Even though we've tried to warn and prepare, none of that makes the inevitable Spec wash-and-rinse any easier to watch.
At the end of the day, it just is what it is.
The year 2017 has unfolded almost precisely as we initially forecast
back in January with two steps back following every three steps higher.
We had carried a target of new highs for 2017, near $1320, through this
most recent rally that began on July 10. That we instead reached $1360
was just a bonus, I guess.
From here and with Bank NET short positions
hitting extremes over the past two weeks, we must expect further
downside as Specs continue to be washed out and USDJPY/CDG reacts
negatively to any hint of positive economic news that serves to
reinforce Mother's hogwash of yesterday. As we discussed in yesterday's
podcast, this period of frustration could very well last all the way
through the next BLSBS two weeks from tomorrow. Once that's behind
us...and hopefully haven't fallen too far from here...the stage will be
set for the final three-steps-forward part of this year's pattern.
So, how far is "not too far from here"? Well, in
CDG we've been mentioning the 50-day moving average as being the first
target for The Banks. As of today, this level is $1291.30 and thus far
we have a low in the Dec17 of $1292.06. See below:
And why are The Banks targeting this level? As
we've been discussing for the past three weeks or so, the three primary
moving averages are all bullishly crossed. This configuration prompts
the Spec HFTs to buy the dips and this generally promotes price
strength. Therefore, the first key to unwinding the Spec longs and
allowing The Banks to cover shorts is to break price down below the key
short-term MA...the 50-day.
From here, attempts will be made to take price
all the way down toward the 100-day ($1274) and 200-day ($1252). The
Banks likely won't be able to get there all at once due to that Spec
buy-the-dip thing. However, they WILL try to get down there over the
next two weeks.
The area around the 100-day should be supportive as $1280 looks like
decent chart support, too. Maybe that's as far as they will be able to
go? We'll see, I guess. Anything can happen over the next two weeks and
maybe something completely unexpected will prevent The Banks from
pulling this off. However, IF things simply play out in the usual
orderly fashion, I expect a low to this cycle near $1250 or so and, from
there, we can begin to rally into year end.
Turning to Comex Digital Silver...Now that price
is below BOTH the 200-week MA AND the 200-day MA, JPM has The Specs
Longs firmly on the run. There's also a general sense of commodity
DEflation again post-Mother and this is prompting selloffs in just about
every industrial metal, too.
This now the SEVENTH TIME IN JUST THE PAST
TWELVE MONTHS that the criminal JPM et al have allowed Spec long
positions to be built, only to flush them back out by smashing price
back below the 200-week MA. Incredible!
So now the only question that remains is: How
far can they smash price down this time? I can see where some will
expect new lows for 2017 and while that's certainly possible, I don't
think that's likely. Instead...and consistent with what we've discussed
all year...I think a sort of bowl or rounded bottom is forming on the
chart.
If we go back further and look at the weekly
chart, I think you'll be able to see what I mean. There's a reason we
bottomed in early July near $15.50 and it's the same reason we'll bottom
now somewhere between $16 and $16.50. This chart doesn't show you
exactly what I mean but I think it gives you the general picture. After
this current phase concludes, I still think we rally into year end with
highs up near that $18.50 level...setting us to break out with a solid
start to 2018.
And that's where we are here on Thursday, September 21. I wish I had better news but, again, it is what it is. With The Banks still firmly in charge (and NOT on the run or any of that other BS:
https://www.tfmetalsreport.com/blog/8494/same-it-ever-was & https://www.tfmetalsreport.com/blog/8554/guard-against-banks), we all knew that this latest Spec rinse was coming and that it was only a matter of time. All we can do now is sit back and watch while we wait for the next entry point and rally. As of today, it looks like we'll need to give it about two weeks or so to play out. In the meantime, we'll try to have some fun and keep our sanity, perhaps drawing a small level of confidence from knowing how and why The Game is played by The Banks.
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Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.
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The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
