Turd (yes, that's his moniker) Ferguson's blog - he's the fellow behind The Wicked Witch. He seems to be a slightly mad near-genius:
tfmetalsreport.blogspot.com
His January 21 article, which sums up my queasy feeling that something is not quite right with the PM markets:
tfmetalsreport.blogspot.com
$1600 Gold By June 10, 2011
Have you ever had a thought stuck in your head? A nagging, bugging feeling that you sense order or disorder, yet you can't quite seem to put all the pieces together. It can become a sort of obsession, if you let it, until you finally have the "A-HA" moment. This is where I've been for past couple of weeks.
Since early December, things haven't felt right in the precious metals. The fundamentals have stayed strong, of that there can be no doubt, but price continued sideways to down. The Evil Empire has seized upon this malaise since the calendar turned and prices have finally fallen sharply. The CFTC position limits hearings revealed themselves to be a total sham and, just today, we got our third margin increase in six weeks. An unprecedented attempt to frighten regular investors out of Blythe's haunted castle! Through all of this, that nagging, bugging feeling persisted...that is, until this afternoon.
Earlier today, it started to come together. I posted a note that made a new date and time guarantee. The last one I made ($1350 by Halloween when gold was below $1200 in late July) was pretty good. Its probably part of the reason you followed me here in the first place. This morning, when all seemed lost and many were getting nervous about our precious PMs, I gave you $1600 by Memorial Day, 5/30/10. I must admit that I kind of pulled those numbers out of thin air but, almost instinctively, I knew that they felt correct. That nagging, bugging feeling again. Then, at the gym this afternoon, I finally got it.
I came home and quickly printed this chart. Got out a calculator and a calendar and started scribbling. Behold that original piece of art; yours for posterity.
Because most of this is unintelligible, please allow me to summarize.
As you know, gold has been in a long-term, secular bull market since 2001. This hasn't changed nor will it anytime soon. The Great Financial Crisis of 2008 changed the fundamentals, however. Instead of mainly being an anti-US dollar hedge, gold became a global hedge against all fiat currencies for reasons too lengthy to recap here. Conveniently, this chart takes us back to about March 2009, which is significant as that is the time period when FASB bowed to the extreme political pressure being applied to it and allowed accounting changes for the TBTF banks, thereby assuring a slow, brutal death to the current, Keynesian monetary system.
The rally in gold that began in early 2009 peaked the week of 5/29/09 at $996. A correction ensued and gold fell to $923 six weeks later for a drop of 7.33%.
It then rallied for 20 weeks, reaching a high of $1234 the week of 12/4/09, for a gain from the low of 25.2%. The corrective bottom was 9 weeks later in the week of 2/5/10 at 1058. Ouch. That was a loss of 14.26%. That's it, the bull market in gold must have been over. Right? Well, that's what Prechter said. Oops. Wrong again, Bobby.
The rally from those lows lasted until the week of 6/25/10 or another 20 weeks. The peak was $1267, which constituted a gain of 19.75%. Uh-oh, here comes another correction. This one lasted 5 weeks and took us back to $1162. Another 8.29% drop. Yikes! This was about the time I issued "$1350 by Halloween". I was ridiculed on ZH. I was also proven right by early October.
Back up gold went, reaching another high exactly 19 weeks later at $1432, or another 23.24%. This has been followed by our current setback of 6 weeks in duration. At $1345, the pullback is 6.07%. At 7 weeks and $1320, the damage will be 7.82% and just about complete.
I firmly believe that there is absolutely no reason not to expect the pattern to continue so, follow closely, as this is some pretty complicated math...
20 weeks from this Friday...assuming the lows for this correction are made this week, is 6/10/11.
19 weeks from next Friday...assuming the lows are made next week, is 6/10/11.
A 20% gain off of a low of 1345 puts us at $1614 sometime during the week of 6/10/11.
A 20% gain off of a low of 1320 puts us at $1584 sometime during the week of 6/10/11.
Let's split the difference: $1600 on or before 6/10/11.
There you have it. It's not complicated and it doesn't need to be. Market "analysts" like to make forecasting seem very complicated with all their charts and stochastics and RSIs and SMAs. Its all bullshit designed to get you to think that the "analyst" is smarter than you and worthy of your time and attention....and money.
So, here's my promise to you. Gold will trade at $1600 on or before 6/10/11. If I'm wrong, I'm shutting down this blog and going away, never to be heard from again as I will have proven myself to be of little value. If I'm right...well, let's just say it would be perfectly appropriate for you to hit the "Feed The Turd" button every day for the rest of your life.
So, in the end, rest well. The turn is near. I honestly have no idea whether the bottom will be this week at 1345 or next week near 1320. What I do know, however, is that gold and silver are about to commence their next UP moves. Be sure you are on board when it happens. Turd out.
