Monday 24 January 2011
Silver's correction is as much due to "politics" more than anything
else. JP Morgan's attempt to keep the price of silver suppressed
through its vast naked short positions got a pass from the wimpy
CFTC saying all is well with JPM and the silver market. Were it
the Hunt Brothers, or you or us, we would be facing litigation for
violating CFTC rules. Like any other attempt to manipulate a
market, and the S&P comes to mind, it can only work for some time.
The endless "printing" of fiat, [it is actually "created" by computer
entries, otherwise, the United States would be facing Bernanke
deforestation of epic proportions], makes certain that both gold
and silver will continue to be the defensive choice for those who
see the fiat hand-writing on the wall.
The chart shows silver to be in a "corrective" mode. The upper
line is supply/resistance, and the parallel lower line is demand/
support. Friday's low, second bar from the end, [the last bar is
Sunday evening session], is possible ending action to the current
The range is small, and we know that in a declining market,
when a small range down appears, it tells us that buyers have
stepped in to support the market, otherwise, sellers would extend
the range more to the downside. One would expect buyers to be
in more control of this strong bull market, anyway. The close was
on the upper end of the range, and we also know that is because
buyers won the battle that day. Plus the close is about unchanged
from Thursday's high volume, wide range bar down. Where is the
follow-through from sellers? Looks like they are AWOL and unable
to press their seeming, albeit temporary advantage.
We will be watching the lower time frame intra day charts for signs
of a turnaround that will translate into a turn for the higher time
frame daily, and the intra day activity may already be turning.