When Fundamentals Meet Technicals - Silver Explosion

[Scottj88]

Is A Physical Silver Shortage Spike Imminent?

http://www.zerohedge.com/news/physical-silver-shortage-spike-imminent

That imbalances in the supply and demand of precious metals, particularly silver, could lead to a shortage of physical product in the future should not come as a surprise to many - it is a topic covered extensively here in the past. Nonetheless, as a useful reminder of the big picture in the silver market, Future Money Trends has released another update video, reminding viewers that if traded purely on fundamentals, there is a high likelihood of increases in the price of silver, and other precious metals. As the authors put it, " There simply isn't enough physical silver to deal with the demand of a fiat currency crisis. As the paper silver market pushes prices down, all hell will break loose in the physical market." While that conclusion may or may not be applicable just yet, when coupled with recent revelations of potential double counting of precious metals at the warehouse level (see HSBC-MF Global story), the situation will certainly get only more exacerbated. Furthermore, should silver miners take Eric Sprott's advice to heart and decide to convert some or all of their product into physical, the market will suddenly recall that in addition to liquidity, prices are also determined by something called fundamentals. And fundamentals, especially in combination with a market risk spike, confirm a price jump may be imminent.

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Silver Prices over the Past Year​

5-Year Silver Chart​

Please visit www.tfmetalsreport.com if you are looking for more information and a well-established precious metals community.

Respectfully,

Scott J

 

[Seraphim]

I agree. I think silver will hit 70-80$ very quickly once it starts to move. I think it will take under a month to roughly double in price once the action starts.

 

[Steven Douglas]

I agree. I think silver will hit 70-80$ very quickly once it starts to move. I think it will take under a month to roughly double in price once the action starts.

I agree. I see it ratcheting up in stair steps - maybe only one more - just enough to make it more profitable to mine, so that production can replenish physical reserves that keep of all the leveraged derivatives afloat. I even think your $70-$80 number is probably about right for the next move (upward to $100, before settling back down to a new floor of $70-$80), without regard to how much of that move is based on demand, price inflation or derivative manipulation. But it also would not surprise me to see an even more massive jump, with a new floor of $120-$150. The higher the jump, the more short-lived it will be.

Because new mining is time intensive, at some point the physical supply will not be able to keep pace with the demand curve for artificial liquidity, and when that happens, all bets are off. Then, and even long before that happens, JPM and others will be forced to initiate more proxied margin call thefts, in a play to cover their own shorts.

This is a chess game thought out 20 moves ahead - with all tangibles targeted well in advance. Not necessarily the timing of the moves, but the moves themselves.

 

[Seraphim]

I'm hoping for a drop to the mid 20's before the next big move up .

Unfortunately, I think that is a fairy dust desire as the real big baseball bat swings have already occured....

 

[pmbug]

It's strange how things work some times. I had a dialogue with SRSrocco on the issue of silver supply and demand just yesterday and now I find that he authored an article on peak silver a few months ago (as mentioned in the video featured in the ZH post).

 

[QE Is Theft]

I don't agree with this.

China is slowing down bigtime.

Und Silber is primarly used as an industrial metal.

Not as money.

Regarding technicals; silver is below the 6, 10, and 12 month moving averages.

This is bearish.

Also, on the weekly ichimoku, silver is below the cloud.

Again, this bearish.

And last but not least, liquidity is tight like a vice-grip at the moment.

The LIBOR-OIS spread is well over 40.

This is bullish for the dollar.

So, taking all these factors into consideration, I'm bearish on silver.

At least in the mid-term.

Now longer term, yeah, it's going, up, up, and away.

But that said, you kinda have to wonder why this hasn't happened already given everyting that's transpired over the last 3 years....

Am I implying manipulation?

*munches on a carrot" "Could be...."

 

[Steven Douglas]

This is bullish for the dollar.

So, taking all these factors into consideration, I'm bearish on silver.

At least in the mid-term.

Now longer term, yeah, it's going, up, up, and away.

I toy around with thought experiments in the short and mid-term, but all my gambling is long term, and when it's a sure thing in the long term, it's a no-brainer. I'll play the house every time.

As for your thoughts about bearish and bullish on silver and dollars respectively, which really is the mainstream consensus -- I tend to agree with Warren Buffet who said, "Be fearful when others are greedy, and be greedy when others are fearful."

 

[squarepusher]

silver down in asia open

 

[Steven Douglas]

silver down in asia open

AWESOME!

Time to get greedy.

 

[xFiFtyOnE]

Down nearly a dollar.

 

[swissaustrian]

The fact that silver didn´t plunge harder than gold today is actually a very good sign. Normally the downside momentum in silver is much stronger than in gold.
Also keep in mind that silver futures are still partially in backwardation, indicating shortages in the physical market:
http://www.cmegroup.com/trading/metals/precious/silver.html

 

[Steven Douglas]

The fact that silver didn´t plunge harder than gold today is actually a very good sign. Normally the downside momentum in silver is much stronger than in gold.
Also keep in mind that silver futures are still partially in backwardation, indicating shortages in the physical market:
http://www.cmegroup.com/trading/metals/precious/silver.html

Scary wonderful stuff. Squatting for a jump. Please hunker down lower, and longer.

Like the eye of a hurricane, I hope the calm before the next storm gives a lot more people enough time to prepare even more.

 

[The_Ruffneck]

I doubt we will see a massive spike this month , markets usually quieten down over the Christmas period.
Maybe in January though.

 

[swissaustrian]

Once again, silver plunged less than gold. Very rare. In 2008 this was totally different.