Tuesday, January 25, 2011

Step One Complete

If we are, in fact, reaching a bottom in the PMs, then today we have completed step one of our bottoming process. This morning, gold traded down to 1321.90 and silver hit 26.54. They then rebounded to about 1334 and 27, respectively. Here are 5-minute charts of each that show the day's trade:
Blythe has decided to continue hammering away in the afterhours session and I have lasts of $1329.60 and $26.74. This is perfectly fine as she is playing right into our hands.

Let me take a moment to explain the bottoming process. "V" bottoms are rare and they almost never occur after sustained corrections like we're having. What we are looking for, and what we need, is a double bottom. Specifically, in this instance I'm looking for a double bottom at roughly 1320 and 26.50. Why those levels and why a double bottom? The process goes like this, in 10 easy steps:

1) Price drops to easily recognizable support point. In this case, 1320 and 26.50.
2) Price stops there as speculators have put buy orders there to test the water and shorts have put cover orders there, too, as many use these projected support points as good places to take profits on shorts. See today's trades at roughly 8:00 am EST on both charts.
3) This rally from the projected support levels gives the bulls (us) some hope. It also strikes a little concern into the hearts of those who are still short.
4) That first rally fades as everyone in the market waits to see what happens next.
5) Market drifts back down to near support points. Thanks, Blythe.
6) Support holds and double bottom is confirmed.
7) New buying comes in as greed replaces fear in hearts of longs.
8) Even more buying emerges as fear replaces greed in the hearts of shorts.
9) Market moves out of downtrend and begins to take on look of uptrend. In this case, a move near   $1350 in gold and $28 in silver. (Don't laugh, we were just there yesterday morning.)
10) Consolidation above the double bottom low takes place and market is now poised to resume UPtrend.

So, there you have it. Watch $1320 and $26.50 very closely overnight as any serious break of those levels will have the opposite effect of that listed above and price my rapidly plunge toward the next perceived support levels near 1280 and 25. Yikes!

On the positive side, many miners look to be bottoming with the HUI about 492.
On the negative side, crude and copper are providing no help whatsoever.
On the positive side (at least historically), the dollar still looks like crap. Here is today's action:
And here is a daily chart:

That's it for now. I promise to check in again this evening, post-Harvey and we'll see how things look then. Turd out.

ps After publishing this note, I found Trader Dan's latest. Looks like we are comparing notes:


  1. Gonna repost this from the last thread bc I would like to get some inout from the Turd and his enlightened followers:

    Professor Turd,

    Haven't seen you comment too much about the Lady Wynter posts, which suggest that big hedge funds are getting together to buy a boat load of silver contracts for March1, STAND FOR DELIVERY, and try to bust COMEX.

    The whole list of messages is here:


    Seems like a plausible idea to me.

    I really perked up with todays' post:

    "The following data is preliminary and might be adjusted greatly by tomorrow.


    The open interest (OI) on gold fell by 81,752 contracts. Basically if this data is accurate, then someone got flushed in gold. Most of the front month Feb contracts got sold as OI declined by 36,417. Of course this might be due to delivery next week and people decided to roll forward. However, this does not appear to be the case, because each and every month after Feb also saw a great number of OI reduced by a total of 45,000 contracts. Again, this data may not be accurate. We'll see by tomorrow.


    Also I am hearing that some of these hedge funds are selling gold so they can stand for delivery on silver in March. Look at the Comex data today and make your own conclusions."

    I guess we can wait and see what Harvey says about the validity of the data, but a drop of 80K contracts in the gold OI is astounding. And put that together with a plausible motive to SELL GOLD and BUY SILVER and STAND FOR DELIVERY -- well, to me that is potentially a game changer.

    What say you??

  2. Here's a recently posted reply:

    "I want to re-iterate again how unbelievably bullish this data is for silver.

