for Physical swap receipts. total paper: 99.72% For silver: 1. cash .19% 2. for physical delivery: .93% 3. EFP (exchange for physical) = 85.39% 4. EFS (exchange for physical swaps+ 13.49% total paper settlements in silver: 98.88% ________________________________________________ This indicates to me that "Wynter Benton" "standing for delivery" isn't enough to guarantee they'll get physical. Does anyone have evidence to the contrary?
Shill
Aug 31, 2011 - 3:48pm

Dam great ending to a decent

Dam great ending to a decent trading day. My call options are on Fire, as in hot!. :)

Pearl Kaptur
Aug 31, 2011 - 3:51pm

TURD THE MASTER

Hi to the Master "Turd the Greatest"!!!!

Being lurking for a while. Not a trader like you guys but am stacking precious metals and trade with actual physical silver and love to read Turds blog! It really bothers me a great deal when i see some of us expect too much from the MASTER and on the top of that we complain too! After all do we pay him for his time each and every day that we read his blog?? It blows my mind that how much time he set aside each and every day to post for us? How many people do you know in your life that do anything for free? I am sure there are NO ONE!! except THE MASTER!! Fair is fair, I honestly believe that we have to figure out a way to pay Turd based on the number of the times we visit his site on a monthly basis!

Turd YOU ARE THE BEST THING THAT HAS HAPPENED TO THE PRECIOUS METAL INVESTORS!!!

Rui
Aug 31, 2011 - 3:53pm
ScottJ silverjedi
Aug 31, 2011 - 3:58pm

@SilverJedi

Hi SilverJedi,

Thanks for taking the time out to share a broader perspective, with constructive criticism directed in a positive way. If more conversations where structured in such a way, I would imagine the world would be a better place. Maybe you could talk to some of your fellow adults and have them work things out this way (hehe, my gripe on "experience").

However, experience in terms of investing and directions of markets is a different thing. If I indeed am coming off on a soapbox, I apologize as that is not my intent. You are correct in my thirst for knowledge, as it allows for me to to live free from the madness that many call reality. All I seek is awareness to as many aspects of knowledge I can achieve before valuable resources such as the internet are limited... alongside many other freedoms that I do not wish to have stripped in the name of my security.

Early in the Turd days, I used to talk a lot about specific miners with little knowledge of how the market worked, and have made a lot of wrong overall calls and hyped them up b/c they "made sense" to me. Since then, I really have not been making specific recommendations as I have been baffled by this nonsense and am learning as it goes too. When I post thoughts down, I post them down for just that... thought.

My main focus really is not the metal prices and investment advice, but to write down my thoughts so others who share similar viewpoints can gain from my perspective, as I have from others. I do not claim to be an oracle, or a seasoned trader, or anything...

I am just as confused as anyone, and am just trying to make sense out of this all.

P.S. -- I have spent a lot of time going down the rabbit hole, and am operating under the thesis that younger people are more prone to understanding the manipulation of the world because of their upbringings upon technology (specifically the internet). I have spent my whole life absorbing all of the information I can get my hands on (with my own developed filter to bullshit). Coupled that with my love for math/statistics and you can see why I am drawn to the Precious Metal Markets.

TheGoodDoctor cpnscarlet
Aug 31, 2011 - 4:01pm

@cpnscarlet Celente is

@cpnscarlet Celente is Italian. So, he gets quite animated. Might be a little bit of ego too because the man has been correct in his projections. I subscribed and his writings are good. My sub ran out but I would subscribe again - as soon as I can.

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