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Gold, Silver, Tin

January 12, 2012

Ellis Martin Report: David Morgan- $60 per Ounce Silver for 2012

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TEMR: David Morgan is an expert on silver, gold and precious metals investments.   He’s a world renowned lecturer appearing on CNBC and the FOX Business Channel.  He’s an author having penned, Get the Skinny on Silver Investing.  Mr. Morgan is a regular contributor and friend of The Ellis Martin Report.  David welcome back to the show and happy New Year to you.

David Morgan: Ellis thanks and happy New Year to you.

TEMR:  Are you optimistic for 2012 with regards to silver or metals in general?

David Morgan: If we take the whole year into account I am, yes. But, I think it’s going to be the most volatile year we’ve probably seen to date. 

TEMR:  Are you encouraged by the start of this week at all or are you just ignoring it and looking towards the long-term?

David Morgan: You can’t ignore one of the biggest gains on a one day basis for silver going back years. I mean, we got off to a rocket launch and of course you have to pay attention to that. But, that just goes back to the word I used just a second ago, volatility. I think you’re going to see a lot of movement both directions but overall the trend will be higher. And, I’m expecting actually to see silver pretty much double over the course of 2012, meaning going roughly from $30.00 to roughly $60.00.

TEMR:  So, you’re predicting $60.00 silver at some point during 2012. That’s a big number for silver.

David Morgan:  It is. It breaches the $50.00 psychological barrier that sells silver down ever since the Hunt Brothers situation. And, it was smashed down at that $48 1/2 level actually or $40 1/2 some time ago. And, it’s going to take some work to get through that but I believe this is the year that it will happen. And, I believe once we get through that psychological barrier that will become a floor for quite some time.  

TEMR:  Now as a subscriber to The Morgan Report or, I get updates from time to time or I read them from time to time from you as do all of your subscribers. And, I while back I believe you mentioned, I may be paraphrasing here, silver as a buying opportunity at any price under $30.00. So, I took your advice and I went out and stacked up on some rounds. Are you buying more silver right now?

David Morgan: Yes I am. And, that’s exactly correct I said for a long-term investor, and long-term these days is like in the 2 to 3-year time horizon, anything under $30.00 buy physical. And, so far that’s proven to be pretty good handle on things because if you look at the chart and see how many days it’s traded under $30.00 there aren’t very many. And, even on the days where it’s printed in the $26.00 level there’s not many prints there. In other words you have to look at these markets in a way that most people don’t understand because they don’t really know how markets work. But, it’s like, I’ll use the car analogy. I know sometimes a lot of car dealers will put a car on display and it will be, you know, the super deal. And, it’s one at this price only. So, they have a lot of other cars that are almost identical to it but there’s only one at that specific price. So, it’s kind of the same thing for silver. How much $26.00 silver is available? And, the answer is far less than is available at $36.00, if you get my point. I hope I made that clear. People get the idea that once it gets to $26.00 or $22.00 or whatever their fantasy number is, I’ll put my $2 million dollars in there or whatever. Markets don’t work that way. There might only be enough silver at that level to take $100,000.00 worth of metal off the market and then the price starts moving back up. So, that’s something to bear in mind. There’s a lot of people out there that just don’t understand exactly how these markets work.   

TEMR:  Well, what surprised me the particular morning I actually physically drove to a bullion dealer in Los Angeles, a substantial dealer, I was the only one there buying silver. In fact, I was the only one in the showroom. I expected it to be packed. What’s going with regard to perception in the retail area and silver?

David Morgan: Well, it’s typical psychology. If you really want to do well in the markets you have to understand psychology more than the numbers. Numbers are important. They’re a tool. But, if you really understand human psychology you’ll do even better. And, well, let’s see, the price has gone off. The price has been below $0.50 May 1st and it’s going lower or I want to wait and see. So, you know, a lot of people that get that wait and see kind of an attitude and they’ll wait. They’ll watch. They’ll see the bottom. They won’t know it’s the bottom and they won’t buy. In other words they just watch the whole time. And, there’s lots of people out there like that because the psychology is they want to get the exact price, low. And, that’s an amateurs game. A professional looks at a market and says this is still a bull market. The major trend is still up. Nothing’s gone on in the financial system that’s made anything close to a resolution of these massive problems on a global basis. The metals is really the only safe harbor. Therefore, I’m going to establish a position and I’m going to keep building it. To use your words, stacking. Keep stacking up your gold and silver. And, a lot of people do get that but a lot of people don’t. They’re waiting and they’ll continue to wait and they’ll miss the market.

