Thursday, May 31, 2007

Tickets? Tickets Please.

GDP revised lower to 0.6% in first quarter
Corporate profits growing at slowest pace in five years

WASHINGTON (MarketWatch) -- The U.S. economy slowed to a crawl in the first quarter, held back by falling investments in homes, shrinking inventories and a large trade gap, the Commerce Department reported Thursday.

The economy grew at a 0.6% annualized pace in the quarter, revised down from the initial estimate of 1.3%, the government said in its second estimate of quarterly gross domestic product. It was the slowest growth since late 2002.

Corporate profits before tax increased $20.3 billion, or 1.2%, to $1.67 trillion after falling $4.9 billion in the fourth quarter. Before-tax profits are up 6.3% in the past year, the weakest year-over-year growth since the fourth quarter of 2001.

Abysmal news to be sure... That is unless you're invested in Precious Metals or short the US Dollar. Strangely enough, the stock markets thought it was good news. LOL, go figure. Following this headline this morning came this:

More gains at open
Stocks chart a course higher, taking weak GDP data in stride, weighing jobs, more.

The GDP report "is being overlooked as it is backwards looking and likely represents a bottom," said Michael Woolfolk, senior currency strategist at The Bank of New York. "A weaker [first-quarter] figure will provide a more advantageous base for the strong results expected" in the second quarter, he said.

Likely represents a bottom? That's pretty wishful thinking...

Taking weak GDP data in stride? Somebody please explain to me how this data is good for the general stock market. Corporate profits are rising at their slowest pace in five years, so I should run out and buy some more stocks? Sure! Don't you get it? This means the Fed will have to cut interest rates and that means the Stock Market will go higher. LOOOOOOOOOOOOOOOL. I'm sorry, I doubt it. Stocks are very expensive. Gold and Silver are very cheap. I think I'll buy some more of the cheap stuff, and take my chances...thank you very much.

Need another good reason to own Gold and Silver? Read this story from the USA Today:

Taxpayers on the hook for $59 trillion

The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.

Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.

The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.

Very nice moves in Gold and Silver today...and with some significant volume. Silver has cleared its 20 day moving average and is on the cusp of clearing it's 20 week moving average. This has the shorts in a panic and is encouraging real buyers to step back into Silver. More real buyers will put the squeeze on the shorts mightily. Gold closed above 658 to confirm it's downtrend break and now sets it's sights on cracking 664. A close above 664 could set up a rapid short squeeze to 675. But let's not get ahead of ourselves...let's see how we close the week in Gold and Silver, and take a look at The Big Picture over the week end.

We have May Nonfarm Payroll numbers Friday morning...I suspect the number will be weaker than expected. We will also get a peak at how well American consumers are doing at holding up 70% of the economy. I suspect they are spending a lot on Food and Energy.

Oh my, Oil is up again? Surprised by the draw down in crude inventories? I'm not. Come on...for the past two weeks the blah-blah was all about increased refining capacity. What do oil refiners do? They r-e-f-i-n-e oil. And if you're refining oil, there will be less left over than when you started. 5th grade math. I seriously doubt there is an economist out there that is Smarter Than A 5th Grader.

Silver Resistance: 13.49 / 13.55 / 13.75

Silver Support: 13.37 / 13.23 / 13.11
__________________________________All prices SPOT

Gold Resistance: 664 / 667 / 672

Gold Support: 658 / 656 / 652

Battle Royal: Gold vs US Dollar

Europe central banks to miss gold sale quota again
Thu May 31, 2007 6:10AM EDT

LONDON (Reuters) - Europe's central banks are again likely to sell less gold this year than an agreed annual limit of 500 tonnes, despite a pick up in recent weeks, analysts say.

"Overall, CBGA sales are most unlikely to be maintained at this recent rate. However, we could end the agreement year a bit above 400 tonnes, rather than at or below the level," Philip Klapwijk, chairman of metals consultancy GFMS Ltd, said.

Analysts said that probably a few banks were in a hurry to sell to maintain the ratio of gold in their total reserves, but most others would go ahead with their announced plans.
Gold's share in the reserves of central banks has risen in the past years due to a sharp rise in gold prices and a drop in foreign exchange reserves at some central banks following their current account trade deficits, analysts said.

Despite all the yada-yada we have all engaged in about central bank gold sales, ultimately Gold's place at any given time is most likely related to the US Dollar's place at that same time. More often than not, these two are inversely joined at the hip.

On May 1, 2007 The US Dollar bottomed intraday at 81.25. On May 6, 2007 Gold double topped with an intraday high of 690.80. Since that week the Dollar has clawed higher and Gold has slumped lower. This would be the most concise technical reason for the past month's frustration for gold bugs. Contract rollovers and central bank gold selling may have exacerbated the current situation, but in the end this pitiful Dollar bounce is what really has Gold in a bit of a bottle today. And speaking should be no surprise that the Dollar "bounced" when it did.

The gas tank on this puny short covering rally in the Dollar looks to by running on empty. But when it's easier to print money than it is to mine Gold one can never count the Dollar out. Technically though, this "dead cat bounce" should revisit the pavement soon.

Gold is showing some technical strength here. An inverse to the Dollars technical weakness. Gold has broken it's RSI downtrend line, and as is often the case this portends a breakout in price. Gold must close above 658 to confirm the break of the May 6th downtrend line. MACD is peering into the the bullish camp here, and a crossover would also confirm the trendline break. Stochastic is paddling up a mean river, but slowly making headway.

Many recently have pointed to Golds annual weakness in the June-July-August period. I say look back no further than to the summer of 2005 to see other wise. The run in Gold and Silver to the May 2006 highs began in June of 2005. I have suspected for some time that 2007 would mirror 2005. It is beginning to look that way more with each passing day.
Silver Resistance: 13.19 / 13.23 / 13.32
Silver Support: 13.11 / 13.05 / 13.00
_______________________________All prices SPOT
Gold Resistance: 658 / 660 / 664
Gold Support: 656 / 652 / 650

Wednesday, May 30, 2007


Chinese Shares Plunge 6.5 PercentWednesday

May 30, 7:05 am ET

Chinese Shares Plunge After Government Raises Trading Tax to Cool Market Boom

The declines came after the Finance Ministry tripled the "stamp tax" on stock trades from 0.1 percent to 0.3 percent, effective Wednesday. The ministry was trying to "cool (the) stock market," the official Xinhua News Agency said.

You can bet this will have all kinds of negative affects on EVERYTHING today...and probably for all the wrong reasons as well. I'll tell you this, if I were a Chinese and I had made me a pile 'o yuan in that stock market, I'd be buying me some cheap Gold and Silver with the profits.

In regards to this " stamp tax increase" it should be noted:

The stamp tax was set at 0.6 percent when it was introduced in the early 1990s but has been cut repeatedly to encourage the Chinese public to invest in stocks. It fell to 0.1 percent in 2005.

Any fall in the Chinese Stock Market should have little if any effect on their economy and it's commodity demands:

Economists say a fall in the markets should have little impact on China's economy, because growth is driven by exports. Also, households have much more money in savings than in shares.

A fall in prices of even 20 percent is likely to have only a modest economic impact, J.P. Morgan economist Frank Gong said in a report to clients.

Gong noted that during a long bear market in 2001-2005, when the main market index fell from 2,300 to under 1,000 points, China's economy grew by about 10 percent per year.

The World Bank, in a report Wednesday, raised its forecast of China's economic growth this year to 10.4 percent, up from 9.6 percent, and said its current account surplus could reach $340 billion.


Silver had a real nice pop yesterday, as did Gold. However a dump in OIL prices clipped both metals wings. Oh my, Nigeria inaugurated their new president...hey let's sell some oil contracts. Never mind the world supply vs demand issues and the annual summer increase in the price of crude. we'll here Oil is down because of "speculation" that China will use less because their stock market went down...I think we covered why that is hooey above. The Chinese stock market is what is too hot for the Chinese Government, not their economy...It WILL keep chugging along.

