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Old 07-22-2012, 12:29 PM   #1
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Lightbulb Gold / silver are about to make a big move

Both gold and silver are in a classical breakout formation, over the last two months, their trading ranges have gotten tighter and tighter. Volatility is disappearing.

They made lower highs and higher lows.





These are textbook breakout formations, the question is:
Do we go north or south?





Arguments for north:

- Supports at 1525 and 26 have been holding very firmly.
- Silver seems to rally everytime it gets below 27 recently (Sprott buying?).
- Strong seasonality.
- Physical demand seems to be picking up (see http://kingworldnews.com/kingworldne...e_Is_Over.html )
- Possible CTRL+P announcement by the FED on 8-2
- Commericals are barely net short the market (few hedging)
- Speculators would be forced to cover their huge shorts = massive rally fuel.
- geopolitical instability (Syria, Iran, Egypt).
- bad economic data -> QE

Arguments for south:

- USD might appreciate even more due to Eurozone chaos.
- Equity market crash could cause panic liquidation in pms.
- Good economic data -> NO QE

Unknown effect:

- options expiry on 7-26. Usually it's negative but the low level of longs and heavy shorting by speculators could cause a counterintuitive rally caused by the put options underwriters.

Anyway, it's gonna get interesting pretty soon.
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Old 07-22-2012, 03:08 PM   #2
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SA,
This incredibly thin trading market is like a coiled snake, waiting on their prey to move so they can strike. With record low volume on the DOW, it will noly take a small black swan event to set the dominoes fumbling one after the other. Tonights Asian market action should be interesting, with PM's telling us early on what to expect tomorrow.
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Old 07-22-2012, 06:10 PM   #3
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SOMETHING must happen soon. Both the floor line (at about 1525) and downtrend lines converge in short order. One or the other cannot hold much longer.

My gut says south, but my brain says north. I don't know which to believe. Regardless, once the breakout happens we will see the spring uncoil rapidly in that direction.

My best guess now is a break to the upside crashing against the downtrend line. If it can't decisively crack that line, look for 1300 or even 1200 gold by the end of the year.
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Old 07-25-2012, 11:40 AM   #4
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Todays strength (in gold, not so much in silver) seems to be opex related, so they question is: what comes after tomorrow?
If friday's close were to be above 1600, gold could get it's breakout. It would drag silver with it then...
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Old 07-25-2012, 11:45 AM   #5
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Rallying into opex?

I think it has something to do with the Fed comments honestly. they are signaling they are going to ease in the next 2 months.. That's not very long and those funds that are short gold are probably starting to cover.
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Old 07-25-2012, 11:54 AM   #6
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Originally Posted by dereksatkinson View Post:
Rallying into opex?
.
Yes. As I said in the op. These are unusual times. There is a very small long oi (calls) and quite a large short position (puts) by the speculators (i.e. hedge funds). Bullion banks and other hedgers ("commercials") on the other hand are barely net short.

This setup could cause a rally into opex.
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Old 07-25-2012, 12:30 PM   #7
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I've been noticing over the last few that gold has been doing a little better than the inverse dollar relationship - eg actually gaining real value, though not a ton.
Seasonality says - yup, the time is within the next month or so. Or, time to BTFD, in other words. I'm fairly heavy long into paper gold right now, some at fairly nasty red percentages - I didn't sell because, hey, it's gold. Looks like I'll be picking up a lot more soon, and sell some when the composite book turns green but starts going down a little, just to be playing with "house money". I always keep the core holdings of course - but I'm well longer than that now, and will get longer yet soon. I want to see it break this trading range first, rather than try to bottom pick.
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Old 07-27-2012, 11:41 AM   #8
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Poor performance by pms today. Probably due to profit taking, running into resistences at 1630 and 27.8 and options traders dumping their opex manipulation longs.

Three recent articles at kwn by Peter Schiff, Dan Norcini and some chartist all suggested that we have seen the breakout in gold during the last days. I'd wait until after the fomc announcement next week (8-2) to finally call the breakout, however.
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Old 07-27-2012, 01:36 PM   #9
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I just looked at a gold chart. It appears that we may have a MINOR breakout to the upside here. Even with that, we are still in a major downtrend for the time being. We need to decisively punch through 1675 basis gold today to break the major downtrend. I don't see that happening in the near future. What I see is gold stalling around 1650 for a while. If it stays there long enough, we will see a major breakout to the upside.