TEMR: Well, they’re going to wait until the price goes up I guess or until it goes down and it may not go down as low as they want it. Is that essentially what you’re saying?

David Morgan: Yeah. What happens is people do the wrong things. I mean, right now you were the only one in the shop. That’s a good indicator you’re buying correctly. I mean, if there was a massive amount of people in there you might question yourself. It doesn’t mean you shouldn’t buy. You might say, hmm that’s interesting. So, people should buy when they’re fearful, which is now. And, they should be selling or lighten up when they’re greedy. But, that’s not what happens if you study the markets. And, it’s not just the gold and silver markets. It’s the tech. It’s the housing boom. It’s any market. People get very euphoric at the highs. So as you said a moment ago silver starts moving back to number 35/40 you’re going to see a lot more enthusiasm and a lot people coming in the market that didn’t want to touch it when it was under $30.00. You know, they might have heard this radio show even and said, you know, that sounds really, really good but it’s going lower. And, they don’t do it. And, then it starts to move higher. And, some of those people will say, I’m throwing in the towel. I’ve got to buy it. I’m going to buy it now. Well, they would’ve had a much better profit base if they would’ve bought it when it felt wrong to buy it.

TEMR: And, we had this almost exact conversation well over a year ago when it was under $20.00.

David Morgan: That’s correct. You’ve got a great memory and that’s precisely accurate. We had a very similar conversation. And, you know, the thinking at that time, generally speaking, I’m paraphrasing, was that, oh my gosh $20.00. It was at $5.00 at one time. It’s a quadruple. Double-digits. Now that’s too high. Well, is $22.00 high when you’ve got an infinite monetary supply and governments that are so irresponsible that they won’t own up to the responsibility? You’ve got governments all around the world that don’t know what to do and they’re actually in a panic mode behind closed doors. They’re throwing rocks at each other. And, they don’t understand how to correct the system because it’s beyond correction. I mean, there really isn’t a physical paper price that you should focus on. We should focus on is, do I have metal or don’t I? You should focus on do I have more at the end of 2012 than I had at the beginning of 2012? And, that’s the way you should appropriate your wealth because it is wealth. It’s stored value and it’s for the future or spending on the present day if you choose to do so. That’s the only way to articulate it. But, people cannot get that paradigm shift in their thinking. Now if we were on a hard money standard then they would say well if I had more silver coins tomorrow than I had today I’m wealthier. And, that’s so simple to grasp that concept. But, when you put in the paper paradigm and everybody thinks of their net worth in terms of paper they can’t get the concept. They’re blinded to it. But, yet the reality is take that red pill. Get out of the matrix and look at your net worth in terms of how many coins do I have today versus what I had a year ago. Do I have more or less? And, that is true value. But, I can’t emphasize it enough and I certainly can’t put those rose colored glasses on everybody so they can see past the illusion into the reality.

Ellis Martin:  Well, let’s shift this conversation into another lateral realm more or less. When I think about silver rounds now having done business with a few silver producers based out of Canada and producing in Mexico and China and what have you, I can’t help but think about these companies producing silver right now and being a part of that. What are your thoughts concerning silver producers right now? Are you grabbing up more of that stock?

