And Away They Go...

11:30 pm EST UPDATE:
The metals are stronger than mustard gas tonight. I have a last in silver of 32.95 and gold is 1395.
Knowing that the Death Star is closed tomorrow is killing me so, to pass the time this evening, I cranked out another xtramormal movie for your viewing pleasure. I hope you find it entertaining.

http://www.youtube.com/watch?v=Lq0bAOVaQwQ

I'll check in at the usual time in the morning. Turd out.

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Well, we're off and running in what may be the most significant week of PM trading in recent history. We've opened flat to slightly higher this evening. Since the "issues" are on the Comex, don't expect a lot of fireworks overnight or tomorrow. On balance, I'd expect that dips will be bought and rallies will be sold until Tuesday morning.

First, here's an updated CRB chart. We've recently picked up so many new Turdites that perhaps I should link to this first: http://tfmetalsreport.blogspot.com/2011/02/preparing-accordingly-ii.html
As you can see, the general commodity rally continued this week. This is the devastation our leaders have wrought. It will only get worse.

Next, here's an 8-hour gold chart. With all the hubbub over silver, many have overlooked the slow, "swiss stair" accumulation that is readily apparent on this chart. Fundamentally and technically, gold is poised to spring higher. The final hurdle looks to be a close above 1390 and then, maybe, 1395. After that, its straight back to the old highs and, from there, $1600 by 6/10/11.

And here's a reprint of a chart from Friday that you must fully consider:

Finally, silver.
There are many things I could say and an almost infinite set of possibilities for how this week may play out. Until proven otherwise, your best strategy is still to BTFD. If I were Blythe (and believe me, I am very thankful that I am not), I would have been covering some shorts on Friday. One, this helps tourniquet the bleeding but two, and most importantly, it frees up my ability to "re-short" sometime this upcoming week. The question then is...where will the EE attempt to raid?

I mentioned last week that, since August, silver has rallied and corrected 3 times. From those corrective lows, the rallies have been about 38%, 25% and 24% trough-to-peak. Applying that same math (which, as you know, I like to do), $26.50 + 25% = 33.12. It is this area, somewhere between 33 and 33.25 that I would expect Blythe to act. Don't get me wrong, she may not. She may wait. She may have even lost the ability to effectively raid. http://tfmetalsreport.blogspot.com/2011/02/wow.html However, I still feel a raid is coming. We must be on the lookout.

In any event, as mentioned above the best strategy is still to BTFD so the next question is: What are our possible entry points? Well, here's the best I have to offer as we are in unprecedented territory:

If things really get rolling, the area around 32.80 might attract some light support, too.

So there you go. Here at 7:00 pm EST, I've already got the PMs rallying at 32.75 and 1391.50.
This situation just begs for another xtranormal video of Blythe and Ruprecht strategizing for this week so  maybe look for that later tonight.
Keep the faith. Buckle up. Things are only going to get more crazy. TF

ps: As we enter this extremely important week, you absolutely MUST MUST MUST take time to read this:  http://traderdannorcini.blogspot.com/2011/02/what-is-commercial-signal-failure.html
Thank you, Dan, for taking the time to write it!

pps: Uhhh...I would say this is pretty important. It must be for Harvey to post on a Sunday!
http://harveyorgan.blogspot.com/

ppps: And this is by the request of our valued reader, TurdleGG.

pppps: Our man flaunt has taken the time to transcribe the main points of Eric King's interview of Trader Dan. Thank you, flaunt!! We are all very grateful.

"Turd, here's the transcript.  I transcribed up to the point where they started talking about gold.

Eric: Joining us now is Dan Norcini of JSMineset.com.  Dan right away we're gonna talk about silver multi-decade closing high.  Hit almost 33 dollars here on Friday closing near that level up almost 2 1/2 or roughly 2 1/2 dollars for the week what are your thoughts on silver?

