What Happens To Gold And Silver Next? Look Out Below?

Hey Basebal, that was a really great analogy! Thanks!

I started buying bullion and junk in January at around $30 which started the slide and continued buying through the decline until my last bullion purchase at just under $19. So thusly, I fully expect it to fall into single digits.

Had I refrained and not bought a 500 oz bullion stash I feel very certain it would be $50 today. So as long as I'm holding my stash don't expect any huge jumps in price. But be prepared, I'll send out an alert if I'm going to sell, the price will skyrocket the next day.

Rick

Thing is, I dont get why people get so so so mean about things like gold and silver. The only thing I can think of is that many folks have their money in gold and silver and they are really getting smashed.

Then to add to their angst, they have kept buying and its going no where. They are underwater.

To me I see gold and silver, still in a downtrend and for now not really going no where. A retracement doesn't surprise me, I expect it but the real tell is if it holds. We dont know that.

So its day to day. The downtrend however doesn't mean I sell short either. That would be reckless. I need some sort of fresh signal expressed by price action to tell me its time and puts the probabilities of lower prices on my side. I dont see that either.

That in turn makes me I look at other active areas in the commodity market. On the buy side cocoa, cotton been moving, crude oil. On the sell side, wheat, corn look like further weakness. On the equity side of things, we have have momo names running higher for trades, BIDU, LNKD, BOFI, NOC, some indices looks great on the buy side such as the nazzy.

So I think part of this problem is the disconnect with people and how they look at things. What the general public misses is that everything is in cycles. Market leader ship is passed from asset class to another asset class. Some themes run for a while. Others are short lived. Its clear that gold and silver dont have the bid as they did before.

@ Miggs:

For every person that got in in 2007 I'm sure there are 2-3 that got in 2011 when everyone was on the PM bandwagon. I'm sure those people don't have as rosy a outlook as you even if they call themselves stackers instead of investors. The guy that got me interested in silver back in 2011 went all in, cashed out his 401k and bought physical silver bullion. He moved away about a year ago and we haven't kept in touch but I doubt he is very happy with his decision today.

Lol the quality role player with a few years of being an everyday guy. He was actually a pretty decent fantasy guy for a while with all the positions he was eligible for, I take it your a twins fan?




Their own is just extremely greedy and probably the worst owner in baseball in all honesty. Their front office in the past did a good job with what they had but the owner did not want to open his check book. If he keeps the payroll under 60 million he makes millions before the season even starts from revenue sharing so anything else is a bonus.

Ironically that is a lot like PMs though, burts of success before fading back into irrelevance.




Thats just greed, humans always have and always will be greedy. Gold and Silver started out as money, then non pm coins were added, then paper dollars were added, now electronic payments have been in the mix too. Over that time frame money has been evolving for quite some time.

In the past gold and silver were as much of a status symbol for emperors as they were money as well. Plus the battles over them were just as much about power as they were about actually getting them. Like the old Roman Empire who required tributes, yes the money was nice but at the end of the day it was all about the submission of the other leaders to the Roman dominance.

Quote:
basebal - nice analogy...I feel like I am a Nick Punto type player even more so now...


Lol the quality role player with a few years of being an everyday guy. He was actually a pretty decent fantasy guy for a while with all the positions he was eligible for, I take it your a twins fan?

Yep - followed him with the Twins - then the Cards and now the Dodgers... if he could hit for a 280 average he would be somebodies every day...3rd - Short - 2nd ..somewhere player.

Another thing I want to add to my earlier comment-

Sentiment many times is key here tho it should not be used as the absolute guideline, that is to say "oh everyone is so down on silver that it has got to go up." The problem with sentiment and guiding by yourself on that is that prices many times go farther in either direction that most folks could even think possible.

Furthermore, we need to understand also at what time frame are we in AND also how far are we from where the move commenced.

In any case, I think one reason we are seeing this retracement is that the sentiment is negative on gold and silver and rightfully so. However, once again, in markets, when everyone is leaning in one direction and the move has already commenced and you get the late comers, it is they who tend to get trampled and help fuel moves in one direction or another.

Finally just to expand a tad more on selling short-

Say I am buying a line GLD-

128.92 (current market price as I write this) times 1,000 shares = 128,290K. Now if it moves out higher from there, I make a profit. I have bought those shares out right.