David Morgan: Absolutely. I mean, my belief hasn’t really changed. They’re the most undervalued best place to be in the market and of course this is the one that has the most fear surrounding it. But, if you are patient and you have conviction the best place to be is in the junior to mid-tier producers. Buy in over the next, I’d say, few to several months, meaning 3 to 6-months and hold to your hats because what’s going to happen in my very strong view is that to people that are extremely late to the party that we talked about a moment ago, that will have to pile into silver above $40.00, more above $50.00 and even more as it moves beyond that they’re going to feel they missed it. But, they’re also going to look at reality at some big way and say my IRA isn’t going to make it. My pension fund isn’t there. Maybe Social Security payments will come but they’re not going to buy anything. In other words, fear will drive the market. So, there’ll be a huge rush into gold and silver. However, most people will not go to coin dealers at that point in time. They’ll feel that the prices of have passed them by. But they will be looking for gold and silver mining companies like crazy. So, I predict that it’ll be similar to the tech or the housing boom only it will be as big as or greater than those in real terms. And, the reason I say that is there’s nothing like a fear driven market. When you think your money is going to lose value rapidly it’s huge motivator to move out of that currency whatever the currency. Be it the euro. Be it the U.S. dollar. Be it the Aussie dollar. Be it whatever. Into a gold or silver related asset. And, that will be the underlying equities because almost everybody in the U.S. and in fact globally has some type of a trading platform that’s computer based and they can click a mouse and buy a gold stock. And, once that phenomenon starts to grab hold, and I really think it’s going to take 1 1/2 to 2 years before you see this, but once it starts it is going to be, you know, the Albania all over again. You’re going to see some of these penny stocks go ten-baggers in a matter of weeks.

TEMR: So it’s ok to accumulate now but you must be patient. Look ahead for 2013 and 2014.

David Morgan: I really believe that’s the case. And, that’s the reason why if you really can think through these things and try to get your emotions out of the way you’re going to buy right now when the market’s quiet, which is exactly what you said. You walked in the coin shop you were the only one. That’s a quiet market. Never sell a quiet market, one of my favorite market adages. And, number two, you really want to be buying when everybody else is thinking about it. So, now is the time. It doesn’t mean this day. As I said, in the next 3 to 6-months I think. You’ve probably got that window of opportunity and then you’re going to start seeing a new base built and start moving up. And, It’ll move up I think well. But, not into the panic buying mode that I described a minute ago. That’s a couple of years off I think.

TEMR: Does politics per se have any immediate decision across the board with regard to influencing you over your investment decisions?

David Morgan: Somewhat but not much. I mean, the political spectrum is so corrupt that it is a situation that the analogy I use is it’s like changing captains on the Titanic. It doesn’t matter which party is in. It doesn’t matter who’s at the control. It doesn’t matter what blather lather speech they’re making. No real changes can be made. The hull has been pierced and the ship’s going down.

TEMR: So, you’re pretty much ignoring the news except for maybe a mild interest in what’s happening politically.

David Morgan: Yeah. Some people use it to trade. I let it influence me slightly. But, I mean, I look at the fundamental picture when it comes to politics. And, the fundamental picture in my strong view is that it’s corrupt and it cannot be corrected at this point in time. There’s some hopes out there. I mean, I’ll voice that I was honored of being able to have dinner with Ron Paul. It wasn’t a one on one. It was at the Austrians Group at San Francisco one time. And, I think he’s awesome. And, I even think if he’s elected he’d not be able to turn the ship around. I think it’s too late. That’s my opinion. But, I really don’t put much clout into the political system any more. I think it’s just really, really similar to the Roman Empire. We’re in the final days. And, at most the Congress critters and most of the senators are looking to fatten their own wallets on a personal basis and could give a hoot about the citizenry.

TEMR: Following up on an earlier point that you made just a while back in this conversation. You mentioned the real estate bubble. You mentioned the tech bubble of the late nineties and the early 2000s. Mining stocks, gold, silver, is that a bubble? Or will it act like one without ever popping?

David Morgan: That is a fabulous question. And, I wish I had an answer. My take at this point in time subject to change is that I think the equities could get into a bubble mode. I mean, It’s pretty easy to figure out what a company is worth based whatever the current dollar price is. And, when you’re in that kind of a blow off rally you got to kind of keep your head about you and realize that you’ve only got a derivative. So, what do you do with that derivative? And, the answer is quite frankly I don’t know. It’s a case by case individual basis but I’ve thought about it a great deal. So, my take would be to change that asset to another one. So, an example would be you’ve got very overvalued mining shares and maybe you could exchange that for the currency (inaudible) and move that quickly into a very undervalued asset such as a land position, raw land perhaps. Maybe real estate. Maybe income producing real estate. I don’t know. That’s the idea. I think you still want to be in a hard asset. And, so, you could either go into a land position or something along those lines. As far as the metal itself I’m reserving comment. My take today and it has been for the last couple of years is to go ahead and hold the metal itself. And, the reason being is that you don’t want to trade any physical metal for any piece of paper unless the whole system has been rectified to some large degree and you have confidence back in the system. And, if there is a currency that’s gold backed or that everyone trusts and confidence restored to the system and then certainly you can take a look at that and sell the physical. But, unless that confidence and trust is restored I don’t think it makes any sense to sell the physical. So, hopefully I was clear on that. You want to sell the derivatives and put it into some type of undervalued asset at the time and you want to hold the metals until you’re sure or as sure as you can be that there’s some confidence remaining in the system or it’s been rebuilt. In other words it’s fallen down as far as it can go. It’s bottomed and now confidence is being rebuilt and things are on the upswing again.