    It's not just that the Mar OI stood resolutely and refused to fall in great number, but that traders are punting July and Sept contracts while keeping the March contracts. Futures traders will all tell you that whenever you have a 'liquidity crisis', the front month contracts are always the ones that get sold off the hardest and quickest. The answer is straightforward. Aside from the time factor, front month contracts have to stand for delivery or it must be rolled forward. If you are experiencing a 'liquidity crisis' then you cant possibly be standing for delivery which means that any sort of forced liquidation will imply the front month contracts will be whacked the hardest.

    Look at what happened to the FEB gold contracts--down a whopping 36,000+ contracts. Silver OI declined by 5,300 contracts but over 4,800 contracts were in the July and Sept months, not the front months of Mar and May. In fact, the May contracts increased by 137 contracts. This means that any liquidation in silver contracts are affecting the back months and not the front months.

    My conclusion is that a great deal of these March contracts will stand for delivery and will NOT be shaken by any price slam down. Again, the bulk of the buying from hedgies willing to stand for delivery has not even started yet. I can't wait for the look on their faces when they see the Mar OI starting to increase in February.

    I am not saying that the March OI in February will necessarily be higher than it is today, but the hedgies will start buying to stand for delivery starting in February. Either way, if the silver shorters find it difficult now to shake will of the March contract holders, wait until February!!"

    I'm telling you, this has the ring of truth to me.

    Anyone want to offer some insight...

  3. Turd,

    What would you consider a "serious" break through and below 26.50 overnight?

    I've dipped into AGQ Feb calls but have 70% cash poised


  4. This comment has been removed by the author.

  5. this really starts to seem like a bottom, would be so nice!

    EXK up almost 4%!!

  6. EXK off its pivot of 5.75......heheheh algos buyin

  7. The USDx looks like death over the past 5 days...

    For a Live Tracker of the USDx

    Can't wait to see "President Obama" explain his plan tonight... this should be as epic as the silver run-up that is about to happen.

    Scott J

  8. Cris: if you really want to get excited, go back and re-watch the silvergoldsilver bears part 3 in this context. Very, very, very interesting

  9. Cris--

    I find it all very interesting but, having already bought all I'm going to buy, I'm mostly just enjoying my popcorn now and watching the show to see what happens with March delivery.

    i think I posted a day or two ago something to the effect that the more I hear about a meltdown at the Comex, the more I figure it probably won't happen because TPTB will do whatever is required to avoid it. Manipulation, suppression, and otherwise criminal activity like we've never seen before, and we've seen a lot. Maybe that's what's going on right now. So BTFD and kick back with a cocktail. Truth will out.

  10. Yes that's right Turd. Everything the bears said is true so far, and this Lady Wynter plot gives all the more substance to it.

    Do you think it is enough to warrant some SLV April 11 calls??

  11. Or calls on AGQ??
    Maybe spend a little "Vegas" money??

  12. Personally, I bought some more march silver $30 calls today...trying to call the bottom...putting my $ where my keyboard is.

  13. Eric,

    What I find the most intersting is that TPTB may have to allow prices to RISE to prevent this from happening in a full blown out COMEX bust. That is to say, only by having silver price rise can they hope to make contracts cost so much that this plot will fall apart.

    I also find it intersting that partof the speculationhere is that it is JPM et al that are buying up physical silver -- like for instance the spike in Eagles sales at the US MINT.

    Look, some things are "conspiracies" and don;t stand on their own, but this one sounds like the real deal to me.

    Certainly real enough to buy a few Aprill 11 SLV calls at strike of 31 or so.

    What's the worst that could happen -- you lose a few $K.

    If it hits you get 10x your "bet".

    Sure physical is the way to go long term.

    But I am convinced that to MAXIMIZE profit from being :enlightened: about PMs, you should at least try to time the "spike" correctly w an options play.

    Call me crazy...

  14. I don't do options, but I did buy a little more SLW today. But now my buying power is all kaput.

  15. Cris-

    I have to say that it takes big brass-ones to invest your hard-earned loot based on the advice of cartoon bears and an anon. internet poster named lady winters. But then, what the hell am I saying- I avidly follow some guy on the internet named Turd Ferguson. Strange times, my friend.

