Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in the METAVERSE Stocks Universe - 8th Dec 21
Stock Market Sentiment Speaks: I Expect 15-20% Returns For 2022 - 8th Dec 21
US Dollar Still Has the Green Light - 8th Dec 21
Stock Market Topping Process Roadmap - 8th Dec 21
The Lithium Breakthrough That Could Transform The Mining Industry - 8th Dec 21
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Are Silver Prices Set Up for Another Heartbreak?

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

By: Dr_Jeff_Lewis

Commodities

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 http://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

    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 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