Thursday, January 20, 2011

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

90 comments:

  1. February 8 is less than three weeks away.

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  2. QE QE QE QE QE.....it aint able to stay down long gang......

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  3. Pretty safe to say 4 months till 1600 Gold.

    The next big upswing we have will be 1550+ gold.

    No way it takes 3 months to happen...
    --
    But I guess anything is possible...
    -Scott J

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  4. I am from Singapore, a regional financial center. Silver is considerably harder to obtain over the months, often will few weeks of lead time. This is no longer free market but communist rationing.

    I feel that by resorting to rationing, banksters is able to prolong their trick for a few more years.

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  5. I'm watching SLW like a hawk. Will probably take a nibble soon.

    Eric

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  6. One of the reasons I say that is your take on the USDX. For any Turdlings wanting to keep an eye on it, here's a link. You'll forgive me for using CNBS for this purpose:

    http://data.cnbc.com/quotes/.DXY/tab/2

    BTHFD: Buy This Huge F*ckin' Dip!

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  7. ON my knees praying for the BoS!

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  8. Turd, thanks for the energy. We've been through this (remember margin hike early November and the day of infamy early December) and we will be this time, too.

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  9. i know days like this are though as Precious metal bulls, but i look it as we'll be able to purchase at bargain prices! its like seeing a 50% off all merchandise sign. we all know this Bull market is NOWHERE near finished, these type of corrections have happened before and they'll happen again... i'm glad i reduced 80% of my miner position 3 weeks ago, it looks like i'll have to wait a few more weeks before buying up miners again.

    heres a cheat sheet for anyone who day trades gold, its a 1000 day avg of the price of gold. note the EE attacks

    http://www.goldcore.com/images/mu/goldcore_bloomberg_chart3_13-01-11.PNG

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  10. It's also coldest right before dawn. As a snowmaker out on the slopes we used to scramble like mad in the 30 minutes before sunrise as the temperature would drop like a rock, especially on very cold, clear nights. I think this manipulation lower is outrageous, but we should expect nothing less.

    Turd - thanks for the warnings over the past week, especially the link to the "Alfie" article. VOLATILITY is the mode of operation for 2011. I think it was John Embry who said something along those lines early in January. We've got our volatility in spades. It feels like Blythe has upgraded from flying monkeys to Dementors

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  11. Don't see why anybody should be concerned about the current price of gold and silver. The USA is in an intractable position, there is no way out, they can't let go of the QE tail. They can only wait for some component to blow a fuse in the US, Europe or China, doesn't matter.

    Everybody will be looking for PMs at some stage, when the flock hear a sudden noise.

    Got my gold at USD 1050 and silver under 20. With the AUD overvalued some 20% ony positive things to look forward to.

    I won't be increasing my physical positions but am poised to increase on some gold stocks and pure silver miners here in Aust. Actually about to buy some a few days ago but pulled out thinking there is going to be a market correction some time soon.

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  12. Yeah ,these are no flying monkeys,they are Fu@#ing chimps.
    DD you are funny...; )

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  13. Yeah, the SLW will go through the roof when this is over. But when will the raid be over?

    Gartman said he was selling all his silver this morning - confirming Harvey's statement that Gartman was a mouthpiece for the EE.

    But I doubt Gartman will tell us when the raid is over. Who will?

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  14. Turd said: "Fight your fear and overcome your greed and you will do well."

    This has to be one of the best trading quotes in a long time. I will print it out and tape it to my monitor as a reminder the next time I become overcome by greed.

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  15. Thomas,some aussie silver miners you like..??

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  16. Apparently Brazil just did an interest rate hike to curb it's 6% inflation last year. 50 basis points. I'm sure the EE is seizing the moment!

    http://finance.yahoo.com/news/Gold-Prices-Slammed-by-Brazil-tsmf-3471045163.html?x=0&sec=topStories&pos=1&asset=&ccode=

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  17. On days like today, one of the things that helps me mentally and emotionally is NOT to focus on my net wealth in dollar terms. Today, I have been calculating my net worth in terms of ounces of gold and silver and my wealth is INCREASING today. That makes me feel better. And I just checked my physical gold and silver - and yep - every ounce is still there. As a long term PM investor, I try to focus on accumulating ounces in the long run, not the number of debt notes. The dollar is a tool to accumulate more ounces.

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  18. There is one called Cobar (CCU) a new one still increasing its inferred reserves. Got in at 0.40 is now around 0.62 I like it because its 100% in Australia and not West Africa.

    http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=ccu

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  19. Thank you Thomas,I will study it.

