Silver’s been acting sickly for enough time to start irritating the most patient among us. I can only repeat that after last month’s huge moves, we were do as big a consolidation. Note — not a full retrace, but some pullback here, while the bull tries to shake the riders.
The good news is, gold’s hanging on here, even despite the attempts to knock it flat. It’s down today to $929 on the spot market, from $939.80 — a little bit more than 1.1% for the day. Silver, on the other hand, continues to take the brunt of it, with a 33 cent loss down to $13.60 — or almost 2.4% down for the day. That discrepency cannot hold, as silver is already undervalued compared to gold.
From a technical viewpoint, both the price of silver (POS) and the ETF [[SLV]] are showing similar signs of running into significant support. I use the ETF here in this example because it’s a little cleaner:
From the chart, you can see SLV’s long term 38.2% fibonacci retrace line lies at $13.14. Moreover, it’s 200 day Exponential Moving Average (EMA) closed at $13.19.
I think there’s a good chance we dip to these levels and begin climbing back before the end of the week. The 38.2% fib line is usually very strong (like it’s inverse — the golden ratio of 61.8%), and it should hold for a solid bounce here. When I see this level, I will be taking advantage of the bounce by taking down a position in the double silver ETF [[AGQ]] , and riding it for at least a swing trade. I may also pick up some more [[EXK]] and any other miners I feel look “opportunistic” at the time.
Best to you.
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Your post today is so much in tune with my own thoughts that I am fearful you are my long lost twin brother. Except you are more patient than me and are waiting for more carnage. I blame that on your fancy charts and your high falutin ed-u-k-chun. I just trade my gut. Where was your post at 3:45 when I was teeing up my balls?
Doubled down on AGQ today at $40.55 and set a limit to sell it (the new half) at $42.50.
That discrepency cannot hold, as silver is already undervalued compared to gold…
I’m pretty sure you don’t want me to point out the other way this “discrepancy” could be resolved. No-one wants to talk about it, it’s too preposterous to contemplate. But still, there “it” is, floating around in the back of your mind, like a splinter.
Outdoors — I think you’ll likely be fine. Eventually! lol… jk!
Scum — nope, nope, no… no possible way gold goes down. Cannot.
(chortle)
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http://www.nakedcapitalism.com/2009/06/china-signals-end-of-stockpiling.html
I’d like to see gold and silver sky rocket just as much as you Jake, but what makes you certain that if the market tanks, gold and silver won’t follow, as they did just before
HUI peaked in 15/7/08, followed a few days later by bonds, and a few days later by the SPX
HUI now peaked again in 01/06/09, followed a few days later by bonds and the SPX on the same day
Seems familiar no?
Just look at the amount of “paper” silver in the marketplace; there’s more owed silver than real silver at this point. Maybe the price goes down short term, but adventually silver will experience an egregious equivilant of a short squeeze. Long term it’s a worthy hold.
HUI now peaked again in 01/06/09, followed a few days later by bonds and the SPX on the same day.
No question the miners have been leading here. The question remains on whether they will stay in a bull market here or not, however. Given the bullish support for gold — it did not make a lower low when the market did in March remember — I think there’s a modicum of safety afforded the Jacksons. That’s the thesis anyway.
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Cain —
Agreud. There’s been some stirringings within the wholly corrupt CFTC as well. The wheat markets have been shown to have been manipulated, and one would hope an investigation of the silver pits would follow soon thereafter.
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Personally, I hope they hold off until I can aquire some more of the physical holding. I’m thinking the next time SLV swings into profit, I may cash out of a fraction of it and have more shipped to my house.
We still don’t know whether ETFs are fully backed by real holdings, but based on the occasional disassociation between futures pricing and SLV’s face value, I’m going to venture a guess and say no. The silver ETF is convenient, but I want to make sure I have a nice solid foundation before trusting in whatever bank created this thing.
Cain, this guy tends to agree with you, and this is a nice article regarding the importance of SLV to the overall silver markets.
I am not such a hard and fast “hard asset” guy. I do own physical silver, but it’s a lot more unwieldy than physical gold due to the price-weight ratio.
I don’t mind owning SLV because of it’s reliability, visability/transparency (see the charts in the above), and most of all, its convenience.
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