Sunday pre-game, 9/11

***UPDATE: the lower trend line on the silver chart held (barely) today. Given that a true silver "breakout" will require a move through the top of the trend channel (note how many times it has tried and failed recently), if we drop below the lower trend channel, that will most likely become a second tier of resistance, and wouldn't bode well for silver in the intermediate term. Stay tuned.




***

Yeah i know it's Saturday, but I'm gonna be away tomorrow.


In short, I'm not bullish on the metals this week. I see the dollar rallying, perhaps over 80 on the DXY, such that I'm betting the following charts make their way back to the blue lines in the weeks ahead.




On this silver chart, I see a test of the lower blue trend line at some point where it intersects with one of the three horizontal purple lines (i.e. depending on whether it takes a few days or ten). If you look at the other horizontal lines I've drawn, the lower blue trend line has usually been support where a horizontal line of resistance/support crossed it.


Looking at the weekly gold chart, I think we're going to move sideways for awhile, with vicious bear raids being counterbalanced by strong buying, e.g. among Asians. I see a retest of the middle black line in the next few weeks.



On the old chart below, I predicted gold would test the top purple line, and it did. It didn't hold, but the price did encouragingly make its way back up around it. However, I think we're going to need a real impetus, some unequivocal gold friendly event (something greater than a devaluation of the Swiss franc, I suppose) before that happens. My guess is it won't happen in September.




I hope my relative pessimism is wrong because my sizable position in both silver and gold and miners is still in tact. Basically, I'm not trying to get cute, since we're in the strong season of a secular bull, with many people (even so-called experts who should have known better from the start) finally catching on to the fact that - surprise! - governments don't see a rise in gold the same way they see a rise in pork bellies or some stupid momentum-traded stock. With my remaining dry powder I'm looking to get aggressive if the point comes when even PM aficionados panic: I've found Turd Ferguson's site to be a great way to discern that: the ratio of Turd fans to Turd skeptics in the comments is a great contrarian indicator. Maybe I'll graph it if I have time.

10 comments:

Robert LeRoy Parker said...

Ben davies called 2100 by the end of the month a couple days ago. His ta must be different.

Johan said...

Hi GM Jenkins,

Can you disclose your contrarian measure of Turd's blog?

Thanks.

Louis Cypher said...

Hi GM,
How does Silver and Gold look to you in Euros?

Yukon Cornelius said...

GMJ,
Haha, seems like everyone is using TF's site as an indicator now. There's a few sites where if certain stocks get mentioned it's good for a nice gain. The markets have been and always will be driven predominantly by psychology and as such someone with a detached broad view and a anchor in the fundamentals will easily be able to position on the other side at the right time to maximize profits.

Now it's easier than ever... Derwent Capital anyone?

http://www.derwentcapitalmarkets.com/

Brian O'Flanagan said...

I haven't been to Turd's site in awhile, but I thought he, like most metals pumpers, bans dissenting commenters. ZeroHedge wouldn't work because I know for a fact he bans dissenters - he banned me a few weeks ago and blocked me from following him on Twitter.

GM Jenkins said...

@RLP, I wouldn't be surprsied at all if we see 2100 in a few weeks - I don't think anybody realy could be. i just don't see it, and I think to argue we're going there so soon is more based on funadmentals (e.g. greek default) than TA... Also, I like Ben Davies, but he's been wrong a lot. I remember he put out a pdf last fall warning of imminent hyperinflation in japan. Also, he said right after the Chavez gold gambit (Aug 18? interview KWN) that we'd see 2100 in a few weeks. The prpblem with King World News, of course, is that most of the interviews are with perma-bull book talkers. I put more weight into Rickards and Faber than a guy like Sprott or Davies (who runs some gold fund I believe). James Turk is another permalbull booktalker, but to his credit he really put his reputaiton on the line by unwaveringly calling for a big summer when it wouldve been easier to equivocate a bit. I guess he does have a good feel for public participation which might ground some of his predictions.

GM Jenkins said...

@Johan, I have used it as a contrarian indicator in a more impressionistic sense; if I wanted to quantify it, I'm open to suggestions; perhaps something as simple as scoring 1/0/-1 and normalizing and following over time.

One could get more creative too, something like following the ratio of comments with "thanks turd" to total posts, adjusted for price movement (the idea being that if PM acolytes say "thanks" on a down day, they are still bullish and the market may have more downside).

@Yukon, glad you're still dropping by here! Just checked out derwent capital ... that seriously might be the ticket. Thanks.

@Brian - I don't think turd bans dissenters, but i think calling him a metals pumper is justified because he repeats mantras like "the metals will go higher." Projecting certainty, even feigned certainty, is a better business model than honest sketipcism, unfortunately. Fact is, no-one knows what the hell is going to happen - the global economy is a mind-numbingly complex dynamic system with too many psychological parameters for anyone who feigns certainty to be taken seriosuly. Place your bets, that is all.

GM Jenkins said...

Louis, here's a long-term gold in euros chart I follow that helped me make a good decision when it bottomed in early july.
http://stockcharts.com/h-sc/ui?s=$GOLD:$XEU&p=D&st=2006-10-02&en=(today)&id=p09532706945&a=236133776
Right at support now at ~1325 (stockcharts doesnt update commodities in real time), so let's see what happens.

GM Jenkins said...

I'm still long dollar (a double etf UUP) as a hedge for my gold and silver positions, so that's like being long gold in euro terms in a way.

Heron said...

My Compliments, GM