Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Gold and Silver Ongoing Consolidation May End Soon - 24th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 24th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

The Price of Silver in the Age of Broken Promises

Commodities / Gold and Silver 2013 Jan 25, 2013 - 04:33 PM GMT

By: Dr_Jeff_Lewis

Commodities

The price of silver remains at the mercy of the big banks that make of the majority of the short side at COMEX — which is still the primary paper pricing mechanism for silver.

Could silver prices go above $50 and beyond this year — and then perhaps retest $50 as a floor?


Concentration Matters

Remember that it is the concentration that matters most for the price of silver. It does not matter if those large silver short positions are hedged or if a long exists for every short, since that is a fundamental aspect of market driven pricing.

All that matters is that one or two entities hold the majority of that short position and therefore they can and do influence prices. This is the same story that has been told over and over by Ted Butler and GATA for decades.

For comparison purposes, and even when the concentration is calculated without removing swaps, the current level of short market concentration eclipses the amount of silver which the Hunt brothers held long so many years ago and were subsequently persecuted for.

Silver Tests Major Moving Averages

If these dominating banks decide to let silver prices run through the closely watched technical moving averages — which it looks like they might — they could achieve this simply by covering their short positions. Such buying would push the market considerably higher and signal numerous weak longs to enter.  The market could get to $50 in hurry. 

The price of silver has already broken above its 200 day moving average and is now trading just below its 100 day moving average.  A break above the 100 day MA would typically be considered a bullish technical signal.

Silver remains severely undervalued and has been cheap for decades. Nevertheless, silver has continued its managed retreat from its April 2011 high of $49.77, although it has repeatedly held its value in the $26 region.

If silver’s next move up through $35 is shorted the entire way up by the big bullion banks — which will be clearly documented by the COT report — then the market will probably remain within the relatively tight $26-$37.50 trading range that it has been stuck in since September of 2011.

Timing the Silver Rally is Difficult

It remains challenging to time any of the silver rally scenarios or guess about when macro issues will finally start to affect the market price of silver, but higher prices for silver do seem more likely than not over the medium and long term.
 
The silver market has one or two concentrated shorts trading against a heterogeneous group of longs in the world's primary silver pricing mechanism. This seems both irrational and illegal, and it creates price moves contrary to where technical indicators say the market should trade.

Silver investors can become aware of the macro set up, the precariousness of the U.S. Dollar Ponzi scheme, and the competitive currency devaluations occurring around the world. It seems that central banks must print to save themselves, and this factor will continue to fuel investment demand for silver, despite deflationary pressures.

Money printing will fuel demand, but there were two lines in front of many coin shops during silver’s dramatic run up in 1980, with plenty of people in each line — as equal numbers bought and equal numbers sold.
 
Silver’s short term price has become a result of the COMEX shenanigans, while long term demand results from basic monetary flaws in the paper currency used to measure silver’s value.

Currency Debasement War Brightens Silver’s Future

It remains possible that if and when the currency debasement war picks up, it could trigger a sharp upside blow off event in silver.  Furthermore, the path to this rally is fairly certain. World governments are on a race to debase their currencies, which are essentially debt tickets or promises to pay with no intrinsic value.

Filling the world with these broken paper promises destroys faith, erodes savings and undermines the overall economic structure. The bust seems inevitable at some point, but the challenge lies in predicting when that will occur.

This makes long term price of silver forecasting rather difficult - outside of measuring relative purchasing power.

Although paper price manipulation discourages silver investment and the convenience of holding paper derivatives beckons, when the music stops, nine tenths of the law is possession. Having physical metal under your control then becomes the ultimate wealth preserver.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2013 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife