Tuesday, January 18, 2011

Tuesday Morning

Well, I didn't quite get the move out of HSBC yesterday that I had forecast. I thought that with America closed, the LBMA would crack silver down through 28 before a bottom was reached and a rally today. Instead, I have another low above 28 yesterday at 28.05 after a low Friday of 28.10. As you can see, the 28 level has become our bullish "Maginot":
While its clearly wonderful that 28 is holding again, don't get all giddy just yet. We're not "out of the woods" on this current beatdown until we move convincingly back through 29. If this recent, range-bound pattern holds, I'd expect one more attempt to crack 28 before the storm subsides.
Remember, this is Tuesday and everybody wins on Tuesday! Seriously, regular readers will recall that Tuesdays are almost always UP days as the EE is reluctant to add to short positions immediately before the weekly COT survey. Lets see what happens tomorrow. For traders, if we can get one more test tomorrow of 28 and if you see it bounce again and roll back UP through 28.25 or so, you should be able to buy with confidence.

Another reason I'm not overly enthusiastic yet is the trading in copper and crude. Though gold and silver are up nicely this morning, copper and crude are still mostly stuck. This tells me that the bounce in the PMs is mainly due to a lack of selling, not necessarily aggressive buying. So, in the end, if we've seen a bottom, you're looking for two things:

1) A convincing move today, up through 29 in March silver and 1378-80 in Feb gold. So far, so good. I have a last of 1375 and 28.91.

2) Failure at those levels today with Blythe painting another FUTF on the chart. Renewed selling later today and tonight. A bounce again somewhere between 28 and 28.20 tomorrow. Then, a confirmation in March copper with a solid move through 444, up near 447-48 and strength in crude with it once again pushing 92.

If we can get either of these scenarios (and I clearly prefer #2), you can feel a high degree of confidence in buying, whether its physical, the miners, AGQ or futures.

More later in what should be an interesting day.


  1. Looks like it is going down again - i prefer #2 as well...

    to much upside action for today till now... after the raid last week

  2. We need to trade up and above 29.50 to get out of the danger zone, but I suspect that any downside from here will be minimal as we have enormous technical support in both metals.

  3. MKS Financial is forecasting a 2011 low of 1320 for gold and 24 for silver. If these occur simultaneously this would be a ratio of 55 vs. about 47 now. Their forecast prices for 2010 weren't too far off.

    Also McClellan still has the low date at Feb 8, so relax, we still have three weeks to accumulate.

  4. consolidation in a trading range for a few weeks then to glory. If you have your core in the physical you can add. If you want to paper trade PSLV is what I am using....It is ROILING their COMEX and LBMA. hehehhee

  5. The cycle for gold is changing that's why TA is so hard. I will be looking to add to stocks as well as physical this month.

    Thanks Mr. T for a great site! Click the adds folks!

  6. Lots of people analyzing TA expecting gold to go back to 144-DMA (round 1300), which means it probably won't happen especially as the fundamentals heat up.

    Too many variables to rely on TA alone.

  7. It may be advisable to watch the China inflation numbers when they come out later. Blythe would use any excuse to drive the price down if the number is "hot".

  8. http://www.freestockcharts.com/ Look up SLV at 9:30 the open and 10:15 add volume indicator and see how the 1.2m and 750k purchase has an immidiate affect of +.13 and +.20 on physical spot price. They are in favor of rise today, maybe the Tues. thing turd mentioned. When we are in for a tanking they seem to sell big at open and close as well. Kinda off the wall but sometimes move for move.

  9. Thoughts of today's gold and silver movement:

    We used to have HUGE downswings and take forever getting back up before another big downswing... but in all we trended up...

    We now are having HUGE upswings with lingering downswings caused by a lot of algorithm dollar movement (small rally)... It seems the upswings are more violent than the downswings now... I wonder where this is pointing? It seems the dynamic in the market has indeed changed. I have a feeling that the algo's are in buy mode...
    Scott J


  10. Bill Murphy has a London source that's saying China got screwed with a bunch of gold-plated tungsten bars and the U.S. is on the hook to deliver, and most of it is going to come out of the Comex, which may be the motivation for the gold raids and could lead to more volatility.

    Also he says JP Morgan is going to settle the lawsuits out of court.

  11. I should have said they will settle out of court if at all possible, not that there has been a material change in the cases.

  12. $29 level getting pressed hard and should give in shortly.

  13. Wasn't the Maginot Line pretty much of a dismal, embarrassing failure? Maybe not the best choice for a metaphor.


  14. Maginot Line..depends on which side of the line you are on.

  15. FUTF!! Lol I'm lovin it! Regardless I think the next couple of months are going to be very interesting. Bought another grand in the physical today as it really looks like we may never see anything below $28 ever again...

  16. Not that I'm surprised:

    <The Commodity Futures Trading Commission may not complete limits on commodity speculation until the first quarter of next year, according to a filing on the agency’s website.

    The top U.S. commodity regulator said it will set limits “only after collecting positional data on physical commodity swaps,” the CFTC said in the filing.

    The commission voted Jan. 13 to put out for comment a proposal that would restrict the number of contracts one firm can hold. The public has 60 days to critique the caps, and there is no deadline for the agency to take a final vote on the rules.

    The Dodd-Frank Act gave the CFTC until January to curb speculation in the energy and metals markets and until April for agricultural commodities. Last month, CFTC Chairman Gary Gensler told lawmakers the commission wouldn’t meet the deadline because it doesn’t yet have sufficient data. The agency will begin collecting that information in the third quarter of 2011, according to the filing.<


  17. Forgot the link:


  18. Was there ever any doubt they would game it??? also ANV has huge volume and forming a spinning top.....hmmmmmmmm....do i or dont i

  19. @ flaunt

    Was that the same tungsten issue first reported in 2009 or another round of this scandal just recently?

    Looks like China is dictating how fast the price will from here. They'll continue to buy up the LME till it's all gone and then set the price free to the next level.

  20. Rui are you referring to the Hong Kong incident? It may be part of the same scandal and may be that China is just now making a big issue out of it. The story is that the bars were manufactured in the U.S. although I don't know how that gets the gov't directly on the hook. There must be more to the story. At any rate, gold got bombed last week and may get bombed again in the near future in order to deliver to China at the lowest possible price. Then again they may have already done their worst.