  16. Turd,

    How do you the short therm (next month, for example), since the equities are about to suffer a correction ?

    Don´t you see equities correction affect the uptrend of MP´s or your bottom your talking in these last posts are for short therm ?

    I would like to have your thoughts about that.


  17. @Chris

    that series of comments from Amber-Winter-Benton is indeed fascinating.
    If her info is correct, then a raid by combined hedge funds will have an interesting effect on March silver.
    However if the supposed ex Blythe Monkeys are not quite 'ex' then someone is being set up big time.

    Hmmm .... sell some gold to fund silver purchase ?


  18. "But then, what the hell am I saying- I avidly follow some guy on the internet named Turd Ferguson. Strange times, my friend."

    Boy, howdy. It's hard for my husband to take me seriously when I start a conversation with "Well, Turd Ferguson says..." It certainly brings some levity to a serious situation, though.

  19. Fjords,

    Now when you put it that way.... lol :-)

    No, as Turd puts it, this is just "Vegas" money. To play options, you have to be perfectly OK w losing it all.

    The big dough (retirement, saving etc) is stashed away as Eagles in a vault or in PSLV and miners.

    But here's my point -- very small numbers of people are "aware" of the story in PMs. We have been waiting, PATIENTLY, for YEARS, for the "takeoff".

    I honestly thought the whole CFTC position lmits thing was gonna be the fuse -- that washed out.

    But it is not just hte bears or Lady Wynter, but Ted freakin Butler and Eric Sprott and the boys at King World News (and the TURD), not to mention my own $.02, who are sensing that liftoff is near by.

    So I want to maximize the benefit of being right all along. Human nature right??

    So I'll plunk down %2-3 of my total investment on a homerun shot.

    Because I really think the time is coming.

    TPTB can only hang on for so long, and we see signs ALL AROUND us that the walls are crumbling.

    Even this latest beat down -- used to be they could knock the price down adn it would stay down for a few weeks. Now it stays down an hour.

    We are coming to an inflection point.

  20. Yeah, LOL

    I'll check with the Turd, Turd will check with Harvey, yada, yada, yada.

    It's like some wierd internet cartoon or something. Wait a minute....

  21. Hey wait a minute Cris,

    As far as waiting, patiently, for years, for takeoff, if you don't think the move in 2010 from 17 to 31 was takoff, then I don't know what you are waiting for. Just sayin...

    BTFD CIGA's!!

  22. One more thing:

    anyone remember that Julian Assange said he would release banking files in January?

    Now that would be a fuse and a half...

    @Turd: that bears video is spooky in retropsect

  23. Couldn't resist and ordered 500oz Maples. If bottom is confirmed I'll buy more..

  24. Eric,

    "takeoff" is $50-100.

    for starters.

  25. Carlos: as long as POMO continues, there will be no general, lasting correction in the US stock "market".

  26. What you are seeing in this game now is higher volume in the higher flying miners like SLW today....as the margin players are being shaken out by the big boyz. The big boyz have lots of fiat to buy short and steal the shares.....this is a process and could play out for several days......just enjoy. If you are lucky enough or big enough....you may get to buy in really cheap. As was said earlier the strong hands are taking control of the shares of the miners for the next big run.....

  27. Turd, are you afraid a "double bottom" at 26.50 might turn out like the one at 28? I remember it bounced hard off 28... Twice. Then it collapsed.

  28. "But here's my point -- very small numbers of people are "aware" of the story in PMs. We have been waiting, PATIENTLY, for YEARS, for the "takeoff"."

    Hey cris. I think the maintream investment community is well aware the story, they simply refused to believe it as it unfolded. Now at 1300+ they're caught inside on a big set. Too stuborn to admit their error, they tie themselves up in pretzles try explain the move, always with a negative bias.