But I digress...SILVER! Very nice move yesterday, unfortunately the volume was a little light for a downtrend line break, but a break of the line we have gotten. A close above 13.03 and a bullish MACD crossover...things are looking up! The 20 day Moving Average was pierced intraday, but we were stopped in our tracks by the first Fibonacci line of resistance at 13.19. Stochastic continues it's slow accent...never mind that it looks like the Wright Brothers first flight. It is important now that we have regained 13.03 to hold it. Yesterdays move in the Euro definitely put some fear in dem Rat Bastids and they appear to have covered a lot of shorts yesterday. The light volume indicates that's about all we had moving Silver yesterday...the real buyers are still waiting and watching...soon many will feel like they are being left at the station as this train gathers some momo. June to September contract rollover antics should abate by Thursday. Unfortunately the Euro has given back everything it gained yesterday morning...somebody in the EU does not want the Euro back over 1.35.

Silver Resistance: 13.11 / 13.19 / 13.25

Silver Support: 13.05 / 13.00 / 12.94

________________________________All prices SPOT

Gold Resistance: 656 / 660 / 663

Gold Support: 653 / 650 / 645

Tuesday, May 29, 2007

Current Account Review

Euro zone March current account surplus 5.4 bln eur vs deficit 3.7 bln in Feb
Tue, May 29 2007, 08:15 GMT

This morning Euro zone economic data revealed a Current Account surplus for the month of March. Following the report, the Euro headed straight up, and the US Dollar straight down. This, in effect, kick started buying in Gold and Silver.

For a quick review of Current Account click here:

A nation's Current Account is a major factor in the perception of strength of a nations currency. The United States has a deplorable Current Account Balance presently. To view the list click here:
To find the United States, simply look to the bottom of the ain't pretty. Just above us is Spain. As noted here previously, Spain has dumped in excess of 80 tonnes of gold on the market as their "foreign reserves have plummeted to wafer-thin levels, leaving the country exposed to a possible banking crisis if the property market swings from boom to bust." Spain is desperate.

Fiat currencies, like the US Dollar, always experience a currency crisis any time their deficit to GDP percentage reached 4.5%. The United States Current Account deficit is now well over 6%of GDP.

Action to reduce a substantial current account deficit usually involves increasing exports or decreasing imports. This may be accomplished directly through import restrictions, quotas, or duties (though these may indirectly limit exports as well), or subsidizing exports. Influencing the exchange rate to make exports cheaper for foreign buyers will indirectly affect the balance of payments. This can be accomplished by increasing domestic inflation (e.g. by cutting interest rates), loosening monetary policy (making more money available), or adjusting government spending to favor domestic suppliers.

Hmmmm...sounds like the Plunge Protection Team's working thesis. People, if you think the US Dollar is going to recover anytime soon, think again.

If you were drinking beer and hanging by the pool or surf this weekend, good for you. I was at the Coca-Cola 600 in Charlotte. Do yourself a gold investing favor and read the three articles I posted in my last blog up date on Saturday: Weekend Reading . These pieces are of great value to our understanding of today's market mayhem.

Silver Resistance: 12.94 / 13.03 / 13.11

Silver Support: 12.88 / 12.83 / 12.76
____________________________________All prices SPOT

Gold Resistance: 656 / 660 / 663

Gold Support: 653 / 650 / 645

Saturday, May 26, 2007

Weekend Reading

Below I have posted three fascinating pieces about the Gold Market that should be read by anyone, and everyone, interested in being invested in Precious Metals. Enjoy them at your leisure, and have a happy and safe Memorial Day Weekend. See you at the races!

Gold Futures CoT 2
By: Adam Hamilton, Zeal Intelligence LLC

The bottom line is the US CoT data on gold futures is interesting, but it doesn’t drive the gold price. Global gold physical supply and demand does. The CoT data merely offers a tiny nebulous view into classes of traders that aren’t very well defined and constantly shift. And it ignores all the other non-COMEX gold trading worldwide. Therefore gold futures CoT reports should be taken with a big grain of salt.

International Forecaster May 2007 (#4) - Gold, Silver, Economy + More
By: Bob Chapman, The International Forecaster

In the last ten weeks ECB central banks have sold 130 tons of gold. This is the most ever in any short time period. In the previous six months they sold only 112 tons. That leaves 250 tons left for sale by 9/30/07. We do not expect Germany and Belgium to be sellers, so that leaves about 140 tons to go over four months or about 35 tons a month. The bad news is behind us. It is possible that France could complete part of Germany’s unused quota, but that is a long shot.

The battle in the gold pits goes on as the spec longs refuse to be big sellers and the cartel goes naked short out of London. At the rate the longs are holding even if the 200-day moving average was hit at $638 we doubt now there would be a further break. The cartel’s work is seen by more and more and understood for what it really is – the tactics of a corporatist fascist government. Worse yet, more and more communicators are calling the government and its market manipulation fascist. As you can see we are making headway.

The cartel is scrambling, terrified they won’t be able to find enough physical gold to hold off the gold buying hoards.

US Housing Discounting and the Gold Bull Market
By: Adrian Ash

"Gold rose 600% in the 1970s and then went down nearly every month for two years," remarked Jim Rogers in an interview with Financial News earlier this week.

"Most people gave up – but then gold went up another 850%."

Fast forward three decades, and the market's giving up on gold yet again. Punters in StreetTracks GLD have shed 6% of their holdings from this time last month – the first ever drawdown since it launched in 2005. Gold futures traders cut their net long positions by 16% last week alone.

"That's what happens in bull markets," shrugs Rogers, author of Adventure Capitalist and co-founder of the Quantum Fund that gained 4,200% during the inflationary '70s.

Friday, May 25, 2007

Beware The Darkside

If you ever need proof that market participants all too often react to the "headline" and not the "story", yesterdays amusing action in the stock market is it. Below, the headline shouts the rosy picture, and down inside the story the darkside is revealed.

US April new home sales rise 16 pct to 981,000 annual rate
WASHINGTON (Thomson Financial) - US sales of new homes rose 16.2 pct last month to an annual rate of 981,000 units, way above expectations for an 861,000 rate, the Commerce Department reported today.
The median price of a new home last month fell an annual 11 pct to 299,100 usd. That was the biggest decline since a 15 pct drop in the year to July 1970.
On a month-on-month basis, prices fell a record 11 pct between March and April.

And the stock market took off...but then somebody read the "story" and the stock market tanked. And brought everything down with it. Very amusing... How the Dollar escaped the carnage escapes me. Precious metals got smoked...though that was probably more to do with options expiring yesterday...absent that, and I don't think metals are off so hard. Copper of course fell on the poor assumption that this data did not bode well for copper demand. LOL, America's Economy is 51st on the list of national economies...I doubt it's current demand, strong or weak, has any real impact on World demand for the red metal. When will people wake up to the fact that the World Economy grows less dependent on the USA as each day passes?

Oh look, Oil is back up AGAIN this morning...

I am as frustrated as the rest of you with the Metals. Have we learned anything in the past four weeks? Yes, May is not a great month to trade the's a great month to buy them on sale. I'll take this May over last though...certainly. We should also expect a similar rotten "experience" to occur when the August to December rollover period arrives. Looking back on the charts, last September's "false breakout" and subsequent dump might be a good reminder of the possibilities come Labor Day.

Continue to "keep the faith"...solid fundamentals remain in our favor and markedly bearish sentiment usually coincides with a bottom. The present contract rollover period should end next week. We continue to hold our ground in Silver at the 200 day moving average, and that has signaled a low risk buy point and trend reversal when the opportunity arises. Until we break the downtrend line and put some pressure on the shorts technically, we will have to be content to waffle around down here. 13.03 Silver remains our pressure point...666 Gold.

