Gold / silver are about to make a big move

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swissaustrian

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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.

29xdfgo.png


35kjqee.png


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

tu.jpg


td.jpg


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/kingworldn...he_LBMA_Gold_Price_Fixing_Scheme_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.
 
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.
 
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.
 
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...
 
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.
 
dereksatkinson said:
Rallying into opex?
.
Click to expand...

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.
 
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.
 
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.
 
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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Nice short squeeze in silver :D

Now we have mini breakout in silver, too.
Would be important to close above 28.
 
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".
 
rblong2us said:
Gold / silver are about to make a big move


gold looking to drop below 1600 ?
Click to expand...

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!
:cheers:
 
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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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...
 
benjamen said:
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!
:cheers:
Click to expand...

This. PMs are only 1% of my portfolio at this point. Need prices to stay low so I can reach 5%.
 
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.
 
ancona said:
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.
Click to expand...

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?!
:flail:
 
benjamen said:
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?!
:flail:
Click to expand...
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.
 
While I agree that these are merely buying opportunities, I am angry on a sort of fundamental level, where things are either right or they are wrong. i believe these derivatives contracts and re-re-rehypothecation of silver in investment vehicles to be entirely dishonest. I am just whining here, nothing serious......move along now.
 
Aggressive short covering in silver into the CRIMEX close. Nothing at all in gold. These isolated silver moves have been becoming more common recently.
 
The breakout which I was calling 4 weeks ago with gold at 1586 and silver at 27.25 (see op of this thread) is now definitely here.
Both gold and silver have taken out their major resistance levels at $1640 / $30.
A weekly close above these levels would be the icing on the cake.

Charts are as of yesterday:

Gold closed above it's 200dma yesterday for the first time since march, the 50 dma has started rising about 2 weeks ago.

261gb9x.png



Silver is fighting to get above it's 200 dma at 30.52 as I'm writing this. It didn't close above the 200dma since late February which was an outlier, the really consistent trading above the 200 dma goes back to October 2011.

xfnww1.png
 
wow, these charts at first look like the mothers of all consolidating triangle patterns, on few year's scale. Good man, thanks!

From my abysmal TA skills, it is said that the breakout from consolidating triangle paaterns is usually violent, and usually going the same direction, as before entering the pattern (that would tell us that in this case TA is on the same side as sanity and our beliefs here - strong move upwards coming) - is that true?
 
bushi said:
From my abysmal TA skills, it is said that the breakout from consolidating triangle paaterns is usually violent, and usually going the same direction, as before entering the pattern (that would tell us that in this case TA is on the same side as sanity and our beliefs here - strong move upwards coming) - is that true?
Click to expand...

Yes, that's what TA says. Once the direction of the breakout (up/down) is clear, things move very quickly. The bigger the launching pad (i.e. the lower part of the triangle), the more energy is out there for the breakout.
Combine this with the fact that there are massive shorts having to get out quickly, it really is a very explosive setup. :cheers:
 
Gold just bounced back from 1675 which was the opening gap for the July 2011 rally all the way to 1926. If it takes out 1675, the next target would be 1700.

Momentum traders are probably entering the market, too.
 
It is odd that Cramer is bullish on gold...

http://finance.yahoo.com/news/crame...RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

"We have a major rally going on in the precious metal right now, and many people don't understand the importance of that rally," he said. "If they did, they'd be more inclined to buy the stock market rather than sell it."

"Cramer added that gold is what investors buy when they think their currency is about to be debased, something that can be a positive force for the global economy."

"At the moment I think there's tremendous gold buying coming from all over the world precisely because of the race to debase currencies," he said.
 
Any time Cramer is mentioned, it is obligatory to reference his total pwnage by Jon Stewart:

[ame="http://www.thedailyshow.com/watch/thu-march-12-2009/jim-cramer-extended-interview-pt--1"]Exclusive - Jim Cramer Extended Interview Pt. 1 - The Daily Show with Jon Stewart - 03/12/09 - Video Clip | Comedy Central@@AMEPARAM@@http://media.mtvnservices.com/mgid:cms:item:comedycentral.com:221516@@AMEPARAM@@221516[/ame]
 
big move

One thing to watch though. According to Ed Steer who talked to Ted Butler Friday

quote

In total, the eight largest short holders are short 36.2% of the entire Comex futures market in gold. JPM et al

the raptors are very close to holding a record short position in gold.

"The last time the gold raptors held such a large net short position was February 28th...the day before LTRO-2 and the Leap Day Massacre." Let's see how it turns out this time.
 
swissaustrian said:
Gold just bounced back from 1675 which was the opening gap for the July 2011 rally all the way to 1926. If it takes out 1675, the next target would be 1700.
Click to expand...

As I have several times said in the past, until 1675 is DECISIVELY taken out, we are still in a downtrend. We have hit 1675, and SO FAR, it has held. Will it hold next time? Time will tell.

When, not if, 1675 fails to hold, look for a retracement to the downside for a few days/weeks (super buying opportunity) before gold races for the moon.

Until then, sitting on the sidelines seems wise to me. It is still possible (not likely) that gold could test its recent lows around 1500 again before rocketing upwards.

Remember 2008. Look at the end of August in 2008, then 56 days later at what gold looked like. We could have a similar scenario again.
 
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mmerlinn said:
As I have several times said in the past, until 1675 is DECISIVELY taken out, we are still in a downtrend. We have hit 1675, and SO FAR, it has held. Will it hold next time? Time will tell.

When, not if, 1675 fails to hold, look for a retracement to the downside for a few days/weeks (super buying opportunity) before gold races for the moon.

Until then, sitting on the sidelines seems wise to me. It is still possible (not likely) that gold could test its recent lows around 1500 again before rocketing upwards.

Remember 2008. Look at the end of August in 2008, then 56 days later at what gold looked like. We could have a similar scenario again.
Click to expand...

Investor sentiment in gold is not the same as it was in 2008. There isn't nearly as much leverage in the market these days. So even if we'd get a stock market collapse, the plunge in gold shouldn't be as extreme as it was in 2008. The same applies to silver.

Here is Gene Arensberg's recent take on the big upmove in gold/silver with indepth analysis of investor sentiment:

 
Well.. to be honest.. Sentiment has improved a lot in the space on this last pop. I wouldn't be surprised to see Jackson hole disappoint and give us ANOTHER entry.
 
Today's monster rally was clearly a short squeeze. However, it still means more than that. Gold took out the very important 1675 barrier and is about to close the week above it. That is major news. Silver's ultimate barrier is 32.5 which could fall within days.
The hui closed right below the major resistance at 460.

September 6th is going to be the next big test. The ecb is expected to lower rates and provide more details on it's bond purchasing plans.

Have a nice weekend and a nice holiday on monday (in the us). :wave:
 
Gold and silver have both FINALLY broken out of their downtrends. Now it is just a matter of a pull back for the buying opportunity of a life time. No clue how far back the pullback will be, but it should be significant. Once that happens, the sky is the limit.

Anyone wanting to get on board should seriously think about buying some on every dip until there are no more dips lower than the last one. THEN HANG ON FOR THE RIDE OF YOUR LIFE.

At the outside, and totally unrealistic from my point of view, is a possible MAXIMUM 40% pull back from today's high for both gold and silver. Whether that happens or not is immaterial if one is buying on every dip lower than the last one.
 
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