Why Gold and Silver are dropping ...

Originally posted by chocise
My guess would be it can't continue...

That's precisely what "they" said at 400 (Prechter at 300), and they've continued to repeat it every year since. I used to have several links bookmarked, 2004 through 2010. Year after year, the same old top-callers, making the same old bubble talk. Some day they might actually hit it, but not until we see a global allocation to precious metals in multiples of what we have today, or, until the Fed raises short-term interest rates and successfully unwinds trillions of dollars in egregious monetary policy. My opinion only, I could be wrong.

On another note, and something that Pritcher piece mentioned in its last paragraph was something about Armageddon... that if things did pan out badly no one would be around to cash in on anything!

I think Prechter qualifies as a hard-line doomster, at least by Wall St Journal standards. As a precious metals investor, my opinion may be biased by the poor performance of his bearish Gold analysis. Maybe one of his current, or former subscribers will show-up with a different perspective.

Bubbles can only form in a stable or semi-stable monetary system. Neither is the case right now

I mean talks of USD and EUR abolishment have hit MSM News in the last few months. There is simply no room for denying it anymore no matter how you look at it.

Great run today in SI - Almost right back to the all time high. Congrats guys!

May have to go to my profile link as pictures seem too wide on preview

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Today - 100 Volume Chart
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reply to post by Dance4Life


Well tomorrow we'll have the big decision, if a new uptrend is going to be established.

reply to post by kybertech

Silver broke thru the old resistance levels while gold is languishing well below its previous highs. FWIW, Tonight (17 Feb) is a Full Moon and we will be hit by the solar radiation from the recent solar flare/cme around 10pm est. Many highs come at full moons when people act erratic (luny). Tomorrow could be a reversal day....we'll have to see how silver acts now on a retest of the breakout area.

World events are starting to compound and grow in speed. its getting scary

silver is braking out. the fall of JPM is coming soon

Silver is up $2 USD in two days.

NO NO!! , you can't profit off of PM purchases, LOL !!!


Ride the waves, and ignore the fools:

Purchase PM's now, purchase land just before it all falls apart.

I don't know if anyone on ATS has posted about this yet, but IMO, it doesn't deserve its own thread, so I'm posting it here.

Red Alert email Confiscation of Gold and Silver

Honestly, I read it as a panic move by those who have been trying so hard to keep the price of silver and gold down. If this is such a likely scenario, then I guess those "Cash for Gold" kiosk owners are going to be really hurting, but wait. I'll bet they are one and the same as the spreaders of this fear-mongering. Don't let them fool you, they just want to make sure they have all of the gold and silver they can have, before they let the price rise to its natural value.

This is just like when Nathan Rothschild started selling his shares after Napoleon's defeat. IMO.

I take this as a sign that we are getting very close.

Originally posted by AmethystSD
I don't know if anyone on ATS has posted about this yet, but IMO, it doesn't deserve its own thread, so I'm posting it here.

Red Alert email Confiscation of Gold and Silver

Honestly, I read it as a panic move by those who have been trying so hard to keep the price of silver and gold down. If this is such a likely scenario, then I guess those "Cash for Gold" kiosk owners are going to be really hurting, but wait. I'll bet they are one and the same as the spreaders of this fear-mongering. Don't let them fool you, they just want to make sure they have all of the gold and silver they can have, before they let the price rise to its natural value.

This is just like when Nathan Rothschild started selling his shares after Napoleon's defeat. IMO.

I take this as a sign that we are getting very close.

Yea trying to confiscate the gold and silver these days is a good way to start a civil uprising. The TV ads wanting to buy "your OLD gold" should be peoples first clue. Gold doesn't get old that is why it has been a standard of trade for thousands of years. LOL! If it is so worthless why are they all buying it up like hot cakes.

Exactly. And here is some additional food for thought: A More Reasonable Article on Gold Confiscation

We’ve previously commented on the possibility of gold confiscation and other steps that may be taken by our financier controlled government in the event that gold does reach certain thresholds. Reaching these new thresholds, for example $2000 or $5000 per ounce, would suggest that the US dollar has likely crashed or begun a final collapse into oblivion, at which point, all credibility for this unit of exchange will have been lost in the eyes of the rest of the world. Will this lead to confiscation? Even David Morgan himself, in a recent Youtube interview, suggested that confiscation in the traditional sense was “ridiculous” and an argument that he doesn’t buy.

It goes on to describe other methods that might be employed to keep the price of gold down, of effectively making it less worthwhile to own.

Where do we go from here?

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Take a look at this quarterly candle that is forming currently. It ends this February btw. We see these candle formations in other EXTREMELY BULLISH situations. The best could be found on the SP500 middle of 2009 on a weekly time chart. That is
shown here if you take a look.

I have to admit I was one of the non believers in this run after witnessing the volatility in 2008 when silver got cut in half. Now I am extremely intrigued. That was a great reversal these past few weeks, and if you are not convinced after this bulldozer through expiration this afternoon then I am not sure what is going to do it.

I do have to say though, the people that are looking for a global meltdown because of this are going to be sorely mistaken. Don't be fooled, there was a LOT OF SHORT INTEREST getting hammered at the close today in all equity markets and it just shows still that people with a lot of money continue to fight the trend. And continue to lose. Same could be said for myself I suppose relating to this run.

IMO, one of two things will happen here.

1.

Another candle will be made this coming quarter, just like this one, but will only go as low as 27.50 - 28.50. This would be in parallel to other candle formations that form in these situations. Notice that we will test an area close to this quarters low, but then end up reversing hard the other way. Then we will close higher than this current quarterly candle. I am hoping this one if the case because I would be happy to buy some OTM calls that could potentially be worth a couple of thousand percent gains in a short amount of time.


2.

It just takes off - maybe around $40 / oz. by middle of this year. Maybe higher, most likely higher if there is absolutely no consolidation.


I have to say though. The word is out, and there are probably a lot of people thinking the same way - or almost everyone. I haven't heard a word out of anyone that isn't going to buy the dip or take anything off the table. Usually when this happens, preceded by a candle like this formation (you will probably have to click the link for full picture) there is at least 1 consolidation candle. Knowing that most of these people will be intrigued as I am for buying options AND knowing that most will lose, let's do some investigation.

I was taking a look at the May expiration calls on the CME, which expire in 67 days. There is a lot of open interest specifically in 2 areas.

1st is 35.00 Strike with 3517 contracts

2nd is 40.00 Strike with 5982 contracts ( whooa! - Joey Lawrence style )

I am assuming someone has put on a massive vertical call spread here. Great trade in hindsight, although still a few dollars away from being worth a whole hell of a lot more. If I had to guess in 67 days the futures price of Silver will probably be pegged in between these two points. There is a lot of money learning towards not being > 40. But I am hoping there will be somewhat of a consolidation before this happens... After today's run though I am not so sure.

When I find the time here I am going to go into the contract after that and take a look around. I would just take the images off my CME application but unfortunately the resizing issue with this website is detrimental to this whole process.

In the meantime I am looking for other opinions based on research relating to these matters.

Forming a pretty large triangle continuation pattern once again in silver

Should be a pretty solid move one way or the other once this breaks

Hourly formatted bars

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That was to be expected, after last week but a 100% rise this year is more or less confirmed.
The 18gram Silver coins were valued all 10 Euro here in Austria for the last years.

The 2011 Edition is a 20 Euro now.
Even the Austrian Mint knows what's going on...

gold and silver aren't dropping, they are rising. The media just likes to say they are dropping when they dip, but if you look at the long term graph gold and silver only go up, whereas the stock market stays relatively the same. Deception by the media to prevent you from owning gold and silver.

reply to post by filosophia


Yeah, but it isn't working, every bank I visit is sold out on fractional gold bullion, silver has a week waiting period, And even the 'collectors' euro coins are now limited to 5 pieces/person with a major waiting period. The only way to get them without waiting are at the mint 'selected' quality with premium

(In Europe you pay 20% sales taxes on silver so these currency coins were still the best deal until now)

Today was the day I was waiting for, a nice size correction for silver. I didn't exactly back up the truck, nor did I succumb to temptations to buy some options (maybe next big dip!), but I did load up on physical, replenished inventory that I had allowed to drift down, as the price went up this past week.