    I totally agree that very few in the "civilian" population understand precious metals. Their loss, but really not their fault. Faulty to no education. It will probably take awhile to unwind that degree of ignorance, adding longevity and many more buying ops along the curve.


  29. Turd, supporting your argument to pay attention to the dollar, Richard Russell just pulled the fire alarm in the crowded theater:


  30. Any reason not to buy 90% "junk" pre 1964 silver coins? Or should I just stick to buying pure 1oz coins? I hear they could be good to have if the dollar totally collapses and they could then be used for their silver content for minor purchases. Or something like that. Figure you guys could explain the ins and outs of that theory if the worst case scenario hits home. Should I get like a 100$ bag of this stuff? Thanks much.

  31. I'm not too wrapped up in the armaggedon, bartering with pre 64 coins thing.

    That having been said, yes I love those coins and believe your silver stash is not complete without some.

    As with any silver buy, watch the buy sell spread and if it suits you then by all means pull the trigger. That there is good silver..

  32. Oops, that "Rebecca" post was supposed to be "Eric". Darn kid was checking her gmail again....

  33. Hey I'm relatively new to the bullion scene and you guys seem extremely educated. I know you don't teach how to buy bullion on the site but could any of your point me towards a reliable site I can buy from?


  34. A few things I need to be clear on.

    1st. Is the physical supply tight enough so that one day (soon) there simply will not be any available silver for delivery at almost any price?

    2nd. When that happens, then what? There already seems to be a huge discrepancy between the COMEX silver and the real item with regard to market value (though it has not been reflected in price). I would not let go of my silver for almost any amount of fiat. If the strong positions are anything like me, then the price of a US Silver Eagle should bust from any COMEX quote in an intergalactic way.

    3. Why would JP Moran need fiat or credit to short silver? Aren't they naked shorting as is? Isn't naked shorting just *accepting* fiat for "paper silver"? This is money for nothing, and I don't get why JPM needs cash to pull it off.

    4.) What on earth is the EE again? European Exchange?

  35. flaunt: Yes, that is certainly a possibility. However, as noted last week, the 26.50 area makes this correction almost exactly the same percentage move as the last major correction in November. Therefore, I'm taking my chances.

  36. stocksman--
    Most of my physical buying has been either locally or eBay, but there are several pretty well known websites but I haven't used them so I won't post them for you unless nobody else steps up with a response.

    If you are talking silver only, not gold, I did buy some last summer from silverstampede.com. Excellent. As long as you are talking 20 ounces or more, then the price he quotes includes free shipping and no surcharges for credit cards. Shipped super fast too. I highly recommend.

  37. stocksman--
    Oh, and I DO NOT recommend eBay anymore. Prices have gone sky high. Better off to go elsewhere.

  38. This comment has been removed by the author.

  39. Thanks eric,

    That site will be a good place for me to start.

    As for local buying, is there anything a newb should know before going out to buy? Are there tricks or scams to lookout for?

  40. stocksman--

    I'd say try to get a feel for which of your local shops have been around the longest. Don't go with some place that just tossed up a "WE BUY GOLD" banner just a few months ago.

    Beyond that, it just comes down to price and availability like anything else. Pull out the yellow pages and call around. Silver is silver. Gold is gold. Buy from the cheapest. Once you own it, it doesn't matter where you got it.

  41. Ian, if you're interested in 90% coins take a look at Gainseville Coins website, they have junk silver coins for spot silver price with no premium in $1 face value increments. You just need to buy enough to make the shipping price worthwhile...

  42. Vain Saints--

    EE is Turdspeak for Evil Empire. Anybody got that link to Turd's Glossary?

  43. stocksman--

    More on how to pick a local shop.
    If the owner has plenty of gray hair, there's a lot of dusty old proof sets and other coin stuff in the case, and a stack of dusty old gray sheets in the corner, and they also deal in old pennies, nickels, etc, then that's the place for me. I like the guys who can tell stories about the wild times in his shop back in 1980. But then, I remember 1980 so I feel a kinship there.