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  20. hmmm, to buy miners today, tomorrow, or next week, hmmm indeed

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  21. Copper almost 426,crude 88 hui 500-, xau 200-.
    Euro gold holds 1000.

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  22. Honestly, I hope this shakes out the weak and the speculators. I want the the parabolic rise we'll see in the next few years to be built off supply and demand. Would you rather continue to stockpile at $27 or $35 an oz? If you know that gold and silver are the truth, you should be happy for days like this. Just buying more for less.

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  23. Silver Falcon Mining (SFMI) is a highly speculative junior exploration silver mine. Apparently, they are planning to release the results if there dore bars sent to the smelter. Again, highly speculative but worth a look at $0.18.

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  24. thank you dd,I will look it up.

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  25. Please keep out of this market for the time being.
    I posted in early December that we would drop to $1,260/oz by end of January. The bull market will remain intact.
    At times like these, many people lose money buying stocks and trying to catch the dips. This ain't a dip, it will be a precipitous drop, with a half-time, oversold bounce!
    You've worked hard saving your money, don't blow it on giving the bankers extra profits!!!

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  26. If you are buying dips, the best place for gold is toward the bottom of the range 1330-1320. Silver can be bought around 26. These would most likely be areas from which the markets would bounce but probably would not represent the ultimate 2011 lows.

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  27. Flowers, no offense, but why should we trust you? :)
    Maybe you just want to keep us from investing, so that our big money doesn't bid silver into the stratosphere before you joined the game :P

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  28. Harvey Organ's commentary tonight will be worth its weight in gold. If it turns out that the silver and gold leaves have not fallen from the tree, then we will surly bounce from these levels.

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  30. Flowers, the dollar is up today relative to gold. So, I sold some dollars today and booked profit. As a result, I increased my ounces of gold money.

    I'm not sure what you are talking about when you say "blowing your money".

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  31. flowers has a point that this could be a more serious correction then a dip that's all he is saying. you try to catch a falling knife and it's not always easy. on the other hand, gold is going up eventually so if you are in it for the long term you have nothing(or nearly nothing) to fear.

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  32. I'm with Don and flowers. The big money will take advantage of any nervousness out there and there is a lot of nervousness out there. This is NOT advice but patience is in order.

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  33. I gotta agree with flowers....I'm the same as anybody, I keep thinking "it can't go lower than this".....but I'm working hard to sit on my hands and not hit the buy button....I keep telling myself it's not a sin to miss the absolute bottom, and it's OK until a definite trend upward establishes itself....my 2 cents, anyway.

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  34. Flowers "could" be correct but opinions are like axxholes....we all have one.....NO EMOTION. pay attention to the facts not what the MMs are showing you in prices. FACTS...100B a month till May. This is an engineered sell off of commods ....and it could go deep as Flowers says. Be patient and watch for confimation of a "bottom" green volume in your miners on a red market day with strong volume.....buy then your miners like a mofo.....I am nibbling on my fav miners small and adding small to pslv.....slw has corrected 30%...yum also ANV getting close

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  35. Turd, is this the "one minor drop below yesterday’s fixings to finish it?"

    "Yesterday the PM fix was $1360.50 and the morning fix $1357.50."

    GOLD
    01/20/2011
    11:57
    1349.10
    1350.10

    http://jsmineset.com/2011/01/18/a-note-from-alf-fields/

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  36. @lollercoaster
    Why not a schnitzel today, a schnitzel tomorrow, and a schnitzel next week?

    Eric

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  37. So, if 1260 is the level, then 80$ from gold to the recent high equal 4$ in silver to the recent high. This means we should expect silver to bottom around 23-24$?
    1260 for gold seems ok for me, but 24$ is somehow beyond imagination.

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  38. OPEX, FOMC, Davos all next week.

    Stay nimble.

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  39. The market can stay irrational a lot longer than you can stay solvent (to paraphrase a famous quote). Do NOT ever leverage anything except for a quick trade with a stop loss. $31, $27, $25 what's the difference, in a couple of years we should be north of $100. I own about $250k of silver right now, and am getting $54k more ready to buy 2,000 more ounces at anything under $27. JMHO, thanks Blythe for lowering the price for my next purchase..

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  40. Go to sleep and wake up one month from now. You won't even know there was a "correction" and you will have saved yourself from all the heart-ache. :)

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  41. Please read an important update to this blog post.

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  42. This comment has been removed by the author.

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  43. Got filled on SLW at 30.50. I'm happy.

    Eric

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  44. Just covered my margin call...not so happy, but what do I expect when I'm geared up so much! I remain committed to my long position and may even increase my position. Waiting and watching.

