Be ready for a pullback

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DSAbug

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We are getting a little stretched after the nice bounce we had off the 1320 lows. We could still end up test 1525 before getting a retracement but I think the odds are favoring that we will be revisiting these levels or be a little lower in a couple weeks.

I'm not saying this to get anyone to SELL. I'm saying this so you are psychologically prepared in the event that post fed, we have a sell off that lasts a week or so. In the long run, it wont really matter. It might not even be all that deep. However, expectations that we go "to the moon" without a little bit of work 1st are unrealistic. Physical buyers *might* even benefit from a little patience because premiums will be cut as well. Eventually, gold/silver that is mined will make it's way back into the system and those premiums will find a new equilibrium.

We are constantly being bombarded with stories about the COMEX, JPM's vault and overwhelming physical demand. If you have a position already, be patient. Continue to stack and scale. DO NOT panic in.
 
Just for once, i would like to see PM's do a nice, slow climb for two or three weeks. Just once.
 
ancona said:
Just for once, i would like to see PM's do a nice, slow climb for two or three weeks. Just once.
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You might get that during the next few weeks. But be aware that after the previous support levels are reached (26 for silver for example), there could be another very wild ride down, possibly into the high teens. If I had unencumbered money, I would go all in at 26 silver on the short side expecting a minimum crash back to 22.

All in all, I don't expect to see the "final" bottom until late October. In the mean time, be sure to have your seat belt fastened. It could be a wild hair-raising ride to the bottom. And if you have heart problems, you should not even be watching.
 
DSAbug said:
... Physical buyers *might* even benefit from a little patience because premiums will be cut as well. Eventually, gold/silver that is mined will make it's way back into the system and those premiums will find a new equilibrium.
...
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You are expecting another spot dip and that will somehow lead to an abatement of physical demand, supply shortages and premiums? I don't understand the reasoning there.

That said, I got some powder drying ...
 
PMBug said:
You are expecting another spot dip and that will somehow lead to an abatement of physical demand, supply shortages and premiums? I don't understand the reasoning there.

That said, I got some powder drying ...
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Premiums will not drop like a rock. I just think we've seen them peak for the time being and the difference between spot and physical will fluctuate and find a new equilibrium which might make a purchase less expensive in 2 weeks than it is today even if futures prices rally. We've seen premiums spike up and drift lower before. This is nothing new.

Markets need to inhale and exhale. We've bounced over $140 off our lows and it's been a straight up move. remember.. I did say BTFD on that Monday so i'm not a wolf in sheeps clothing. I wouldn't sell but I do expect a brief pullback that starts this week. It's NORMAL and provides a better, lower risk entry than buying this strength. All i'm advocating is not reacting to these stories you hear and wait for volatility to decrease a little.

Since gold and the miners are soooooo oversold on a weekly basis, I wouldn't recommend selling a single ounce or share. If you are looking to buy, wait for a few down days. We will get them.
 
Understood. Premiums will abate when buying demand slacks off and production has a chance to catch up. I'm just not sure that we have seen a peak for the premiums yet (especially in silver). If spot prices drift lower, that would tend to bolster demand for physical, so premiums may remain under pressure for a while.
 
Looks like buying demand is starting to return to earth. If the spot price doesn't get whacked too fast, premiums may start to fall as fabrication/production catches up.
 
PMBug said:
Looks like buying demand is starting to return to earth. If the spot price doesn't get whacked too fast, premiums may start to fall as fabrication/production catches up.
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Where this next pullback starts and ends should tell us a lot. We don't want to break the 1280-1300 zone. Getting a pullback over about a 1 week period that ends with a reversal and follow that up with breaking the high of this impulse move should result in ANOTHER impulse move that could potentially break through 1525. That is a level LOTS of people are going to be watching. Things will get VERY interesting if we can break through that level.
 
It seems like we are actually just trading within a range at this point. 1480 seems to be the upper end. Premiums on gold seem to have abated some but silver is still crazy. Especially with the 1oz coins.

Zerohedge mentioned that 10 oz and kilo coins seem to not have the same issue with premiums as the 1oz coins. interesting how big of a difference there is between the two.

http://www.apmex.com/Category/50/Australian_Silver_Koalas_2013__Prior.aspx
 
Ok.. This is probably getting close to being done on the downside. Might be putting in a higher low here. Quite a big 2 day drop and it's likely getting over done short term.

down almost 50 now.. "drama"..
 
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not really strong dollar but ultra weak yen.

Everyone and their dog is short the yen now. It reminds me of when everyone was short the Euro and it was "certain" it was headed down the crapper. It's getting tons of press on CNBC as a "good" thing. At some point it will be recognized as a bad thing.
 