Fortunately, I'm a regular at most coin shops in my area, so no one was surprised to see me, but there is something less experienced people may encounter on a big down day.

You may call around, asking for whatever you are planning on getting, and find that many dealers will tell you that they are "out". Don't immediately believe them! Sometimes it's true, but often, it's not. If they are smaller dealers, they probably carry less inventory, and whatever they have in appreciable volume, they may literally have purchased from the public during the few days before you called. That being the case, if you tell them you want "X" quantity after a $1.50/oz. drop, they may fib, and say to try back later. Sometimes they're smart, and they just raise their prices accordingly, with a take it or leave it attitude.

Obviously, they want to make a profit, and in some areas, the margin can be tight, on particular products, such as silver rounds. Real example, dealer buys a dollar back of spot, and sells for 50 cents to a dollar over (depending on who he is selling to, or volume involved, etc.). That $1.50 drop may not have completely erased his margin, but darn close. If you are a customer that gets the 50 cent-over special price, don't be surprised if they don't want to sell at that price.

Larger dealers are interesting, some of them hedge of course (futures), but not as many as you might think, because depending upon how they are reading the market, they may decide to dump everything they have assuming the next day will get worse. The problem here is that they can get on the phone and move so-many thousand ounces instantly, by committing to deliver. In that case, when you call, they may be sitting on 10,000 rounds, but they are "out", because they dumped the whole thing with one phone call.

Here's my advice for the newer investor in physical silver, in these crazy markets. Just SHOW UP, don't call ahead. Obviously, you need to keep some powder dry, and watch the price, but when it drops, be ready, and have a few shops targeted already.

It's exactly what I did today. I was out getting a tire repaired (slow leak) when I glanced at my iPhone and the 35 cent decline turned into $1.60, in mot many minutes. As soon as they got me back on the road, I hit three shops, and really cleaned up, as dealers were counting up inventory, and considering their options (one small shop, the guy still didn't realize things had changed so fast, until he went to check the price, as I stood there).

"If" I had called a couple of these guys, they might have told me anything, but since I hung my head in their face, they tend to feel more obligated to give you something. Also, it's hard to tell a person face-to-face that you're out, when the coin counter noise is echoing in the background! Usually, they CAN accomodate at least some of your demand, so grab what you can get, and head on to the next place.

Silver price is back up 44 cents as I type. No guarantees about tomorrow, the decline could resume, and a further correction could temporarily make my "success" not feel as sweet.

BUT, if tomorrow is lower, I still haven't shot my wad, not at all. I'll be back to see what else I can find. BUT, my expectations won't be as high. I won't be too surprised if they tell me some guy (like me) was in the day before, and cleaned them out already. On Day Two of a big decline, such a statement will ring truer and truer. And if I can find anything in volume worthwhile, I will be thankful, but I won't hold my breath. Rather, I will congratulate myself on my previous day's gains, knowing that something $1.50 lower, is better than nothing $2.50 lower.

Such is the "real math" of this super tight physical market. Take it for what it's worth, and good luck to all.

JR

reply to post by JR MacBeth


Interesting conversation today with a coin dealer. He has been around a long time, and is firmly convinced that silver will be around $50 per ounce by the end of this year, and over $100 per ounce sometime in 2012....

Originally posted by manta78
reply to post by JR MacBeth

 

Interesting conversation today with a coin dealer. He has been around a long time, and is firmly convinced that silver will be around $50 per ounce by the end of this year, and over $100 per ounce sometime in 2012....

edit on 3/11/2011 by manta78 because: (no reason given)

I'll go out on a limb here a bit. Based on what I see going on, I wouldn't be surprised if silver hit the $50 mark by June.

