Tuesday, January 11, 2011

Algos in Charge

"Tea with Blythe" was working beautifully overnight as silver continued its trend higher. Then, at around 8:30 EST, news hit that UBS had issued a $35 price target on silver due to "increased physical interest in the metal". This shot silver through resistance at 29.40 and 29.60, all the way up to 29.71. We have since settled back to 29.40 as the USDX has spiked once again and algo-related selling has ripped back the gains from the UBS report. Did the fundos of the UBS report change? Of course not! The blasted computers don't care, however. All they '"see" is buy dollar/sell PMs. The "teacup" is still intact, however, with a target of $30.20 so let's just see what happens. Maybe the USX will roll over again and head back down through 81.
One more thing, there was some talk in the comments section of the "silver bears" video post. Speculation on the true nature of the Buyer(s) of Size. Again, I have never contended that the BoS is the Chicoms. I have always felt that, if the BoS does truly exist, they are a loose consortium of big money, Middle Eastern and Far Eastern interests. Unbeknownst to me, apparently Trader Dan suspects the same. Read this from JSM this morning:

Filed under: Trader Dan Norcini
Dear Friends,
Throughout the entirety of the now decade-long bull market in gold, it has been the physical market where the real deal is bought and sold, that has been the arena in which the true level of “value” has been found and not the phony paper market in New York known as the Comex.
Time after time we have seen the speculative trading funds get loaded on the long side of the gold market taking it up another leg higher but then their buying has met up with selling resistance which they have been unable to breach. The result has been a temporary stalling in price which has then moved lower as these same funds liquidated longs and began reducing their long side exposure.
The big buyers from the East have awaited these bouts of speculative selling as an opportunity to secure the metal at a lower price which has then served to put in a floor of chart support allowing a period of base building to commence which has then preceded the next leg higher.
With that in mind, please see the following story that came down the wire feed last evening from Dow Jones concerning the demand for gold hitting the Perth Mint of Australia. It is this kind of demand which is going to make life extremely difficult for the gold bears should it continue.
As said previously, the pause in the gold market does not look like that associated with a trend change but rather a lull in speculative buying as some indecision and uncertainty enters the psyche of traders. That lack of buying has allowed prices to drift lower which is being met with very strong demand as reported by both this story and JBGJ. If bears begin to get stymied in their efforts to take price below $1365 and hold it there for an attempt at $1340, they are going to be forced to cover.
Once again it appears the battle for middle Earth has been joined.
Very interesting stuff. More later.

12:50 UPDATE:
Watching the close very closely.
In March silver, a close above $29.60 would be wonderful. Above $29.80 fantastic. Above $29.90 unbelievably, fantastically wonderful.
In Feb gold, if we can get a close above $1385, we should all get very excited about a run back to/above $1405.
Lasts: $1382.50 and $29.62


  1. UBS and PerthMint story,positive,also yesterday Harvey talked about stellar day today..lets see..we are near overhead resistance.

  2. Here's a link. Scroll down a bit for the Perth Mint story.

  3. From the gold expert himself,

    "Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage and political will to recognize the mess and act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched and where the rot is by far the deepest".

    Harry Schultz, in his last newsletter to his subscribers before he retired last week

  4. Here's a link on Harry Schultz:


  6. The party poopers took silver down to $29.49.... Twenty minutes left to watch them spill beer all over the dance floor.

  7. I have $29.54 for silver @ 13:30 fix. Does that sound correct?

  8. Afternoon entertainment:

    Every Breath Bernanke Takes


  9. I use theses times to buy PHY Silver Eagles.
    Taking the real deal in my hot little hands.

    I will also add to my gold and silver stocks
    Over the next week I will be a buyer not a seller.