Tuesday, November 30, 2010

This Might Take a Minute

Several items to touch upon this evening so please bear with me.

First of all, I need to extend a genuine, humble "thank you" to all of you who have "fed the turd" today. Never in my wildest dreams did I imagine this outpouring of support and it is greatly appreciated. I plan to use the donations to buy some silver, of course. I'll post a picture of my purchase when I make it. Additionally, our little site had a record 8,113 pageviews today. This is a mind-blowing number. 3MM annualized, for crying out loud! In all sincerity, thank you.

If you haven't gotten your daily Harvey yet, I suggest you do it now.
Unprecedented happenings at the Death Star! At this point, there are some 27.14 million ounces of silver standing to be served and delivered. If you're keeping score at home, that's 844 metric tons! By the way, if you're wondering how I did that conversion, keep this site handy:
Anyway, back to the Comex...Of course, not all those standing will, in fact, demand delivery...but...844 metric tons!!! That's about 5% of all global annual production! Holy moly, the next few weeks are going to be very, very interesting.

On to today/tonight's action on the Globex. As I type, the Feb11 gold is at 1390.10 with a high of 1391. March11 silver is 28.21 with a high of 28.25. Gold is particularly interesting. If it can draw away from 1389 overnight, it'll probably run up and tap 1400 before the Comex open tomorrow. At this point, Blythe and Her Monkeys have two options:
1) Bad
2) Worse
She can cling to this silly, H&S top notion and try to jam it down overnight. Absent some global "event", I don't think she'll try it. Too much genuine momentum against her at this point. More likely, she'll fall back to the area between the all-time closing high of 1412 and the all-time intraday high of 1426. She'll fight like hell to paint a "double-top" there for sure. Will it work? Who knows? Who cares? Even if it does work, it will only be temporary. Go back and look at her pathetically unsuccessful track record of painting double-tops at all the previous "all-time highs". She's worse than Prechter! Hey, wait a minute...I've never actually seen Blythe and Bob together, in the same room. Hmmm....interesting. I digress. Sorry.
Silver continues to struggle with 28.20-25. Lots of contrived "resistance" there. I've got a hunch that by late tomorrow or early Thursday, silver will smash through, hit a bunch of "buy stops" and catapult up toward 29. Let's watch and see.

Next, I've been asked several times recently if I believe in the miners and, if so, which ones. OK, here you go. First, a disclaimer: I don't know any more about these equities than anyone else. I own them for various reasons, which I'll try to explain below, but that doesn't mean they're all going to work. Got it?

First of all, maybe you'd just like a plain, old mutual fund. My favorite is the First Eagle Gold Fund. Well diversified in quality companies and well-managed. Any registered financial advisor will be happy to sell it to you. Trust me, he/she is dying for a commission right now.

If you'd rather own an exchange traded fund (ETF), for pete's sake, don't buy the fraudulent GLD or SLV! (http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=13341:the-seven-sins-of-gld&catid=48:gold-commentary&Itemid=131)
Check out GDXJ, instead. Its comprised of what are called "junior miners". The "juniors" are typically where you get your most bang for your buck and greatest leverage to rising metals prices. Here's a link:

The five miners I currently own are: EGO, TRE, NG, SVM and EXK.

EGO: I must admit that I got this one from Cramer. Big presence in China and, at 17.44, its about $3 of its all-time high.

TRE: This is Santa Sinclair's little baby. I figure that if anyone knows how to run a gold exploration company and not screw it up, it's General Jim. I also own it because, one of these years, I'm going to attend the annual shareholder meeting and finally buy Jim a beer. Its also a point off its highs.

NG: Simple greed led me to this one. I'd read that it was a possible takeover candidate and the chart looked OK so I bought some at 8 something. Its now 14 and change. Working pretty well...so far.

Now, for the other two. They are in silver and, as you know, I've very excited about silver right now so these are my two biggest % holdings. They are junior and explorative companies. Riskier but more upside than say PAAS or SSRI.

SVM: I own this one because, like EGO, it has great exposure to China and it seems to be relatively solid financially. I also think uninformed people drive the demand for it because of its name "Silvercorp", think "Goldcorp". Kind of a lame reason, I admit. But, hey, I think that's a better fundamental reason than some of the nonsense spewed by CNBS all day.

EXK: Had it for a while and it became a top holding when I read this:
Interesting, huh? We'll see but I like it. A lot. It's also run into profit-taking lately and, at 6.21, is down about a dollar from its recently-attained, all-time high of 7.16.

Finally, be sure to review these charts from Trader Dan at JSM. New all-time, monthly high set today for gold. Remember, the hourly and daily charts are for short-term trading only. The real, long-term, secular bull market in gold can be plainly seen in these charts. Ignore the fool top-callers!!

So there you have it. That's enough for today. Time to go spend some family time.
Rest well. Let's see where things are tomorrow morning U.S. time. Another $9B in POMO is scheduled for tomorrow so, absent armageddon, we'll probably have another fun day. Turd night night.

 8:25 EST update: As mentioned above, gold did draw clear of 1389 overnight. The Feb11 contract reached a high of 1398.30. The March11 silver actually traded as high as 28.88. Though, the EE has done a little of their 7:00 am dirtywork, the pullback has not been too significant.
Almost everything is up this morning as the dollar rally appears over at it reached the 81.50 level I'd mentioned back on Monday. Watch 80.80 on the DecUSDX for confirmation. Again, lots of POMO today so lets see if we can break 1400 and 29. More later.

Dissecting the March11 Silver Chart

As you know by now, I am not a believer in technical analysis as it pertains to the current situation in gold and silver. However, because so many traders and computers are intent on making short-term buy/sell decisions based upon chart position, a simple chart review can give you a pretty good idea of where the EE and traders alike will act.
With that in mind, dear reader, behold this fine-looking chart for moment. It is a 3-hour, March11 silver.
Let us dissect points 1-6 for clues as to what lies ahead.

1) This is the peak from three weeks ago today, $29.40 on the March11 contract.
2) Rather predictably, a short 36 hours later, silver had rebounded almost exactly 50% to 28.24
3) The selloff wasn't over, though, as silver double-bottomed very nicely on 11/16 and 11/17 at 25.05 and 25.10, respectively.
4) On its way back up now, silver moves decisively back through $26.50 on 11/18 and then, importantly, tests that level as support on 11/19.
5) 26.50 held which set up a run back toward the critical point #2 of 28.24. It almost made 28 on 11/22 before a frightened and scared Blythe took action and tried to shove it back. She almost succeeded. Note how silver traded back to the critical 26.50 level (see point #4) three times on 11/26, 11/28 and 11/29 and, three times, support held. This is why I was so encouraged by the action yesterday.
6) Brings us to today. Not surprisingly, March11 silver hit 28.39 (see point #1) before being shoved back. As I type, it stands at 28.06.

So, what can we expect next. Since we did traded through but did not close above 28.24, I'd expect a bit of short-term consolidation between the high of today and, maybe 27.80 on the downside. The consolidation will probably last into and through tomorrow. It doesn't necessarily have to; it may just keep on rolling. However, since we couldn't close above 28.24, a "breather" is likely before the test of the old highs.

But, don't worry. That test of 29.40 is coming. It is, most definitely, coming later this week. Just like the $26B in POMO that is most definitely coming later this week. And, yes, the two are related.

