ed steer comments on friday's rally in precious metals:

So, where to from here? I'm expecting a big run to the upside from this point. Gold closed right at its 50-day moving average and silver closed slightly below its 20-day moving average. Once these key averages are penetrated convincingly to the upside, it's almost a certainty that the technical funds (in the Non-Commercial category of the Commitment of Traders) will be in this market going long in a big way. But the $64,000 question you have to ask yourself is this one..."Will the bullion banks (JPMorgan/HSBC USA Ltd.) be there to go short against them as they always have?"

That will determine how fast and how high this rally goes. If they show up, it will be the "same old, same old" garden variety rally that we've always had. But if they just fold their arms and stand aside...then the tech funds will be buying into a vacuum...and we'll have a 10/10 "reverse" waterfall to the upside that will take your breath away. Ted Butler says (and I agree) that the bullion banks have just spent four months beating the living crap out of the tech longs in all commodities...especially the money commodities...and that now that they have covered every short position that they can, they won't be back to put their heads in the lion's mouth again. We should know pretty soon what they're going to do...and the price action will tell all.

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