Silver Resistance: 12.94 / 13.03 / 13.11

Silver Support: 12.88 / 12.83 / 12.76
__________________________________All prices SPOT

Gold Resistance: 656 / 660 / 663

Gold Support: 653 / 650 / 645

The latest from the Silver Guru should keep you optimistic:

The Raptors By: Theodore Butler

I’d like to report on a profound new development in the silver market. It’s a development that has been over a year in the making, but I wanted to be sure I wasn’t jumping the gun in writing about it. Let me give you the conclusion upfront. It’s a new and powerful reason for making a long-term investment in silver.

Thursday, May 24, 2007

The Land Of Oz Exposed

Stocks slip after warning on China stocks
NEW YORK (Reuters) - U.S. stocks edged lower on Wednesday as a warning about Chinese stocks by former Federal Reserve Chairman Alan Greenspan erased gains fueled by takeover talk in the aluminum sector.

Greenspan said he feared a "dramatic contraction" in Chinese stocks after the recent boom, adding the run-up was "clearly unsustainable."

Greeny, who does he think he is, OZ? I think we all know Greeny's predictive value, does anybody remember the "irrational exuberance' speech? Yes, China's stock market will inevitably stumble and fall, but it won't be thru a heads up thrown out by this economic uber criminal for a speaking fee.

US, China Make Modest Progress on Trade
WASHINGTON (AP) -- The United States and China concluded high-level trade talks Wednesday with progress reported in a few areas but no breakthrough in the biggest dispute, China's undervalued currency.

Back to the drawing board. When will Henry Paulson and his PPT Rat Bastids realize that the Chinese aren't stupid. They have had years to watch the capitals destroy themselves and have no intention of letting these criminals lead them around by the nose. Henry Paulson says that the Chinese citizens save too much. Maybe this dumb ass should consider encouraging his own citizens to save more. The days of stealing the world's wealth to fund this nations flatulence are quickly coming to an end.

Dollar Falls Vs. Rivals On Rate Expectations
NEW YORK (MarketWatch) --The dollar retreated Wednesday, coming off multiweek highs against the other major currencies on growing expectations that interest rates in Europe will continue to rise this year.

LOL! "Growing" expectations of a rate increase in Euroland? I think it has been clear for sometime that interest rates are on the rise in Europe. A revelation for the Dollar Bulls...

Copper rises after LME reports tighter supplies, nickel down
Thu, May 24 2007 LONDON (Thomson Financial) - Copper rose after the LME reported a hefty fall in stocks following a strong session in Asia.
Copper stocks stamped in LME warehouses across the globe fell 1,475 tonnes to 136,100 tonnes, said the LME in a daily report earlier.

Does anybody really know how much copper there is? Does anybody really care?

Jim Willie CB, has penned another wonderful piece exposing the US Dollar for what it really is...a piece of East River Flotsam. Absolutely take the time to read this marvelous piece of writing. If you need more reasons to buy, own, or possess Precious Metals this is a must read for you:

Don't Cry for the US Dollar

We have come full circle from responsible competent economic counsel dating back to the 1960 decade to a guided path to truly cataclysmic Orwellian financial structures. We see the rancid bitter fruit of a US Dollar suffering from debt constipation and economic sclerosis, whose supporting tree lacks the proper manufacturing branch burdened by increasing weight of baby boomer retirees. As the United States gradually becomes isolated on the geopolitical stage, for whatever reason, whether an unfortunate damaging twist of fate or inept aggressive leadership or a compromised Congress, the USGovt and US populace find themselves dependent upon what can be described as the ‘Weimar Engine’ in a highly precarious manner. The ongoing credit and debt explosion keeps the system running, keeps the rivers of money moving, while leaving the door open for fraud and granted gravy gathering by powerful insiders. Von Mises warned that at an end stage, an acceleration of money and debt will be necessary in order to sustain even flat growth. We are there now, here and now today. The Gross Domestic Product for 1Q2007 will be officially announced as almost flat, probably under 1% growth. Accept that number if you accept a 3% to 4% price inflation. Not here, not me, no way, no how!


Patience is a virtue and a choppy market is a pain. This contract rollover activity that has been weighing on the markets should be pretty much wound up by the middle of next week. Spain appears to be dumping it's entire nations wealth on the market to try and resolve it's current account woes. The Banco de Espana's holdings of foreign currencies and gold have fallen to €13.2bn (£9.02bn), equivalent to 12 days of imports, according to their website. Last week saw a continuation of their sales of gold of, possibly, in the region of 10 to 15 tonnes more.
To see more read this scary piece:
Spain’s Savings Spent?

Durable Goods and Housing numbers this morning should have "some kind of" effect on the markets. I would not be surprised if the rigged numbers print "positive" to see the metals higher with the Dollar and the Stock Markets. Oil is set to bust 67...keep a close eye on US Naval maneuvers in the Gulf in the coming days.

Silver Resistance: 13.03 / 13.11 / 13.23

Silver Support: 12.95 / 12.88 / 12.80
__________________________________All prices SPOT

Gold Resistance: 661 / 664 / 666

Gold Support: 658 / 656 / 653

Tuesday, May 22, 2007

Over, Under, Sideways, Down

Headlines from the PPT mouthpiece Bloomberg:

Copper Rises in London as Stockpiles Decline; Aluminum Gains
May 21 (Bloomberg) -- Copper rallied in London after its biggest weekly decline in more than three months, as a drop in stockpiles signaled growing demand.

Copper Drops in New York on Speculation Chinese Demand May Slow
May 22 (Bloomberg) -- Copper futures fell in New York on speculation that demand may slow in China, the world's biggest consumer of the metal used in pipes and wires.

Okay, let me get this straight...yesterday copper was up because there wasn't enough to meet demand. And today it was down because of speculation that demand in "China" may slow.

China's government last week increased the amount its currency can appreciate, raised interest rates and curbed bank loans to rein in the economy, which expanded 11 percent in the first quarter.

``If China cools off, the blazing rally we've seen in copper is sure to end,'' Frank McGhee, head metals trader at Integrated Brokerage LLC in Chicago, said on May 18.

LOL! "IF" China cools off... Where has this dumb ass been the past 3 years? China has made countless token gestures to rein in it's economy, and all have been fruitless. Why? Because China does NOT want to rein in it's economy...What China wants to rein in is the excessive speculation overwhelming it's stock market. China, India, and most of the other 50 countries whose economies are ALL growing faster than the United States will together make sure the demand for copper now and into the future does not "slow". The two headlines you read above are an example of trying to "talk a market down". Good luck. My guess is that some big investment house is short Copper around 290 and is dying to get out of that mess. I'll make the bet here and now that Copper is over 400 by Labor Day.

Oil Prices Fall More Than $1 a Barrel
May 22, 2007, 5:53PM NEW YORK — Oil prices dropped below $65 a barrel as investors sold contracts before their expiration Tuesday, and before the government's weekly inventory report.

You have got to have a screw loose to trade Oil. If you want to be in Oil, buy the ETF PowerShares Dyn Energy Exploration (PXE) and sit tight. Summer begins this weekend and the annual three month rise in Oil prices begins with it. I expect to see Oil prices at a minimum up 20% from here by the middle of August. For those of you struggling with your math that would be $78.

US Hears Blunt Trade Warning From China
Tuesday May 22, 6:54 pm ET
Chinese Official Warns U.S. Against Making Trade Disputes Political
WASHINGTON (AP) -- The Bush administration pushed for concrete results in high-level trade talks with China that began Tuesday, but the head of the Chinese delegation bluntly warned against confrontation.

NOTHING Dollar positive will come out of this meeting between Trade Representatives from China and the USA. The spin following the close of these talks may suggest otherwise, but the moves China made last week at home mentioned above, to "rein in" their economy, are and will prove to be Dollar negative.

IMO the "smart money" right now is loading the boat on Gold and Silver as all the fools sell their bullion and stocks out of frustration with the Metals consolidation over the past year. The draw down in Gold Stocks in the Gold ETF last week were not big investors selling their shares...this was a lot of little people dumping their positions and using the funds to "foolishly" chase the daily record highs in the stock market. I feel sorry for them... Rule #1 in the Metals markets: NEVER sell into weakness.

Yes today's "action" in the Precious Metals was a bit disheartening, but this action was on some of the lightest volume over the past three months. We gave back 666 Gold and 13.03 Silver to dem Rat Bastids, and now we're going to have to fight with them again to get it back, much as we did in mid March. Remember, the longer the Metals are held down, the higher they'll go when they bust out.

Silver Resistance: 12.95 / 13.03 / 13.11

Silver Support: 12.88 / 12.84 / 12.80
_______________________________All prices SPOT

Gold Resistance: 661 / 664 / 666

Gold Support: 658 / 656 / 653

Monday, May 21, 2007


The pictures tell the whole story...

Silver Resistance: 13.03 / 13.11 / 13.23
Silver Support: 12.95 / 12.88 / 12.84
_______________________________All prices SPOT

Gold Resistance: 664 / 666 / 670

Gold Support: 660 / 655 / 653

Sunday, May 20, 2007

Not Out Of The Woods Yet, But...

It was nice to see Silver close the past week above the 200 Day Moving Average, but we are not out of the woods yet. We have a lot of technical repair work to do. Silver has been down 5 straight weeks. Going back three years on a weekly chart the closest downturn in time we can find is May/June 2006...down four weeks out of five...that equals this spate of weakness. And given a choice, I'd take the past four weeks over those five weeks last Spring...that was UGLY.

First we need to quickly get back above 13.03. Which, coincidentally, would break the present downtrend line. 13.03 is ours, and we must get it back from dem Rat Bastids if we are to force some short covering and get this vermin back on their heels some. Our next hills to take would be the 20 Day Moving Average and the 20 Week Moving Average. Cracking these might prompt some bulls back into the market and accelerate the short covering.

These are not tall orders, and are certainly achievable. Nothing happens until, and unless, we break the downtrend.

I have posted a Big Picture of Silver above more as an observation than a prediction. With summer fast approaching it may be a bit much to expect the "Big Break" to occur in the next 6-8 weeks. But hey, these are strange times to say the least. Silver continues to stay above the important 65 Week Moving Average...and it is important that it does so.

I'll let the Weekly picture above speak for itself. There are a number of similarities between the 2004/2005 major consolidation off the much heralded, at the time, high of 8 and the May 2006 to date consolidation we have been enduring. I believe this second major consolidation is longer because we are consolidating a HUGELY overbought market now as opposed to 2004/2005. The major differences between the two consolidations are the time frames in which they took place. But given that "anything can happen" in these markets these days I wanted to share this "observation" with you.

Silver Resistance: 12.90 / 13.00 / 13.11

Silver Support: 12.85 / 12.82 / 12.78
__________________________________All prices SPOT

Gold Resistance: 664 / 666 / 670

Gold Support: 660 / 655 / 653

An interesting narative: Hedging at its most basic

Commentary by Roger Wiegand that is worth noting:

Precious Metals Rallies Will Not Be Denied
As gold and silver have climbed steadily in price since 2001, the longer term rally is quite young. To date, the only players have been professionals and smaller gold bugs.Our guys and gals in the street, the dominant retail trade, who mostly own mutual funds and less exotic markets than precious metals, remain the largest force. We are still often surprised to discover how the herd marches through life completely oblivious to gold, silver, oil and grain rallies. Yes, these folks are actively whining about unleaded gasoline prices and blame big oil for the crunch. But, just a few months ago, it was reported Exxon-Mobil earned 9 cents a gallon; net while the government’s take was 56 cents. Who is ripping off whom? Exxon’s profits while dramatic, as a percentage of sales, are grossly exceeded by several high-tech companies. Keep your eyes on the larger picture and our longer trends.

Friday, May 18, 2007

Dodging Rubber Bullets

Caught between deceitful government economic data releases this week and the wishful thinking of the floundering Captain Bernanke and his assorted sputtering mouthpieces, Gold and Silver took it on the chin again today. Despite reports to the contrary, both remain standing. Oil? Oh my, look at that...Oil has bounced back again. This country faces a serious gasoline "situation" in the coming months and no amount of weekly dribbling increases in crude "supplies" is going to change that. Gasoline demand is up and supplies are down...way down...way way down. Refinery problems persist and it is too late to play catch up now. OPEC has turned a deaf ear to requests to open their taps further. These OPEC guys aren't stupid. They realize that presently there is not a "oil" crunch, there is a "gasoline" crunch caused by refinery incapacity. Oil prices WILL continue to rise, as they do EVERY summer. And rising Oil prices will expose the lies inherent in today's Government economic data. The future of ALL the metals is bright...remain focused on the Big Picture.

Oil surges on US concerns; Opec ‘content’ over prices

Despite record gasoline pump prices above $3 a gallon, there has been no let up in robust demand in the world’s top consumer.

Consumer nations have called on Opec to open the taps, but the group, which supplies a third of the world’s oil, says it sees no need to act. Its next scheduled meeting is in September.

Chuck Butler at the Daily Pfennig says it best when referencing the Dollar's reaction to the latest questionable government economic data:

Geez Louise, let's get our heads on straight, and realize this is simply a technical correction, in the dollar, we've seen these over and over again during the weak dollar trend that began in February of 2002... As I always tell my audiences... An asset begins a weak or strong trend because of a Fundamental reason, and the trend will not end until that fundamental reason is corrected. The trend, however, is not even close to being over! The dollar entered the weak trend when its Current Account Deficit reached the historically telling number of 4.5% of GDP... I say historically telling because over time, fiat currencies always experienced a currency crisis any time their deficit to GDP percentage reached 4.5%. Of course, the U.S. Current Account Deficit has only gotten worse, and now stands about 6.9% of GDP... So for all those traders out there buying dollars... Put that in your pipe and smoke it!

Jim Willie CB always has some insightful commentary for the folks at For an excellent read on the contradictions in government economic data please read his latest here: it's an eye opener.

Cheer up peeps! The end of this "retracement" is closer than we think. There are some headwinds to overcome as we have given back a lot of hard won ground to dem Rat Bastids. The Big Picture is sound. The Fundamentals are solid. The lies are being exposed. NO government is bigger than the markets. In time dem Rat Bastids will be over run. The metals are on sale, buy some or add to your positions. The odds of buying the "exact" bottom are infinite. The same goes for selling the top. Maintain a "core" position in your metal of choice. If you must trade regularly: buy when the metal is onsale and nobody wants it, sell into strength when the line to get in is long. REPEAT. When Levi's are on sale you don't wait for the price to go back up do you?

Silver Resistance: 12.88 / 12.95 / 13.03

Silver Support: 12.80 / 12.74 / 12.65
________________________________All prices SPOT

Gold Resistance: 661 / 664 / 668

Gold Support: 656 / 653 / 650

Wednesday, May 16, 2007

Behind Every Dark Cloud, There Is A Silver Lining

We have a battle on our hands. It’s the battle for the price of gold to reach $700, and it is just the latest clash in a long war being fought between gold and its perennial antagonist - the gold cartel.

Who is the gold cartel? And what are they trying to accomplish? The gold cartel is an alliance of governments and a few bullion banks. This group is led by the U.S. government. Though their aims are different, their congruent interests put them on the same side. Here’s what they are trying to do.

Please take the time to click on the headline above and read this entire piece by James Turk. Not only is it insightful, but it will lift your spirits on an otherwise dreary day today. This is a must read.

