Tuesday, December 28, 2010

Take Some Profits?

11:15 EST UPDATE:
I normally would craft a completely new post but I feel strongly about the info below from earlier so I want to leave it up all night for our Far East readers.
Not much happening this evening. The metals are steady...like everything else...about what you'd expect for a no-news, 12/28 evening.
I did want to post a USDX chart, however. With gold and silver having such huge moves today, one would have expected that the dollar had sold off. In fact, quite the opposite happened. Frankly, this chart makes me even more confident that the EE will emerge tomorrow morning with some fresh paper shorts.
Have a great evening. More in the morning. Turd out.
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What a great day! Silver has closed above $30 for the first time since the 1980 peak. We should all be excited as the next UP leg has clearly begun, as predicted last week.
http://tfmetalsreport.blogspot.com/2010/12/interesting-weekly-charts.html

Now, let's see if we've learned anything over these past few weeks together.
Do you remember this? It is essential that you take a moment to re-read this post:
http://tfmetalsreport.blogspot.com/2010/12/wicked-witch-of-new-york.html

Here is a reprint of the gold chart from that post:
Here is the same chart, updated and current:


With that in mind, here's what we know right now:
1) Silver exploded to the upside, in line with the expectations from last week, on a nice short-covering rally. This next UP leg should carry us to the $32.50-33.00 area over the next couple of weeks.
2) Silver has made a new closing high but not a new intra-day high, That number is 30.75.
3) The Evil Empire does not like to raid the PMs on Tuesdays as the COT survey is always basis the Tuesday close.
4) The EE, in their recent, aggressive efforts to cap price for 6 straight days, obviously had no interest in adding to their already substantial short positions today. They may even have covered some.
5) The EE will, most likely, raid tomorrow and try to drive price back down under $30.

So what do we do next? Personally, The Turd will try to lighten some positions here, either later today or at the open tomorrow. If the recent pattern holds (and why wouldn't it?), silver will probably continue to rally up near the old intra-day high overnight and early tomorrow. The EE will then commence their raids and price will probably fall back to the $29.50 area. Remember this?
http://tfmetalsreport.blogspot.com/2010/12/hi-yo-silver.html
It sure looks like the BoS are putting up support lines at $1.50 increments and the next level is $29.50.

Now, of course, I could be wrong, so I would caution you against completely blowing out any position. There is nothing worse than being out and watching the market continue higher. If you are holding physical long-term, just sit back and watch to see if this plays out. If, however, you want to try to trade this thing like me, study all this information carefully. Consider selling a little when silver gets above 30.50 and look to buy back when it dips toward 29.50.

Lastly, please read this from Trader Dan. Very important info:
http://jsmineset.com/2010/12/28/trader-dan-comments-on-soaring-commodity-prices-and-plunging-bond-prices/

That's it for now. Please don't forget to visit our "sponsors" on our way out.
More later. TF

25 comments:

  1. I am commenting about the very same information. Your blog is a great tool. I suggest that people hedge themselves with silver junior miners, as they will outpace the price of silver (as they have a lot of room to grow to get back to pre-08 crash levels) on some of them....

    Big returns in this sector...
    I am writing about that and the Ron Paul Revolution on my blog.

    http://thehardrightedge.com

    -

    Keep up the good work Mr. Ferguson
    -
    Scott J

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  2. Scottj88, if one is net long silver in some form, which I suggest 99%, if not 100%, of the folks reading this board are, how in the hell is buying junior silver miners "hedging"? JD

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  3. It is a form of investing in silver that will outpace in %tile terms (1000%'s of percent of return possible... somebody has to produce the physical!).

    Better to be here than in the financial markets.
    -
    People still have money in stocks, might as well go in the hot sectors...
    REE markets as well. Everything is blowing up!

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  4. Turd,

    What do you think about the delivery day in Comex Futures?
    -
    Do you see a physical squeeze playing a role in silver price? I see silver catching up fast very soon with the new year coming...

    Chinia and Russia are buying physical and selling off the dollar...

    The bells are ringing... a comex settlement news day will surely bring attention to the market. Will they be able to raid in that type of situation?

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  5. Scott or Turd,

    What is your opinion of SIL, as a silver miners ETF? For that matter, what about GDX and GDXJ?
    Besdies physical gold and silver, I only own TRE and need to diversify a little.
    Thank in advance.
    P.S. If you like individual silver miner plays as well, please add those.

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  6. Hey Pat,

    Turd posted his picks for ETF and miners at the end of November, along with explanation of why he is into each one. Here is a link:

    http://tfmetalsreport.blogspot.com/2010_11_01_archive.html

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  7. I think it will not be long until we are at $36. It should only be a matter of weeks for that move. There is so much pressure on demand/supply, and we all know that it is manipulated. What would silver's price be if it was not manipulated? $100. $200. $300. $400. $500........

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  8. Did Silver close at a 30 year high today? It looks like kitco says the london pm close high was 30.50 on 12/7/2010.

    http://www.kitco.com/LFgif//agdec10.gif

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  9. Observation: DXY up. PM up. Oil up.

    That's unusual.

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  10. I took all my holiday gift money and bought silver yesterday. Screw the Banksters. I made almost $80.00 today on that purchase alone.

