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Simit Patel's  Instablog

Simit Patel
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I'm a precious metals and energy investor as well as a currency trader who combines analysis of geopolitics, monetary economics, energy technology, innovation cycles, Internet technology, and technical price patterns to develop trading and investing outlooks. I trade/invest in all timeframes --... More
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Forex Trading Journal
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Wealth Management in the New World
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  • Wait For the Pullback Before Getting in on the Swiss Franc's Run to New All-Time Highs
    USDCHF is reaching new all-time lows -- but is also coming up against the supporting trendline of a price channel. The chartbelow illustrates.

    Zooming in to the hourly, we see a long wick coming in on the 1 PM GMT candle. See the last candle on the chart below. 

    Fundamentally, the longer the debt crisis goes on and grows, the more the safe haven plays like the Swiss Franc will draw capital seeking a safe preservation of capital.

    I'll be trailing my stop up based on these levels, and the price gap on the daily chart. 

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jul 25 12:30 PM | Link | Comment!
  • Ex-CIA Warns of War in Middle East -- What’s the Economic Impact?
    Former CIA official Bob Baer, known for being the agent who served as inspiration for the main character of the film Syriana, made headlines today stating that he expects Israel to attack Iran in September.

    How will this impact financial markets and the global economy? A few ideas:

    Higher prices in precious metals and commodities; think GLD, SLV, DBA, DBB, DBC, USO. War tends to be bullish for commodity prices, due to supply destruction via usage by military forces as well as by destruction of enemy supplies. Oil prices, or even sensitivity on the part of the market resulting from news and rumors, could impact prices along the entire energy sector.

    This case is reinforced by price action; in the chart below, note the pattern of higher lows forming while the daily range is consolidating -- basically an ascending triangle pattern.

    On the right news event, I think oil is poised to make a break out higher, and revisit its previous recent high at around $114, and likely higher from there as the trend of inflationary monetary policy resumes.  I believe downside risk is capped at $88, and would not that expect that level to be breached barring some type of sincere political desire to accept a deflationary spiral coupled with significant withdrawal of US troops from military bases around the world.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: USO, DBA, DBB, DBC, GLD, SLV
    Jul 18 2:46 PM | Link | 1 Comment
  • Make Sure You Own the Right Kind of Silver Before Its Big Parabolic Move Comes

    The rumors of some type of fraudulent manipulation in silver are nothing new. The general idea is that some one, perhaps JP Morgan and HSBC, has a large short position in the market that cannot be delivered upon. In having short contracts unsupported by any underlying silver, the perpetrators can manipulate the market by artifically boosting the supply.

    I tend to believe these accusations. The character of the Morgan enterprise has long been questioned; the Pujo Committee, a US Congressional subcommittee formed in May of 1912 revealed that no less than eighteen different major financial corporations were under control of a cartel led by J.P Morgan, George F Baker and James Stillman (see the Pujo Committee Report). And with respect to the silver market, CFTC Commissioner Bart Chilton has stated that there appears to be a manipulator in the market holding an extremely large short position, likely to be unable to be fully backed by the underlying metal. 

    And this is one of the factors that makes me most bullish in silver. As COMEX inventories continue to decline, the bears will need to purchase more silver to cover losing short positions. As bears get squeezed out of the market, demand will approach inelasticity, driving price significantly higher in a very short amount of time. The mini-bubble we had earlier in silver was, in my opinion, simply a warm-up to a much higher run up.

    Those trading from this viewpoint, though, should bear in mind that if fraud is involved, there is an issue of what contract to trust. Will all the exchange-traded silver investment vehicles accelerate?

    I don’t know for sure, but I do know that I avoid SLV with my money, choosing only to own physical silver in vaults and in coins. If I were to invest in an exchange-based instrument, it would be more along the lines of PSLV, or other instruments designed from the perspective of awareness of fraudulent, short-selling manipulation in the silver market.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: SLV, PSLV
    Jul 17 9:03 PM | Link | Comment!
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