I hope that helps. I'll try to add another post later this evening, after we've all heard from Harvey.

a/o 12:50 EST 11/30/10

Just a silver quickie.

Silver has breached the important EE Maginot Line of $28.20. Study this chart for to understand why this is important.
Let's see what happens in the final 30 minutes but all indications are that the strength will continue.
Much more later.

ps Due to popular uprising, I've added a "Donate" button to the right. Please don't hold it against me. I am NOT in this for the money. However if, through a donation, you'd like to help me stock the shelving of my bunker, Mrs. Ferguson and I will be highly grateful for your support.

I thought I'd add this from my friend, Dan Norcini at JSW. Dan is a great guy and very, very experienced in commodity trading. Be sure to check JSM every day for his updates.


Monday, November 29, 2010

Re-visiting November 16

Below is a re-post of a blog entry from Tuesday evening, November 16. I re-post it tonight to prove(?) the idea I put forth that evening:
"I took some time tonight to review the charts of several of my favorite commodities and I found that they all have something in common.
After reviewing gold, silver, wheat, soybeans and crude, I found them all to about 1-2% away from what would be looked-back-upon as very logical bottoms. I find this quite interesting from a correlation standpoint.
We've all observed the PMs getting smoked for the past week.  No doubt we've seen the entire commodity sector get smacked around pretty good. But would you have thought their charts looked so similar, not only on the upside the past six weeks but back down this past week, as well?
This draws me to a conclusion in which I am quite comfortable. What we have seen in the past week is a wholesale selloff of risk assets. Nothing more. The five commodities listed above are related only to the extent that they are dollar-denominated. For example, wheat has an entirely different set of fundos than gold but the wheat chart is almost identical in terms of percentage move.
As this relates to the PMs, it is further proof that we are simply seeing a price correction. Not a top. Not a new paradigm. Not a Wave 1 of Bear 1 of...blah, blah, blah Elliott nonsense.
Gold will probably test today's lows and may even see 1320 but I am supremely confident that that is as far down as it will go.
Silver will test
25 again but no way it goes much below 24.75 before rebounding sharply.
Crude's gonna find a ton of support between
80 and 82.
Wheat may see
$6. If it does, holy cow! The chance of a lifetime to buy. Very tight global stocks and a long, cold winter guarantee it won't go any lower.
Beans between
1160-75 are a steal.

My point, again, is that all these commodities are within the same % of very substantial support.
The change in sentiment that has caused this correction is very near the point where it will flip back.
Keep the faith. Buy this final dip. Much fun lies ahead."

OK, so what is the point? Well, I think I'm being proven correct. All five commodities were experiencing a simple correction; a temporary move away from "risk assets". Nothing more significant was happening. This is proven by the fact that all five stopped and reversed course almost exactly where predicted. 

Gold: Had hit 1329 on 11/16 and double-bottomed at 1330 the next day. Now 1367. +2.86%
Silver: Same thing. Hit 24.98 on 11/16 and 25.02 on 11/17. Now 27.17. +8.77%
Crude: Made a low of 80.28 on 11/23. Now 85.89. +6.99%
Wheat: Hit 6.18 on 11/17. Now 6.50. +5.18%
Beans: Traded down to 11.75 on 11/17. Now 12.35. +5.11%

As this relates to the precious metals, these rebounds prove to me that the down move from 11/9 thru 11/17 was, however painful, just a simple price correction within the ongoing, secular bull market. Only if silver and gold make new closing lows below 24.98 and 1329 should you begin to get nervous that something more significant is happening. These numbers now provide a very telling "line in the sand" for us bulls. Until then, keep the faith. Buy all dips. Hold your ground. Rest well. Much fun lies ahead.

A Very Encouraging Day

Wow! The Turd is excited. Today was a very encouraging, positive day in gold. CNBS and other media will report that gold closed slightly higher but you, dear reader, should know otherwise.

In the face of a significant physical supply squeeze, the Evil Empire has tried on three occasions since last Friday to raid the gold and silver markets in an attempt to scare off weak-handed longs. To Blythe's considerable chagrin, it hasn't worked! Even in the face of a 1.30 rally in the USDX, it hasn't worked!
HAHAHAHAHAHAHA! Eat it, Blythe! Take a look at this 30-minute chart:
Note that our buyer(s) of size show up, as if on cue, to stop the declines at subsequently higher levels. The speed of the rebound shows the size of the orders which caused it. The BoS are determined to use any and all dips to add to positions.

As I type, Dec10 gold is at 1369 and Dec10 silver is at 27.20. Both are butting up against EE-constructed resistance at those levels. I fully expect the resistance to give way either later today or overnight as the PMs continue to trade on the Globex. By tomorrow at this time, gold should have approached the critical 1375-85 level and silver 28-28.20. If not tomorrow, certainly Wednesday. Too much POMO to hold it back and the USDX rally/dead cat bounce looks to have run its course at 81.50.

Lastly, Jim Sinclair likes to link to a blog by a guy named Eric De Groot. I've done the same below as Eric provides charts of gold priced in every single, major fiat currency. You can plainly see that the desire to own gold is a global phenomenon. The fallacy of chart-reading topcallers like Prechter lies in their reliance upon the charts of gold priced only in dollars. The fact that Prechter ignores these other currency charts in his "analysis" exposes him as either a clueless dope or a charlatan. I'll let you, my dear reader, pick which option suits him best.


I'll try to check in again later this evening. Until then, I've developed a habit of adding extra thoughts in the "comments" section of my posts. Be sure to always check there if you're looking for updated opinion.

Oh...and one more thing. I've reluctantly added a couple of Google ads to the site in a blatant attempt to compensate myself for the time I'm spending keeping things current. If you appreciate the quality of what I'm trying to do here, please remember to click through to one of the "advertisers" when you leave the site. Thanks! Turd.

Watching Silver

It'll be very, very interesting to watch silver this week. Are we actually going to see the enough buyer(s) of size stand for physical delivery that the Comex fractures and begins to fail? Read Harvey right now.


Set an alarm on your phone for 8:30 EST tonight, too. By then, Harvey will be out with his all-important analysis of Friday night's open interest. Whether or not you're actively trading and attempting to profit from this situation shouldn't matter. It's great and compelling theater.

In the meantime, keep an eye on the Dec10 silver contract today. A breach of 26.35 would be bad as it would indicate a drop to at least 25.75. A move up through 27.20 would be positive as it would signal 27.75. Personally, I'll be very surprised if we head lower here but with all the bs and nonsense coming out of the EU, anything can happen...at least in the very short term.

More later.

Sunday, November 28, 2010

The Tipping Point

I spent some time over the holiday weekend pondering what has brought me to this place, what prompted my "great awakening". Though there were many contributing factors, one of the salient events took place on Sunday, March 14, 2010. Not an event in the traditional sense, this one was simply me, in front of a TV.

After twenty years as a participant in the financial services "game", for some reason I began to feel unease with my profession in 2006. The feeling grew through 2008 as the entire world nearly melted down. It became a queasiness in 2009 as I watched Wall Street attempt to spin and deceive it's way back to credibility. It coalesced on 3/14/10 as I watched the following interview. If you have some time today, and if you can endure the Lipitor commercials that precede them, please take time to watch both parts. If you're near a bookstore, pick up a copy of "The Big Short", too. It's a great read.


