A Losing Game

I must admit to being amazed. The utter desperation of The Cartel is palpable. They may still win this battle but it is increasingly clear that their empire is crumbling. They are losing and will lose.

The size of the raids to protect and defend 49.50 are enormous.
The backwardation to 2012 and beyond is growing.
Option premiums for July are extraordinarily high.
Bullion banks are quickly acting to protect themselves by reclassifying bullion so that it can't be used in the delivery process.

All of the signs of a coming signal failure are there. The market participants know what's at stake and are desperately trying to avoid it. However, their own actions betray them as it is quickly becoming "every thief for himself" and, as the saying goes, there is no honor amongst thieves.

All that said, I still don't expect this overnight or even next week. It might happen. I'm just saying that I don't expect it to happen, at least not yet. If I had to give you a timeline, it would look something like this: (Again, I'm attempting to predict the future here. Please don't do not expect me to be 100% accurate with everything I state below.)

1) First notice day for May silver is tomorrow. Expect intermittent raids through the evening, overnight and tomorrow as The Cartel tries to shrink the May OI as much as possible.
2) The POSX continues to decline next week. It will get desperately close to critical support between 70.81 and 72.17 on the cash number.
3) Though volatile, gold and silver rally through next Thursday. Gold breaks through 1550 and even approaches 1560. By Monday, with some Cartel pressure removed, silver finally begins a successful assault on 50 and reaches toward 52 by Thursday.
4) Just as all looks lost for the dollar and the PMs look ready to roll, the BLSBS report comes out next Friday with a better-than-expected (versus reduced expectations) number. Dollar shorts scramble to cover. The POSX gets a desperately needed bounce away from 72. Over the next 10 trading days, it even makes a run back toward 74.
5) In the face of a rising POSX, the metals trade in a downward consolidation from 5/7-5/21. Gold trades back down toward 1535. Silver reaches a selling climax all the way back down toward 47 or even 46.

IF all of this plays out even remotely close to what I've described, I believe we will be set up for the opportunity of a lifetime. From 5/24 until the end of June, silver will streak higher, peaking somewhere between 65 and 70. Gold will rocket higher, too, achieving my stated goal of $1600 before 6/10 and rolling on toward Santa's oft-stated goal of $1650 before the end of the month.

The key is to not get carried away and act in haste. Let the events of the next three weeks play out before you act. Be patient. Wait for your opportunity to strike. You will be rewarded.

Here are your charts for the day. First, here's a 5-minute gold. Very important to note the resilience and strength of the buying every time The Cartel beat it back. Very, very impressive. 1550 here we come. Maybe as soon as Monday.

Take a look at silver. On this hourly chart, you can clearly see the desperate and foolish attempts of The Cartel to keep it below 49.50.

And now, the pathetic POSX in three pictures. Recall that The Fed must choose between the long bond and the dollar. They can't prop up both. In light of yesterday's events, it is clear now that they have chosen the long bond. Though bounces will invariably come (next Friday?), the fate of the greenback has been sealed.

It's 4:20 EDT. Gold, the strong leader of the next 6 days, has effectively shrugged off today's raid and rests just $2.50 off of today's highs at $1536.30. Silver, the object of Cartel scorn, is still $1.17 off of it's highs at $48.39. For silver, the overnight and tomorrow will be wild with volatility. Trade if you must but beware. The Wicked Witch stalks the night like some sort of chain-smoking chupacabra. You have been warned.

TF out.

ps
The blog is now running every day between 90,000 and 100,000 pageviews. With that, the volume of emails I now receive is literally overwhelming. I try to read every one but it is no longer possible to respond to them all. Please do not be offended if I don't get back to you. Thanks for understanding.