With all the action–especially in commodities–over the past week, something feels amiss. Up 5%, down 5%, up 10%, down 10%. All in a day. Day after day. Is it demand? Is it purely speculative? And what does it all mean?
The deal is that leverage requirements are still too low because levered speculative traders continue to bring big volatility to the wild-swinging products like silver and oil. Sure, there remains a delivery problem for silver, but the commodity flash-crash last week could happen again at any time. And the specs who buy the dip may get burned. If that happens, watch out as prices will go back, in silver, to where it all began. Sure, today looked fine and dandy but you had better pay attention.
As far as stocks are concerned, they are simply treading water. Some exhibit higher than normal levels of volatility but other than silver stocks, things are range bound if you can believe that.
If you enjoy the content at iBankCoin, please follow us on Twitter
Scott,
Nice post as always. So you think Silver has a good chance of going back to $20? If this occurs, then it will draw comparasion to the great commodities crash that started back in July 2008? That’s a pretty bold statement.
I played the drop but sold today for a scalp on a number of names–in fear, precisely, of what you describe so nicely here. I’m also putting stops under a few other equity positions, as it all seems like it’s beginning to spin out of control as no one knows what the end of QE2 means, and things do not seem cheap up here.
“And what does it all mean?…….Double rainbow is what it means…. http://www.youtube.com/watch?v=OQSNhk5ICTI
IMO, as long as the dollar drops gold and silver shall continue their ascent.