Wednesday, February 2, 2011

Well, What Is It?

I have a question for you to ponder.

Is copper now greatly overvalued or are the PMs undervalued/suppressed?

Take a look at this 12-hour March copper chart. Note the straight UP rally from last week to new highs.
Recall that most everything sold off into mid-November, after the initial rally post QE2. From that mid-November low, copper is now UP 25%!

Nw look at silver:
And, lastly, look at gold:
So, again, here's your question: Is copper grossly overvalued or are the PMs undervalued?
A week ago, you could have made the case that copper was "coming back to the field". Today, not so much. With copper extending to new highs, it is inevitable that silver rallies back toward $31 in short order. Gold will rally, too, back UP near the $1400 level.
A second question: why the disconnect?
OK, that's a rhetorical one. I think we all know the answer.

Onto today...we continue to slug it out with the EE. Gold just cannot seem to make any progress to the UPside. More importantly, however, it seems well-bought at $1325, too, so a move higher through that pesky $1350 level is certainly coming very soon.
Silver continues to hammer away at $28.50 now that $28 has been put in the rearview mirror. This is all well and good. Let's just keep grinding higher. Eventually, the sellers step back and we catapult UP toward $29.50-75.
As I type, I've got 1335 and 28.25, so lets keep an eye on things today.
Don't forget that Blythe loves to raid on Wednesday and Thursday as there won't be another CoT survey until next Tuesday which gives her plenty of time to square her books. We "documented" this back in December. Here's a reminder:
http://tfmetalsreport.blogspot.com/2010/12/wicked-witch-of-new-york.html

Have a great day. I'll update as needed. TF

p.s. The Turd is not an alias for James Turk, though it sure seems that we think alike:
http://www.beaconequity.com/silver-reaches-important-bottom-says-pm-expert-james-turk-2011-02-01/

61 comments:

  1. Seriously, how the F can anyone NOT be a buyer when they are already talking about QE3? It's a form of insanity, as someone else said recently.

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  2. Fair enough. But let's just say that if Turk is on CNBS in February and starts making references to "ole A cups", "Turd Town", and "Feeling Good Lewis", this denial may not be all that effective.

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  3. flaunt: Just keep buying your physical. Let the machines sell the paper. Eventually, they will turn into buyers, too, but for now they're stuck in sell mode.

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  4. Seems like dips in SLW are getting harder and harder to catch. That would be a good sign for metals overall, yes?

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  5. Eric, I would think so. I considered buying some options on SLW during the last big dip but I didn't.

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  6. Turd, I posted something similar late last night but it probably got overlooked. Anyway it would be great if you have the time to opine on this.

    Here's a thought: If large commercials (Bullion Banks) were forced into a short squeeze on the Comex by longs standing for delivery - I would imagine, since they ( the BB's) are authorized participants eligible to redeem SLV shares for bullion, that they would do just that. In affect giving them access to bullion at off-market prices. By off market I mean having the ability to buy tonnage and not move the price. I'm therefore anticipating a continued and increasing drawdown in SLV shares/bullion holdings. The BB's have enough money to buy as many SLV shares as needed and since buying SLV is paper silver and doesn't move spot why wouldn't they - buy the paper redeem to physical, serve the longs standing for delivery, escape short squeeze (at least for the moment since in the long run they would be selling off their fractional reserve unallocated silver deposits and such drawdowns can only go on for so long without replenishment/reshuffling). Any thoughts as to why this wouldn't work? is this BB's insurance policy (get out of jail card)?

    If I were the Morgue that's what I would do so I'm just trying to anticipate how I'm going to get f$cked

    tx,

    -v

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  7. Turdster, isn't copper up because JPMorgue has cornered the copper market and owns 90% of the OI?

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  8. Victor: You're close...why do you think the fraudulent POS ETFs were created in the first place. I mean, besides the obvious opportunity to rape the general public for annual management fees.

    Ollie: I don't buy the JPM-corner-copper story. If they owned 90%, Drc would be trading at 20, not 4.5

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  9. 2 to 8 feb is Chinese new year holiday.

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  10. I think about 3:30 pm EST today will be a good time get some more AGQ.

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  11. The bottom line is there is a fierce battle being waged with ponzi. There is an unrelenting effort to own physical which is NOT stopping. This is going to end ugly. The next move in Silver will be profound. Don't worry about the interim. Its all smoke and mirrors. Just take delivery of physical and thank the ponzi.

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  12. Eric and flaunt

    Friendly reminder that the SLW Q4 earnings call comes March 7th or 8th

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  13. "2 to 8 feb is Chinese new year holiday."

    Could be used by EE to knock down the PM's because a big buyer is on holiday, making EE's work easier.

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  14. Yup! Just keep putting your hands on the physical limited resource of silver by discretionary means!! If you're only in for the crash jpig morgue buy silver; an ounce, then you've done you're part for we the people returning to an honest hard currency system!! As the drop of water persists in consistently penetrating; eroding a granite rock over time; so the bankster fraudsters eventually get crushed; caught in their own craftiness!!

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  15. Maybe the Chinese New year explains Wynter_Benton's Feb 8th start date?