For me, all the dots finally connected and the mental image I'd created of an "industry" that was, in the end, honest and beneficial came crashing down. The examples of corruption are nearly endless and I'll examine more in the days to come but, for now, let's just choose one, in ten simple steps.

1) Major TBTF bank insolvent due to overwhelming amount of underperforming and/or worthless debt.
2) Congress pressures FASB to change accounting standards thereby allowing said bank to reclassify worthless securities and loans as having some notional value.
3) Bank allowed to borrow unlimited/infinite amount of money at Fed discount window at 0.0025%.
4) Bank takes borrowed dollars and buys US Treasury bonds paying 3.0%.
5) Bank keeps spread from risk-less transaction and books this as profit.
6) Bank employees pay themselves huge bonuses commensurate with their brilliant minds.
7) CNBS begins non-stop parade of sell-side analysts who exclaim that the bank common shares are "undervalued" based upon cash flow and earnings.
8) Unwitting investors bid up shares of the still insolvent bank, perpetuating the illusion of financial health.
9) Bank "insiders" unload millions of personal shares and options to duped public.
10) Responsibility and wealth transferred. Bank executives, management and traders wealth is preserved at the expense (and loss) of the average, regular, hard-working investor.

Oh, and along the way, the Fed/Treasury benefitted, too. The insolvent bank participated in a stealth form of quantitative easing. By using borrowed money from the Fed to buy treasuries, the TBTF banks create a synthetic demand for those bonds and notes, thereby keeping rates artificially low, consistent with stated Fed policy. Pretty slick, huh?

At any rate, I'll check in again later this evening, once the metals begin trading again on the Globex. Enjoy one more day of relaxation. This next week promises to be a doozy.

Friday, November 26, 2010

Black Friday Shenanigans

Sorry but I've got to keep this brief today. Lots of football to watch.

No one who holds or trades the PMs should be surprised by what is occurring today. To summarize:

1) A billion Chinamen are the first to really feel the squeeze of HellyBenny's printing press. The cost-push inflation is already rearing it's ugly head there as dollar-denominated input costs are soaring. One billion people are hard enough to control when they're content. One billion hungry people are an entirely different matter.

2) The EU continues its death spiral which is leading to dollar strength. As noted in "A Quick Buck" earlier this week, a move through 79.60 on the USDX signaled a move to, perhaps, 81. Well you got it.

3) Blythe and The Flying Monkey Brigade have predictably seized upon these events to drive prices lower on this light volume, holiday Friday. Gold found buyers, however, right where I'd expect, at the 1350 level.

4) One other thing about the Chinese that you must understand. They are desperately trying to exchange their dollars for hard assets and precious metals. Anything they can do to temporarily drive prices lower, they will. Just whom do you think our buyer(s) of size are, anyway? They know that any move to raise rates and/or margin requirements will trip all the mindless, robot algos into sell mode, thereby lowering the prices of the items they wish to accumulate. The long-term trend in gold and silver is undeniably UP. The Chinese know this, too, and they hate to overpay so they will occasionally "manufacture" weakness to help their cause.

The charts below speak for themselves. Next week still promises to be a crazy, volatile and exciting week as $36B in freshly printed greenback flows into the Primary Dealers but let's worry about that then. For now, ignore the markets, kick back, have a few adult beverages and watch some football. That Alabama/Auburn should be a good one.

2:00 EST update: Gee, I wonder who started buying at 1350 and has, in the past three hours, managed to put $15 back into the price of gold? Hmmm, let's see. Who could it be???

Wednesday, November 24, 2010

Absolute Advice For Relatives

If you're like The Turd, you will most likely get peppered tomorrow with questions from pseudo-intellectual relatives regarding the current world/market environment. Your over-educated yet under-informed cousin or brother-in-law will seek out your current "wisdom" on investing, politics, etc. He or she will then feign interest while you speak but you will feel certain that, in the end, they just don't "get it" as your absolute conviction overwhelms their status quo mindset. You could probably talk for hours about the failure of Keynesianism, Quantitative Easing, the criminal political class, the fallacy of TBTF, POMO and the PDs, the infallibility of gold, etc...but why even try? Your cousin's husband doesn't understand any of this anyway and your show of intellect will only make him feel threatened. He'll quickly tune you out and run off to the family room to watch the Cowboys.

So what do you talk about tomorrow when someone asks? What kind of simple advice can give someone to prepare them for what is certain to be a very challenging year ahead? I plan to dial it back a bit and talk about one thing...inflation. And not just any old, run-of-the mill 3% inflation but serious inflation. I'm talking 20-30% inflation. Milk to $5/gallon kind of stuff. That is what's coming and its a topic most folks can actually get their arms around. Even the fuzzy-headed new boyfriend of your divorcee sister understands inflation and he might even be able to understand why its coming if you explain it well. (This is a chance for you to show off some of your worldly knowledge, too.)

Most folks with a high school-level understanding of economics (this includes your Fed governors) only understand and recognize demand-pull inflation. This is the classic demand side, Phillips Curve inflation that says rising wages, employment and wealth cause economic expansion which leads to more money chasing a static amount of goods. New, excess demand "pulls" prices up and the result is price inflation. Pretty simple stuff. What is coming in 2011, however, is the forgotten beast of cost-push inflation. This type of price inflation is caused by producers and merchants being forced to pass along through higher prices the rising cost of inputs to their products. Consumers, particularly the lower-and-middle income, bear the brunt of the pain.  Your income isn't rising to keep pace with rising expenses and you get squeezed. Hard. And its not luxury items that are going up in price, its the staples. Bread, milk, gasoline, clothes, eggs, meat...the basics that no one can realistically live without. It's going to hurt and 2011 is going to be a mean year.

Why will input costs go up? Simple, they are all dollar-dominated and with our Fed now engaging in their final policy option, "QE to Infinity", all dollar-dominated assets are going up in price. Significantly. Your crazy uncle Henry may never take your advice to sell his stocks and buy precious metals but he just might take your advice to stock up now on essentials, before the prices skyrocket. Tell him that if he's going out to buy a new pair of pants, he should buy two. Tell your sister that instead of just buying her kids' winter coats for this year, she should buy coats for next year, too. Tell your cousin that instead of buying groceries every week to, instead, buy a whole dressed-out cow and put it in the freezer along with all the other dried and canned goods she can store.

Still, most crazy relatives won't listen but at least, come next Thanksgiving, they'll remember that you were right. One down side, however. Because you'll end up being the only member of the family that will have prepared and, most likely, the only one with affordable food to eat, you'll probably have to host everyone at your house next Thanksgiving. Oh well, there's a cure for that, too. Wine. Lots and lots of wine. Keep a couple of good Pinots on reserve and you'll be able to handle just about anybody.

Lastly, as expected, gold and silver are wrapping up an uneventful day. Barring any Korean craziness, Friday should be quiet, too. I'll check in again after the close on Friday to report on the status of the weekly chart and its implication for the weeks ahead. I still expect next week to be quite exciting as $36B in POMO is just over the horizon.

HAPPY THANKSGIVING (in the US) !!! Turd out.

Tuesday, November 23, 2010

The New (old) Safe Haven

The events on the Korean peninsula have caused almost everything to drop in price this morning. Everything, that is, except the dollar, gold and silver. Isn't that interesting? Do not minimize the importance of this. The PMs are no longer lumped in as "commodities". They have, instead, retaken their rightful place as a safe haven currency. As I type, silver is up 0.7%, the dollar is up 0.6% but gold is up 1.40%!

