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There He Goes Again

485
Mon, Oct 24, 2011 - 7:55pm

At some point, I guess I've got to stop and decide whether or not it's just wishful thinking.

About two weeks ago, I gave you this:

https://www.tfmetalsreport.com/blog/2658/rally-cometh

I'd been itching for a gold rally but, until now, it hasn't developed. In the post above, I called for a rally in the HUI to 560-580 and it made it to 560 before falling back to 500 last week. A sharp rally has it back to 538 tonight and it still looks like 580-600 is in the cards. That would be about a 10% rally from here.

paper_10-24hui.jpg

But what's got me really worked up is the latest CoT survey. Remember how I always say that the only consistent way to make money trading the metals is to sell when all looks rosy and buy when all looks dreary? The tough part is to get yourself to actually follow that discipline as it goes against basic human nature. Put a different way, history has shown that you want to buy with the banks when the specs are selling. Additionally, you should sell when the specs are strongly buying. Now, back to that CoT survey. Note these week-over-week changes:

Large Specs long: -3901 contracts

Large Specs short: +3623 contracts

Small Specs short: +1878 contracts

The speculators (those consistently wrong) continue to rotate away from long to short.

Commercials (banks) long: +2592 contracts

Commercials short: -6733 contracts

The commercials (those consistently right) are covering shorts to and some are even going long.

Now, chew on this for a moment. The dreaded and evil BoA puts out a report that warns of further U.S. credit downgrades before year-end.

https://latimesblogs.latimes.com/money_co/2011/10/us-credit-rating-debt-downgrade-warning-merrill-sp-moodys-fitch.html

Hmmm. Do you recall what happened from 8/7 to 9/6? How about a $250 gold rally, primarily caused by massive bank short-covering, all of it following the initial U.S. downgrade from S&P. Think of that CoT survey again. Could the banks be trying to front-run the next downgrade?

So, let's just go ahead and put it on the record: I'm expecting a 10% rally in gold before 12/1/11. This gives us a minimum target area of 1780-1840. Let's split the difference and call it 1810 or about 10% UP from where we stand this evening. That type of rally corresponds with where we are on the charts, too:

paper_10-24gold8.jpg

Soon, we will burst through the tough resistance around 1700 and begin mounting this assault on the backs of continued bank buying as well as the short-covering of the misguided specs. If December plays out similar to Decembers past, gold will then finish the year somewhere between 1750 and 1800, continuing the trend of 20-25% annual returns.

I wish I could be as enthusiastic about silver but I'm not. Though I still expect a stellar 2012, the remainder of 2011 will find silver continuing to struggle with high margins and a pit bully named JPM that doesn't appear ready to begin covering its massive short position just yet.

paper_10-24silv.jpg

So, there you go. Once gold closes above 1705, my confidence in this forecast will grow considerably. At that point, I'll look to buy some Dec11 calls. Maybe buy some outright or spread some 1700s vs some 1800s. We'll see. I'll keep you posted.

TF

9:50 am EDT UPDATE:

WOPR is in charge this morning as the PMs are being sold because of this headline:

https://www.zerohedge.com/news/ecofin-meeting-cancelled

Down goes euro. Up goes dollar. WOPR sees dollar up. WOPR sells gold and silver. Yawn.

Perhaps some human buying will emerge soon. At around 1630-35, the hourly chart holds the promise of a little reverse H&S bottom of off last week's test of support near 1600.

paper_10-25amgold.jpg

Hang in there and enjoy the ride. More later. TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  485 Comments

RedRover · Oct 25, 2011 - 9:14pm
Where's Andrew Maguire? - Silver Manipulation Debate Wrap-Up
Shill · Oct 25, 2011 - 9:16pm

Men I will call Ivars out as much as possible, not for flaming or for a funny ( well ok maybe ) but if we cannot critique his view, you best watch your P's and Qs when calling Turd out, cause as one of the top leaders in this forum I will defend Turd, like you defend Ivars, and it may get personal.

Hopefully it don't and we move on like the adults we are purported to be.

I will not clog the main forum with silly drama good evening.

redwood · Oct 25, 2011 - 9:18pm

"In mathematics, a half iterate (sometimes called a functional square root) is a square root of a function with respect to the operation of function composition. In other words, a functional square root of a function g is a function f satisfying f(f(x)) = g(x) for all x. For example, f(x) = 2x2 is a functional square root of g(x) = 8x4.

One notation that expresses that f is a functional square root of g is f =

Hope this helped."

I can always count on a final laugh with you. Too precious....

johnboatcat · Oct 25, 2011 - 9:22pm

I hate to get equationed!

