Bullion Soars Despite Cramer’s Endorsement

We should know soon whether the animal spirits that pushed gold and silver sharply higher yesterday can withstand the endorsement of James Cramer.  Although we seldom watch his show – even with the TV off, you can practically hear him shouting within a ten-mile radius of CNBC’s Fort Lee studio — someone mentioned in the Rick’s Picks chat room yesterday that he’s hot to acquire gold and precious-metal shares. Never too late, we suppose, but we somehow doubt he was so keen on the stuff ten years ago, when an ounce of bullion was selling for about a fifth its current price. Is it too late to jump on the bullish bandwagon even though Cramer’s doing it?  Not at all.  In fact, so certain are we that an ounce of gold will trade above $1400 by year’s end that we promise to don a grass skirt and dance the hula in Times Square in the middle of winter if we’re wrong. (Oh, right, we’re already doing that because Goldman shares failed to fall to a $29 target we were equally certain about. What could we have been thinking? So foolish to have bet against a company that, through interlocking directorates, owns a majority stake in the U.S. Government.)

Silver impaled the bad guys Tuesday and then came back for more...

You don’t need to be a technical analyst these days to discern that precious-metal quotes want to go higher.  Silver in particular has gone marauding despite the best efforts of the bad guys to hold it down. We had alerted subscribers Monday night to the possibility of a price surge that would lift gold as well when we wrote as follows: “Silver has been showing more energy than Gold lately, a fact that has been reflected in [our] enthusiastic Silver touts over the last couple of weeks.  Late Monday night, the futures were pushing past the 20.185 Hidden Pivot midpoint of the pattern shown in the chart. This implies they are bound for at least 20.445, its ‘D’ sibling, although there are bigger patterns with commensurately higher targets that were identified here earlier.”  In plain English, Silver was chomping through the last obstacle DaBoyz could set in front of it. When it finally popped, the December contract gained 25 cents in the wee hours – peaking at exactly 20.445; then it got second wind when Chicago markets opened, hitting an eventual high of 20.550.

By that time, gold, which had been somewhat lethargic in the last week or so, didn’t need any help.  The Comex contract shot up nearly $30 intraday, bettering our 1264.40 target by $12. We’d said it would be clear sailing to at least 1291 if the December futures got past 1264, and we’re holding to that forecast.

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  • keith September 15, 2010, 11:39 pm

    Agreed. Cramer’s excitement in gold is only the first step for the barbarous relic becoming in vogue and sexy to the average investor. I guess we could mark this as phase 2 of the bull market where it moves to secular. The next phase is the mania but we are not even close to being there yet. Phase 3, the final mania, will be marked when Cramer says there is no way anyone can lose money if they buy gold!

  • Robert September 15, 2010, 5:43 pm

    Ben Bernanke declaring that he “doesn’t understand” Gold’s action should be met with the classic Jack Nicholson response:

    “Sell crazy somewhere else- we’re all stocked up here”

    The real bet we all need to place is with what manner of currency we trust the most to extinguish our debts, and to maintain some manner of wealth preservation…?

    I vote for Gold over any printed paper- it’s as simple as that.

    To the question of “should I be buying Gold in this price environment?? my response would be “Only if you feel that you want/need some for the insurance factor” – I personally feel there is never a bad time to buy when you are looking for an asset that you plan to lock away for a rainy day. If you qualify in this sense, then BUY PHYSICAL, buy a safe or safe deposit box, lock it away and forget about it.

    If you are thinking of buying Gold in order to make some speculative capital gains, then you should be preparing for a pullback rather than thinking of entering a new position here (JMHO). Otherwise, prepare to get burned (just as all the late-to -the-party ding-dongs got burned in January 1980, or in September 2008)

    I believe in the secular Gold Bull, but I also believe that the volatility in this market is going to get real crazy within the next 12 months. I can easily envision occasional one-day swings of $100 or more within the next year or two…

  • Bradley September 15, 2010, 5:34 pm

    I subscribed to Real Money for a number of years, starting back in the late 90’s, and corresponded many times with Cramer (back when he would email back himself). I found him to be unbelievably energetic, and if not optimistic, certainly opportunistic. He was, (and I believe still is), a trader at heart, with a trader’s instincts, impatience and desire to find the next trend. He has tried to morph into a market commentator and/or advisor away from his trader’s mentality, but I think he has failed for the most part, drawing a huge number of young people into the equity markets, encouraging them to flip shares as they try and compete with professionals and computers. On some trading boards, his acronym is “TGFOAT”, meaning The Greatest Fade Of All Time, as experienced traders fade the moves he broadcasts to his minions, as they pile in during extended trading sessions or the morning after his show is aired.