The importance of this cannot be understated. Investors worldwide are beginning to see the proverbial "writing in the wall". The US dollar can be used as a safe haven only for very short-term trades. However, the long-term future of the US dollar is bleak, so why even fiddle with it. Just buy gold and be done with it.

We have now reached a very important spot on the daily gold chart. See below:

Trust me on this one, the EE would give anything to buy themselves some additional time by painting a head-and-shoulders top on this chart. The first level that they will defend is 1377 on a closing basis and then, obviously, 1388. Events may spin out of control somewhat and gold may blow through those levels regardless of Blythe's best efforts. However, if she can slow it down, she most certainly will. Your first sign that her efforts are futile will be a close above 1377.60. From there, a close above 1388 is hugely significant as it assures a test of the all-time highs of two weeks ago. By Friday, a close that is simply above 1372 would be fantastic for its weekly implications.

As noted above, silver is not rallying to the same extent as gold this morning. Let not your heart be troubled. This is only temporary. The Monkey Brigade is working feverishly to contain silver below 28.20 and there are lots of paper silver sell orders waiting to be initiated between 28 and 28.20. Give it some time. As frequently noted here, the fundos in silver are overwhelmingly positive. (If you haven't checked Harvey yet today, now is a good time to do it.) Silver will, eventually, blast through 28.20 and rocket back to 29.34. Blythe's attempts to paint the tape there with a double-top will not be successful as silver then streaks to 31, then 33 and maybe even 35.

Don't forget to keep an eye on the Dec10 USDX, too. A move through 79.60 would mean more upside to come. Maybe even an extension up to 81. See the entry "A Quick Buck" from yesterday. A move to that level would definitely be hurt the commodity complex and equities.

Keep the faith. This week is shaping up to be far more interesting than we thought it would be.

Monday, November 22, 2010

Moron Silver

I had to chuckle today when I saw several chart-readers posting on ZH that silver was "parabolic and due for a 20% pullback". What complete morons these people are...right there in the dummkopf category with Keynesian economists and green shoot-sucking CNBC hosts. As mentioned ad nauseam, only fundos matter in the PMs right now. Simple supply and demand. Throw your charts out the window.

As Harvey informed us over the weekend, the OI in Dec10 silver was still around 49,000 contracts basis last Thursday evening. 49,000 is a staggeringly large number given that the Dec10 futures and options go "off the board" tomorrow! If they intend to take delivery, these contract holders must pony up the funds by the close of business this Friday. Clearly, not all 49,000 are going to be exercised but if even a fraction of them stand their ground and give Blythe the finger, the Comex is going to have a very significant situation on their hands. I believe the action in the metals today, where they held and went higher in the face of a strong dollar, is indicative of the building pressure on the Evil Empire. Right now, the only thing you need to do tonight is read Harvey's update. Again, he usually updates around 8:00 EST.

I thought I'd post this chart. It looks like crap but it gives you an idea of what I expect to happen next.

Note the 10+% burst to a new high in mid-October. A pullback and consolidation before another burst of nearly 20% into early November. Now another pullback and consolidation is nearly complete. Silver will soon move back through 28.20 and then go tackle the closing high of 28.91 and intraday high of 29.34. Those levels will be bested leaving all the technicians scratching their heads. If the recent form holds, silver will trade to 33-35 before once again puling back and consolidating. I would expect this move very soon. Let's look for that $33-35 level to be reached by the time the current POMO schedule is finished, roughly December 9.

Again, ignore the chart-readers and the top-callers. Read Harvey tonight. Rest well because, with the expirations tomorrow, things might get a little crazy.  Turd out.

A Quick Buck

I'm watching the Dec10 USDX this morning. To some surprise, the dollar has rallied this morning as tensions rise in Ireland and across the continent regarding Euro QE to infinity. Never forget that the dire fiscal situation in Europe pales in comparison to the individual, state components of the US but, for the near future, that doesn't really matter too much.

In the short term, watch the Dec10 USDX. Last week if failed on consecutive days to breach 79.60. As I type, I have a last of 78.87. A move through 79.60 and we may see 80 and then 81. This amount of dollar strength would be counter-productive for the entire commodity sector as well as equities. Therefore, I don't expect it to happen. Instead, let's look for the USDX to approach 79.50 then double-top and begin to roll over. Watch this very carefully.

As predicted last night, gold tapped 1365 very early this morning before rolling over. It should be very well bid anytime it moves below 1350. See the chart below. I would not get concerned unless it moves decisively though 1341 and, even then, I have a very hard time believing it could get through 1330. More likely, it'll be range-bound between 1345-1365 until it breaks out to the upside and moves into the resistance area between 1375 and 1390.

More after the NY close.

Sunday, November 21, 2010

Sunday of Thanksgiving Week

In a stunning development, Ireland has decided to allow the EU to bail it out. NO!! REALLY??

How anyone can be surprised by this is beyond me. TPTB will always postpone their day of reckoning, of that you can be assured. Ireland was "bailed out" just like Greece before it. Soon Portugal, Italy and Spain will follow suit as will California, Illinois and New York. In the race to the bottom, never ever forget that all fiat currencies are traded and valued against each other. There will be periods of dollar strength and euro weakness like the past  two weeks just as there will be periods of euro strength and dollar weakness. In the end, it simply doesn't matter. All fiat are headed to lower and some are headed to virtual zero. I have no doubt that, one day soon, they will all be replaced by some sort of new global, partially asset-backed unit of exchange. It is no longer a question of if, it is simply a question of when. The end of the Great Keynesian Experiment is upon us. You must prepare accordingly.

OK, on to gold and silver. Predictably both are higher in early trading this evening. Dec10 gold stands at $1358 and Dec10 silver is around $27.75. Overnight, I'd expect additions to these gains. Gold may approach 1365 and silver 28.20. Tomorrow will be interesting as we have another 9bil or so in POMO coming our way. With Ireland "resolved" and 9bil in fresh greenback available, its hard to see the PMs and equities having a down day. There is one thing to watch, however. Tomorrow, the PMs will be almost certainly be subject to another 7:00-9:00 EST Evil Empire takedown. You can bet that Blythe and her monkeys can see the writing on the wall for an up day, too, so they will try to take $5-10 out of gold when no one is looking just to make it start from a lower level. Let's watch and see.

If you haven't read Harvey Organ's weekend update yet, you need to do it now. Go ahead, I'll wait...


Glad to have you back. What did you think? Sounds like ole Harvey is getting pretty excited about the damage we're inflicting on the Death Star (Comex). With expiry on Tuesday, it is imperative that you check Harvey every evening this week. He usually updates around 8:00 EDT. Once again, if you are relying upon blogs, CNBC and the WSJ for your metals opinion and not reading Harvey, you simply are not receiving an accurate picture of the fundamentals behind gold and silver. For now, the only thing that matters is the physical squeeze on the Comex. Period. Do not be persuaded by top-callers and snake-oil salesmen like Prechter. If the silver Comex fails, either now or in the near future, there is virtually no limit to the extent that gold and silver could rise.