TEMR: If you don’t mind David tell our new listeners about your website, or also

David Morgan:  Certainly. I think what I’d suggest to most people that are not familiar with my work is get on my free list. It is absolutely free. You’ll get The 10 Rules of Silver Investing. And, you can go through those. I think they come out about every 3 or 4 days. And, then I send out a weekly update to everyone for free on the economic conditions. And, it’s also a way to kind of track where I’m speaking or what I’m doing over the course of the following months or so. And, then if you like the way I write we offer usually a sample edition to report that you can read and view if you want to actually get my best thinking which is reserved for my members only.

TEMR: Well, David it’s a pleasure to speak with you. Again, I’ve been speaking with David Morgan, the silver-guru, expert on mining, money and metals. The website again is and David thanks a lot for joining me today.

David Morgan: My pleasure Ellis. Thank you.

TEMR:  Listen to this segment again on the homepage of our website, Ellis Martin  

copyright 2012 Ellis Martin Report all rights reserved. May be reprinted in its entirety.   htpp://


Gold, Nonferrous Metal, Silver, Tin

December 17, 2011

General Access, Investment Scoring and Timing Newsletter

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For market insights many investors focus on the “historical/backward” looking news but fail to realize other exceptionally powerful forces that are also at work; such as “Seasonal Trends”.  We believe there is some validity to paying attention to the News events that can impact ones investments; however seasonal factors may provide a simpler and more reliable market insight.

To keep things simple we will first display a few charts and then discuss what they may be indicating:

When we look at the red line in the above chart we can see that the price of silver usually performs strongly from about November to April.  Around this time of year we typically see the price of silver pushing higher and higher with relatively small corrections.

In this gold chart we can see a similar result to silver.  In the typically strong month of November we are seeing gold price performance that is “weak” instead of “strong”.   This summer (not shown in the chart above) when one would expect the price of gold to correct, it remained very strong and it really didn’t have any kind of a “pull back” until September. 

Here we see the US Dollar illustrating unusual price strength instead of typical seasonal weakness.  Because precious metals and other markets are “priced” in US dollars, when the US dollar heads up, the” price” of the asset it is measuring tends to fall.

So what does all of this mean?  To be clear we are extremely bullish on the price of silver and gold in the big picture.  We believe that both silver and gold will eventually advance into a full fledged bubble market that will surpass most investor’s wildest dreams.  However, in the short term unusual market action is usually a “warning sign” more than it is a “green light” to load up on new positions.  Although we believe seasonal trends are a very powerful force and the metals may very well be higher in February than they are here in November, the unusual price action does raise the caution flags that perhaps something a little different is brewing this year.  It has been a long time since silver, gold and commodities in general have had a very meaningful correction.  There are a lot of warning signs in the markets these days and at this time it may make sense to proceed with caution.

Ultimately we expect to make our largest profits from the huge macro moves in the markets.  At we try to identify long term macro trends such as the current silver bull market, identify intermediate term entry points and watch for our ultimate exit point.  We not only want to identify and profit from the coming bubble market, we also want to keep our profits for the next low risk opportunity.  To read more free commentaries or to sign up for our free or paid newsletter please visit us a

Gold, Silver, Tin

December 10, 2011

Gold’s 4th wave consolidation nears completion and breakout

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David A Banister-

Back in August with Gold running to parabolic wave 3 sentiment induced highs, I warned of a major top and multi-month correction. We all know that the fundamentals for the shiny metal are stronger than ever, but you must keep in mind that the market prices all that in well l in advance. Coupled with excessively bullish sentiment that was capped off by a USA Today cover with Gold on it, it was easy to see a major sentiment correction and therefore price decline was at hand.

