Stuck

Stuck

by Turd Ferguson

It’s what we are. Perhaps with the BS ECB rate decision earlier today, we can begin to move higher. I’m still tentative, however. Its Thursday. Lots of pain inflicted on Thursdays past.

The gold-crude coupling has wiggled some this week and that’s good. We don’t want gold and crude tied at the hip for too long. Gold is money, a store of wealth. Crude oil is a natural resource, a commodity. They should not trade together. That said, I still feel we should keep a very close eye on crude here. The chart looks like it wants to roll toward $110. I hope it does…I’ve got some May 110 calls that I need to get out of before they expire. However, as you can see below, crude is stuck in a range just like the PMs. I doubt that it can rollover toward the bottom of the range and not drag the PMs down with it.

Regardless of that, gold just looks terrific. After breaking out of a six-month trading range, it is simply consolidating before moving higher. Note how all three dips toward 1455 have been bought, two rather aggressively. This is very encouraging as it shows the conviction of buyers in their belief that the breakout will stick. A move UP through 1464 will cause even more short covering and we may see 1480 pretty quick when it happens. Some of you have suggested rotating out of a few silver miners and into gold miners. Not a bad idea but be very picky. The silver miners still have a long ways to go so you don’t want to swap a kick-ass, unhedged junior silver miner for just any old gold stock. If I get some time over the weekend…and I may not as I have a family reunion to attend…I’ll try to give you some gold names to watch.

Silver, ahh silver. Some have construed my flat position in silver to be a lack of faith. I assure you it is not. I could not be more excited about the next three weeks. I’m simply hoping for a dip so that I can leverage back into an even bigger position. We all made a lot of money back in February. The buying panic as we approached “first notice” day for the March contract took silver UP about 15% in 8 days. In the end, the Death Star did not technically default…but…The Cartel still doesn’t have the silver to satisfy all of those who will stand for delivery in May. In fact, the way that they have been settling for cash, instead, almost guarantees that those standing for delivery will only increase in May. IF we can get a dip here, buy it. I’ll be buying it with both hands. The next three weeks in silver are going to be great fun.

And here’s a 30-minute chart. Like gold, it has solid support at the low end of the current range. I’ll be looking to buy at 39.20 and again at 38.80, IF I get the chance. Fingers crossed. Greed is kicking fear’s ass right now and I’m really not liking being out of the silver market.

More later. Have a great day! TF

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