Darkest Before Dawn

I guess I should have waited a little longer...

All my trepidation and patience got thrown out the window yesterday as I decided to buy some PM calls. Not a full position, thankfully, but still, you'd think I'd have learned by now. The main clue yesterday that it wasn't over yet was copper, just like we'd discussed ad frickin nauseam here over the past week or so. There's still a little ways to go:

Then they decided to kick the crap out of crude, too. At least I didn't buy the $95 calls I was looking at yesterday. Like copper, give this just a little more downside before you act:

But your key is this, the USDX. As we covered at length yesterday, when we hit 78.47 you knew a little rally was near. Well, we got it and, so far, its stopped dead in its tracks at 79. Let's just see what happens next. Everybody and their brother thinks we'll rally back into the range and they all may be right. I, for one, think this chart looks like shit and the USDX is headed in short order to near 77. I'll be "betting" on it, if you get my drift.

Alright, so here's why you started coming here in the first place...
None of the fundos have changed. Regardless of the SPIN and MOPE that you see on CNBS, our economy is in shambles. The US government in technically bankrupt and is being forced to print new money out of clear air just to pay its bills. 43 individual states are either hopelessly broke or close. All of the major US banks are insolvent and are only being allowed the illusion of health through accounting loopholes granted them under extreme political pressure by FASB. The notion that, because the BLS crafted a better-than-expected, seasonally-adjusted weekly jobless claims number means that QE2 is the last of the money-printing is so helplessly uneducated and silly that I can't even craft a serious response to it.

Gold and silver are headed higher. Much, much higher. Here comes my latest and greatest gold prediction:

GOLD WILL TRADE AT $1600 BY MEMORIAL DAY, 5/30/11.


In the short term, you will soon have everything you need for a tradable bottom. I'm aggressively buying gold at or near 1340, which may be later today but maybe tomorrow. I'm aggressively buying silver at or near $27. The HUI is near 500. Gold stocks have either bottomed right now or are very, very close.

Because of the endless, illegal and cruel intervention of the EE, the only way you make trading profits in the PMs is to buy and sell when its most difficult, i.e. buy on serious down days and sell when everything looks glorious. Fight your fear and overcome your greed and you will do well.

Today is just another of those difficult days but trust your instincts. You know that the PMs are only headed higher due to the reasons discussed above. Get ready to buy. Get ready to be proven right. TF


12:30 EST UPDATE:
Gold has rallied about $9 from its low and silver about 30 cents. The HUI tapped the important 500 level but is now back to 508. I'm relieved but I'm not sure its over yet. I did pick up some EXK at 5.89 and some NG at 13.45 about two hours ago. I have not bought any PM options yet as I expect one more push in the dollar, back toward the earlier highs. If it does, gold and silver will re-test and, possibly, make new lows, at which point I buying. I'll keep you posted.
Back to the GOLD AT 1600 BEFORE MEMORIAL DAY official Turd call I made earlier. Some context: At the height of the shitstorm last July, when nearly everyone was jumping off the PM bull and gold was around 1160, I figured everyone at ZH needed some reassurance. I began famously calling for 1350 by Halloween (an almost 20% move in 3 months, I might add). I was scoffed. Ridiculed by many. I stuck to my guns and was proven correct. Why? Because the fundamentals had not changed. We were simply in a correction and corrections in bull markets happen. They are, in fact, healthy. We are currently near the bottom of another correction. At 1340 in gold, it will be near 5%. Could we go lower, say 1320, or so? Certainly. Would that change the fundos? NO! Will that make 43 bankrupt states solvent? NO! Will that make the $1,500,000,000,000 US budget deficit for this year alone disappear? NO! Will all the bad CMOs and CDS on the TBTF books suddenly have actual value again? NO!
We will spring to new highs once this correction is over, whether that day is today, tomorrow or next week. Twenty percent higher from here is roughly 1600, so there you go.
Relax. Be happy. Buy some more physical today to protect yourself and your family. And don't forget to visit our "sponsors" on your way out. TF