Tea With Blythe

First of all, I think its funny that so many folks now know who Blythe Masters is because, frankly, I'm pretty sure I started it. Last summer, I got kind of tired always referring to The Evil Empire et al as some nameless, faceless monster. I felt the forces of evil needed a public face...a person we all could relate to. I then read an article that referenced the head of all commodity trading at JPM. A lady named Blythe Masters who was also intimately involved in the CDS fiasco. I knew I had found my villian! The next day, on ZeroHedge, I began referring to "Blythe and the EE" every chance I got as I tried to put a human face on our opposition. Apparently, it worked, because now everyone from "Tyler Durden" to Harvey to the silvergoldsilver bears are mentioning Blythe in their comments. The power of the internet strikes again!

OK, onto today's action. A pretty solid day, all-in-all, as the metals rallied nicely on $ weakness. It seemed that every two steps forward were met with a one step back EE beatdown but that's OK. We still finished up about $5 in gold and $0.30 in silver. If we could average that every day this week, I'd sure take it and I'm sure you would, too.

Regarding "Tea With Blythe", do you recall this chart of the USDX from two weeks ago?

Do you remember how I regularly updated this chart and we watched the "umbrella" play itself out until we reached all the way back to the bottom of the dollar's recent range? True, the USDX has since rallied back to the top of the range but the "umbrella" is still a very significant, technical pattern, particularly in issues that are temporarily range-bound.
The reverse of the umbrella is often called a "teacup" or a "bowl". Tell me, do you see the potential for a "teacup" on this 1-hour gold chart?

How about this 1-hour silver?

I'm not ready to rush out and buy some calls...yet...but if we break higher overnight and trade through 1380 in gold and through 29.40 in silver, we may be in for a powerful, mid-week rally back to 1400+ and 30.40 or so.
For now, I still think we are simply consolidating along/above support at 1365 and 28.50 but watch tonight's action closely for clues to a potential money-making trade. The umbrella and the teacup always need to be heeded.

More later.

6:00 UPDATE:
This is very, very interesting. If the CoT numbers and Bank Participation Report that Harvey discussed Saturday are, in fact, evidence of a drawdown of EE activity, this lawsuit will only serve to speed up the process.
http://gata.org/node/9496

Please read this, too. Full of good info and the private email discussion to which Dan refers was between he and I this morning. I had asked him to review my notes form this weekend in the post entitled "An Important Week Looms".
http://jsmineset.com/2011/01/10/hourly-action-in-gold-from-trader-dan-388/


8:00 UPDATE:
Keep an eye on the cash USDX. If it fails to move back up over 81, you will see silver start to pop tonight, back UP near that critical $29.40 level.
A reader just sent me this. I understand the intent of the law but, sheesh, its OK for the average citizen to buy weed in California but not gold. Amazing. http://www.pasadenastarnews.com/news/ci_16988452


12:45 UPDATE:

I've decided to stay away from ZeroHedge for a while, at least everything that isn't directly related to the PMs but even those have been taken over by trolls who simply try to bait and confuse and its getting old.
ZH used to be the absolute best. Its gotten so popular that the comments are now overrun with anarchists and assholes. When it reaches the point that folks can't even agree that its sad and tragic when a 9-year old girl has died...well, lets just say, that's not a place where I wish to spend my time.
This blog may die a slow death without ZH readers and links and that's just fine if it happens. Gotta stand for something and anarchist-hate ain't my bag.