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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • Silver - A Healthy Correction Underway. Firesale Prices For Buying Physical. 3 comments
    May 9, 2011 9:37 AM

    Monday  9 May 2011

     The "shock and awe" drop in silver from the last several trading
    days is likely to be viewed as a normal, and much needed correction
    and good for the market.  There are several factors at play here. 
    From a technical perspective, the steep assent was unsustainable,
    plain and simple.

     From a fundamental perspective, higher prices brought out supply from refiners wanting to take  advantage and sell scrap metal,
    estimated to be running 4 - 5 million ounces per month, and maybe
    for the next few months in duration.  It will take several months for the
    market to absorb this supply, and we expect to see a trading range
    develop, going forward and into the Fall.  This augers quite well for
    the market, for once silver goes back to the $50 level, the current
    supply will have been absorbed, and it will not be a factor, next time
    around, and that will set the stage for the next rally.

     Another fundamental factor that has not changed is the tsunami
    numbers of fiat Federal Reserve Notes that are flooding the world
    markets.  Americans are already seeing the effects through much
    higher prices in the cost of living, and the pervasive erosion of the
    fiat currency.  In the 1980s, world assets were in the $70 - $75 trillion
    range.  Today, it is now around $180 trillion, mostly through
    measuring via currency movement and not by growth from new
    production of goods.  Some use this reality to project silver to go to
    $145, or so, adjusted for inflation.  This is on the low end.  There are 
    silver "pundits" look for $450 silver.

     From the weekly chart below, the last swing high occurred in January,
    at $31.27.  The current low, after the equally steep drop is $33.53. 
    That leaves a "space" of $2.26.  Should that spacing hold, it will be
    very bullish.  Why?  It indicates a willingness for buyers to step into
    the market and buy NOW, without waiting for lower prices.  We are
    seeing another transfer of silver, going from weak-handed sellers to
    strong hands of substantial buyers.  This is how all markets function
    for the past hundred years.

      We are also seeing more of a disassociation between physical
    silver and paper traded silver.  Much of the recent decline is an
    intentional washing out of those who buy silver on margin.  That,
    along with the purposeful raising of margins to put the squeeze on
    margin traders has been effective.  It has done nothing to shake the
    confidence of owners of physical silver.  In fact, this may well be one
    of the firesale opportunities to own physical silver in a lifetime.

     It is highly recommended that everyone take advantage and buy
    silver bars, silver Eagles, getting rid of fiat and investing in both gold
    and silver as a reliable store of value into the future, and the future
    is now!

     

     Questions/comments go to mn@edgetraderplus.com  Web site:
    www.edgetraderplus.com

     SIN D 9 May 11

     

    Themes: Silver, Metals
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Comments (3)
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  • Dopamine
    , contributor
    Comments (363) | Send Message
     
    Question: If I bought 100k perth mint unallocated silver at 15 dollars and then had half fabricated and delivered in physical coins and sold the rest for 100k (because it doubled in price), would there be capital gains tax applicable?
    15 May 2011, 07:47 AM Reply Like
  • edgetraderplus
    , contributor
    Comments (61) | Send Message
     
    Author’s reply » Monday 16 May 2011

     

    Not an accountant or CPA, and everyone handles tax situations
    differently.
    16 May 2011, 08:02 AM Reply Like
  • Dopamine
    , contributor
    Comments (363) | Send Message
     
    Thanks, sorry to bother you, appreciate your attention.
    16 May 2011, 08:58 AM Reply Like
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