Now if I was selling short a line, say I took a line short yesterday at say yesterdays low 127.28. Instead of buying those shares, I am borrowing them. I was planning on seeing GLD go lower than the 127.28. Lets say my line was again 1,000 shares low. Guess what, today we see GLD is higher. Well already I am underwater by over 1 pt.

Well, a good trader would have a stop, that is a protective way to get out of the trade since its going in the wrong direction. Well, to "cover" the line short, those shares I borrowed, I must now buy them back. That action causes the shares to rise,... keep in mind this is a cumulative effect being duplicated many times over.

So thats how you would get your short squeeze.

Hope that helps explain things even more.

Here's a recent article on the supposed manipulation of silver by Adam English with the same flavor as many others I read a few years ago:

JPMorgan's Silver Cash Grab

JPMorgan inherited a massive amount of silver shorts priced between $20 and $21 when it took over Bear Stearns. Combined with HSBC, the two megabanks covered 85% of all silver shorts.

That right there is a solid case for manipulation â€" because the short position was so massive compared to physical silver trading and long positions. What's worse, the U.S. Treasury created the situation.

If the free market resolved the situation, silver would have more than doubled as the short position was covered and evaporated.

The massive position was maintained for years because it wasn't easy to wind down. Any large-scale attempts to unwind the position would be countered by other big traders and result in a loss. JPMorgan didn't have to, though; it simply needed to rig the system to turn a buck.

A precious metal trader named Andrew Maguire sent detailed information in an email to the CFTC on Feb. 3, 2010, about what to expect in two days after he noticed signals from JPMorgan and HSBC traders using after-hours high-frequency trades to crush prices.

His description was perfectly accurate. The trader, selling four hundred contracts per second, dumped 45,000 contracts into the market. Each was for 5,000 troy ounces for a grand total of 7,000 tonnes. The seller then suddenly shifted and started purchasing everything he could. Still moving far faster than other traders, he or she walked with $3.6 billion.

In more recent history, JPMorgan has been holding about 25% of the silver short market with the largest eight commercial silver shorts account for 50% to 60%. Estimates put paper silver positions at 143 times the actual amount of physical silver traded.

Massive volumes of sell orders are placed and canceled in fractions of a second by them. The lower sell prices still appear in market data for anyone that cannot handle trading by the millisecond, leading to panic selling by other (much slower) traders.

The high-frequency trading system then snaps up the positions for profit. After all, they never sold anything to begin with... They simply maintained short positions and canceled sales to buy at discounts.

Silver is Not an Exception

With the gross amounts of manipulation we've seen across every sector of finance, I cannot believe how silver price fixing has dodged every bullet and has still not gained widespread acceptance.

Virtually every commodity, anything with an interest rate, as well as every type of financial instrument is dominated by a select few massive positions that move in tandem.

Silver has some of the most lopsided, large positions in history â€" yet manipulation of the white metal is scoffed at.

It is beyond crazy to think megabanks would make silver the sole exception to the rule.

Two separate lawsuits were filed in 2010 and 2011 and later combined in the Manhattan Federal Court. But nothing substantial came from it. HSBC convinced a judge to remove them from the case, then the judge threw out the entire case earlier this year.

In spite of the overwhelming and obvious proof of manipulation, the judge decided there was no absolute proof of "intent to cause artificial prices to exist." Apparently, turning a massive profit by controlling the market isn't indicative of intent at all.

The one remaining hope for an end to the silver price collusion is a change in Commodity Futures Trading Commission (CFTC) rules to stop manipulation through high-frequency order cancellations.

On Monday, the CFTC used its new authority from the 2012 Dodd-Frank law for the first time.

A small firm called Panther Energy Trading is being charged with manipulation of 18 U.S.-based contracts â€" including natural gas, crude oil, metals, foreign currencies, and financial indices â€" through the CME Group's Globex trading platform.

Bart Chilton, head of the CFTC, has even publicly stated that silver prices are subject to "fraudulent influences," and the parties behind it should be prosecuted.

We can only hope Chilton will follow through on the blatantly obvious proof of silver manipulation that he has openly acknowledged.

Maybe then whistleblowers like Andrew Maguire will be vindicated, and the indefensible dismissal of reality will end.