  44. Anyone else can answer my question please ?

    "I am new in these matters but i read Harvey Hogan´s post. What does he means whith default on SLV and GLD. What will happen to the owners of ETF´s SLV and AGQ´for example ? Will they lose their money ?

    Thanks. "

  45. Vain.

    1. There's always a price for silver. The point is, at one moment the people who actually need silver for industrial purposes will demand it. If someone offered me $600 for an oz, it would be very hard to say no. The question is what is the price.

    2. When the comex busts, that's essentially when you get a run on the bank. Everyone who thinks they're holding silver (paper silver) will demand it, and this will drive the price of physical higher.

  46. Carlos.

    SLV is paper silver. Compare this to a bank. You go to a bank and deposit your "silver". They give you an IOU note, and at the same time borrow your "silver" to other people and make a spread on the interest.

    If you go back to the bank the next day, and ask for your "silver" back, they don't have it, and that causes a default.

    The owners of SLV and GLD are unsecured creditors. When the default happens whatever "silver" they have in their bank will be distributed to all the people carrying pieces of paper. But there's a lot more people carrying pieces of paper then there are silver... So yes they lose their money. :)

  47. 68ShinyStuff...

    yeah definitely, I just found out last week that GVille Coins is actually about 5 miles up the road from me here in Tampa.
    So tomorrow could be the day to buy if it goes back down around 26.50 to 26.65 right? It's bumped up a little bit right now over 27, but that isn't anything to worry about once tomorrow's market opens up huh? Aren't Wednesdays or tomorrow in particular some big news day that might cause the price to drop down further?

  48. Thanks Earl,

    What about AGQ since it owns silver contract futures ? Same thing ?

  49. Michelle, I feel your pain.

    When I try to end a discussion with my girlfriend by saying "But Turd said" it does not quite have the finality I expect.

    I cannot understand why..

  50. stocksman-

    Not seeing a lot of other responses for you. Try these:


  51. Patiently awaiting Harveys take on the absolutely crazy OI #s today...

  52. Some of you will enjoy this, from ZH

    Earlier, Marc Faber appeared on Bloomberg TV, in what may go down in history as his most scandalous interview ever. When asked, in advance of the SOTU address, what he thinks of the president, Faber, who appears to have had enough with all the bullshit, propaganda, and lies, replies: "I think he's done a horrible job and I think that will continue, I think he is a dishonest person, and nothing has changed... Some politicians are more honest than others. I don't think that I have a very high regard for politicians, I have a high regard for businessmen and for people who work, and not for people who abuse the system continuously. And in comparison to other politicians, I think he came in on a platform as a president that would want to change the government in Washington, and actually he's made it worse... We foreigners, we just laugh at someone like Mr. Obama. I was very critical of Mr. Bush, but at least he had one line and he stuck to that line, and at least he set out to do a thing and he was relatively straight on the thing that he did. He may have been wrong, but at least he didn't change his mind continuously, and didn't prostitute himself."

  53. Hey Turd, looks like Harvery gives credence to the Lady Wynters posts:

    "There have been rumours that certain hedge funds and sovereign wealth funds are willing to take possession of all gold and silver. In gold it is the February month and in silver it is March. If this is true, the game is over as there will be a default at the comex

    which will bring on defaults at the SLV and GLD, and then a default at the Bank of England, and then all the banking system in the USA. I will be watching this closely."

    I mean seriously, a default of the entire banking system in the USA -- pretty strong statement.

  54. Hi all,

    I'm still very confused on options trading, and would be much appreciative of a bit of advice if anyone is willing to help.