Lastly, this week promises to be equal parts volatile and drab. Tomorrow should be fun and Tuesday will be volatile but Wednesday and Friday should be quiet with an upside bias. Gold will initially trade to about 1365 or so before taking a breather. Its going to have a difficult time slogging through 1375-90 but once it gets through there, probably early next week, it should go back to the highs of 1424 in short order. $36B in POMO next week ought to do it. In silver, look for 28.20 first, maybe overnight tonight. Then a breather and pullback on expiry day to 27.50-75 but then, once it clears 28.20, there's nothing restraining it until 29.30 where you can bet your arse Blythe will be waiting to try to paint a double top.

Let's see how things open in NY tomorrow. Don't forget to watch for the monkey beatdown between 7 and 9 eastern. I'll try to update things by mid-morning.

Friday, November 19, 2010

Anatomy of an EE Attack

This morning saw another, typical EE attack. As mentioned yesterday, the Evil Empire likes to stage their raids when no one is around to stop them. Typically, the raids come between 6:00 and 8:00 am New York time. Why then? Simple. Asian and European traders are done for the day. New York traders are not yet at their desks. As you begin to watch for these raids, you'll notice that the EE stages them as often as three times per week. Here is a chart of today's:
Again, how do they do it? The EE compiles a bunch of new, paper short orders and then they wait. They watch the order flow. They see an opportunity when there is a momentary lapse of bids to buy. They seize this moment to overwhelm those bids and the market is quickly driven lower as it seeks buyers to fill all the sells. Very simple and very fast.

Now, check this out. Do you recall the price action back on QE2 Day, November 3? There was much angst and wringing of hands by gold holders as the gold market was crushed pre-announcement. At one point, gold was down nearly $30 intraday. What was happening? Did "insiders" know the Fed would disappoint and were selling early? "NO" I cautioned. The Evil Empire knew that QE2 was massive and they knew that gold would rally post-announcement so they had to bash back its starting point. Here is  a copy of a ZH post I made that morning:

by Turd Ferguson
on Wed, 11/03/2010 - 10:43

Obviously, Blythe decided to act early. The question is, what does this mean?
To me, the only reason for smashing gold now is this: The EE either knows or suspects that the QE2 announcement is going to be larger than anticipated and, therefore, PMs are going to rally sharply. So, crush the PMs now in order to cover shorts at lower prices before the blastoff.
Again, if anyone doubt the existence of the EE and their influence on today's action, simply look at a one-minute chart of todays' action. Violent one-minute downdrafts galore. Only the EE has the power to overwhelm the bid like that. They are clearly trying and succeeding in dropping price before the announcement. Again, why before? They are clearly afraid of getting their collective nuts and ovaries in a vise this afternoon.
I am very confident of a big price move UP later today.

Here's an exchange I had with the one and only "harry wanger" later that morning:

by HarryWanger
on Wed, 11/03/2010 - 11:24

You think gold is getting hit now, just wait until 2:30. I hold lots of precious metals long term but am expecting a big sell off.

by Turd Ferguson
on Wed, 11/03/2010 - 11:28

Yes, Harry, but you may have already seen the majority of it. Don't look for gold to drop much below 1325 before the usual buyer(s) of size step in.
If Blythe had allowed gold to rally this morning up to 1385-90, I would be extremely nervous about what lies in store for us this afternoon. The fact that she chose to crush it before the announcement clearly means that the QE will be more significant than expected and that the PMs are going much higher.

So, Harry and many others were wrong and I was right. How did I know? Was Turd's Crystal Ball particularly clear that day? Not really. All I needed to see was this:
Violent, one-minute drops are the specialty of Blythe and her monkeys. Only she has the size and scale to be able to simply overwhelm the gold market in this fashion. Notice, too, that each one-minute move takes the exact same $7 out of the price. Methodical selloffs are one thing, taking $21 out of the international price of gold in three, one-minute increments is something entirely different.
Save this chart. If you, or anyone you know, ever come to question the existence of The Evil Empire, pull it back out. It is truly all the proof you need.

Finally, regarding today's price action...pretty much as expected yesterday. This morning's EE beatdown was a little more extensive than expected so we'll probably close a little lower than forecast yesterday. Lets look for 1345-50 in gold and 26.25-50 in silver. Next week, even including expiry, promises to be a week of range-bound consolidation before the big POMO week of 11/30. Have a great day! TF

Thursday, November 18, 2010

Copy and Paste from JSM

You all know how fond I am of Mr. Sinclair and all associated with JSMineset. If you're not checking that site several times a day, you're truly missing out on very important information.

Below is a note from one of his "CIGAs" named Richard. Richard has been following the internal math of the bank closures for some time now. He continues to quantify the size and scope of the deception brought about by the FASB capitulation of March 2009. It is extremely important that you understand what is happening. Please take the time to read what is below then consider what the implications are for the entire banking system, not just the TBTFs, and the US economy as a whole.

Dear CIGAs,
The following analysis covers the 38 banks closed by the FDIC between August 6, 2010, and November 12, 2010. So far this year, the FDIC has closed 146 banks. So far in this crisis, since 2007, it has closed 311 banks.
Collectively, the 38 banks had stated assets of $13.78 billion and deposits of $11.97 billion. The FDIC’s estimated cost of closing all 38 banks was $2.72 billion, about 23% of deposits. That brings the FDIC’s total estimated losses for 2010 up to $21.6 billion.
Loss Share Remains The Rule
In the overwhelming majority of cases (30 closings out of 38), resolution of the failures was accomplished by way of the FDIC entering into loss share agreements covering a high percentage of the assets taken over by the successor banks. In connection with these 30 closings, the FDIC entered into new loss-share agreements covering an additional $8.2 billion in assets.
That brings the total face value of assets covered by FDIC loss share agreements up to about $189 billion. As we have discussed in the past, these loss share agreements typically guarantee at least 80% of the value of assets over a period of eight to ten years.
This is another form of quantitative easing being practiced by the federal government. FDIC loss share agreements place an artificial floor under the value of bank assets. This forestalls the day of reckoning when banks are forced to own up to the decimated condition of their balance sheets.
Failures Show Dramatic Overvaluations
One of the more valuable bits of information we can glean from FDIC bank failure announcements is the extent to which management of the failed banks exaggerated the value of the banks’ assets. These exaggerations were made legal in early 2009 when the Financial Accounting Standards Board repealed fair value accounting requirements.
Taking the 38 failed banks as a whole, they had declared assets of $13.78 billion and deposits of $11.97 billion. The FDIC estimated the closings cost $2.72 billion, meaning the banks’ assets were really only worth $9.25 billion. Overall, bank management overvalued assets by $4.53 billion, around 49%.
Specific examples were far worse:
Maritime Savings Bank of West Allis, Wisconsin, had stated assets of $350.5 million and deposits of $248.1 million. The FDIC estimated its closing cost $83.6 million. Based on that estimate, the bank’s assets were really only worth $164.5 million, and had been overvalued by 113%.
ShoreBank of Chicago, Illinois, had stated assets of $2.16 billion and deposits of $1.54 billion. The FDIC estimated its closing cost about $370 million. Based on that estimate, the bank’s assets were really only worth about $1.17 billion, and had been overvalued by 84%.
Premier Bank of Jefferson City, Missouri, had stated assets of $1.18 billion and deposits of $1.03 billion. The FDIC estimated its closing cost $407 million. Based on that estimate, the bank’s assets were really only worth $623 million, and had been overvalued by 84%.
K Bank of Randallstown, Maryland, had stated assets of $538.3 million and deposits of $500.1 million. The FDIC estimated its closing cost $198.4 million. Based on that estimate, the bank’s assets were really only worth $301.7 million, and had been overvalued by 78%.
Finally, Horizon Bank of Bradenton, Florida, had stated assets of $187.8 million and deposits of $164.6 million. The FDIC estimated its closing cost $58.9 million. Based on that estimate, the bank’s assets were really only worth $105.7 million, and had been overvalued by 78%.
Pace of Bank Closings Artificially Slow
The FDIC’s closure of 38 banks over three months is by no means an insignificant number. However, in the context of the FDIC’s overhang of troubled banks, it suggests the pace of bank closings is being kept artificially low.
As of April 2010, there were about 425 banks operating under serious FDIC enforcement orders that called into question the banks’ solvency. Since then, upwards of 25 new banks have come under such orders each month.
Therefore, closing 13 banks a month has done nothing to reduce the backlog of troubled banks operating in the Country. That backlog could only have grown.
Most likely, the pace of bank closings had been held back artificially by the need to keep up appearances for the benefit of the mid-term elections. With those now behind us, I would expect the pace of bank closings to accelerate considerably.
Respectfully yours, 
CIGA Richard B.

