Wednesday, December 8, 2010

Buck This!

I've gotten a lot of questions regarding the timing of yesterday's EE raid on gold and silver. "Why yesterday" and "how did it start". I believe your answer, and your clue to what happens next, are in these charts.

The first is a 120-minute USDX chart. Note that from the peak last week at 81.52, the USDX decline had been orderly. When the index snapped up through that channel at 10:00 EST yesterday, Blythe picked up the ball and ran with it. It started with a quick, EE-inspired, $6 takedown from 1428 to 1422. From there, the algos took over and every USDX uptick was met with commodity downticks. Recall that not just gold and silver were retreating. For example, crude declined from 90+ to 87. As you know, the real criminal damage was done on the Globex at about 3:30 but there's no need to plow that ground again and get all worked up.
What does this chart tell us about the near-term future. Well, you can see why the PMs found a bottom a few hours ago as the USDX backed off from resistance. If this is it, and we now roll over, back through 80 and down toward 79.40, the PMs will rally back more. If we can generate enough downside momentum, 79.10 will give way and we'll be right back in the down channel we broke out of yesterday with a test of 78 in sight. If that happens, you can bet your booty that gold will be back up near 1425 and silver over 30.

For a longer term perspective, here is your daily USDX chart. I think it's self-explanatory.
As I type its so far, so good:
DecUSDX 80.08           0.34 off its highs
Feb11 gold $1384.30    12.20 off its lows
March11 silver $28.46    0.45 off its lows
Jan11 crude $88.45         1.12 off its lows
March11 wheat $7.84     0.18 off its lows
Jan11 beans $12.96        0.30 off its lows

So, at least in the very short term, watch that USDX. A breach of 80 and then 79.90 would be great as it would mean we're headed to at least 79 and the PM selloff is already over.

Have a great afternoon and evening. I'll try to do my usual evening posting later today. TF


  1. Good!! This is a nice area to enter...ANV was nice buy today.....SSRI HL barely sad.

  2. Don,t worry I am sure the next leg down in Europe will start anytime soon,Spain,Portugal,Belgium, in fact anywhere.Just buy the f****n dips and you won,t go far wrong.

  3. Thanks Turd!
    You rock.
    Don't let the less testicularly fortified at ZH and elsewhere drive ya nuts. I strongly suspect they don't understand their own motives for owning PM.

    Nervous Nellys with no independent risk assessment capability should not take advice in anon online forums about anything, especially money...
    Not even when it is as good as yours ;).

    I like your opinions and your homework is always A+ and easy to understand and verify.

    Keep it up! and Thanks!

  4. Now that is a real good summary. I'm not suprised your blog meets so many visitors.
    You clearly have skills in your domain, and, you are able to bring the information very naturally and informative.
    You're like Carl Sagan on PM trading ;) and that is a compliment!

  5. Looks like we have good support for tomorrow, hopefully the globex brings it up a bit. See ya tomorrow!

  6. I thought the blog readers here might enjoy this spreadsheet I made:

  7. Thanks, Thomas.
    There are "billions and billions" of PM "experts" out there. I'm trying my best to be different.

  8. HACKER ATTACKS. It appears the Wikileaks/Assange haters have really pissed off the hackerati. was down; it was back up; it redirected to, which is now down; apparently mastercard is having issues

    Really would be interesting to see what happens to the "bank" about which Wikileaks has intended to release information - when and if the time comes.

    Maybe they'll credit all our accounts with a billion digi-dollars?

    Finally, if you ask me, the whole damned internet is moving slow.

  9. None of the fundamentals driving PMs up have changed in the past couple days. The entire Western World is mired in debt which cannot be repaid. Our choices are default or devalue. Either way, PMs win. Long term, PMs are the only meaning play these days. Plus, silver is shiny.

  10. Well the internets moving SSSSSSSSSLLLLLLLLLLLOOOOOOOOOOOOOOOWWWWWWWWW and Visa,s bitten the dust,who,s next.Good job they can,t touch physical.Just buy the f****n dips,man.

  11. @sassballsgrandpa After charting your data, it would seem that from year 2000 - 2009, supply has met demand. Can you get the numbers for 2010?

  12. Thanks Turd for the update. I'm comfortable with the ever growing news of more trouble coming for the Euro and the dollar. Silver is the Lexapro.

  13. Thanks Turd:
    I was at first pretty bummed losing about 3.5% in my mining stocks yesterday and another 2% today thanks to the EE and all the panic selling that took place... but then I have to remind myself why I am in PM's... and so I have to take a step back and remember how I consider myself lucky/blessed enough to be like you fine folks and have a good grasp on the macro and fundumentals of PM's. There are so many investors who have no clue what is happening and what is about to happen on a macro scale. So even though it is one crazy ride at times, I just remind myself that we will be seeing triple digit silver eventually and we will all look back and be grateful that we discovered or were led to PM's and commodities as a hedge against coming hyper-inflation.
    In the meantime, your reads on everything has proven immensely helpful Turd. Rich

  14. Turd, again a big thank you for being so generous with your time and wisdom.

    Let's not hold out hope that the CFTC will impose position limits anytime soon, as Gensler is saying he doesn't have enough staff:

  15. Ben - supply always meets demand in these tables. The difference is computed into the implied investment demand. 2010 numbers not available yet, because - well, it's still 2010! But I CAN tell you that the silver ETFs are way up in holdings, so there is a LOT of investment demand, and that coin production is setting records. The COMEX inventories were over 200MM ounces a couple of years ago and now down to 107MM, of which only 48MM is "dealer" the rest begin customers safeguarding their bars there.