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Silver - Have Things Changed? Not Really.

 Sunday  7 August 2011

 What just happened?  Everyone is aware of the global debt crises,
and the problems created by world governments are spinning out
of control.  Who does not have their own opinion of events?  The
biggest lies come from those who are in control, and if there be
any cause for questioning that proposition, one need only look at
results and see the meltdown on an ongoing basis.

 No one has THE answer, or sometimes ANY answer.  All we can
do as traders and investors is to look at what the charts are saying. 
Has there been some technical damage in the silver chart, again? 
Yes, to a degree.  The silver market is much, much smaller than
the gold market, so it is far easier to try and manipulate silver in an
attempt to have a dampening effect on gold.  However, by
comparing the two, it is quite obvious that any drive to push down
the price of silver to temper the rise in gold is having less effect.

 To P T Barnum's oft quoted wisdom, "You can fool all of the
people some of the time and some of the people all of the time,
but you cannot fool all of the people all of the time."  The holders
of gold are not buying the cool-aid of those trying to operate
behind a veil.  The attempt to be short the silver market has blown
up in their face to the tune of billions, and it ain't over, yet.  There
is more to come, and the losses will get bigger.  This is a rare
occasion where the "little guy" is on the right side of the market.

 The ploy to increase margins and eliminate day trading in silver is
an unabashed attempt to put the screws on the "speculators."  But
the more salient question is, who ARE the speculators?  It is NOT
those who have been buying silver, both physical and futures, but
the true speculators are the primary agents with political backing to
purposefully suppress the price of silver.  1 May was no accident.
However, our primary realm is the charts, not editorializing, so to
the charts we go.

 You can see how the forced sell-off starting 1 May ensued.  By day
four, there was some respite with a decent close, but the one day
rally that followed said the market was still weak, and that meant
either a retest of the low or possibly a lower low.  It was the latter.

 Moving forward to current price activity, we see another sell-off,
not anywhere near as severe as the one in May.  The question to
now ask, and there is no known asnwer, is how will the retest
develop from here.  We may be a bit premature in posing the
question, for we do not know if Friday's low is the low of the current
correction, but it does not matter.  From wherever the next swing
low is, we need to watch the reaction to determine if it is weak, as it
was after the first May low, or if the reaction will be stronger without
having to make another lower low.

 The point is, we do not have to know, nor do we have to guess. 
All we can do is to let the market develop, as it always does, and
then READ the development in order make some informed decisions.
What we know for a fact is that most all corrections are retested. 
Rather than try and pick a bottom, let the market be our guide and
prove that a successful retest has taken place.  At that point, one
can reduce risk exposure in establishing a position from the long side. 
Our stated conclusion presupposes a market that is to go yet higher.

 To illustrate the point made between silver's performance as
compared to gold, and how the gold market is not buying the silver
manipulation charade, we include a daily chart of gold for your own
inspection to draw your own conclusions.
 

SIA D 7 Aug 11 

 There was a sell-off in May, but not as severe as the one in silver. 
Both metals went sideways for a while, absorbing all the selling
efforts in preparation to go higher, but the smaller, more
susceptible silver market has not fared quite as well as gold. Note
how gold ralied and the recent correction was minor, by comparison.

 Silver will catch up, and it will have to outperform gold, in the
process.  It may be difficult to be in silver futures, so we continue
to strongly advocate buying and holding physical silver, NOT ETFs. 
We had been long silver from 39.53.  When price rallied on Friday,
prior to the large break, there were no signs of stopping action that
would have us liquidate long positions.  As price declined for the
balance of the trading day, our 38.93 sell stop was triggered, and
we had a loss on the second half position.  The first half was sold
at 40.78.

 We are now flat the futures but continue to be personal buyers of
physical and urge all of you to do the same.  There are no margin
calls on the physical, and we were buyers when silver was at $48,
and still hold those positions, and we sleep well with them as the
expression goes.

 

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

 GCA D 7 Aug 11