An Amazing Week

First of all, I want to thank everyone on ZH who encouraged me to make my posts public and easier to find. This blog went live exactly one week ago at 3:00 EST and, at last check, we have had a total of 21,632 pageviews. I'm truly astounded at that number! Thank you all very much for participating and reading. For fun, if you continue to find the insights shared here to be helpful and interesting, please pass along our web address to anyone who might also enjoy visiting.

We all should feel pretty good about calling that bottom back on Tuesday. When $1330 gold and $25 silver held their inevitable retests, it was clear that the corrective selling/manipulation had peaked and that the bottoms were in. As I type, Dec10 gold is 1353 and Dec10 silver is 26.86. Very, very nice.

I wouldn't expect much price change tomorrow. The bias is clearly higher but there will be light selling heading into the weekend as weak-handed longs pull some bets, wary of being long until Monday. Lets look for a Friday close around today's highs in gold near 1360. Silver may see 27.50 tomorrow before pulling back to close somewhere between 27 and 27.50. All in all and considering how dark the landscape looked back on Tuesday, not too shabby.

Next week will be interesting as we get option expiry on Tuesday followed by the holiday on Thursday. Probably a quiet, give-and-take week. This will set us up for an explosive first week of December when $35,000,000,000 in new POMO comes into the market. That first week should take us back up and through the highs of early last week. The second week of December is when I expect the gold market to finally fulfill my $1500 by 12/10/10 prophecy.

Thanks again for making tfmetalsreport a smashing success. TF

Turd's Crystal Ball

I get asked often just how I'm able to so accurately price movements in gold and silver. It's not complicated. You can do it, too.

Once you admit to yourself that gold and silver are not free "markets" in the traditional sense, you're halfway to Junior Turd level. The Evil Empire, at the behest of The Treasury Department and Federal Reserve actively manipulates/suppresses price through the creation of unbacked, "paper" gold. In short, they raid the price by picking moments of bid weakness to simply overwhelm the bids with an avalanche of sell orders. This causes a period of rapid price drops. Tomorrow I will post a price chart from November 3rd that clearly shows their dirty, unfair work.

Now, once you know who's in charge, a quick study of the daily and intraday charts can give you ample warning of where and when the EE will attack. Their favorite time to attack is always going to 7:00-9:00 am eastern. Volume gets very quiet then as Asian and European traders are calling it a day but Americans haven't yet had their morning coffee. These early session raids are so utterly predictable that they almost become comical in the blatancy. Later, if you have a few minutes, review this:


Absolutely one of the best, well-researched and complete reports on the Evil Empire manipulation ever written. As a bonus, in the comments section, you get to read some of the nonsense one "johnny bravo" used post for laughs. What a tool that guy was.

OK, on to today. As predicted via Crystal Ball, gold traded to 1358 overnight. Between 7:00 and 9:00 EST, it took four stabs at that level before finally giving up. On cue, here came the EE and price was driven back from 1357 to 1348 in 41 minutes, beginning at 8:51 EST. It has since stabilized around 1350  Silver was similarly beaten back from the expected resistance level at 26.60. It rolled back down to 26.35 but it is already beginning to crawl its way back higher and that is the key.
Again, as mentioned yesterday, silver is now the driver. I expect silver to consolidate this morning but then drive higher, through 27 and on to 27.50-75, maybe as soon as tomorrow. This would bring gold along with it, maybe to 1365 or so.

That's it for now. I'll try to update again later, closer the Comex close.

Very Early Thursday

Very late evening/early Thursday update:  Dec10 gold 1353 & Dec10 silver 26.25

Be sure to read Harvey...http://harveyorgan.blogspot.com/

I simply cannot stress enough the significance of these events on the Comex. To scare $4 out of silver yet the OI only contracts a couple couple thousand contracts? Words cannot describe how unprecedented this is. I have referenced a buyer(s) of size for months. The BoS has seemed intent upon breaking the EE and their Death Star (the Comex). At times I must admit to fearing that I was reading too much into the price action...maybe I'm just chasing specters amongst the shadows. But with each passing day, as we head in to late November, it becomes more apparent that my vision is 20/20. The BoS seem determined to break the EE, if not in December then very, very soon.

Buckle up tight and hang on. We live in historic times. Much fun is immediately over the horizon.

Wednesday, November 17, 2010


I have to keep this brief as I am on a business trip this evening.

Silver just looks fantastic. The next key level is 26.50, which may initially see overnight. It will probably take a couple of thrusts to burst through there as you can expect lots of EE fortifications at that point.

To me, however, the only question is when we move through 26.50 and back on toward 27.50 and 28. Could be as early as Friday but, more likely, late next week.

Big brother gold is being more actively restrained because of its headline-grabbing ability. As I've mentioned countless times before, however, silver has been dragging gold along now for over 90 days. That trend will undoubtedly continue. As silver approaches 26.50, gold will approach 1350. As silver moves back toward 27.50-28, gold will see 1370-75.

Again, last night I began to strongly believe that the bottoms were in. All that were needed were successful tests of 25 and 1330. We got em and now the charts look very promising.

Keep the faith. Rest well. Feel good.

So Far, So Good

Overnight saw a successful test of yesterday's lows and we have now moved a solid $10 or so away from those lows. Now the fun starts.

Blythe and her Flying Monkey Brigade (http://www.youtube.com/watch?v=SESI19h4wDo) have set up shop squarely at 1345 and will do anything to repel advances at that level as a breakthrough there will send gold directly back to the 1355-60 level. If buyers then start returning en masse, she'll have to fall back to 1385 and begin to pray. Again, with all the turmoil in the world, she'll probably be successful in containing things through Thanksgiving week but after that...

Silver just looks terrific. A true, perfect double-bottom right at the ideal support level of $25. A move now through 25.80 to 26 and you'll get a quick jump to 26.40. Blythe will be waiting there with a fresh round of paper shorts so it will probably then relax back to the 26 level before getting rolling early next week. Let's look for 27 before Thanksgiving and a nice, rounded bowl-shaped bottom.

Lastly, read this:


Don't ask me to explain it but it looks interesting.