I don't know that I was completely taken by surprise today, but the US Dollars reaction to today's Housing Data and Industrial Production data was certainly befuddling. I hardly think these numbers are worthy of the reaction they got. Just yesterday everybody was pooh-face the dollar because the inflation numbers were tame. Isn't "low" inflation supposed to be good for the Dollar? And "high" inflation bad? Yesterday I thought a strong economy was bad because then the Fed would not cut interest rates, and a rate cut is bad for the Dollar and good for the stock market. But today a strong economy is good for the Dollar and good for the Stock Market? Oh my head hurts!

NOTHING has changed people...NOTHING! Every month we go through the same drill...the same "monthly" data reports. And with every report we get the same blah-blah: "This signals that and because it should." It's ridiculous! Not one of these data "lies" is going to change the inevitable facts of monetary fate: The US Dollar is going to go down the toilet; Silver, Gold, Oil, Base Metals, Corn, Wheat, Sugar...ALL Commodities are going to go to the Moon. It's not going to happen tomorrow OR next week OR next month for that matter. But it is going to happen. But before it does, Gold has to clear $700 an ounce first and the Dollar has to fall below 80 on the USDX index.

If you read James Turk's brilliant piece above you will see that we have faced many battles with the Gold Cartel thus far to date in the secular bull market in Gold. And Gold has won every battle. And Gold will win this one as well.

Today's action in the Precious Metals was NOT pretty, but it wasn't ugly either. Both Gold and Silver took body blows, but have managed to remain standing. Silver is getting woozy. Both experienced volume spikes as they engaged support. Gold at its 100 day moving average, Silver at it's 200 day moving average. Could this be a blow off bottom? Previous bottoms have been set on volume spikes as the weak throw in the towel and the strong add to their positions. Silver had the added benefit of major Fibonacci support at 12.73. Surprisingly, Silver's Stochastic remained bullish. It's not a lot to hang one's hat on, but only a fool and his money parts ways here. Selling weakness is foolish. Buying strength is foolish. Unfortunately, when it comes to the Precious Metals, reverse psychology usually reigns supreme in decision making as to when to buy and sell. Nobody wants gold when it's cheap...everybody wants it when it's expensive. Go figure... If you were going to sell a portion of your Silver position it should have happened with protective stops at the 50 day moving average and at the 13.39 Rat Trap, as advised here, when Silver was trying to crack dem Rat Bastids at 14.04. Today was a bad day to sell Silver, or Gold for that matter.

Think about it...For several weeks, in the face of relentless central bank Gold selling, Gold refused to back down. It's resilience in the face of this endless stream of supply was quite remarkable given last Springs response to a similar dumping of Gold on the market by central banks. And then today, on some marginal at best Housing data and Industrial Production the Dollar has a 38 pip pop and suddenly the sky is falling? LOL! This smells like dem Rat Bastids pulling the bids on the Comex so they could sweep out all the stops bellow 666 Gold and 13.03 Silver...and in the panic, steal your Precious Metals from you. If the Industrial Production number was so spectacular, why didn't Copper rise today? If housing starts were up so significantly, why didn't Copper rise? Just more weak shorts covering in the Dollar today. And the weak bulls in the Precious Metals threw in the towel at the worst possible time. The Precious Metals shorts need your metal to cover their shorts [and their ass]. And if you sold out today, you are guilty of aiding and abetting the enemy...good luck getting your metal back.

We have a lot of work to do to repair the technical picture in Gold and Silver. It is not never is. Why? Because the Fundamentals DO NOT LIE. They are stronger today than they were one year ago...and they will be even stronger one year further on up the road. Silver has been a buy it's last 5 times it has "dropped in" on it's 200 day moving average. I don't see any reason why this time should be any different.

Silver Resistance: 12.95 / 13.03 / 13.10
Silver Support: 12.87 / 12.81 / 12.73
_________________________________All prices SPOT

Gold Resistance: 664 / 666 / 670
Gold Support: 662 / 660 / 655

What Next? Chart Review

AP: Consumer Inflation Moderates in April

In paragraph 14 of this "story" the writer gets to the truth about inflation. Well, the government will never give us the truth about inflation...but inflation isn't moderating, it is double what it was ONE year ago:

Through the first four months of this year, consumer inflation is rising at an annual rate of 4.8 percent, almost double the 2.5 percent increase for all of 2006. The acceleration has occurred in large part because of higher costs for food and energy.

Excluding food and energy from "inflation figures" is ridiculous. Down may as well be up, yes should mean no, and we should stop at green lights. The rising costs of food and energy, two items we MUST all buy EVERY day, affect how much money we can spend on "ex food and energy" items. We, the consumers of this increasingly desperate nation, account for 70% of GDP annually. If we don't have the money to spend on "the other stuff" because we're spending it all on food and energy...we won't have much of an economy. Last month, consumer credit rose $13.5 billion, an annualized increase of 6.7 percent, after an upwardly revised increase of $5.5 billion in February. Revolving credit rose $4.6 billion, largely a result of higher gasoline prices. It appears we don't even have the money now to pay for gasoline, let alone the "other stuff".

I'll get off my soapbox now and let the charts do the rest of the talking. Please click on them to enlarge.

Silver Resistance: 13.16 / 13.24 / 13.32

Silver Support: 13.10 / 13.03 / 12.92
_______________________________All prices SPOT

Gold Resistance: 672 / 674 / 678

Gold Support: 668 / 666 / 664

Monday, May 14, 2007

"Ticking Away The Moments That Make Up A Dull Day"

General malaise in commodities hard and soft today kept the Precious Metals on the soft side today. As I've said before, never underestimate copper's influence on Silver [and Gold] The bumbling US Dollar and a firmness in OIL allowed the Precious Metals to maintain a little bit of a bid all day.

A lack of any pertinent economic data across the globe left the metals markets generally directionless today. But that may all change Tuesday as there is a raft of potentially volatile data hitting the wires. German and EU GDP numbers and UK CPI and Retail Sales numbers will be revealed before any here in the US.

Data on U.S. consumer prices, which may offer crucial insights on the direction of inflation in the economy, will be released on Tuesday at 8:30 a.m. Eastern time. The median forecast of economists surveyed by MarketWatch calls for a 0.5% gain in the CPI and a 0.2% increase in the core rate, which excludes food and energy prices.

The Federal Reserve Bank of New York's survey of regional manufacturing also is due out, as is the Treasury Department's International Capital report.

"The dollar might have recovered from the lows seen recently but, as far as we are concerned, the risks still lie to the downside for a number of reasons," said Steve Barrow, chief currency strategist at Bear Stearns.

Treasury Department's International Capital report will most likely be the most "overlooked" piece of data by the media, but could be potentially the most damaging to the US Dollar. Estimates are for $74.4B. A number below that will be bad...and a number below the recent Trade Deficit number $63 will be very bad. ...but good if you own Precious Metals.

Fundamentals supporting all the Precious Metals remain absolute. Technically the picture looks damaging to be sure. Silver is walking a thin line here flirting regularly the past couple days with support at our original Rat Trap of 13.03. As ugly as things look, a reversal may be imminent. Today's data if negative enough would be most helpful...

Please click on the chart to enlarge.

While perusing Silver's predicament today I noticed that recent "technicals" as well as price action look very similar to the mid-December dump and subsequent January bottom. Both declines included a gap down thru the 50 day Moving Average [MA]. A quick bounce back to the 50 day MA and a turn down to a lower low. The similarities in the two retracements that caught my eye first though, was the Stochastic at the bottom of the chart. The "double bottom" there coinciding with the lower lows leaves the potential for a possible reversal here. Also of note is that our current retracement does not come from an "over bought" condition as the last two did. And the MACD at this time is tracing a much shallower bottom than the previous two bottoms. RSI 36 has proven support for the past 8 months. If this current retrace is a "fake-out" as discussed yesterday, I suggest the market quit playing games immediately.

Silver Resistance: 13.16 / 13.24 / 13.32

Silver Support: 13.03 / 12.92 / 12.80

_____________________________________All prices SPOT

Gold Resistance: 672 / 674 / 678

Gold Support: 668 / 666 / 664

Is It Real, Or Make Believe?