    Apart from the short term trade however, I have found it very difficult to determine whether an opinion of Cramer’s will pan out or not. He is a virtual “weathervane” of prognosticators, making so many calls and changing his mind in such a short timeframe, that you can never pin him down, and he can always point to one opinion or another to prove that his calls have merit.

    Say what you will, the man has made a fortune doing what he does, and whether I like it or not, that is another matter…

    • redwilldanaher September 15, 2010, 10:11 pm

      Yes and he’s used duplicitous means and committed outright fraud in making his fortune. He’s the poster boy for much of the damage that he and his fellow boomers have unleashed on this country. The man is despicable.

  • LoneStarHog September 15, 2010, 4:36 pm

    One must understand that silver is a natural biocide and quite capable of defending itself against even a virulent pathogen like Cramer.

    • Robert September 15, 2010, 5:14 pm

      That was a good one…. 🙂

  • Tom September 15, 2010, 1:15 pm

    If I recall Cramer was right about google for awhile as well. Not that I watch the show, but I know that was one of the things he screamed about to his watchers for months as the price doubled.

    I guess even a broken clock is right 2x per day…..

  • Benjamin September 15, 2010, 10:26 am

    The way I see it, silver is catching up to gold’s headstart.
    Looks fairly strong, and I’ve no doubt that by year’s end (also meaning early next year) that silver will make a new, post 1980 high.

    One thing I would like to point out is the Nov. elections just around the corner. Now, the last time gold silver were simultaneously making new highs… well, we all know what happened after that. I kind of, sort of suspect a nice crash in Nov. would serve the interests of certain parties and banking entities…

    Anyway, it might be imagination, but I see some similarities in this up-leg and the initial one. If one looks at a chart (I prefer dots, btw) back from 2006 or so, I can see that (maybe) current silver is about at, pattern-wise, where it was back in winter 2007/2008 (Dec to January). Assuming a proportionate rise, silver could hit around 24-25.

    And that’s… my two cents worth 🙂

  • C.C. September 15, 2010, 5:55 am

    Paraphrasing here a bit, but I think the current Fed chairman has quipped on more than one occasion in the past 3 years, ‘I can’t explain it…’ regarding the gold price.

    He can explain it alright, but he will pooh-pooh the encroaching metal-storm as a mere ‘distraction’ taking place along the economic periphery, while he/they attend to more cerebral tasks – like, finding another euphemism for creating new currency, backed by nothing.

    When the light bulb goes on, and the the distinction between precious metals and real money is drawn together, we will have a ‘Cramer moment’. At the present, confusion, fear and indecisiveness rule the day for the commoner.

  • jj September 15, 2010, 5:40 am

    Rick, by the time we are singing “tis the season to be jolly” and $1400 Gold is in print on the chart, where would you guesstimate the US$ Index will be trading?

    If you’d rather leave that target for your pivot point insight than perhaps I can get your opinion on whats the main driver behind your $1400 gold target……INflation or DEflation…..or both??

    Cheers!

  • Chris T. September 15, 2010, 2:34 am

    Rick,

    Seeing as both bets are tied to the same thing, the first the company, the second, its shrillest animateur/mouthpiece (even now), I propose that one dance will cover both, if it were to come to that.

    As to silver, haven’t seen the COT’s lately, but how will those inordinate AG-shorts ever cover at near post 1980 highs, without a (by now necessary) major takedown, unless they really are angling for an eventual cash-only settlement / delivery default?
    The Fed, grace-a-Dodd, prob. has the power to do anything here by now that they deem needed.