If we fast forward a few months from my then blasphemous call for a top and multi month consolidation, we can see that Gold has lost favor with the taxi driving crowd and the shoe shine group both. What has in fact happened is we have had what I call a 4th wave triangle pattern, which works to consolidate prior gains. Triangle simple let the economics of the underlying security or commodity catch up with the prior bullish price action. In this case, Gold was in a powerful wave 3 stage advance from the October 2008 $681 lows and over a 34 Fibonacci month period of time. When everyone on the stage was convinced this act would continue, it was time for the curtains to draw.

The 4th wave so far has been characterized by a typical pullback in terms of price and also time. The drop to the $1530’s is a normal 31% Fibonacci retracement of the entire 34 month advance. In addition, the pattern that has clearly emerged lines up as a typical 4th wave triangle pattern, which has 5 total waves within. Waves 1, 3, and 5 are down and 2 and 4 are up. We are currently finishing wave 4 to the upside from the low $1600’s and likely to see a wave 5 near term to the downside. As long as Gold holds above $1681 levels, I expect we will see a breakout north of $1775 to confirm that wave 5 up in Gold has begun.

Targets for the 5th and final wave of this suspected 13 year cycle of Gold begin at $2360 and then we will update from there. Below is the chart I sent to my paying subscribers last Thursday and we can see that this pattern is still playing out. Aggressive investors would be wise to get long the metal on this final pullback, with a stop below 1680 to be conservative.

Gold Forecast

If you would like to have forecasts for price and pivot points in advance on the SP 500, Gold, and Silver that keep you on the right side of the markets, check us out at

Gold, Silver, Tin

November 14, 2011

The final Market rally up before the big leg down is near an end

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David Banister-

Back on October 3rd, I penned a public article forecasting a major low in the SP 500 to occur around 1088.  The SP 500 had been declining from the 1370 highs this May and was in the 1130’s and nearing its final descent in a corrective pattern.  The next day, the market bottomed intra-day at 1074 and closed north of 1100.  Since that time, we have rallied impressively to a high of 1292, with a strong pullback to 1215, and now what I believe is the finally rally to a major top formation.

This current rally is part of a normal retracement of the 1370 highs to 1074 lows that similarly occurred in the 2008 rally off the first major market drop.  One would expect this rally to take a few months to complete from October 4th and likely peak sometime between now and Christmas in the 1292-1320 ranges as outlined below.

First you must understand that my forecasts are largely based on human behavioral patterns and not economic news or European headlines.  The crowd commonly buys and sells in the same fear and greed swing patterns over and over again throughout history.  Once you understand these patterns, you can make pretty strong educated guesses on the direction and pivot highs and lows within a few percentage points.  Other than those wave patterns, there are other indicators I use to confirm what I think I’m seeing, so let’s review:

  1.  The bullish Percent Index readings are now at 72%, which typically is an area that marks a rally high in the markets.  These indicators tell you how many of the SP 500 stocks have bullish point and figure charts.  Typically a reading over 70% is way overbought and all bulls are on board, and a reading below 30% is the opposite.   The market bottomed this summer twice on August 8th and October 4th as these readings were sub 30%.  The market topped in July at 1356 as this reading was over 70%. With my wave patterns and this reading now again over 70%, it’s a strong warning of an imminent reversal.
  2. Sentiment Indicators are now back to full on bullish.  In the most recent AAII survey, we have nearly 46% of those polled bullish, up from an extreme low of 24% in early October near the market lows.  In addition, the Bears in this survey are at a near extreme low of 24% of those polled, leaving the ratio at almost 2 to 1 bulls.  This is another warning flag.

The Bullish Percent Index chart is below with some notations: />

Best Market Forecast
Stock Market Forecast 

Longer term, my best view right now is that this is a counter-trend bounce off the 1074 lows that will give way to another big down leg.

Here is my reasoning:

First, look at the SP 500 chart. I show the congestion zone from 1275-1300.  My Fibonacci and wave targets have been 1292/93-1306 for a few weeks; we hit 1292/93 once and fell hard.  The market is trying to work back up there in this final E wave up I think.  So far 1274-76 were hit (One of my targets) and we will see if it can run to 1292/93 and the final is 1306-08.