    I was hoping that somebody would raid silver and drive it down but I couldn't wait, now I'm glad I did.

    Thanks Turd for a great site and great advice, I am recommending you to everybody I like.

    ReplyDelete
  11. The problem with ETF's like GDX and GDXJ is you are not exposed to the volatility and returns that I feel you can get with a little diligent research. In my individual stock picks, I am personally up 200% in a few and up 30% in others, while down some in others.

    I believe that taking this risk on during this time period is not as risky as normal market conditions. The fact that some companies (GGCRF.PK) come to picture showing 400% growth from current levels to previous 2008 levels shows what I see as an arbitrage play...

    what kind of ETF is undervalued 400% due to junior stocks lagging majors?

    Price of gold and price of silver... what drives this? Currently it is paper price... I believe it will be physical price in the not too distant future...

    Who has to produce this physical silver and gold? (silver is more useful...) Of course the miners! The market should value all mines to their resources as time goes on, which is why I am touting about junior silver miners....

    A price of silver ~~$300oz can only make me wonder what conditions our world will be in at that time period... and what it means for my little juniors that are "penny" stocks for the time being.

    It comes down to trusting your theory on what is going to happen... this is where I want to be though, not an ETF.
    -
    Speculative plays in ideal conditions = massive returns (to then convert to something the cheap asset at that time).
    -
    Much more personal analysis must be done, but I advise you to read forums!

    A link on my page shows a forum post that I feel holds million dollar information.
    -
    http://thehardrightedge.com
    -
    Keep up the good work Turd,

    As ETFs will go up too :), I just think I will outpace them.
    -

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  12. Roger: I base everyhing off of the Comex close in New York.

    ReplyDelete
  13. Nice call Turd,

    I bought March call option on SLV yesterday and closed it today at handsome profit. The reason that drove me to buy option yesterday was after I read the famous champion trader Marty Schwarz's quote at 'market wizard': if market allows me get out of worrying position too easily then I better off holding it or increase the bet. I figured that yesterday was one those days as I was able to close one of my losing position with small profit at the end of the day (after lots of worries due to China rate hike on Sunday). So I increased my long positions by loading up 'SLW', SLV option etc before yesterday closing. Just my humble gut feeling...

    I've been trading only stocks so far, and I'd like to play small fraction of my capital in more leveraged account, namely futures market. Could anyone kindly recommend me a good broker for futures trading? Cheers.


    I decide to use small fraction of my capital to play in futures market. I have been using interactive broker

    ReplyDelete
  14. Free, check this out:
    http://tfmetalsreport.blogspot.com/2010/12/opening-options-account.html

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  15. Scott: The next delivery month in gold is Feb11 and silver is March11.

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  16. For anyone interested in the macro picture, a must-read from Alasdair Macleod:

    http://www.financeandeconomics.org/Articles%20archive/2010.12.28%20Treasuries.htm

    He thinks the tide has turned in US Treasuries, and Yuan appreciation is only a matter of time.

    "So when the dollar plummets in the coming months, in commodity terms at least, the inflationary pressures will rack up, exposing the folly of Bernanke’s theoretical economics of zero interest rates, QE1 and QE2. The end of the Treasury bubble signals the end of one interest rate era and the beginning of the next. The highly indebted and those relying on further dollar borrowing will be unfortunately crushed. The tide has indeed turned."

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  17. This comment has been removed by the author.

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  18. From numismaster, arguing for $50 silver in 2011:

    http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=16521

    But contained in the article is the following quote: "The above list is not exhaustive of all the reasons why I expect silver prices to soar in 2011, possibly within the next two months. However, I think you better understand the reason for the strong investment demand for silver (and also gold). It stems from an expectation of a huge drop in the value of the U.S. dollar and an almost total collapse in the trading of “paper” silver (and gold)."

    Is this to mean that futures contracts will collapse when the LBMA implodes?

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  19. Some interesting points on China, gold, and the Yuan from the latest Faros Trading blog on King World News:

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/28_2011__China_and_Other_Asian_Central_Banks_Light_The_Way.html

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  20. Turd, thanks, I will contact them shortly.

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  21. "Observation: DXY up. PM up. Oil up.

    That's unusual."

    Not too unusual to see $ and PMs move up together. They're competing currencies but they can both gain at the expense of the euro or other fiat. I know of a few gold bulls who have long expected that $ and gold will be the last two things standing. Then there will be one.

    I'm more surprised to see PMs and commodes up with bonds down. Could be that I haven't observed the relationship as much as I should but my impression is that people turn to investing in "stuff" because bonds won't pay them a decent real rate of interest - so when yields actually rise I'd expect commodes to get whacked.

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  22. Gold and silver lease rates hit 6 month highs.

    http://www.kitco.com/charts/s_leaserates.html

    http://www.kitco.com/charts/g_leaserates.html

    Significant?

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  23. Hi Turd,

    Can I ask when did you post the specification in the last sentence of this entry?
    "Consider selling a little when silver gets above 30.50 and look to buy back when it dips toward 29.50." I like and collect your posts, and did not see this originally.
    Thanks for the clarification.

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