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  16. @Tyler: I'm still working on my first cup of coffee. What happens at 3:30pm EST today?

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  17. 28.50-75 lol, that is awesome, made me laugh out load like LOL...come to my blog too for different silver and PM info as well, updated daily. Keep up the great work Turd.

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  18. Anybody here remembers that story on yahoo board ?

    Where 8th of Feb was told as turning point and expected low`s of PM´s ?

    Not that far away from reality....

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  19. Eric and LH, thanks for your replies on Turd's last post. Worth noting that your divergent views represent the polarities in my own head. My wife and I are young (30+ earning years left) so I guess I feel the aggressive cash-out all-in PMs "physical as apocalypse insurance" approach is somewhat reasonable [being LH's perspective].

    I guess my fear is that *eventually* the USD will default, and even before that happens the money supply will grow by 100's of times ... so $2700 gold and $60 silver don't seem so improbable [Eric's view].

    In the end I suppose a tough call like this is a decision for her & I to make, but I do appreciate the objective external feedback.

    Also, Turd Ferguson, you are my hero. Never grasped TA until I found your site. Thanks.

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  20. I respect all your opinions on paper silver, but I disagree that the paper price can diverge from physical both significantly and for an extended period of time. As evidence I cite the 2008 divergence. Paper came screaming back to meet the physical reality. There are people with lots of experience in the silver industry who have said paper can only be suppressed for so long.

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  21. kliguy hits it right on the sweet spot and parks it in the upper deck.

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  22. As noted above, our silvergoldsilver friends have started a blog, too.
    Please be sure to visit it. They're doing great work educating the masses!

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  23. flaunt: I agree with you. I know Harvey and other notables disagree and that definitely gives me pause. But IMHO, the absolute worst thing that can happen to the EE in PM's is to lose control of price discovery.

    Once that happens -- as evidenced by APMEX, Sprott and others charging absurd premiums -- it's all over for the US Economy.

    I think they're flirting with it now, but they'll let silver prices spike here soon to bring back some equilibrium.

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  24. i added a new chart for GOLD / Silver / HUI and CRB.
    http://nachrichtensammlung.blogspot.com/2011/02/commodity.html
    Remarkable is that drop after Lehmann !

    Imagine what prices we could have right now without that 2 year delay caused by Lehmann...

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  25. Dilemma

    Altough I have a strong opinion that silver will rise massively and allows for huge potential gains at buying silver contracts long at the Comex and asking for delivery I see the problem that a) comex might default in this case and less likely b) private possession of silver might be made illegal in this instance, I see no real way out of this dilemma. Does anybody? At least I can comfort myself that due to the price suppression of silver and gold I was able to buy physical gold and silver at all in the last two years to low prices.

    I tried to think about the probablity of a default. If for instance silver would rise to 90 $ and gold to 2700 $ there could arise a loss for silver short sellers of e.g. 19 billion $ and 32 billions $ for gold short sellers (50% of current open interest 128000 contracts with a loss of 60$ per unze for silver and 50% of 470000 gold contracts with a loss of 1350 $ per unze) .

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  26. @CO_DAN

    I had a feeling it might get whacked today (being Wednesday) and was thinking about buying if it dropped. Could dump tomorrow morning if worried about weakness from the Chinese new Year.

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  27. Thanks, Tyler. I must admit to having gone mostly "all in" yesterday morning. I expect we may have the rest of this week to get locked and loaded.

    Whether or not Wynter is legit, I don't plan on leaving too much fiat on the table come Feb 8.

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  28. Everyone keeps assuming there will be weakness due to the absence of Chinese traders... But what if we see the opposite? So far this week silver has been doing great. I do find it interesting that Feb 8 coincides with the supposed date Wynter and her clan will start acquiring contracts.

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  29. pick52--
    are you suggesting you'd like to be in the stock before earnings or after?

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  30. FUTF? At lunch time no less... Extreme desperation.

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  31. Scotia Mocatta sells out all silver bars.

    http://www.zerohedge.com/article/scotia-mocatta-sells-out-all-silver-bars

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  32. FUBM alert. Looks like Blythe is having her fun..

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  33. FWIW, just to see what would happen I put an ungraded (but nice) 1986 ASE up for sale on Ebay a few weeks ago... it sold for $51 (not including shipping), I think I set a record. Maybe it was my sales job in the info I provided on the silver fundos in the item description. Anyway, demand is big out there for people who don't seem to have access to coin dealers.

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  34. Eric--

    I play options and I've already started averaging very cautiously and slowly into DITM March calls on SLW

    Look at a 6 month SLW chart. The share price was right around $26 when their Q4 started, reached $42.34, and closed December at $39...a 50% share price move in the quarter alone

    Since SLW is a royalty company with about the best business model possible, I have to believe they'll report an incredible quarter. That being said, the share price does seem to move in direct correlation to silver spot, so I am trying to be as cautious as possible. Also, I'm taking into account that everyone is expecting a good SLW Q4 and so there may not be a huge launch during/after the earnings call

    Still, I love the odds of silver spot and SLW moving higher in the very near term and March calls buy you plenty of time for that to happen

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  35. I'm just buying the stock outright. Put in some last week at an avg cost of 30.00, so I'm happy. Was thinking about another little slice this week yet, if Blythe would oblige me.