Past performance is no guarantee of future performance or, if it happened last time it may not happen next time. I read an interesting piece over the weekend that gave clarity to some thoughts I have been pondering recently about the Precious Metal markets. What if most of the gold bugs are afraid of "deja vu all over again" in regards to the May 2006 top in the Precious Metals. This piece posted by Howard Katz on GoldSeek questions the fear that these markets are about to tank again.

The Theory of the Fake-Out Move

May 11, 2007, 1:00 pm (Eastern Daylight Time)

The decline of May 8-10 was a false move, a trap. Gold is set to go sharply higher, and this decline is a wonderful buying opportunity. This is the conclusion which follows from my theory of the fake-out move.

Whenever any market has an important move which leaves a dramatic impression in traders’ minds, the prime condition has been met for a fake-out. Most of the time this move will be a decline, but this is not essential.

If at a later time the market superficially resembles the dramatic move but the fundamentals are pointing in the opposite direction, then the secondary condition has been met for a fake-out move.

The classic case of a fake-out move occurred in mid-October 1989 in the stock market. This was very close to the second anniversary of Black Monday. The market had recovered all of its ’87 loss and was back to its Aug. ’87 high of 2700. So two superficial conditions were the same: date and market level. However, the fundamental condition which determines stock prices (the movement of bond prices and hence interest rates) was exactly the opposite. In 1987, the Fed was tightening, and bonds were going down. In 1989, the Fed was easing, and bonds were going up. On the Friday before the 2nd anniversary, the stock market swooned as people who believed that there would be a reenactment of Black Monday rushed to sell. On Monday, stocks opened lower; there was great fear. AND THAT WAS THE BOTTOM.

The dramatic event which has been hanging over the gold market for the past year is the decline which started on May 12, 2006 and carried to June 14, taking $160 off the gold price in a month’s time. As of May 8, we were within hailing distance of the May 11, 2006 high thus giving us agreement with two superficial conditions (date and market level). However, at the present time the fundamentals on gold are very different from a year ago.

A year ago, traders had enormous profits in gold. When central bank selling hit the market, it sunk like a rock. But today that profit taking has been done, and we are ready for another leg up in the very long term trend. Over the past two months, the central banks have again tried to put gold down, but the gold market, up to now, has absorbed their selling.

So when we see the gold market swoon as May 11 approaches, this is very like the stock market’s swoon on the Friday before the second anniversary of Black Monday in 1989. It is a time to buy.

Such swoons generate a great deal of fear. But you should not be afraid. Reason tells us that this is nothing more than a fake-out move, and this is an opportunity to be aggressively bullish.

For more of my thinking and information about my newsletter, The One-handed Economist, please visit my website,

An interesting "theory" to be sure. Certainly the fundamental reasons for Gold and Silver to move higher are substantially more powerful today than they were one year ago. The market to date has absorbed about 100million ounces of central bank gold selling so far and only showed sings of cracking as we reached the anniversary of the last major top in Gold without a new high.

The Blanchard Economic Research Unit has kept us up to date on these central bank gold sales and commented Friday:

What is important is that we have this data now which gives a firm explanation of why the market is having trouble moving higher. Unfortunately, the market will continue to come under this supply increase pressure until it becomes clear that the selling has slowed down. The real positive to take away from these increased sales is that the market is struggling to consume the additional physical supply, but it's not breaking underneath this pressure. May of 2006, the market broke under less pressure. We're not seeing that at present.

As a new week dawns, oil is back above $62, and the dollar is looking down. Every morning I ask my self, "Who would buy the US Dollar?" The answer is always the same, "Weak shorts." There is no good reason to buy the US Dollar, and no amount of central bank intervention will change that fundamental of today's Precious Metals equation. Until "real" buyers come into the dollar, it's future is bleak.

Looking at The Big Picture, Gold is technically much sounder today than it was one year ago. The uptrend of of the June 2006 lows has been much stronger technically than last years parabolic rise. Catastrophe "should be" averted this time around. As always, only time will tell.

Silver Resistance: 13.15 / 13.25 / 13.39

Silver Support: 13.10 / 13.03 / 12.92

_______________________________All prices SPOT

Gold resistance: 674 / 676 / 681

Gold Support: 672 / 668 / 666

Thursday, May 10, 2007

So What's Going On?

What a load of crap. Bullshit if you prefer. I join you all in a string of expletives.

If today is not proof that the Gold Market is manipulated, then we will never have any proof.

If today is not proof that the US Government is the World's greatest criminal entity, then the world has no criminals.

The Blanchard Economic Research Note says it best:

This morning, post-Fed decision where there were no changes made to the statement of any significance, we've got a raft of data hitting the market that should all be precious metals positive, but silver and gold are taking it on the chin again this AM.

Please read their entire post for FIVE fundamental reasons why Precious Metals should have been popping on the upside today. Below I will offer some detail to these FIVE reasons...

Trade gap widens sharply in March
Bigger drag on first quarter growth than first thought

The nation's trade deficit widened by 10.4% in March to $63.9 billion, its highest level since last September, the Commerce Department said. It marked the largest increase in the deficit since September 2005.

As a result of the deterioration in the trade balance in March, the deficit will be more of a drag on first-quarter growth, already at a low 1.3% annual rate, economists said. The government had previously estimated that the trade sector subtracted half a percentage point from growth in gross domestic product for the January-through-March interval.
Economists said that after accounting for the March trade and inventory data, first-quarter growth would be cut to a slim 0.5%-to-0.8% range. This would be the weakest since the fourth quarter of 2002.

What a rosy picture...perhaps I should sell my Precious Metals and buy some US Dollars.

Chain U.S. retailers suffer worst April since same-store-sales records began 37

years ago

CHICAGO (MarketWatch) --U.S. retailers posted the weakest month of same-store sales on record Thursday as an early Easter holiday and chilly weather April dampened shoppers' desire for spring merchandise.

Of course it's the weather's always is. Trade in your Gold for US Dollars.

However, Thomson Financial's Jharonne Martis warned investors not to take the month's results to heart, urging them instead to combine March and April -- what some analysts call "Mapril" -- for a clearer picture of how consumers are spending.
"April's negative [results] are not necessarily an indication that consumers are not spending or that the economy is going down," she said. "They are simply the result of the shift in the Easter calendar."

Yeah right, "Mapril"...that's the ticket. Is that not the lamest excuse you have ever seen. This woman has redefined in "I am a dumb ass, and you are too if you belive this."

ECB and BoE meeting Review

From the FX price action point of view the USD got initial support from the two Central Bank decisions, but moves remain suspicious as the events were not that bullish for the Dollar, rather the opposite.

Oil prices rise on concerns about inventory report

WITH gasoline prices poised to break records at the pump in the United States, energy futures prices jumped yesterday as traders noticed a gas supply imbalance in the fine print of Wednesday's government inventory report.

Though the Energy Information Administration reported that gasoline stocks rose an average of 400,000 barrels last week, the first increase in 13 weeks, a closer inspection shows much of that increase is due to a 1.1-million barrel increase in inventories on the West Coast, said Kevin Saville, an analyst at Platts Oilgram News, according to The Associated Press.

"When you back out that 1.1 million build, you really get a draw (or reduction in inventories) of 700,000 barrels in the rest of the country," Saville said.

The West Coast is relatively isolated from the rest of the country, meaning an increase in gasoline inventories there doesn't do the rest of the US much good.

Oh, the fine print! Look..., the price of Oil IS going to keep going up through the entire summer. Wishful thinking and ignoring the fine print are not going to change that in the least.

Copper Falls Most in Three Months on Signs of Slowing Demand

May 10 (Bloomberg) -- Copper futures in New York tumbled the most in three months on signs that demand may slow in China, the world's largest user of the metal used in pipes and wires.

