James Turk: Shorts Are Losing Control

James Turk makes 3 points in his latest interview that have been made here this week:
1. Gold's 4% gain yesterday is an indication that the shorts are losing control as gold is typically capped at a 2% daily gain.
2. Silver's 2% gain yesterday is extraordinary considering every other financial asset was tossed out the window.
3. Once silver clears $42 cleanly, it should quickly run back to $50

Based on Friday’s Comex close, you have gold up $65 today to roughly $1,717.  You often hear about gold being capped, only allowed to move 2% from the previous day’s close.  James McShirley actually discovered this capping technique, which is used by the shorts to defend their position and minimize their losses.  The reason I mention this is that as we speak gold is up 4%, which indicates to me that the shorts are losing control. 

I have been discussing with you, prior to the onset of summer, the fact that I expected this summer to be a repeat of 1982.  The way the market is acting is just confirming my belief that the upside explosion, which I mentioned in my last KWN interview, is now well under way.  This is not a time to be selling, this is a time to be sitting tight with your position.  No one can predict how far or high this will go, but I go back to one of your favorite Jesse Livermore quotes Eric where he says,
“Men who can both be right and sit tight are uncommon."  I found it one of the hardest things to learn.
Silver has been caught in some cross-currents.  On the one hand, we are seeing a repeat of the pattern where silver falls when a financial crisis heats up.  On the other hand, gold should be a magnet pulling silver higher, and to some extent we have seen that result today. 
As an example of how silver bucked the trend of today’s selling pressure, oil was down over $6 on the day, while silver finished up almost 2%.

Don’t get discouraged by silver not doing as well as gold the last couple of trading days, it is building a base for a breakout above $42.  Once that occurs....silver will in all likelihood shoot straight to $50.Read more from KWN: