Friday, November 12, 2010

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.


  1. Awesome work Turd. I hope you get a chance to recharge your battery for next week!

  2. Great analysis on silver.

    So what the heck happened to POMO? Big POO POO today?

  3. Turd - you can use the "link"-Icon (above the textbox where you enter text) to provide a link. That way your readers just need to click the link instead of copy & paste

  4. Yea, I screwed that up somehow. I hope to get it right next time.

  5. Obviously POMO money went into shorting commodities instead of buying AAPL. A possibly even crazier development is the fact the 5 year is off over a 1/2 point which is about where the FED was buying, and really the whole treasury market sold off with the exception of the long bond...

  6. Furthermore with "Snagit" (a 49 Bucks software) you can create snapshots (hardcopies) from images/windows/charts where you can add comments etc - that way no need to print out and comment and scan etc - these are examples from my site: created with netdania charts + snagit ... that way in the end you have less work!

  7. Kyle: Or maybe POMO is all that prevented a 300+ point down day.

  8. Yep. 300 would have been a disaster for the EE. Money didn't go into bonds/govies for safety though. VERY WEIRD if you look at the flood there after Greece and not the same reaction with Ireland. The whole curve sold off, and the 10 yr was off over 1 pt. Quietly, it may have been a black swan that not many people noticed. If China is reading the writing on the wall, this could be the start of everything come Monday.

  9. We all wondered why so much POMO was loaded into the first week. I guess we've got our answer.

  10. Turd,

    Re: Paper/electronic silver v phsyical, fascinating battle.

    I am now watching it with the absolute comfort of physical only, having traded last year and early this year on a retail trading platform that offered up to 200:1 leverage. You know how that went...

    At an expensive function put on by the platform the local head of "customer relations" offered that they very rarely cover the retail positions...and this was a gathering of their biggest clients, brokers plus whales (plus one, I snuck in on a friend's ticket)...thus confirming they trade against their customers. GS owns 10%.

    When I see attacks like yesterday it reminds me, the banks can all see where the stops are bunched. But I was smart, I always traded without stops...I consider I got off lightly.

    Congratulations on your blog, more power to you Turd.

  11. Great stuff! Loved this move down and took the chance to buy more, wish I could have waited and picked up another 1% of the move down.

    I have to agree with Turk isn't a big move down crazy if the big players are willing to push them on physical delivery? I can understand fighting a price action war but it seems like it would be to try to contain the price or stall it's gain while POMO rockets around not create buying opportunity for the Big Buyers.

  12. Harvey's update tomorrow ought to be interesting. He usually updates by late morning on Saturday. I'll try to link to it but just in case, try this:

  13. James Turk ...

    With gold and silver in retreat, King World News interviewed James Turk out of Spain. When asked about silver specifically James said, “They are not dislodging physical silver by running the paper market down. In fact the silver market is getting tighter and tighter. That’s why I am perplexed at why they are trying to run this paper market lower. If they want to get physical silver they are going to have to take the price higher, not lower.”

    November 12, 2010

    Turk continues:

    “I’ve not seen this kind of tightness in the silver market before and you know that I have been talking about how tight the physical market has been these past few months.”

    James, is this sort of like the kamikazes flying into aircraft carriers at the end of the war?

    “That’s it exactly. There is no other logical answer. What we’re seeing now is exactly what your source out of London said would happen and where the source said the Asians would be aggressively buying. It’s actually sort of good to have the script ahead of time from your London source.

    Maybe what we are seeing here is the silver shorts trying to make a few bucks in the paper market by dislodging the weak longs. Liquidity is at its lowest point of the week late on Friday.

    From all indications there is going to be a major boomerang effect, and everybody who has been scrambling in the physical market is going to become even more aggressive trying to find and then buy physical metal at these low prices.

    So the shorts who are selling here are playing with fire because if they are called on to deliver, they are going to have a herculean task trying to find physical metal.

    Regarding gold, the important thing to remember is that we are still in an uptrend. The 21 day moving average has not been broken and gold is resting back at key support in the $1,360’s. The same thing applies for silver, the 21 day moving average is at $25 so it is still above strong support.”

    Well there you have it, James Turk has tremendous connections in the physical market and it is extremely tight.

  14. From KWN.
    “They (the banks) wanted to target $25.50. If they are able to do that it will have to be achieved on a sharp, fast move down. The longer you hold the price down, the more physical you are going to give up and the lines will cross against you.
    The only way to get the lines to cross in your favor is a sharp move down where you quickly cover into stops from weak-handed longs. They will lose too much physical metal if they try to hold it down at those levels for an extended period of time.

    Blythe managed to get the price that low briefly in sydney.
    What are the implications of this?

  15. And once again Turk:

    The Outlook for Silver Remains Very Bullish—James Turk

    November 14, 2010 – Silver’s short-term uptrend remains intact, notwithstanding silver’s big price drop on Friday. The fundamental factors driving silver higher have not changed. The outlook for silver remains very bullish.

    There has been no damage to silver’s technical condition. For example, silver is above its 21-day moving average. Also, silver remains well above $25, its last major resistance level. More importantly, the price drop at the end of the week occurred with bullish sentiment taking a nosedive. These conditions bode well for silver’s short-term outlook, as does the following chart.

    The above chart will be familiar because it is the one I used on King World News on October 28 to forecast a $30 silver price in less than 18 trading days. Silver closed that day at $23.871. On November 9, only 8 trading days later, it reached $29.342 – nearly hitting my target. The good news is that my reading of the above chart indicates that silver might yet reach $30 within my 18-day target, i.e, November 23.

    Note the new pattern silver has formed. It is a pennant, and these have the same features as the flag pattern upon which I based my $30 forecast. Both are continuation patterns within uptrends. They allow for a short-term consolidation, mainly to work-off some bullish sentiment, which accurately describes what happened in silver as this pennant formed over the past few days. A pennant pattern typically ends with an upside breakout.

    My expectation therefore, is that silver will break out of this pennant to the upside, and probably early this week. The demand for physical silver remains very strong, and it is the demand for physical silver, and not paper-silver, that ultimately determines the silver price.

    Most trading in physical silver takes place in London and Zurich. The weakness on Friday occurred after both of these centers had closed. That means that prices were driven down in the paper market. We have seen these late Friday raids to ‘paint the tape’ many times over the past decade, so this latest one should not be a surprise. But what is indeed a surprise to me is that the silver shorts would try this gambit now when the physical market is so tight. Lower prices will only heighten the demand for physical metal. Thus, I expect the silver price to rebound sharply this week.