As far as silver goes, there is no indication of a breakout at all, either up or down. Just trending sideways.
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Last edited by mmerlinn; 07-27-2012 at 01:39 PM. Reason: Added silver
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Old 07-30-2012, 10:12 AM   #10
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Nice short squeeze in silver

Now we have mini breakout in silver, too.
Would be important to close above 28.
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Old 07-30-2012, 11:10 AM   #11
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The CB's will define this tale in the short term. I expect PMs to generally go up in hopes of something more than jawboning - and if nothing concrete happens in the next few days, take a dive. At least the 50 sma is finally turning up.

To me, that's just the usual wiggles around the trend, and the main trend is set by worldwide debt ceilings, particularly ours, which may have to get a raise just to get to the elections. Of course Timmy might find a way to steal pensions etc again for a bit to avoid that need...due to politics, but a raise in the ceiling, which is very correlated to all the really big moves, is inevitable at some point, the main question being - real soon (we're at the ceiling now, or very close) or after the election. Depending on your trading timescale, either could be called "soon enough".
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Old 08-01-2012, 08:35 AM   #12
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Gold / silver are about to make a big move


gold looking to drop below 1600 ?
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Old 08-01-2012, 08:39 AM   #13
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Originally Posted by rblong2us View Post:
Gold / silver are about to make a big move


gold looking to drop below 1600 ?
I think we will see swings in the next 48 hours as rumors of what is being discussed at the FED meetings swirl around the internet.

Personally, I hope prices drop! I have an August purchase to orders!
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Old 08-01-2012, 09:13 AM   #14
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It's just paper boys, just paper. No one in their right mind is parting with any physical metals. Da Boyz are simply dusting off their desks and shuffling around their "assets" such as swaps and futures. This is nothing, go back to sleep.
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Old 08-01-2012, 09:49 AM   #15
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Look out below!

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Old 08-01-2012, 11:25 AM   #16
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As long as gold stays above 1550 everything is ok. It managed to regain 1600 so far after bouncing back from the 50dma at 1592, so there's nothing to worry about so far. The real action comes later at the FOMC announcement...
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Old 08-01-2012, 12:48 PM   #17
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Originally Posted by benjamen View Post:
I think we will see swings in the next 48 hours as rumors of what is being discussed at the FED meetings swirl around the internet.

Personally, I hope prices drop! I have an August purchase to orders!
This. PMs are only 1% of my portfolio at this point. Need prices to stay low so I can reach 5%.
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Old 08-01-2012, 12:53 PM   #18
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It looks like PM's are fighting back this early afternoon. Although volume is pretty light, maybe there are enough buyers to bring us back up to 27.25 - 28.00

I hate watching these drive by shootings all the time.
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Old 08-01-2012, 12:58 PM   #19
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Originally Posted by ancona View Post:
It looks like PM's are fighting back this early afternoon. Although volume is pretty light, maybe there are enough buyers to bring us back up to 27.25 - 28.00

I hate watching these drive by shootings all the time.
Am I the odd one that likes when this happens? In both commodities and equities I like to wait for the market to over react to some bit of news and drive the asset belows it's realistic value before I buy that asset. To me these types of "drive by shootings" are large flashing buy signs!

So many cheap PM prices! Do I want $1,400 plat, $585 palladium or $27 silver?!
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Old 08-01-2012, 01:15 PM   #20
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Originally Posted by benjamen View Post:
Am I the odd one that likes when this happens? In both commodities and equities I like to wait for the market to over react to some bit of news and drive the asset belows it's realistic value before I buy that asset. To me these types of "drive by shootings" are large flashing buy signs!

So many cheap PM prices! Do I want $1,400 plat, $585 palladium or $27 silver?!
You're not the only one. I used to day trade a bit, and would screen for stocks that dropped >5% overnight. If they were a good company and were excessively punished for missing earnings by a penny or two, I'd buy. Usually could make 2-3% over two days.
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