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  45. Eric, you should be, that is a GREAT buy. Congrats.

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  46. I am with flower,
    As said by Ed Seykoda/Livermore/P. Jone and many other smart minds, hardest thing in trading is, I believe, suppressing desire to play all the time in order to avoid going broke eventually. Seykoda asked: do you want to win or just enjoy excitement of trading. Admittedly, I lost some money this month due to the desire for the trading excitement, and I will take the loss as tuition following the wisdom of Jesse Livermore.

    Nobody knows when bottom is, and I don’t want to time the bottom. I think we will have plenty of time to buy when trend changes to upwards. If I dare to speculate, I think PM will rebound no later than the expiry of March futures contract that is tied to physical delivery and EE will do their best to shake weak hands until then. More important question to me is when to buy physical. If I wait until mid to late February then I am afraid of physical shortage, hence I'd better take action no later than early Feb. I will keep buying small quantity of physical every week. But if I want buy big amount physical then when would be best time to buy? Any thought on this? Thanks.

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  47. SLW...took my eyes off of this one. Barb, nice pick up!

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  48. Reefman, agreed but just don't sleep all the way through this classic buying opportunity. Add to metal and miner positions.

    If we agree that it is wise to DCA, this month will be a great time to maximize the contribution. What nice values. Some are now ridiculous.

    Case in point: Pelangio (PGXPF) at .81. What a joke. Buy it today.

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  49. Surely this correction is just getting started so not sure why people are jumping on the buy bandwagon so early; if the general market corrects then that pulls almost everything down with it, including pm's. I think some people here have a combination of emotional and ideological/dogmatic attachment to metals which clouds their judgement. I couldn't care less if silver goes up or down, the only thing that matters is being on the right side of the trade.

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  50. Why guess when we could just plant a microphone in Blythe's office? Does anyone know the janitor over there?

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  51. I am down with Don's Feb 8 call. Though some prices look pretty good right now. Patience

    "Those six weeks of waiting for the right moment were the most strenuous and wearing 6 weeks I ever put in. But it paid me."
    Jesse Livermore

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  52. "Heron said...

    Why guess when we could just plant a microphone in Blythe's office? Does anyone know the janitor over there?"

    This

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  53. rapper: Patience is the key here, isn't it.

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  54. I got faked out by the dollar earlier in the month and essentially bought the top even though I had my plan all worked out. So that was an expensive lesson. Now I am back to my original thesis (plan) and will stick to it and will get paid handsomely.

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  55. I guess the bears were right.
    http://www.youtube.com/watch?v=AId_UiPtPpQ&feature=related

    "Expect a downward fiat price soon, but watch for the open interest on the metals. Will be perfectly timed with the CFTC hearings... to let Blythe hammer this thing down. Will be short-lived, but fierce....Don't get shaken out."

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  56. US Dollar May Fall Further on Crowd Trading
    http://www.dailyfx.com/forex/technical/ssi/table/2011/01/20/ssi_table_story.html

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  57. @Rapper. I did the same damn thing, but we got "Blythed" so don't worry about your call on it. The fundies were undermined by criminals. I only wish I didn't have to pacify my wife with all the remodeling she wanted done to the house. I could have put that 1500.00 to good use. Instead, I was only able to squeeze out a minuscule 5oz of physical silver on this dip with some money I saved on the side side (good thing I didn't tell her about that or she'd find something else to remodel with it.. sheesh).

    Anyone have any tips for waking the significant others up to what's going on? I can't get her to see that the system is a virtual failure and math will rule the day.

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  58. You know when you think about the supposed "reasons" for silver weakness most of them go out the window as the primary cause. The following correlations have been made in the past but they have largely been broken.

    Silver should move opposite the dollar, but lately when the dollar goes down silver also goes down, or as most stays flat. When the dollar goes up, look out below for silver.

    Oil and silver are supposed to move together, but lately there have been days where oil goes up and silver still goes down.

    "Economic recovery" is supposedly correlated with more demand for silver, but even then it goes down.

    So, fwiw (not much probably), the action is simply specs and banks having their way.

    This just out from James Turk via KWN:

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/20_James_Turk_-_Gold_%26_Silver_to_Take_Off_Despite_Weakness.html

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  59. My physical gold n silver didn't lose a penny today........hehehehhhehehehehheehehee

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  60. I forgot a few obvious ones... Silver generally moves with commodities but lately commodities up, silver down. Also, reported supply constraints generally lead to upward pressure on spot, but again that doesn't seem to be helping.

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  61. @UGREv

    I don't know about how to get da wife on board as far as the big picture goes, but here are my rules regarding physical:

    Rule #1: Always lie about how much silver and gold you have stashed away. If my wife knew about half of what I have, she'd skin me alive. What she doesn't know, won't hurt me.