All is well. Have fun watching the game played out today.

Tuesday, November 16, 2010

One More For The Road

A final thought for this evening...

I took some time tonight to review the charts of several of my favorite commodities and I found that they all have something in common.
After reviewing gold, silver, wheat, soybeans and crude, I found them all to about 1-2% away from what would be looked-back-upon as very logical bottoms. I find this quite interesting from a correlation standpoint.
We've all observed the PMs getting smoked for the past week.  No doubt we've seen the entire commodity sector get smacked around pretty good. But would you have thought their charts looked so similar, not only on the upside the past six weeks but back down this past week, as well?
This draws me to a conclusion in which I am quite comfortable. What we have seen in the past week is a wholesale selloff of risk assets. Nothing more. The five commodities listed above are related only to the extent that they are dollar-denominated. For example, wheat has an entirely different set of fundos than gold but the wheat chart is almost identical in terms of percentage move.
As this relates to the PMs, it is further proof that we are simply seeing a price correction. Not a top. Not a new paradigm. Not a Wave 1 of Bear 1 of...blah, blah, blah Elliott nonsense.
Gold will probably test today's lows and may even see 1320 but I am supremely confident that that is as far down as it will go.
Silver will test 25 again but no way it goes much below 24.75 before rebounding sharply.
Crude's gonna find a ton of support between 80 and 82.
Wheat may see $6. If it does, holy cow! The chance of a lifetime to buy. Very tight global stocks and a long, cold winter guarantee it won't go any lower.
Beans between 1160-75 are a steal.
My point, again, is that all these commodities are within the same % of very substantial support.
The change in sentiment that has caused this correction is very near the point where it will flip back.
Keep the faith. Buy this final dip. Much fun lies ahead.

Silver Update

I thought you might be interested in a short-term silver update.

As forecast last week, silver stopped and reversed at 24.98 on the Dec10. Lots and lots of support at 25 so, barring global financial collapse, that should be it. Because price has fallen about 15% in 5 days, we'll most likely get a re-test of the 25 level before further consolidation with an upward bias.

A break of 25.30 means your re-test has begun.
A move up through 25.60 signals 25.85 and, through there 26.40.

As mentioned this morning, the most likely scenario for Wed-Fri is a quick re-test of 25 then the upwardly-biased consolidation leading to a Friday close near unch for the week, around 26 to 26.50.

Some of my favorite silver miners have really been dialed back, too, and look pretty interesting here. SVM @ 10.5 and EXK @ 5.5 both look quite compelling.

Lastly, don't forget your daily Harvey.
The open interest in the front-month Dec10 contract is still extraordinarily high. It's quite interesting that with a 15% correction, so little OI has been closed or rolled. Keep a very close eye on this.

Was It Really Just A Week Ago?

Last Tuesday at this time, gold was trading at 1424. Now it is testing its first level of significant support at 1340. Almost a 6% correction in a week. Ouch! And at a time when many were "all in" based upon QE2 and this week's POMO schedule. So what happened?

1) The increasingly desperate EE pulled out one of their remaining arrows in the form of increased margin requirements. Not significant monetarily but significant symbolically in freaking out inexperienced, weak-handed longs who were caught by surprise. "What? They can changes the rules mid-game?" Yes, they can. And they'll do it again and again in their pathetic, criminal attempts to retain power.

2) Does anyone else find it just a little to coincidental that, after six months of peace and quiet, the entire EU debt fiasco once again rears its ugly head just as the Euro reached 1.42 and the dollar was collapsing? I mean, seriously, the timing is blatantly obvious. If you don't believe in the global manipulation of the 24-hour news cycle, you should. This is prime example #1. The currencies, in their relative movements, were getting out of whack. Hmmm, how to weaken the Euro and thus strengthen the $? I know, lets bid up PIIG cds and get that ball rolling again. In one week, the euro has moved from 1.3950 to 1.3550 and the USDX has gone from 76.90 to 79. So far, you have to say, its worked pretty well don't you think?

3) Ass-covering academics and politicians, has-been and current, are filing out of the woodwork to cry foul at QE2 but we all know that HellyBenny has no options. If he changes his mind or reins in some QE, the bond market will collapse, taking with it stocks and the entire economy. Rates skyrocket and tax revenues plummet. The entire US ponzi collapses nearly overnight. THIS WILL NOT BE ALLOWED TO HAPPEN. Ignore this nonsense for what is is...media spin and perception management.

4) Please re-read this:


and this:


None of the fundamentals have changed. All that is changed is sentiment and sentiment changes very quickly. The last week being your most recent example.

Keep the faith. Gold and silver are simply testing the support levels I outlined last week. The 1330-40 range in gold should be significant support. Last is 1337. Silver will be very well bid around 25. Last is 25.19.

Obviously, anything can happen going forward but my guess is that, by next Tuesday, all will once again be well, the PIIG situation will have cooled down, the $ will be rolling over and the PMs will have consolidated in price and will be ready for the next big move up, beginning after Thanksgiving.

Monday, November 15, 2010

Top-Callers Out In Force

After being bombarded all weekend with articles and notices from so-called experts and market-timers regarding the death knell of the 10-year old, secular bull market in gold, I thought I might attempt to provide some fortitude for you, my dear reader.


Three years ago this week, gold closed at $890/ounce. After trading to almost $1100 by March of 2008, gold was back down to $770 by November 2008. At this time last year, gold was trading around $1125.
Look at this chart:


Lots and lots of price corrections but never an end to the bull market. The action of last week is not the end, either. Have the fundos changed? Is the US suddenly solvent? Are states like CA, NY and IL suddenly solvent? Are all the various state and local pension funds suddenly solvent? Are buyers lined up out the door to participate in all future Treasury auctions and refundings, thereby eliminating the need for QE2 and QE3 and QE4?

Why is it that gold is the only bull market where every 2-4% correction brings out the top-callers? How many times did AAPL correct 2-4% in its run from $10 to $300? How many times did the Dow correct 2-4% in its run from 800 to 14,000?

Be at peace. Do not sell your gold, your silver or your mining shares. Do not trade front-month futures or options. This latest correction in price will only serve to contain gold and silver in a range, probably through Thanksgiving. As mentioned on Friday, let's look for maybe 1345 on the downside and 1390 on the upside until the next big move commences.

Saturday, November 13, 2010

A Change of Pace

Though I promise to devote this blog primarily to the discussion of gold & silver, on weekends I may post items that I have found interesting during the previous week. This is one such post. My rationale is that since many of us are diehard ZHers, we most likely share many of the same world views. Therefore, if I find something interesting, then you, my dear reader, may find it interesting, as well.

Below is a work of the great poet, Rudyard Kipling. It was written in 1919 at the end of the "war to end all wars". As with all great poetry, its meaning is subject to personal interpretation. To me, it describes the basic truth that, no matter how diligently man attempts to evolve and "progress", ultimately our human frailties and the laws of nature will blunt our growth. At least that what it means to me. I look forward to hearing what it means to you.


Friday, November 12, 2010

All That Glitters

Like silver, you can expect gold to see some follow-through selling overnight Sunday into Monday or Tuesday. You may see gold trade down to 1345-50 but that ought to be it.

