Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Are Silver Prices Set Up for Another Heartbreak?

Commodities / Gold and Silver 2014 May 16, 2014 - 12:35 PM GMT

By: Dr_Jeff_Lewis


For long term investors and precious metals observers, the range-bound price action has rubbed salt into the open wound of short price sentiment. That is, if there is anyone left to remember the move up to $50 in 2011.

How long prices can remain relatively quiet and range-bound (in the face of growing fundamentals, geopolitical tension, and the rising awareness of inflation) is anyone's guess.

Restlessness is developing, perhaps correlated with the volatility and commingled with hope over news of the ending the "London Fixing".

Due to trading positions and willingness to overtly manipulate the market, combined with upcoming geopolitical tensions, it might be best to expect a move down over the short term.

Price Discovery

Price discovery is the main culprit. As long as positions held at COMEX remain dominated and concentrated, nothing is real and the darker mechanism out of London means very little.

It's not difficult to envision JPM, et al., walking unsuspecting weak-handed longs and seeking natural safety into this market in order to sheer them out of position and buy the HFT-induced dips. Producer prices surprised the market to the upside, while the BLS has just "discovered" food inflation.

Professional traders can play this game and come out as winners because they are nimble enough and can turn on a dime. But as weak (paper) hands play into the game, their losses will probably become the big bank's gains. This is the script.

In addition to range bound restlessness, traders are looking now toward volatility to gauge the next move.

Low Volatility

Forbes recently published:

"Just last week (silver) prices slipped to $18.685, the lowest level since mid-July on a continuation chart and a four-year low for a July futures contract. Prices rebounded, following the bounce in gold prices.

30-day silver options volatility is around 12% as of Tuesday’s close, coming just off a 10-year low made during last week’s price drop.

The last time silver volatility fell to the mid-teens was last year, just before silver prices broke in April 2013 and then in late 2010, ahead of the 2011 spike to record highs.

Comparatively, silver’s volatility is usually around 30%.

Volatility is always mean-reverting, so when volatility is that low, it’s ready for a big move, according the (obscure) source quoted."

Volatility is all about where the big banks want the price and perception to be in the short term.

Again, (viewed from the perspective of specs who are ultimately at the mercy of the big shorts), they can be harvested - they will be, independent of prices.

Having such low volatility is unusual for silver, and one analyst said it’s a situation that’s unlikely to last.

Does this mean anything more than an after-effect of what happens when each and every rally is stifled? When a range-bound channel works well for those seeking a profit, picking up nickels in a steamroller - and those who would rather not see the price move too far too fast?

Users are happy - and by proxy. And it works out for monetary policymakers, most who probably don't think or concern themselves with the metals.

Bernanke's answer to Ron Paul's question in 2012 said it all. His answer that gold was not money was probably less of an outright lie than an example of how far off the radar we've gone.

One must not forget is that the manipulation of gold and silver has been achieved by legal mechanisms. It's the equivalent of allowing a semi truck to drive through a regulatory loophole. Ultimately, by distorting fundamental expression (as well as cultural wealth expression) for so long, the resultant risk builds tremendous fuels for whichever ransom spark eventually ignites the fire.

What Fundamentals?

Here are few developments on top of the more obvious ones. For example, above ground investment grade silver amounts to less than one fifth the supply of gold, yet the price is inverse - to the tune of 65 to 1. Or that most silver used by industry is delivered just in time and, therefore, demand is totally underestimated. Or that silver is the only commodity that makes inflation adjusted high seem like some bizarre phenomenon.

A few others:

  • Silver is more oversold now than anytime in the last 28 years.
  • Silver eagle and silver maple leaf coins are selling at a record rate this year.
  • Indian silver import in 2013 was 6125 t, an all-time record, up 189 % from 2115 t in 2012.
  • Over 42% of the silver at the Shanghai Futures Exchange has been removed since the end of February.

With regard to investing alternatives, let us be reminded that there are always a thousand reasons to buy at the top; and a thousand reasons to sell at the bottom.

Most have a clear choice between buying into a conventional stock market, making all time high after all time high. Or buying an asset like silver that is off over 60% from its highs and 100's of percentage points from conservative inflation-adjusted highs. Markets (even rigged ones), contrary to what many are saying, do not fall forever.

What Do You Think?

Any thoughts about this? Share it!
(Note: If you have specific question for me, please contact me through the Free E-Course - thanks!)

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of

    Copyright © 2014 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

© 2005-2019 - 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

6 Critical Money Making Rules