I know that it may sound way too bullish, especially considering the big run it's already had over the past 6 months, but the USD, the Euro, and now quite likely the Japanese Yen, are going to be fighting tremendous headwinds. All commodities are going to appear to rise, in terms of the various fiat measurements.

PLUS, precious metals are still in their seasonal up-swing (as much as anything can be "seasonal" in this chaotic environment).

Some may have noticed that silver was down rather a lot this morning, but it was a fake-out (I took advantage of the big down yesterday, was at the biggest dealer in town right at opening, and cleaned up...I'm into the physical). It ends UP 60+ cents. What I think may have happened was that the shorts were in the process of their almost predictable two-day attack (always a Thursday, with a concentrated follow-up to kill the close for Friday).

But the earthquake in Japan screwed up their timing!

No one seems to be talking about this issue (yet), as it relates to precious metals.

I have no idea how powerful the combined efforts of JP Morgan, and the Fed are, but Mother Nature isn't exactly powerless. (I know, someone will be here soon saying it was HAARP...maybe, but I still think "real" earthquakes happen!)

ANYWAY, make no mistake, there are going to be repercussions. Read your MSN, they're already saying the "most expensive" earthquake ever, kind-of sort-of thing. How will that be paid for? FIAT. Does the world really need more fiat right now? Couldn't Mother Nature have been more polite, realizing that the Fed already had the presses running at maximum?

For those who read the usual Kitco articles (normally good for contrarian purposes), notice how they're trying to diffuse this thing, acknowledging that precious metals are going to be up next week, but ignoring the elephant in the living room, the quake. Their top headline, "Gold Expected to Stabilize, Work Higher Next Week; Mideast Crisis, European Debt to be Keys..."

Sort of sounds like, "Don't you DARE think gold will get too crazy next week! Sure, it will go up, but think in terms of namby-pamby "stabilize"! Gold will have to WORK higher next week! THAT won't be easy! Oh yes, FORGET the Japan thing, think Mideast! European debt! Go with our PLANNED program, IGNORE this pesky quake! (And oh Golly, we sure hope the almost certain aftershocks won't really screw the pooch!)"

In my book, when the "official word" acknowledges upward pressure as a virtual short-term given, but makes a firm point of blunting the potential strength of the up-move, and simultaneously asks you to look at the "other hand" (ignoring something major and unexpected, like the quake), you almost can't get a more bullish signal than that. I could be dead wrong, but we'll see soon enough.

As for you traders out there who were long, you might thank Mother Nature on this one. Things looked as if the Big Boys were about to stick it to you (again). ACTUALLY, they DID stick it to a whole lot of traders who bolted yesterday, but for those who held on...If I was to guess, next week your fortunes are looking rather bright.

JR

reply to post by Dance4Life

2nd is 40.00 Strike with 5982 contracts ( whooa! - Joey Lawrence style )

I am assuming someone has put on a massive vertical call spread here. Great trade in hindsight, although still a few dollars away from being worth a whole hell of a lot more.

Well Dance4Life, you're one of the astute traders on this thread. That $40 strike isn't looking too bad right now to me, after this Japan quake.

I realize that the traditional, more industrial treatment of silver might read a huge disaster, like a quake, as hitting the global economy, and therefore likely to put downward pressure on all things used in industry. But with the blossoming of silver investment demand, based more on safe-haven and monetary considerations, I'm thinking that the bullish pressure should easily exceed the bearish.

I wonder what your take is on this mega-earthquake? How will this impact precious metals? I tend to think that there have to be traders out there who are going to jump on this.

And if there are any large aftershocks, that hit more populated areas, the damage costs could quickly mount.

My thinking is that Japan would be forced to unleash a tidal wave of fiat to deal with it, and in a world where we're already drowning in fiat, this could only mean that gold and silver must go up. Possibly quite dramatically, as this "perfect storm" continues to brew...

JR