    The only way I can find of trading options is through a CFD platform. This claims to be the same as trading options proper, except they are all cash settled and no delivery. This suits me just fine, but:

    The good Turd has referenced some OOM calls he is interested a few times (TF: a search button on your blog would be very handy!), I think maybe Gold 1600 April calls. These were going for $160 bucks a piece, which is what they cost on my CFD platform. Turd then talks about them being worth roughly $17k dollars if the price is hit. That sounds lovely, and well worth the risk as far as I can tell. Only my trading account is telling me that I only break even when the price is hit (plus the piffling cost of the option), so I'm only making a profit if the price goes over 1600, and then only on every pip over that. Is this correct? If so, I can't figure out where Turd is getting his profit figures from! Any help here would be appreciated, as I think time may be running out on getting some of these!

    My trading account tells me that I can't 'sell' options. Is this something to do with it? Is the profit TF is measuring something to do with my not being able to take advantage of the higher option prices down the line or something? Or is this just a quirk of CFD options? Gah! I've been doing as much research as I can on this and simply can't find the answer, help!

    Oh, and if it's my stoopid CFD platform that's in the way here, can anyone recommend a good (UK) broker that can sell me some proper options?

    And Turd, my first paychecks from my new job are coming in the next week or so. I promise you're getting some silver your way soon. Best regards, FBV

  55. Yes, the Marc Faber interview posted over at ZH is awesome. Nothing like telling it like it is.

    Be advised though, he likes gold but feels it could be in for a 20% correction. My abacus says 1430 minus 20% is 1144. Ouch.

  56. Heck of a post by Harvey tonight Turd. He's usually pretty tame with his comments, but tonight he called out there will be a comex default and collapse of several banking institutions. What do you think or are you still digesting it all?

  57. The Shit is going down in Egypt. Check out ZH or Raw Story for links.

  58. whoa and hold the fort...silver stampede want $33 for generic rounds...that's $6.00 over spot...I don't think so Eric when you can buy at $1.50 to $2.00 over...watch the advice you give folks on this blog as $6.00 over is INSANE...try JD Mint...

  59. timpa
    I'm seeing 29.50 on silverstampede. Sure it's $2.50 over but also consider as I said that includes shipping and there's no surcharge for credit cards. Most other online places will nick you an extra 3% for a credit card. To me that puts it in the ballpark of competitive and worthy of consideration. Otherwise all I was vouching for was that I have in fact used them, and was happy with the transaction. I had my silver in like 3 days.

    If I recall correctly, one early morning last year I saw a big pop in spot silver, like a buck or something, so I quick went over to silverstampede and saw that he hadn't updated his prices yet, so I grabbed some, at what at that moment was most definately competitive.

    My sneaky bad ;)

  60. Buy treasuries, gold down 20%, s&p down 10%, china down 20-30%... Kinda crazy.


  61. Turd I think if you have a fault is expecting this to be logical and make sense. You and Blythe are at a poker table and she's bluffed you off J10 and a pair of queens. She's not doing it just to you but to all of us. She's the "big stack". It's not that Blythe's hand is so good. It's that we are not sure our hand is better. So we will grab the small pots and keep moving up. Plus watch how the dealer shuffles the deck. Sorry for the poker metaphor but it's not just chips(money/FRN) It's people as well.

  62. I deal with CMI Gold and Silver....they are into privacy, bigtime, right down to the shipping box having the name of a "company" on the box that isn't theirs.

    They have an EXCELLENT education section.

    And yes, the guy who runs CMI is on with Eric King for the metals wrapup every Friday.

  63. www.gainesvillecoins.com Looks like really good prices to me

  64. Great post. Your blog is one of the few that I actually stick around to read all the comments too, keep 'em coming!

    I also have to recommend gainesvillecoins.com to the person who asked. Best internet prices around w/shipping and it has never taken me longer than 3 business days to receive orders. Also, use "NIAUS" as a promo code and you'll get $5 off your total.

  65. Carlos,

    I'm not too sure about AGQ. But I'm guessting that it's just another type of paper metal. Likely just an entitlement for the future. If the future price is sky high, then it's unlikely they'll be able to deliver it. For that one check the prospectus to see what an owner is entitled to.