Short Squeeze Could Propel Silver Prices Higher

Gold: With the Labor Day national holiday in the US today, it should be a quiet day for the precious metals. However, even though a firmer dollar and a bout of profit taking pulled gold back from $1000/oz last week, it only retreated as far as $986/oz before climbing back to $994/oz. This is a strong indicator that gold can maintain its bull trend. The next level of resistance is $997/oz with $1,005/oz and $1,032/oz thereafter.

Silver: Silver has been the star performer over the past couple of weeks, de-coupling from gold and bringing the gold/silver ratio down to 60:90. If this continues, a ratio of 55 would provide channel support. Due to the huge move in silver in a short period of time, investors should be aware that there may be profit taking and may need to be consolidation.

The daily momentum in silver is overbought, the first time since June and it is currently at the top of its confluence of resistance which is $16.22/$16.33/oz. These pullbacks should indicate buying points rather than wholesale liquidation as silver looks to continue to push higher, despite short term corrections.

While being overbought there remains the risk of a short squeeze which could propel silver prices higher.

Platinum group metals: Platinum is currently trading at $1,263/oz, palladium is $295/oz, rhodium is $1,500/$1,700/oz.

Disclosure: No positions

Comments

[AtTheMurph:]

Is that $5 or $50 or going to $500??

Sep 07 10:15 AM

[Sakata:]

Back in May I responded to one of GoldCore's posts with the following:

"I am not convinced that gold will outperform silver. The gold-to-silver ratio has been steadily declining and is now below 65. In another thread recently I said that I thought it would reach 60 by the time gold hit $1000 again. That would give a value of $16.67 for silver. I also said I expect it to drop to 50 by the time gold hits $1250, for a silver value of $25."
(seekingalpha.com/user/...)

Seems like I was pretty much on target (currently the ratio is about 61). I am not concerned about any short term trends or resistance. I firmly believe that gold will be $1250 by the end of the year and that the ratio by then will be around 50. Short terms concerned about squeezes or resistance are for speculators, not investors.

Sep 07 10:35 AM

[TWTFG:]

No silver demand ?? What about electronic , medicine , last generation batteries , solar panels , etc .
Nice bearing try !!


On Sep 07 11:20 AM NUCLEAR1929 wrote:

> Take +, nice comment.
> I don't see silver demand, all I see is stocks, etf, options, futures
> trading. Buffett loaded silver in the early 90's just to dump it
> for $5 after few years for a loss. He was wrong then, but his long
> term view was right, there is no demand for it as before was for
> silwerware. I wish you good luck with your silver investing, try
> once to carry 1 silver contract 5000oz (150kg) then you will see
> how heavy it is and nobody will pay you for it even market price.
> Beyond futures, silver scrap price is 20% below spot. There is no
> market for it.
>
> On Sep 07 10:15 AM AtTheMurph wrote:

Sep 07 02:11 PM

[KIT:]

Big use was film ..... I use digital for all pics now check out EK stock price


On Sep 07 02:11 PM TWTFG wrote:

> No silver demand ?? What about electronic , medicine , last generation
> batteries , solar panels , etc .
> Nice bearing try !!

Sep 07 05:26 PM

[Rich in Bpt.:]

Perceptions become reality, silver is the poor man's gold. When the mania comes both silver and gold will increase dramatically. Of course, there will be rallies and pullbacks. Within three years, we will see at least $1600. gold and $35.00 silver. I believe, I am being conservative with that estimate. For $2000.gold and $50.00 silver is not out of the question. It depends on inflation and weakness in the US dollar. The peak of this gold and silver bull market as yet to be reached. I repeat, will there be corrections along the way, of course.

Sep 07 11:55 PM

[376602:]

The Gold/Silver Ratio will Hold
Silver prices have been a 5,000 year bear market

Sep 08 10:59 AM

[Silver nut:]

Better everybody read Ted Butler - the REAL authority on silver. Google him and hit the Archive(Free) link, then read Warning Ignored. That should knock your socks off. BIG things are going to happen in silver soon and it will all come from the COMEX. JPMorgan Chase are up to their ears in do-do on this one and knowing them by their reputation it will be exciting to see how they wrangle out of that short squeeze. Wrangle out of it they will of course - they live on the same street as Bernie Madoff so have got the training. One hopes the whole bunch of them will get their 150 years, but we all know better. Isn't it exciting that China which apparently is the trader has publicly announced that they intend to default? Guess JPMorgan Chase will claim "force majeure" and claim it's not their fault. But think of what could potentially happen if the short squeeze on silver forced them to make good on their contracts! Looks like exciting times ahead in silver!

Sep 08 12:07 PM

[Ed Zimmer:]

Worldwide silver demand in 2008 was 832 Moz. None of that demand number included inflows to ETF funds. Photography use has dropped to half what it was, but that also impacts scrap sales as less photography use means less recycling of photograpic silver (recovery rates from photographic silver are above 90%). Economic downturn MAY turn silver production/demand away from a deficit this year, but any "recovery" will include silver industrial demand. Above ground stocks are less than 750 Moz of which the majority of that is ETF holdings and private coins & medals. Without the shorts, think about what the price might be.

Sep 08 02:36 PM

[Boot:]

Visibility by the CFTC on Silver is quite high currently. With short positions being monitored, the silver spot shouldn't retrace quickly as it has in the past. The COMEX is being scrutinized and has to ease the reins a bit.

Sep 08 03:54 PM

[TWTFG:]

COMEX WILL DEFAULT SOON... VERY SOON !!
Wait and see !!

Sep 13 06:10 PM