Stock Market forecasting
Stock Market forecast Prediction

This is a B wave rally or wave 2 rally off the 1074 lows. We are in a bear cycle bounce.

From March of 2009 (I forecasted a market low on Feb 25th 2009), the market rallied from 666 to 1370 in 3 clear waves, ABC. Those are corrective patterns of a bear market. The market topped at .786% of the 2007 highs to 2009 lows at 1370 with Bin Laden’s death, a seminal event. 

Since then— 5 waves down (impulsive) to 1074 marked a 38% retrace of the Bear rally that went from 666 to 1370.

This is a counter-trend rally from 1074 to 3 potential pivot areas. 1292 (which I forecast and already hit), 1306-1308, and max 1320. 1306-08 is probably the max in my views.


A wave: 1074-1233 wave A from October 4th lows.  (I forecasted a bottom on October 3rd)

B wave:  1233-1195 wave B (A mild .236% retrace of A wave)

C wave: 1195- 1292, 1308, 1320 wave C  (Where wave c is either .618, .71, or .786 of wave A (159 points 1074-1233))

This recent pattern in a more microcosmic view is much like the ABC rally from 666 to 1370. There the A wave was huge and went from from 666 to 1221.  The B wave 1221-1010; and then the C wave 1010-1370.  That C wave was only 64% of the A wave.  All of those pivots, 1010, 1221, 666, 1370 etc. have Fibonacci relationships to prior market highs and lows.

I’m looking for this current counter-trend rally to mimic the nature of the 2009-2011 ABC Rally.  That means this final pattern up now we are in from 1195 pivot would be much less substantial than the rally from 1074-1233.  That is why I look for 1292-1306 ranges (same forecast I had weeks ago) as a top between now and Christmas at best.  At any time this market could top and crack, so I’m laying it out as best as I can.

Bottom Line: Market is trying to complete a counter-trend rally which so far peaked at 1292/93 and is struggling to get back up there or maybe a tad higher before the markets lose strength.  Many indicators short term are peaking as well, and everyone should be on guard.  If you’d like to be forewarned of major tops and bottoms in Gold, Silver, and the SP 500 with outside the box thinking, check us out at for a great offer.

Our normal price is $327 per year, however, in the spirit of the holiday’s and the upcoming “Black Friday” shopping day, we are offering an early Holiday Present with a large discount of $100 off the annual price for just $227 for the first year of your TMTF subscription.

Copper, Gold, Lead, Nonferrous Metal, Silver, Tin

October 26, 2011

SP 500 Looks Poised For A Sharp Pullback Near Term says Dr. Copper

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October 20, 2011 /> David A. Banister-

Back on October 3rd I wrote a public article forecasting a major market bottom at around 1088 on the SP 500 index.  I surmised we were about to complete a 5 wave move to the downside that commenced with the Bin Laden highs of 1370 in early May of this year.  The following day we bottomed at 1074 intra-day and closed over my 1088 pivot and continued higher as we all know.  That brings us to the recent highs of 1233 intra-day this week, a strong 159 point rally off the 1074 lows in just a few weeks.

Markets I contend move based on human behavioral patterns, mostly because the crowd reacts to good or bad news in different ways depending on the collective psychology of the masses.  There are times when seemingly bad news is ignored and the markets keep going higher, and there are times when very good news is also ignored and the markets go lower. This is why I largely ignore the day to day economic headlines and talking heads on CNBC, as they are not much help in forecasting markets at all.

Using my methods, I was able to forecast the top in Gold from 1862-1907 while everyone was screaming to buy.  I was able to forecast the April 2010 top in the SP 500 well in advance, the bottom last summer, and recent pivot tops at 1231 and 1220 amongst others.  All of this is done using crowd behavioral theory and a bit of my own recipes.  That brings us forward to this recent rally from 1074 to 1233, which as it turns out is not all that random.