Shill · Oct 25, 2011 - 9:31pm

LOL See glad some caught the humor.

Guys lets move on ok, it really is all good, we have a tremendous day coming up tomorrow I would rather we all, ALL ( Yes you too Ivars ) go tits up in this as team players, not enemies. Call me out at the appropriate times not 12 hours later, that is kind of lame, Even for a board of this stature.

Ok, now can we move on too business.

crisismode · Oct 25, 2011 - 9:32pm

Turd,

You are the MOST AMAZINGLY slow guy to respond to daily events!

What? You want the world to explode and then you will respond by tomorrow Morning!!??!!

All kinds of stuff happens, and you just sit on your hands.

Wow, really responsive you are.

redwood · Oct 25, 2011 - 9:34pm

Yeah, tomorrow could be D day, but from what I'm reading this could easily drag out till at least the end of the week, if not more.

¤ · Oct 25, 2011 - 9:37pm

Your being sarcastic and just didn't needle TF, right?

johnboatcat · Oct 25, 2011 - 9:39pm

Go back and count up the hat tips on all of the last few pages of the comments on this topic and then come back and tell us what "many" means. You are not many.

Turdle GG · Oct 25, 2011 - 9:40pm

"Owning gold is by definition an inverse function of not owning paper currency. The more individuals switch their holdings of money, the faster the this process will proceed. This is an example of scale invariance at work, which if it observes power laws can accelerate exponentially".

https://www.hindecapital.com/docs/hil_reports/Hinde%20Capital%20CEO%20Ben%20Davies%20GATA%20Conference%20Speech%20Aug%202011.pdf

redwood · Oct 25, 2011 - 9:42pm

Everybody else feel the tension in the air....ouch, tomorrow is going to be tough.

Bay of Pigs · Oct 25, 2011 - 9:42pm

No, he is an asshole from ZH.

Shill · Oct 25, 2011 - 9:42pm

Very important day, and I look forward too TURDS Comments on it. Wow Pailins forum rocks, I may have to stop by there more often, thank you EWC

ewc58 · Oct 25, 2011 - 9:42pm

Huh? People sure as hell don't come here to see endless charts in comments, ya? The only charts I'm truly interested to see here at all are Turd's. This Blog first and foremost is about seeing what Turd has to say, the lead he wants to take, and letting the comment-ers go from there. Even beyond that kind of freedom, as you are well aware, there are dozens of existing forums that allow anyone who wants to do Deep Dives into other areas. Often much deeper than appropriate for the front page.

No one has suggested Ivars or anyone else should not post everything they like. But many feel it should be done within the spirit of the above.... This is not a "chart" blog, not outside of Turd's charts it isn't. It's his house. Of course charts and T/A are welcome and illustrative. Now and then. And in context of points that can be grasped by, and are relevant to, most readers. IMO, as an example, Tom L. occasionally employs charts for us in this way and are useful b/c they are relevant.

Many here are all about Metals & Miners, but don't know T/A or even how to read charts to any great extent. And with just a few things going on in the present, many can't really get too worked up about anyone's guess about the price of Ag in 2015, never mind 10 years later.

I think what many are saying is that long term Ag (and other) price predictions and other forms of crystal ball gazing are best done off the main page. Some of Turd Town's forums are as heavily accessed as the main page, it's not like moving off Main St. is anything scary or shameful. It's not banishment.

It's already been done by many with all kinds of Special Interest topics and some have attracted quite a following. All those folks are doing it where it belongs.

Just look at how popular Pailin's Trading forum is...

  Topic Replies Views Last postsort icon
new All About Physical new
by WheelerSilver on 10/24/2011 - 12:13
6
View 6 new
148 by wanab
10/25/2011 - 20:43
hot-new Pailin's Trading Corner updated (Page: 1, 2, 3Last Page)
by pailin on 06/15/2011 - 08:39
9,012
View 417 new
434,306
Rufanuf ewc58 · Oct 25, 2011 - 9:44pm

Point taken.....but its not a music blog, or political art blog either is it? So surely anyone posting charts, is much more "on topic" than people posting "The Doors".

redwood · Oct 25, 2011 - 9:45pm

" This is an example of scale invariance at work, which if it observes power laws can accelerate exponentially".

Please, no more math on this board - it is harmful to one's health.......wink

Planters · Oct 25, 2011 - 9:46pm

Looks like this latest rally only brings us to the top of the channel, I am happy with it but I would like to see it POP it;s

TURD-DLE HEAD above the long term line.

ewc58 · Oct 25, 2011 - 9:51pm

hat tips: bro, do ya really want to go there?