BoJ giving Fed room to expand QE (lol @ "exit").
 
Wouldn't surprise me at all.. I have no idea what is going to cause the dollar to finally correct but speculators are way too short the yen and way too long the dollar. The fact the G7 is this weekend is a perfect time for news to come out that screws with that trade.

As for gold..

These back to back big down days are usually pretty good times to scale in purchases.
 
When you say "scale in purchases" did you mean to say scale "up" purchases? as in now is the time to buy a little bit more?
 
Aubuy,
I think he is referring to the dollar cost average total for all your metals. You bought some at "X" some at "Y" and then some more when the price got slammed down to "Q" .

Add them together and divide by 3 to get DCA.
 
Au...

The way I advocate buying is to always buy a little each month while keeping powder dry for big smackdowns which ALWAYS happen to this group.. I don't buy strength. I look for periods where gold is oversold and you have clear capitulation or some sort of bottoming pattern developing. It's how i've chosen to build up my collection.

Could we go lower from here? Certainly. it's not out of the question to see gold retest those lows of April. If we do, i'll still be a buyer. Am I going to be selling my coins next week? Month? Year? hell no. I'll buy what I can afford until i think it's no longer a buy. IMO, we are no where near that point. Most people don't even know how to buy gold and silver. By the end of this bull market, not only will people know how to buy it, they will own it in size.
 
Price action is consistent with a successful retest. I expect higher prices now. We will have a CONFIRMED low in place if we can take out that high from a couple weeks ago.

So today ends up being a buy day. After today, I wont be doing any more purchases until late summer early fall time frame in anticipation of the typical late summer low.. Between now and then I do expect to see net/net higher prices but lots of volatility.
 
Two levels we need to break..

1420 and 1440 on closing basis. Short term we need to break through or we risk retesting the 1340s and 1320s again.

On a retest, you will want to watch GDX, GDXJ and mining companies. If you see gold make a new low for the move but the miners NOT make a lower low, that is a positive divergence. That will signal the low is in and actually makes a stronger case for a bottom.

If we manage to bust through these resistance level above, I would fully expect gold to make a higher high and target the 1520 zone. Under that scenario, I'll have to see how indicators are looking at that point in time.
 
I think we have 7-10 days of sideways to down that will be frustrating for both bulls and bears. Bears will be wanting more traction than they are getting. hell.. we might already be done with the move. If you are trading, I probably would be cautious. Do not expect continuation in either direction.
 
Todays market action is inorganic buying. I'm watching various issues rise on zero fundamentals and no news whatsoever. This is government cash being tossed in to the river of liquidity. When this pimple pops, it's going to be ugly.
 
Everyone I know says they have a plan to quickly jump out of the market just before the next crash. It's going to be a crowded exit.
 
Aubuy said:
Everyone I know says they have a plan to quickly jump out of the market just before the next crash. It's going to be a crowded exit.
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I think we finished the A of an ABC correction in the general market. the B rise will likely top out at the same time as gold turns up. Then, we see a real smashing.. If we take back more than 75% of the move off the highs, then i'll reassess..

Right now, I think that today's move in gold was fairly predictable based on how things were behaving. I would strongly advise against getting too bearish here though. If we see things stabilize in here, we could still make a run higher. When I see gaps below pennant formations, that usually is a fake out, not a breakdown. I could be wrong but based on how this declined happened, I am not inclined to recommend hedging or shorting based on the pattern. Prior to today, I was trying to convey that caution was warranted..

I say that completely independent of other factors as well. Not the least of which is the speculative short interest. Last week commercials were down to only 65k net short which hasn't happened since 05. If we see another drop this week in the the 40s or 30s, I will be a buyer in the last 30 minutes of the day and likely run to my local coin shop and do some purchases even though I had previously decided not to buy till august/september.
 
COT report showed 59k net short so i didn't do anything over the weekend. It expected follow through to the downside and IMO, this isn't follow through. So that is a good thing. I don't expect much to happen between now and thursday/friday where we have economic news.
 
It was hard watching ~$1180 ish gold and being out of town. Really wanted to hit my LCS at that time. Made it by this morning though.
 
.......and here comes the slam. Someone is stepping on the metals as we speak. Both silver and gold are getting monkey hammered.
 
ancona said:
.......and here comes the slam. Someone is stepping on the metals as we speak. Both silver and gold are getting monkey hammered.
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I think these are the summer lows or within a day. The final smackdown probably comes in October. After that, it's going to be a fun 3-4 years..
 
Unbeatable said:
I wish I was flirting with my DCA! :) My DCA dumped me a long time ago.
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My flirting days are over. Now I can legally marry my DCA and take our little bullion to the LCS without fear of discrimination. :rotflmbo:
 
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