The rally to 1233 will have taken place within a 13 Fibonacci trading day window which ends today.  In addition, the rally is leading into the end of Options Expiration week which tends to mark pivot highs and pivot lows nearly every single month.  Also, at 1233 we have a 61% Fibonacci retracement level of the 1010 lows of July 2010 and the 1370 highs of May 2011.  1233 was my “Bear line in the sand” I gave out a few months ago to my subscribers as a likely bull back breaker.  In essence, the market is having trouble breaking the glass ceiling at 1233 for a reason; it’s a psychological barrier for investors now.

Near term, I expect the market to have another sharp correction to work off the near 160 point SP 500 rally that has taken hold in just over two weeks and again on 13 Fibonacci trading days as of today.  In addition to that, we should follow copper as it tends to be an extremely good indicator for the SP 500 index long and short term. /> Right now, Copper has dropped 8% this week while the SP 500 levitates on a magic carpet ride within a 30 point range.  Copper looks like it has begun a 5th wave down, which will likely take it to the $2.70’s per pound from $3.46 last week on its recent bounce from $2.99.  Below I offer a few charts showing the projected copper pattern and also one showing the SP 500 relating to Copper.

Right now, Copper has dropped 8% this week while the SP 500 levitates on a magic carpet ride within a 30 point range.  Copper looks like it has begun a 5th wave down, which will likely take it to the $2.70’s per pound from $3.46 last week on its recent bounce from $2.99.  Below I offer a few charts showing the projected copper pattern and also one showing the SP 500 relating to Copper.

In any event, we are due for what I call a “B wave” correction of sentiment in the SP 500 and market indices, which should take the SP 500 to the 1149-1167 ranges minimally, and perhaps set up another entry for a C wave to the upside.  Caution is warranted near term is my point.  If you’d like to receive these types of regular updates during the week covering Gold, Silver, and SP 500 and more, check us out for a coupon or free weekly update at

Gold, Silver, Tin

October 20, 2011

Large Commercials take bullish gold and silver positions

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Over past fifteen years or so, I have watched the Large Commercials (LCs), as they are known to futures markets traders, change their positions in gold and silver with uncanny accuracy.  The LCs have not always been on the right side of the markets, but they have been right often enough to profit handsomely from their positions.  Critics of LC positioning call it manipulating, and there are good arguments that they are right.

One of the best analysts of the LCs’ positions is Gene Arensberg, who publishes Got Gold Report.  From the latest Got Gold Report:

In the five reporting weeks just since September 6, as the price of gold fell as much as nearly $350 at one point, before snapping back up to settle a net $213.19 or 11.4% lower (as measured on Tuesdays, from $1,874.87 to $1,661.68) the combined commercial traders have covered or offset an eye-opening 59,236 contracts or 26% of their collective net short positioning.  Indeed last week’s COT report (Oct 4), showing 164,751 contracts of LCNS was the lowest net short stand by the commercial traders since the post 2008-crash positioning of April, 2009.

We find it enormously interesting and instructive that in the 10-weeks since August 2, as the price of gold launched from the $1,650s up to the $1,900s, then careened lower in panic and liquidation to as low as the $1,530s and has now returned almost exactly to where it was in August – actually slightly higher than then – as gold apparently pulled a blow-off top, the largest, best funded and presumably the best informed traders the CFTC classes as commercial have very, very strongly reduced their collective net short positioning for gold futures. (From 287,634 contracts net short August 2 to 168,478 lots on Tuesday, Oct 11. A reduction of a whopping 119,156 contracts or 41%!)

In case it isn’t just as obvious to readers as it is to us, let us state it differently. Since August 2 the price of gold, with all its gyrations up and down, is nearly net flat, but the collective bets by commercial traders that gold will fall in price are now much smaller than then. If we can assign a confidence level to the commercial traders by their positioning in gold futures on the COMEX, we would have to say that as of this past Tuesday they are a lot less confident that the price of gold will fall looking ahead.

As I read gold price chart and analyze the action, I see a period of consolidation.  My analysis, of course, is not unique.  Other better analysts see the same consolidation.  Still, I am encouraged to see Gene Arensberg’s analysis of the LCs’ positioning in gold.

Arensberg’s work can be found at  He also reviews the LCs’ position in silver.  Subscription options are explained on the site.

For silver investors, this will be of interest: Special GGR Excerpt – Silver COT Most Bullish in Eight Years.