What seems to be the issue with putting special interest content such as deep dive charts and other off the beaten track content in a forum?

Is there some reason you would be ruling out Ivars simply doing what many other Townies have already done for their own pet projects, topics, or what have you?

Or does it just sound like that? 

crisismode ¤ · Oct 25, 2011 - 9:51pm

No, Turd's one of these guys that waits a LONG, LONG TIME to respond.

He want so much to GET IT RIGHT.

But then he waits, and the world turns and he is far, far behind the curve.

As usual.

crisismode · Oct 25, 2011 - 9:52pm

Life is more than just this site.

redwood · Oct 25, 2011 - 9:52pm

Can't remember who came out and stated that at least 1 trillion would be made available for this crisis and the markets responded positively. This is already factored in. The slightest disappointment could stall the market and maintain the metals.

crisismode · Oct 25, 2011 - 9:53pm

I just posted a new thread that took about 90 minutes to compose. Sorry it wasn't fast enough for you.

Sunnyboy · Oct 25, 2011 - 9:53pm

Dear Mr T et al

Thanks for a cool banked 200 oz of silver today. Special thanks to Smiley Dimon for his hissy fit a couple of weeks ago that got me in at 1608 :-) just stopped out at 1709 :-)), Turd, your rally call had me thinking/reviewing and staying long and coupled with Palin's corner lads and Ladettes (level head, Kitty et al), the one and only Mr Bolinger at 18,2, Missies Moving Average at 9,18,36,72 and 144 (Thanks Mr Armstrong), thank you all we are green again :-)))

What a move 2day, anyone expecting a continuation? I say watch the miners and the Missy moving averages above :-)

Woof

Sunnyboy

Turdle GG · Oct 25, 2011 - 9:53pm

I left out the really exciting maths from Davies' paper, that being Benford's Law, otherwise known as the first-digit law. With it, Davies shows that gold should be at $2,000 by Feb 2012...

He also quoted Lao Tzu: "Those who have knowledge don't predict. Those who predict don't have knowledge".

And the biggest mathematical certainty of them all: "we have no hope of sustainable growth ... by which to repay our debt burdens"

¤ · Oct 25, 2011 - 9:57pm

I wonder what really happened today at that time. Both PM's spiked pretty much at the same time. I didn't see any drastic POSX movement. The equity markets were down at the time but not in a big way at that point.

Something has become disconnected from what we are used to seeing happen. Oil has been talking loudly the last two days. And to see the miners take off today with no real POSX decline or equity market to propel the miners higher was impressive and a departure from the recent norm.

I like what I'm seeing in the Asian trading so far. I think it's a risk trade based on the EU and ME in equal measures and some type of news leak about the QE that's about to take place in the EU and the U.S.

The cat's out of the bag maybe on the QE plans. The only other thing I can think of, in of itself would be all the supposed short covering that took place the last several weeks and the big banks and hedgies etc. have decided to go the other way with the PM's and the miners...finally.

We've heard just about every major banking entity call for higher PM prices going forward and a recognition also about the mining shares being undervalued. So maybe they just decided to finally take the selling pressure off now that they are probably positioned in the PM's and miners during all of that self created market turmoil they took advantage of.

It might actually be all four things I mentioned all at once.

Get ready. If you're feeling totally disinterested or down about your investment prospects and a bit skittish to get back in then maybe that's the biggest contrarian indicator there could be.

They zig when everybody is zagging. ZIG - ZAG Rolling Papers - Box

Shill · Oct 25, 2011 - 9:58pm

1 trillion is a drop in the bucket, I am thinking along the line of a global thing not just European. Think 10 trillion.

Hell the US already spent 2.5 trillion, so now the union tosses in another 2 trillion, so that is 4.5 trillion. Ok now were even, now what?

( Raises hand ) An additional 5 trillion..But from where?

Thin air, thats where

ewc58 · Oct 25, 2011 - 9:58pm

But dude, at least most of us know how to operate music videos! cool

Bay of Pigs · Oct 25, 2011 - 9:59pm

We're not complaining about the pace around here. Don't sweat it.

You're doing a fine job. Thanks...

¤ · Oct 25, 2011 - 10:02pm

ok, so you've exposed yourself just as crisis dickweed just did and your....click...poof! All gone.

WheelerSilver · Oct 25, 2011 - 10:05pm

Crisismode is a TROLL! we all know how much goes into your posts, don't let that moron get under your skin! 

________________________

https://www.wheelersilver.com

~Handmade Quality Bullion~

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