What will be most interesting is to see how it reacts as it rebounds back toward 1390 (where it was just a few hours ago, I might add). You can be certain that Blythe will be waiting with nearly unlimited paper gold to sell at 1385. She and her flying monkey brigade will do everything in their power to paint a head-and-shoulders top on the chart in an attempt to constrain price for a while longer. See below:
My best guess is that she will be successful, at least in the very short term. Like silver, gold will rebound with the help of $33,000,000,000 in POMO next week. With Blythe sitting squarely upon it, gold will most likely be range bound between 1345-85 until after Thanksgiving. We'll then finally blow back through 1400 by 12/1 as that first week of December sees another $35,000,000,000 in POMO.

Regarding Silver

First of all, read this:


And this:


If you haven't already, read this, too:


Lastly, take a look at the chart below. Once silver broke 26.50 today, it almost made 25.50 a certainty but that's as low as its going to go. In fact, with the amount of GTC buy orders waiting for it at 25 or so, you can bet your arse it'll never get there. If you want to aggressively trade (and in this market, I don't recommend that you do), look for a bottom overnight Sunday or Monday near 25.50 leaving those waiting for 25 grasping at straws. Once silver then turns on Tuesday, those unfulfilled masses at 25 will panic back in above 26 and 26.50, driving the price even higher. Silver then closes next Friday at the top end of this current consolidation, near 27.75 or so. I'd expect continued consolidation through Turkey Week before we blast to new highs in early December.

Blythe, you naughty girl...

The chart below pretty much says it all. The Evil Empire has tried to capitalize on fear this morning. Fear of the PIIGS and fear of margin requirement increases. Don't let them win.

Days like this are just a reminder of why you never trade PMs on margin and you never own front-month contracts, in either the futures or options. I admit that I broke this rule earlier this week and I am the proud owner of some Dec10 $29 silver calls that are considerably less expensive now than they were on Tuesday when I bought them. Bad Turd.
Again, have any of the fundos changed? Sell PMs because of the PIIGs? Hmmm, let's dissect that:
1) PIIG collapse only means more printing of Euros and European economic weakness.
2) PIIG collapse and European economic weakness means more US economic weakness and more printing of dollars.
3) In the end, PIIG collapse only further ensures QE to infinity in both dollars and euros.
And how is QE to infinity a long-term negative for the PMs?

Again, if you're going to follow/trade PMs and miners, you'd better get used to days like today. They have always happened and they will continue to happen. In fact, days like today are only going to get more frequent and more volatile as the Comex gets closer to collapse...of that you can be assured.
Hang in there. I'll update again later once everything has settled out in NY, sometime after 1:30 EST.

Watching the USDX

Metals look to be once again testing 1385 and 26.50. Key to support, besides the buying of the buyer(s) of size, would be the USDX, which is rolling over.
The Dec10USDX is last at 77.96. A break of 77.60 would probably send us back to 77 and, from there, 76. Obviously, $ weakness will help the PMs and the stock "market".


Lots of freaked out traders overnight as nearly everything was sold off on fears of a meltdown in Ireland. I guess we now know why the Fed front-loaded so much POMO for next week. OK, great. Now for some perspective.

Can we all agree that the Greek "crisis" peaked on May 6 when "students" were storming the Greek Parliament and the "market" experienced its first flash crash? If so, chew on this for a moment...gold closed that day at $1201.90 and, one short week later, traded as high as 1248. Silver closed May 6 at 17.58. And no POMO back then, either. Well, at least not obvious, above-board POMO, that is.

My point is that this, too, shall pass. Overnight the Dec10 gold again tested support around 1380 and, again, it held. As of 9:20 EST its rebounded all the way to 1392.50. Silver did the same as it bounced right off of 26.50 once again and has a last of 27.18. As we go along today, all of the overnight fireworks will be nothing but a distant memory provided the Dec10 closes above 1372 and the Dec10 silver closes above 25.90 (recent lows). With $6-8B in POMO hitting the PDs later this morning, I would be absolutely stunned if we happened to fall below those levels. With a little POMO love, we may even put in a "upside reversal day". An upside reversal day would occur if we can close today above yesterday's high of 1417. It would take a lot of work but it's worth pulling for if only because of the damage it would do to the weekend plans of Blythe and her minions.

Lastly, ignore the doomsayers and top-callers. CNBS will be wall-to-wall with those douchebags all day. They'll never mention that events in Europe only increase the need for global QE, which will further serve to devalue all fiat money, which will certainly drive the PMs to new highs soon. Oh, and be sure to check Harvey Organ from last night. Nothing in Europe changes that impending delivery crisis on the silver Comex, either. Buy. Buy all dips.

Thursday, November 11, 2010

Thank You and Good Night

To all from ZH and anyone else who might have found this site today, please accept my sincere gratitude. This site has been "live" for about 5 hours and we've already received over 2500 page views. I don't know, maybe that's not very many but it sure seems like a lot.
My promise to you is this: I won't waste your time and I'll always do my best to provide accurate and timely information. These are truly amazing, and desperate, times. I named this blog "Along The Watchtower" for a reason. I believe that we (you and I) are modern-day "watchmen".  The Lord has blessed us with the ability to see the threats that are looming just over the horizon. Sadly, there is little we can do to stop the Fed and our politicians from ruining our country. We can, however, prepare ourselves, our families, our friends and anyone else that will listen, for what clearly lies ahead. Hopefully, this blog will help with the process.
Finally, with this being Veteran's Day, please don't go to sleep tonight without saying a prayer of gratitude for all the brave men and women that have served and died for our country. Our debt to them is incalculable. Thanks! TF

A Miner To Watch

I've had several inquiries about specific miners I like. Below is a chart for Novagold Resources.
In the "Blind Squirrel Finding A Nut" category, I was fortunate enough to buy some of this baby about a month ago at 9.16. The chart compares the price of NG vs the "gold bugs index" or HUI. Pretty interesting, huh?
I have no idea why its moving up so fast. I just own it. If I had to guess...well, let's just say "Blue Horseshoe appears to love NG" and leave it at that.

A Quick Note On Silver

Even with the EE manipulations of late Tuesday, I was confident that the Dec10 silver would hold $26.50. It did and on the chart below you can clearly see why.
What's next? With $8B in POMO tomorrow, I'd expect silver to trade through the $28.20 level and finish up a very strong week. Next week brings $31B more in POMO. You can bet your betooty that the Dec10 will make new contract highs, well into the 30s.

Our "Buyer(s) of Size"

Review, for a moment, the chart below. This is an 18-hour chart for the Dec10 gold. Actually, the timeframe doesn't matter, I just wanted to take the chart back to the lows of last July.
Note that the 20% advance from the lows has occurred in steps. Technically, this is known as a "Swiss Stair" accumulation. Don't ask me why they call it that. The name is the name. At any rate, this type of chart pattern is your most certain sign that the buyer(s) of size I so often mention is truly at work in the gold market. The buyer(s) accumulate, then market reaches equilibrium and adjusts to the new price range. The buyer(s) then accumulate some more and so on. I expect this trend to continue, perhaps until the Comex is finally broken and The Evil Empire has been defeated.

A test. This is only a test.

TF Metals Report
Day 1, edition 1

Hmmm. I like this idea. At the urging of many on ZeroHedge, as well as Mrs. Ferguson, I have decided to create "Along The Watchtower", the official blog of Turd Ferguson. It will always be my goal to inform and educate by providing daily and intraday updates on the precious metals markets, particularly gold and silver.
Check back soon for our first post.