Stockpiles in Shanghai Futures Exchange warehouses have more than doubled this year to the highest since December 2005, indicating that China may buy less copper from overseas. Futures had climbed 32 percent in the two months before today as China's imports surpassed last year's pace for four straight months.

``We're expecting to see a deceleration in Chinese imports,'' said Mark Liinamaa, a metals analyst with Morgan Stanley in New York. ``It's likely that they got a little ahead of themselves in the first part of the year and imported more than their overall need.''

As reported by Bloomberg as told to by Morgan Stanley. Signs? It ceases to amaze my how "signs" move the markets. Especially when the "signs" are pointed out by the likes of Morgan Stanley...a mouthpiece for the PPT. If Bloomberg isn't "making up the news" their spreading the lies and disinformation provided by the PPT. The PPT would love for you to believe that China is overbought copper. China is buying all the copper they can get their hands on while it is cheap, and they're going to be a lot more of it in the month and years to come despite the "maybes" the like of Morgan Stanley want you to believe.

Resource Investor, VA - 13 hours ago

Yesterday, Peru's Energy and Mines Ministry reported that gold production in the country was down 14% in March at 15.1 million grams compared to the same ...

Resource Investor

Obviously things are bad and Precious Metals should be kicking sand in dem Rat Bastids faces. The cronies at the PPT who engage in rigging the markets 24/7 are at the height of desperation. The rate at which they are dumping gold onto the market to avoid the inevitable is astonishing. They are about to be overrun, and they know it.

Today was a loud noise. Try and ignore it. Listen to the folks at the Blanchard Economic Research Unit:

...keep an eye on long term trends like mine supply and bank sales, not daily action described as profit taking, book squaring and fund activity. Precious metals are a medium to long term trade, not a day trade. Keep your eye on the London close where the physical metals are sold. While certainly not true every day, 84% of the last 35 trading days have seen prices bounce back considerably once the London market shuts down. Additional supply from banks is keeping prices bottled up, but we strongly believe this is a temporary phenomenon and that this should be greeted as an opportunity to add to positions .

Silver Resistance: 13.10 / 13.15 / 13.30

Silver Support: 13.03 / 12.92 / 12.73

_________________________________All prices SPOT

Gold Resistance: 668 / 672 / 676

Gold Support: 666 / 664 / 660

Wednesday, May 9, 2007

Bargain Hunting

Fed Speak comes and goes. Again, NOTHING they "do" or "don't" say changes anything.

"The Fed said we're not going anywhere," Larry Smith, chief investment officer at Third Wave Global Investors. "They're not saying inflation is going to the moon, they're not saying it's a huge problem right now, but they're concerned that inflation won't come down to their comfort range."

Like the Fed is ever going to tell us the truth. The truth hurts, and the peeps can't handle the truth.

Though some investors were hoping the Fed would raise the possibility of a future rate cut, they weren't surprised by the committee's stance. Moreover, they were relieved to hear the Fed is not more inclined than it has been to raise rates, a move that would make access to capital more expensive and potentially hurt the stock market.

Is that meant to imply that cheap and easy money is driving the stock indexes to historical highs? Shocking!

Have you been adding to your Silver positions this week? The past two days have offered excellent buying opportunities. Silver gave an intermediate buy signal on May 3 at 13.28...Traders take note: The last time silver had a similar buy signal in March it went up $1.50 an ounce off the prior low. Tails on the candles the past two days are signs of bargain hunting. Silver has traded in a tight range between 13.14 and 13.50 for the past 10 trading days. Bouncing between the 61% and 38% Fibonacci Lines, the spring on Silver winds ever tighter for the next assault on dem Rat Bastids wall at 14.04.

Please click on the chart to enlarge.

Silver Resistance: 13.32 / 13.42 / 13.52
Silver Support: 13.27 / 13.17 / 13.10
____________________________________All prices Spot

Gold Resistance: 681 / 686 / 691
Gold Support: 679 / 676 / 672

Tuesday, May 8, 2007

Interest Rate Blah-Blah Ahead

Gold And Silver had sharp reversals today at 11AM est. 11AM est is always a pivotal hour in the metals markets as this is when the London LME closes for the day. Movements in the markets are often "surprising" after 11AM. Today's "surprise" may have been the result of the hammer of more ECB gold selling being lifted as the market in London closed. I'm only speculating, but the idea seems plausible. We've often seen prices tank after 11AM as well, as dem Rat Bastids at the Comex in NY to take advantage of the thin market after the LME closes in London. Oh, the games these Vermin play...

A reverse head and shoulders bottom has formed on the one hour chart of silver...a close above 13.55 could be just the technical catalyst we need to attempt another assualt on dem rat bastids wall of resistance at 14.04.

More often than not lately, reversal days like we had today are followed by several up days in the market...with little to put wind in the US Dollars sails and hold the metals in check it would not surprise me to see rising prices into the end of the week.

Tomorrow the FOMC will offer to us their decision on interest rates. It is expected that they will remain the same and all ears will be open to the FOMC's post meeting statement as it pertains to the "possibility" of future rate cuts or increases. Crude oil inventories will also be released tomorrow...OIL was back above $62 today, a close above $67 remains our target.

Little talked about "event" tomorrow: ...three subcommittees in the U.S. House of Representatives announced plans for a joint hearing on May 9 to examine foreign currency manipulation. The panels said they would focus on China and Japan, although they did not announce a witness list. "News" coming out of these hearings could potentially have a big impact on the US Dollar.

Thursday the Bank of England will have an interest rate decision to share with the world...many believe that it will be an increase to 5.5%. That is higher than it is here at home. The ECB also will have a rate decision of their own to share with the world. No increase is expected, but a statement indicating a rise in June is. The ECB is determined to keep Euro Gold under 500, and are gradually losing their grip on that idea.

And we get a look at Retail Sales for April in the good 'ol USA on Friday. It's is doubtful anything we here or read about these data events for the balance of the week is likely to be US Dollar positive. Any buying being done in the US Dollar these days is limited to short covering. The US Dollar is doomed and it is only a matter of time when it will slip into the abyss below .8050 on the USDX...not IF it will.

Silver Resistance: 13.55 / 13.61 / 13.75

Silver Support: 13.44 / 13.39 / 13.30
_______________________________All prices SPOT

Gold Resistance: 686 / 691 / 694

Gold Support: 681 / 676 / 672

Monday, May 7, 2007

Trading Gospel

Unless, or until, you have read Reminiscences of a Stock Operator by Edwin Lefevre the markets will remain a mystery to you no matter what you may think you "know" about them. This one book will teach you more about yourself and other investors than years of experience in the markets ever will. Crowd psychology and market timing have never been better explained than within the pages of this timeless classic. It is recommended reading for ANYBODY that wishes to be succesful trading or speculating in ANY market.

I have read the book several times, and reread portions of it often when I begin to question my convictions. The following excerpt from this "bible" of speculating, I have seen posted many times on the internet. It is one of my favorites, and the point this excerpt makes is no more valid than right now in the Precious Metals Markets. Frustration would be an understatement when describing today's market. Many, unfortunately, have recently thrown in the towel out of frustration and left the Precious Metals Markets. Those that have will have a lifetime of regret to look forward to.

Please take the time to read this short narrative. The wisdom it contains is priceless.

It's A Bull Market, You Know!
By Edwin Lefevre

In Fullerton's, there were the usual crowd. All grades!

Well, there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered advice and never bragged of his winnings. He was a great hand for listening very attentively to the others. He did not seem very keen to get tips – that is, he never asked the talkers what they'd heard or what they knew. But when somebody gave him one he always thanked the tipster very politely. Sometimes he thanked the tipster again – when the tip turned out OK. But if it went wrong, he never whined, so that nobody could tell whether he followed it or let it slide by.

It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn't donating much to the firm in the way of commissions; at least not that anyone could see. His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast.

