Probably starting at 3am on the dot, I expect the charts for both gold and silver to show a sharp drop that carries through to the COMEX open, and then another sharp decline as the NFP numbers are reported. That will be the lows for July. I think we have already seen the lows for the year in both metals, although I also think the Cartel will continue to try and shred the spot markets with more paper.

I have been harping lately about FR and SLW as very reliable indicators about the short term direction for the metals. Both looked very weak today. We get a takedown in the metals tomorrow. The question is, how quickly will we see the rebound?

I am putting about a 50-50 chance that both silver and gold will see steep declines but actually close the day in the green. There is not enough low hanging fruit to make it pay off for a big paper dump right now. Who is left to sell? There has been mild buying in the metals during this little uptrend the last few sessions and perhaps stop loss selling will eject a few of those longs. I just do not see the justification to support a more severe shakeout here.

I have no plans to sell anything tomorrow. I may dip in and buy more ECU here though since I still think this merger is going to happen and it will be very bullish going forward, to make the stock acquired here a bargain. I can wait until September since I have been around this story now for more than 7 years and I think we are on the verge of getting a sustainable development in place for a much larger mine.

Cheers!

mike