    Rule #2: On the part that she does know about, regularly drop comments about how much higher it is now that when you bought it. Tends to keep her quiet about the whole thing. But, don't brag it up too much or she'll want you to sell it and remodel the kitchen instead.

    Works for me!

    Eric

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  62. damn, metals climbing higher, Blythe, get back to work goddammit

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  63. CNBS has been pimping Chesapeake Energy all day long. Makes me want to puke. CEO McClendon is a promoter and klepocrat of the highest order.

    Eric

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  64. silver damage report: skipper we've taken two torpedos in the aft but we are still afloat. Most of the weenies have already abandoned ship....but the boarding party will skin the rest tonite....aye aye Blythe

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  65. Silver bull and gold bull had a nasty year start..but they are ready to stand up;)

    http://www.youtube.com/watch?v=sMSS-RBhB-A

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  66. looks like Blythe read my last post :D

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  67. Last six hours we have a text book "blythes boobs" formation on the silver chart.
    Buy it!
    ; ))

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  68. Man, this price action is really depressing.

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  69. George, escuse my ignorance but whatdo you mean with "blythes boobs) formation ?

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  70. Carlos: take a look at a 3 minute chart, there there boobs become very evident.

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  71. Carlos its the curvy shape of the chart the last six hours,I was just kidding,no formal such formation exists.
    As dd says,its depressing price action...need a little humor to cheer up.
    Sorry.

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  72. Ok. :-)

    Dont worry.

    I was thinking you were seeing some formation witch could "bring silver to $28" :-)

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  73. But it seems a bear flag is forming, don´t you think ?

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  74. I think we will have possibly fireworks at the start of spring.
    In a very few weeks.
    This is what I think including silver 90 usd by year end.

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  75. George in the short time, you think we may see more correction on silver or a pull back from today´s level ?

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  76. I think ..worry...we will touch 27 tommorow,but this is my strictly personal view.

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  77. closing the globex session at dead bottom for the day. Ugly is all I can say. We will need a miracle overnight to stop this bloodbath.

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  78. @Barb/Eric.
    She has no clue how much I have. I know she knows of at least 10oz from a receipt I left on the counter by mistake. So if that's all, then I'm good on that part because since I've been buying, I've double my value. Yay for the days of 12.00/oz. It's a shame I missed the even earlier days of even cheaper metal.

    I'm new to the game, but have learned more between ZH, the general populace therein, and from Turd and people like him than I ever have from any school ;)

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  79. I will be drinking heavily tonight.

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  80. why the hell does the spot price of silver go down when the dollar goes down.. I simply can't grasp this relationship...!?

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  81. [Will be perfectly timed with the CFTC hearings... to let Blythe hammer this thing down.]

    I long for the day when the CFTC are carted off to prison for corruption, and there can be no doubt they are systemically corrupt. Common WikkiLeaks, any documents between CFTC and banks and the Fed?

    The price of gold and silver is at times arbitrary, set by those corrupt banks. But they are just a wave on rising tide, they can give us peaks and troughs but the tide keeps the boats rising.

    Buy now, buy later doesn't matter too much if the tide on silver is coming in. The fundamentals of silver put it on a long term upward trend.

    For me physical gold and silver are strictly long term insurance plays. The world has a lot of mess to work through yet, we are only just beginning and nobody knows how things will look at the end of it all. But history gives us the knowledge that PMs are always valuable.

    If I had a billion I would be buying JPMs naked shorts and demanding delivery.

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  82. Can anyone give me the relationship between the 10 year interest rate ( TNX increased 1.22 today to 34.59)?
    I always thought that when interest rates rise, carrying costs on commodities rise and it forces the prices down.

    Also I seem to see a pattern in the dollar going up every other week, as the treasury wants to get the highest price on the bonds and the lowest rate to pay on interest. I track it on econoday the calendar showing the treasury auctions.

    (http://mam.econoday.com/byweek.asp?cust=mam)

    It would seem that the dollar should go up next week. This would depress gold and silver for another week. The relationship does not always work, but seems to track fairly well

    also It seems that the daily stochastics on uup are ready to turn upward. So dollar should rise.

    Any thoughts?

    I very much like the Turd theory of evil empire, but think that they are a minion of the Fed which can control a far broader range of methods to kill commodities.

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  83. John: Exactly! The EE suppresses the PMs at the behest of the Fed. Period. End of story.
    I'm working on a new video of "Blythe and Monkey #1" which covers this issue. I hope to have it completed by this weekend.

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