    Which looks like it might be underway right now...

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  36. I see a "flash crash" of 28.13. WTF.

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  37. That's a great call, too, of course...and I could be wrong about the earnings. Shares are definitely the more prudent way to go

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  38. Has anyone here read the road to roota public archives? I'm not saying I agree or disagree with this gentleman's view but I find the two articles around the Yamashita gold and 911 very intriguing.

    http://www.roadtoroota.com/public/145.cfm

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  39. flaunt - Just Blythe stepping on the gas as she goes towards the cliff. Stay tuned for fiery explosion.

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  40. Look at the TLT chart. The bottom is in danger of falling off in the long bond market so a raid in gold and silver is in the cards.

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  41. This comment has been removed by a blog administrator.

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  42. 10 Yr Treasury just again bounced off 3.50 like a wall is there. They are playing wack-a-mole.

    It will all collapse at once at some point. Scary!

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  43. Picked up this nice silver coin today today to celebrate Chinese New Year. The lighting makes it look like gold. I wish!

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  44. TLT troubles, strengthening dollar, light volume, Chinese New Year.

    I'll be surprised if we get a FUBM here. If we do, then watch out!

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  45. I just caught today's dip and bought silver using a new method.

    You might want to take a look at some 0% interest rate credit card offers out there.

    http://www.creditnet.com/Credit_Cards/0_percent_balance_transfer_credit_cards.php

    I just got the JP Morgan/Chase "SLATE" credit card. It offers a 0% interest for the first 18 months.

    There is something inexplicably satisfying about maxing out the card buying physical silver, knowing JPM will pay for the metal while I get an interest-free float for 18 months.

    I will pay the card off in full just before interest starts accruing, assuming JPM is still in business at that time.

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  46. @JP - I was thinking about this as well. The past week I have had three sepearate 18 month 0% APR come to my door. Even though I would probably make money, I'm not sure I want the debt.

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  47. ofcourse copper rises, JPM controls almost all copper

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  48. JP-yeah, I did the same thing last summer. One from Citi and one from B of A. Suckers.

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  49. Short-term silver technical analysis:
    http://www.youtube.com/watch?v=ch-n46rvnus

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  50. Citizen Doc: I love the Perth Mint coins. I have a batch of the Year of the Tiger and a slew of the Kookaburras. The quality of the finish and the great plastic containers are awesome. I've noticed they are getting great premiums on ebay as well.

    Was going to place a link but the mint's website is crashing at the moment.

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  51. You havent missed the boat. Far from it. A 3-minute intra-day chart could excite even a 5 year old. Come off it guys, a bottom is not yet in place. I know its hard to picture an actual correction with everything thats going on at the moment however it NEEDS to happen before the rally can finally get back on track. Watch out for a correction in commodities (yes, PM included) take a blip together with the Equity Index. There are too many USD shorts out there so let that be a driver for it all.

    It makes no difference to the fundamentals though, just dont get too greedy :) If you are a hoarder like most, then ignore this post.

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  52. I was able to capture a "disappearing melt-up" similar to what I had seen yesterday, a 1-minute inverted hammer at 12:32 today whose entire shadow (up to $27.82 from $27.50!) disappeared a couple of minutes later. Effectively, I suppose, the trades must have been re-wound somehow.

    I provide screen-shots on our blog at:
    http://blog.bacq2bacq.com/?p=548

    Any comments, anyone?
    b2b

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  53. Weather break while we hove at today's bottom.

    Amazing Photo of Chicago snow-packed interstate!

    Any of you poor souls in the Chi-Town area?!

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  54. Check out AUD today, up 1% because of the cyclone. Lots of money already being spent there due to the floods, rebuilding after this cyclone is going to boost their economy. AUD should remain strong for a while.

    Forex

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  55. @JP- I too am considering the 0% credit card strategy. I hate debt, but the idea of buying July 2012 physical gold for today's prices is very tempting.

    Another twist - The Slate card cash advance fee is only 3%. That comes out to 2% annually. I don't want to be overconfident, but I really think I could invest the cash and make a whole lot more than 2%.

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  56. Justin-Yup, same storm, different state. More shoveling to do. I feel your pain.

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  57. just picked up my 160 silver eagles today over at Gainesville Coins. Owner said it's never been so busy, especially with walk-ins. I paid for the eagles January 24th, but they were out. Not too long of a wait though. I have 70 buffaloes that I'm waiting for now also that might be in this Friday.
    Happy to get to do my part fighting the EE w/ you guys!
    Turd's site is right up there now with what I read first theing every day all day long along w/ ZH and Drudge.

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  58. Nice one Ian. Welcome aboard the Silver Bullet.

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  59. @justin cars got stuck on the thruway here in Buffalo last month just like that picture in Chicago. People were in there cars overnight. Glad I was at home!

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  60. Not a bad video if you can make it past the goofy beginning

    Mike Maloney speaking with David Morgan:

    http://wealthcycles.com/blog/2011/01/26/david-morgan-mining-expert-touts-physical-silver

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