Dan: Hi Eric again pleasure to be with you this week as always.  Silver again awesome very impressive week powerful performance as everybody no doubt is aware of by now.  You know looking at the charts it put on a heck of a close and really came in yesterday and today with some really strong pushes which is what really where we got most of our gains this week from.  You know we had a good day Monday coming in we had a good strong up day but boy I tell ya come Thursday and Friday you had awful lot it looked to me like short covering going on or some short was in big trouble because that market went up at such a rate.  And it went through resistance levels at such speed and such force that the resistance levels didn't even appear to have any resistance left in them.  That's how impressive the move was so uh, you know on the chart basis when we're looking at that thing you know we're kind of in rough new territory up here because you know we haven't been at these levels in 30 years Eric.  And as you and I have talked about before when you're going back and looking at price charts and you're trying to sort of draw out maybe some resistance levels on the chart, when a market is making 30 year highs, a lot of things have changed since 30 years a lot of the players that were trading back then are no longer playing uh you know a lot of things in the world economy... Everything has changed so I don't know how much credence you can lend to technical levels that are drawn from the 30 year chart but having said that we really have to go off something so what I'm looking at with silver is trying to make some price projections as far as where this move might carry, where it might run into some chart resistance and where some support levels could emerge on this if it tests back some, and based on what I'm seeing here, it looks like we might have some resistance up around 33 and a quarter, 33 dollars and 25 cents, 33.50 somewhere in that general range.  Um if we push through that my goodness this thing's gonna go to 35 pretty quickly.  Downside support we've got a very very good support around 31 dollar level right now.  I'd say even 31.50 there's some light support there on the chart. One thing I think we need to keep in mind when we're talking about silver Eric, if what we think is true what is happening if there's a major short in this market that's being squeezed that's in trouble, the dips in silver or any price setback even on an intraday basis are not gonna last very long.   So we're gonna watch the price action and sorta see what develops around that front.  Generally, what'll happen I wrote a little bit about this on my commentary today at mid day.  What'll happen when a short is trapped in a market and somebody is pushing it, you know they're looking to get out and try to minimize the damage that's already occurred to them.  They've already suffered great damage and now what they're trying to do is kinda stop the hemmoraging stop the bleeding as best as they can.  So whenever an offer comes in that's got any size to it, so in other words let's say a long is trying to maybe take some profits and book out and they've had a good position, they'll say let's take 50 contracts off or 100 contracts or whatever they decide to take off they put it in as one order.  Anybody that's trapped is going to look for a large offer so they can hit that thing and get out because you know they're trying to get out of the market.  And the problem is that you know generally there's not a lot of offers on a market that's moving up at that speed so what'll happen is these guys will hit the offer very quickly it'll disappear or if the market sets back a bit they'll step in front of it very quickly and try to hit the offer before it gets filled or gets disappeared.  So I think we're gonna watch that and see if that's the kind of pattern we're gonna see or the price action we're going to see in silver as we move into this next week but for now let's kinda keep an eye on the 33 and a quarter level.  Of course we have to move past today's high around just shy of 33 but if we push through that I think we'll run up to around 33 and a quarter, 33.50 and then how we handle that level will tell us whether we're going to go to 35 real quick.

Eric: Dan I do want to add in here legendary chart analyst Ralph Acampora in an interview on King World News did talk about silver specifically and the fact that you were just chatting about the old support levels not really applying after 30 years.  He said the people just aren't around anymore that were in those positions so you have to be careful so I think you're doing the right thing giving that information to the listeners to look at which is the stuff you're pointing out.  I want to bring up this piece up with James Turk.  He was talking about a short squeeze in silver and he pointed out, he listens to metals wrap each week and he said "I refer to the insight Dan Norcini provided in the KWN Weekly Metals Wrap namely that silver is trading above all its important moving averages."  You were saying that last week Dan.  That was one of the reasons that we took off from those levels so that was a good call on your part and James also says here, "short squeezes usually end up with a rapid escalation in price, meaning this could be the big one."  So there's potential here Dan you're saying, for this to get pretty ugly and disorderly for the shorts?  That possibility exists?

Dan: Oh yeah it definitely exists.  You know when you look at the extent of the move so far already, when you're talking about for instance the last couple days in silver you had, really Eric you had almost a 2 dollar and 50 cent move in just two days.  You know you do the math on a contract one silver contract 5000 ounces you know it moves a dollar that's a 5000 dollar move that's a big move.  And you know when you start talking about stuff like that, that is not an insignificant amount of money for a short to be bleeding when that market moves against them.  So you know just consider the amount of contracts that are held short in this market and you can see the trouble that these guys are in when this market continues to move higher.  And James makes a good point though too and he has a very good grasp on the fundamentals that you know the physical market of silver as well, is when you have a market that's in a backwardation structure or generally leaning in that direction though too it tells you that the demand is very very strong for that product, the real product.  It tells you that buyers are willing to pay a premium to get the stuff NOW.  I mean that's what a backwardation tells you in a market.  You know they say, "Look, I want it, I want it now, and I'm willing to pay up for it."  And of course when you have that kind of demand in the physical market it's gonna be reflected in the commodity market.  I mean it's just that simple.  And so when these markets push up and they start taking out these moving averages and they start violating technical resistance levels, you know in our modern markets which are based on momentum that is gonna pull in the hedge funds I mean it's just that simple.  These guys are looking at the markets that are trending because they want to push a market that's trending as far as they can in that direction because frankly that's where they make the majority of their money.  You know hedge funds really don't make money in choppy markets.  Markets that are consolidating or range trading back and forth within a defined top and a defined bottom.  They really can't their algorithms aren't set up to maximize profits as a matter of fact they tend to get chewed up pretty bad in those markets.  So when they find a market that's trending boy they're going to come into that thing and push it for all its worth because that's where they're going to make the big money from.

Eric: Dan obviously you and I have stayed bullish during this entire move along with James Turk, Ben Davies and others.  We had the move up to just above 30 dollars toward that 31 dollar area we started to pull back, you and I were saying this move was not done.  You were bringing out support levels and encouraging people to get long on that dip down there.  Part of the reason is we're looking at the big picture on this Dan and trying to give the listeners and the institutional people out there a feel for which direction this thing is going to go and surely this move wasn't over because we're going right through like a hot knife through butter through 31 dollars and here were are near the 33 dollar level.  So we're going to keep trying to do that for them as we go through this move."