Others To Watch

Wow! It sure is fun to open things up in the morning and see PMs prices like these. It puts a smile on ole Turd’s face.

It does pose a challenge, however. As you know, much of what I do is pattern recognition. This leads me to accurately predict where The Cartel will cap or cover and where the sheep might get frightened. With both PMs at unprecedented and uncharted levels, The Turd must admit that his foresight is somewhat compromised. Rather than just throw darts and make guesses, let’s see if we can find some clues by looking in other directions, specifically the POSX and crude.

Let’s start with the dollar. What a pig! An absolute, snorting, smelly, muddy, rolling-in-its-own-crap pig! Remember, the POSX is an index. A measure of the US$ vs a full basket of other currencies. To really get an appreciation of just how little the entire investing world thinks of its “reserve currency”, take a look at this chart of the dollar vs the euro:
4-6ameuro.jpg
That the dollar has fallen this sharply versus this piece of amalgamated monetary shit is startling, frankly, and somewhat disturbing. How desperate must global money managers be that they are running to the euro as a safe haven. The euro, for the love of pete! And now that its through 1.43, it will likely strengthen further. Goodness gracious!
Now look at the POSX. Its already teetering upon critical support at 75.50. A breach of that level will lead it down to 74 and, through there, 72. Past 72? Beyond there be dragons.
4-6am%2524.jpg
A weakening dollar will certainly support higher PM prices. What about WTI crude? Take a look at this chart. Very, very interesting how it is stuck in such a tight range.
4-6amoil.jpg

Especially when you compare it to this. This is a 30-minute chart of Brent (European) crude over the same time period:
4-6ambrent.jpg
(musical interlude)

OK, back to business. IF Brent keeps chugging higher…and I have a last of 122.70…WTI is eventually going to snap higher, too. If WTI, moves toward and through $110, the PMs will be dragged along behind.

So, what does a gold chart look like this morning? In a word, GREAT! We finally broke through The Cartel’s cap at 1440-45 and are chugging higher. We will certainly see some selling and profit-taking along the way but, technically speaking, I doubt we’ll see much gold-specific resistance/selling until we get near 1500 and above.
4-6amgold.jpg

Silver is currently dealing with this exact “round number” issue. You can already see today a reluctance or hesitation to bid it past $40. No one wants it to be their order that prints 40.00, so we rather tentatively probe higher. Relax. We saw the same phenomenon at $30. Psychologically, its just a tough number to break. It will break, however, and soon. First, we might get a chance to buy a dip. If we do run out of momentum here, do not be surprised if a small raid develops that gets fed by profit-booking sheep. IF we can get the silver ball rolling downward, expect a test of support near the old highs of 38.20. I would be buying like crazy there. Remember, this is a delivery month. The “first notice” day for the May contract is three weeks from Friday. Do you recall how much fun we had as we approached the first notice day for the March contract back in February? I don’t know about you but The Turd made a lot of money! The same thing will likely happen this month, only augmented in larger $ moves as open interest and price are both higher than they were in February. Anyway…here’s your chart:
4-6amsilv.jpg
OK, that’s it for now. Thanks again to all who have shared the windfall and “fed the turd” over the past 24 hours. Your generosity will be put to good use, I assure you. Have a great day! TF

http://tfmetalsreport.blogspot.com/2011/04/others-to-watch.html

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