8:30 EST UPDATE:
All posts today will be an update of this particular thread because I feel the info above is extremely important and I don't want it pushed down the homepage and replaced by another dollar chart.
Speaking of the dollar, lets start there. It looks terrible. What will TPTB come up with this time to rescue it from 78.47 on the March contract? Who knows but it looks more and more like 77-77.50 is coming very soon. The metals are still heading lower this morning, which, in the grand scheme of things, is just fine. I'm confident now that gold will bottom next week, near 1320.
Someone asked earlier about silver and whether I could make a similar forecast in that metal, comparable to the gold forecast above. In truth, I can't. Too many crazy and wild rumors out there. Pull a number between 35 and 100 out of a hat and you'll have just as much chance of being right as I do. Here's what I can say, however, and I think this is significant.
In early November, right after the announcement of QE2, the PMs suffered a similar, confounding decline. You can read all about it if you go back and search the history of this blog, which is located to your right. At any rate, the fundos were overwhelmingly positive yet the PMs kept trading lower. Does this sound familiar? It should, since the first of the year, we have had to deal with a remarkably similar situation. In the current case, the PMs have tanked in the face of tremendous dollar weakness. Just like November, it doesn't make any sense. Well, since humans are pack animals, I firmly believe the end result of this selloff in silver will be almost exactly the same.
March11 silver peaked on 11/9/10 at $29.40 and then declined to bottom of 25.05 on 11/16. It re-tested that bottom the next day and then began its next leg higher. The total down move was 14.8%.
March 11 silver then peaked on 1/4/11 at 31.28. Subtracting the same 14.8% gives us 26.65, which is remarkably, and not coincidentally, right near major, huge and significant support at $26.50.
So, let the metals come in a little more. Sometime next week, we'll likely get the chance to "buy the bottom" near 1320 in gold and 26.50 in silver.
More later.
NOON EST UPDATE:
So far, a very nice rebound in copper, the dollar is holding on for dear life and the HUI is back well above 500. Let's see what the next 90 minutes hold. I did get filled on some March11 $30 silver calls this morning. I'll certainly be buying more if we get down to 26.50-65 early next week.
1:30 EST UPDATE:
The March USDX is trying ever so hard to close the week below the critical 78.45 level. There was a weekly double bottom there in mid and late November. Though is seems lately as if the dollar and PMs are positively correlated, I can assure you that condition is temporary. Precious metals are the ultimate fiat hedge so it is 100% likely that, eventually, dollar weakness will once again translate to PM strength.
A March USDX close under 78.40 virtually assures that next week will be very tough for the dollar. The next breakdown will take us to 77.50 if not 77.
As background for my next post later today, please be sure that you have read the 8:30 update above. I'm going to expand on the remarkable "coincidences" of price and time on the PM charts and how these "coincidi"(?) are giving me such extreme confidence.
Finally, I feel that this is truly one of, if not the, most important post I have made. Please "spam" a link to it wherever else you hang out. Thanks.
More later this afternoon. TF
7:00 pm EST UPDATE:
The USDX did, in fact, settle under support at 78.37. In the afterhours market, it got even weaker and traded down to 78.12. This ugly fact is going to sit on the face of the dollar bulls all weekend long.
I felt compelled to add this note from Santa. It is the most succinct and accurate post I've seen yet regarding the odd gold/$ relationship of late. As always, heed Santa.
I'll have much more for you tomorrow as next week is definitely going to be interesting. TF
Posted: Jan 21 2011 By: Jim Sinclair Post Edited: January 21, 2011 at 5:11 pm
Filed under: In The News
Dear CIGAs,
Gold today is a perfect example of what our present markets are about.
The US dollar pulls back to the underside of a box formation and falls away. That is a classic bearish formation and the algorithms sell the dollar heavily.
Gold and gold shares injured by the Euro holders of gold liquidating as the euro rises draws a negative technical picture, and the algorithms sell gold and gold shares.
Algorithms have no mind.
Algorithms are exercises in advanced mathematics.
Algorithms will turn and buy gold the instant the fundamental guys say enough.
What has injured the field will benefit the field. For me, on my speculative side, it is an opportunity in calls on the various gold shares that have performed well over the last year as the sheeples sell and the option professional try to take them out at pennies in the April maturity.
On an unrelated topic, what if your town goes broke? What do you do with your garbage? I make a lot of mulch, and have a really well placed burn pile. Think about it.
Margin rates move higher, always, in a bull market. It is good, not bad news for price. Some day the public may learn that, but do not hold your breath. Some day commentators in our gang may learn that. Do not hold your breath for that either. |