The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had not done with the tip so he would tell them what they ought to do. But whether the tip they had ways to buy or to sell, the old chap's answer was always the same.

The customer would finish the tale of his perplexity and then ask: "What do you think I ought to do?"

Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, "You know, it's a bull market!"

Time and again I heard him say, "Well, this is a bull market, you know!" as though he were giving to you a priceless talisman wrapped up in a million-dollar accident-insurance policy. And, of course, I did not get his meaning.

One day a fellow named Elmer Harwood rushed into the office, wrote out an order, and gave it to the clerk. Then, he rushed over to where Mr. Partridge was listening politely to John Fanning's story of the time he overheard Keene give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he heard it.

Well, Elmer made for the old man and, without a word of apology to John Fanning, told Turkey,

"Mr. Partridge, I have just sold my Climax Motors. My people say the market is entitled to a reaction and that I'll be able to buy it back cheaper. So you'd better do likewise. That is, if you've still got yours."

Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur, or gratuitous, tipster always thinks he owns the receiver of his tip body and soul, even before he knows how the tip is going to turn out.

"Yes, Mr. Harwood, I still have it. Of course!" said Turkey gratefully. It was nice of Elmer to think of the old chap.

"Well, now is the time to take your profit and get in again on the next dip," said Elmer, as if he had just made out the deposit slip for the old man. Failing to perceive enthusiastic gratitude in the beneficiary's face Elmer went on: "I have just sold every share I own!"
From his voice and manner you would have conservatively estimated it at ten thousand shares.
But Mr. Partridge shook his head regretfully and whined, "No! No! I can't do that!"

"What?' yelled Elmer.

"I simply can't!" said Mr. Partridge. He was in great trouble.

"Didn't I give you the tip to buy it?"

"You did, Mr. Harwood, and I am very grateful to you. Indeed, I am, sir. But"

"Hold on! Let me talk! And didn't that stock go up seven points in ten days? Didn't it?"

"It did, and I am much obliged to you, my dear boy. But I couldn't think of selling that stock."

"You couldn't?" asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers.

"No, I couldn't."

"Why not" And Elmer drew nearer.

"Why, this is a bull market!" The old fellow said it as though he had given a long and detailed explanation.

"That's all right," said Elmer, looking angry because of his disappointment. "I know this is a bull market as well as you do. But you'd better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself."

"My dear boy," said old Partridge, in great distress–"my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"

Elmer Harwood threw up his hands, shook his head and walked over to me to get sympathy: "Can you beat it?" he asked me in a stage whisper. "I ask you!"

I didn't say anything. So he went on: "I give him a tip on Climax Motors. He buys five hundred shares. He's got seven points' profit and I advise him to get out and buy 'em back on the reaction that's overdue even now. And what does he say when I tell him? He says if he sells he'll lose his job. What do you know about that?"

"I beg your pardon, Mr. Harwood; I didn't say I'd lose my job," cut in old Turkey. "I said I'd lose my position. And when you are as old as I am and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It's a bull market, you know." And he strutted away, leaving Elmer dazed.

What old Mr. Partridge said did not mean much to me until I began to think about my own numerous failures to make as much money as I ought to when I was so right on the general market. The more I studied the more I realized how wise that old chap was. He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me.

I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements – that is, not in reading the tape but in sizing up the entire market and its trend.

– Extract taken from Reminiscences of a Stock Operator Copyright © 1994 By Edwin Lefevre.

Silver Resistance: 13.55 / 13.61 / 13.75

Silver Support: 13.44 / 13.39 / 13.30
____________________________________All prices SPOT

Gold Resistance: 686 / 691 / 700

Gold Support: 681 / 676 / 672

Sunday, May 6, 2007

Third Time Lucky

Before any discussion on the Metals, I must make note of the recent "decline" in OIL prices. The reason behind this decline has got to be the either the dumbest excuse I've ever heard or one of the US Governments most desperate acts to manipulate the markets...OR BOTH.


May 2, 2007, 4:58PM
DOE Halts SPR Crude Oil Purchases
NEW YORK — The Energy Department said Wednesday it rejected as "too high" all bids for the purchase of up to 4 million barrels of crude oil to have been shipped in June to the Strategic Petroleum Reserve.

DOE also said it will "suspend direct purchases of oil for the SPR until at least the end of the summer driving season."

DOE had previously rejected all bids for purchases of up to 4 million barrels of crude for the SPR in a May solicitation for the same reason.

"Both solicitations resulted in no awards because the department determined that the bids were too high and not a reasonable value for taxpayers," the DOE said.

Let's make fun of this and point out some fundamental facts. On Friday I gave this link: to a chart of Seasonal Oil Price Trading Patterns. This chart clearly shows that the price of OIL rises annually from June thru August. But the DOE has determined that OIL at today's prices is "...too high and not a reasonable value for taxpayers...". Only the geniuses in the US Government could come to such a conclusion. Why would the DOE "suspend direct purchases of oil for the SPR until at least the end of the summer driving season."? Do they want you to believe that their purchases of oil for the Strategic Petroleum Reserve are disruptive and affecting supply and thus putting upward pressure on prices this Spring? They've held off purchasing a measly 4 million barrels of oil in the hopes that it will rein in OIL prices? LOL!!! 4 million barrels of oil is equivalent to spiting in the ocean. IT IS INSIGNIFICANT relative to the big picture. THE USA consumes in excess of 20 million barrels of OIL each and every day of the year.

Just in the month of June ALONE the USA will consume 600 million barrels of OIL. LOL!!! Like not siphoning 4 million barrels of OIL off the market is going to make a damn bit of difference to available supply. The entire planet uses OVER 85 million barrels of OIL a day. Clearly the DOE is trying to "talk" the price of OIL down. The fools in the trading pits fell hook line and sinker for it too. Silver closed off it's highs Friday because of the drop in the price of oil. Fundamentally there is EVERY reason for the price of oil to go substantially higher...and by the end of this week it will again be north of $64 a barrel. Ignore the noise!


What a crazy week. In the end Gold closed at an 8 week high. And on Monday closed at an all-time monthly high. Gold tested it's 50 day moving average successfully, retraced 38% of it's recent leg up and worked off it's "overbought" RSI in the process. Gold is gathering strength for a third try at breaching resistance around 691 (SPOT) since January 1st.

Silver on the other hand... Someday the moves up in Silver will be as dramatic as the moves down. And those days may be closer than we think. Silver's slide stopped right at our Rat Trap at 13.03. Dem Rat Bastids either didn't want to press their luck or weren't up to the challenge. Silver has some serious "investment demand" building in it's ranks now:

Silver ETF has tied up 15% of world's silver supply

The silver ETF currently holds over 136.5 million ounces, after launching in late April last year at 1.5 million ounces. This implies that the silver ETF has now tied up nearly 15% of the world's silver supply.

Any froth in the Silver market has been worked off and our troops appear to be massing for another assault on resistance at 14.04 (SPOT). The gap down on April 26 should not be as difficult to work back thru as the gap down on March 2 was as this recent gap down was on relatively light volume.

Silver and Gold have established lows at the beginning of months 1, 3, and 5 now. And they have established intermediate highs in months 2 and 4. Is this a pattern? Recall that I said the next runs in Silver and Gold would be to new highs around June 8th or 15th... Time will tell if this has become a pattern and those new highs are reached. $756 Gold / $16.80 Silver = 45 Gold / Silver ratio.

The US Dollar

Technically the US Dollar is poised for a bounce...a bear market rally. Unfortunately, for the US Dollar, nobody is much interested in buying it except for those wishing to cover their shorts. Any "bounce" in the US Dollar should be short lived.

Please click on charts to enlarge.

Silver Resistance: 13.55 / 13.61 / 13.75
Silver Support: 13.44 / 13.39 / 13.30
____________________________________All prices SPOT

Gold Resistance: 686 / 691 / 700

Gold Support: 681 / 676 / 672