Morning Silver Market Report - International Business Times

Morning Silver Market Report - International Business Times

www.TheSilverPrice.info

June 6, 2012 10:19 AM EDT

Compiled 06/06/12 6:00 AM (CT) Statistics: London Gold Fix $1,633.25 LME Copper Stocks 231,200 tons +325 tons SILVER MARKET FUNDAMENTALS: (6:00 AM CT) With a sharp upside extension and breakout on the charts overnight, July silver has reached the highest level since May 10th. Like gold and global equity markets, the silver trade seems to be anticipating action from the ECB. In fact, some players are also thinking the US Fed is poised to easing and that has to have a portion of the bear camp in silver under pressure. Another issue that might be prompting buying of silver is the hope of a 3rd party budget control agreement in the EU. It is also possible that physical commodity markets are anticipating some fresh bank recapitalization plan. Silver might also be drafting some support from marginally support action in the Euro and perhaps silver is simply seeing bargain hunting buying in the wake of a heavy pattern of speculative liquidation that dominated the silver trade from the beginning of March to the May 16th spike low. At least in the early action today, silver looks to be vesting itself in some form of action from at least one central Bank. Comex Silver Stocks were 142.329 million ounces down 649,227 ounces. Silver stocks have increased 11 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Hong Kong shares managed more short covering gains overnight, while Shanghai equities simply marked time again on the charts. European equity markets were higher overnight off hopes of something positive from the ECB meeting early this morning. Early US equity market action was posting definitive gains, as there are expectations of central bank assistance in the air. Seeing a downward revision in Euro zone GDP readings overnight probably increased the hope of easing from the ECB. The US economic report slate today is rather thin, with a weekly mortgage application survey due out early, a couple Fed speeches due out during market hours and a Fed Beige Book scheduled for release in the early US afternoon trade. In general, there appears to be an attempt to fan risk-on sentiment but the question is whether or not the ECB meeting will contribute to that theme or detract from that theme.

Have Gold, Silver, And Mining Stocks Bottomed? | Precious Metals | Minyanville.com

Have Gold, Silver, And Mining Stocks Bottomed? | Precious Metals | Minyanville.com

www.TheSilverPrice.info

On Friday, the price action in gold caught the attention of most market participants as gold put in a monster move to the upside in light of risk assets such as the S&P 500 selling off sharply. In fact, gold futures rallied nearly $58 per troy ounce on Friday (+3.71%) while the S&P 500 Index sold off over 32 handles (-2.46%).

Monday saw some profit taking in gold and silver futures as Friday’s monster gains had to be digested. Short term traders were locking in profits, but overall the price action remains quite bullish at the moment. The gold miners remained extremely strong into the bell on Monday as buyers bid up prices in the afternoon to push them nearly 1.65% higher for the trading session.

Long time readers understand that I am a gold bull in the longer-term and have been for quite some time. Unlike some gold bugs, I will discuss the downside in precious metals from time to time even though it generally fills up my email inbox with some rather rude and hate-filled emails.

My view of gold and silver is that they are senior currencies. With that being said, I monitor the value of gold in US dollars and recognize that a stronger US dollar in the longer-term is not necessarily bullish for gold. Yes both gold and the dollar can rally together, but mutualistic price action generally does not last for long periods of time.

Obviously I monitor the price action of the US Dollar Index futures on a regular basis to help me gauge when the dollar is at key turning points regarding price action. Back on May 5 I penned an article titled The Dollar & Gold have Eyes on Europe where the following chart and statements were made:

“The key level to watch is the 80.76 price level on the US Dollar Index futures. If that level gets taken out, the dollar could extend to recent highs and beyond should the situation in Europe begin to unravel.”

A few weeks have passed since I posited that chart and statement to readers and time has proven my analysis wise. On May 14 the US dollar took out the overhead resistance at the 80.76 price level and has since worked even higher taking out the resistance level around the 82 price point.

In the same article, I discussed my expectations for gold prices in the intermediate term as quoted from the gold chart below:

“My expectation is that we may test the key support area [1,550 – Gold Spot Price] one more time, but price will likely breakout to the upside when this pattern is finally triggered.”

The gold futures weekly chart shown below illustrates how we tested the key support level as discussed above and a major bounce to the upside appears to be unfolding.



While we could see some short-term consolidation, I continue to believe that gold prices are likely to climb higher. In addition to the safe haven status, should an all-out currency crisis begin to unravel in Europe, gold and silver will be viewed as safe havens to protect European citizens’ and corporations’ wealth against a faltering euro.

In fact, all ways out for Europe are positives for precious metals. If a currency crisis takes place and countries default, money will pour into gold and silver as Europeans attempt to protect their purchasing power.

However, politicians are not going to allow governments to default without a fight. Instead I suspect more and more pressure will be placed on the European Central Bank (ECB) to print piles of euros. Both outcomes are bullish for gold and silver in the intermediate to longer-term time frames. In fact, the fundamental case for gold seemingly continues to build as central banks around the world print vast sums of money and multiple currency crisis scenarios are likely to transpire.

Silver has actually outperformed gold recently during this selloff. Unlike gold, silver did not quite test the recent support zone. In light of this divergence, I would not rule out the potential for one more move lower in gold and silver that might trigger stops on the other side of key support.

I do believe that probabilities favor that we have bottomed in precious metals, but there is always a chance of one last push lower to shake out weak bulls. The weekly chart of silver futures is shown below.



The weekly chart of silver futures shown above demonstrates how silver outperformed gold on the recent selloff as silver failed to test key support. However, gold has started to show out performance to the upside which is most obvious when comparing the strength seen on Friday.

While both gold and silver appear likely to have formed a major bottom or are in the process of forming a major bottom, I continue to believe that gold miners are offering more potential upside. The gold miners have been absolutely crushed the past few months.

Back on February 29 of this year, the Market Vectors Gold Miner’s ETF (GDX) made a high of $57.91 / share that day. The most recent low which occurred on May 16 saw GDX trade as low as $39.08 / share. The move over the course of only a few short months produced a loss over 32% for investors that held an unhedged position.

From a fundamental standpoint, valuations have become close to levels not seen since the lows which formed during the financial crisis in 2008 and 2009. However, an excerpt from James Turk’s analysis which recently was published in “Things That Make You Go Hmmm” by Grant Williams is certainly worthy of discussion.

Turk produced the following 30-year chart which depicts the amount of gold in grams and ounces required in order to purchase one unit of the gold mining index (PHLX Gold/Silver Sector (XAU)). The gold mining index is very similar to the HUI Gold Bugs Index (^HUI) or GDX.



The following quote comes from James Turk where he references the chart shown above:

“I want readers to take a look at the following 30 year chart which I believe is the most important and extraordinary chart for 2012. It presents the XAU Gold Mining Index measured in terms of gold, not dollars. We’re making history here. Gold stocks have never been this undervalued before.”

The chart above speaks for itself. Long-term investors looking for deep value should look no further than the gold miners for opportunities. In the past 30 years, they have never been this cheap relative to the price of gold.

Obviously gold miners have rebounded sharply from their recent lows the past few weeks. In the longer term they are still extremely oversold, but in the short run a pullback to back test a variety of key support levels may be warranted.

Should a pullback occur, I think it will likely mark an excellent buying opportunity in the intermediate to longer term. The daily chart of GDX is shown below.



GDX could very well power right on through the short-term resistance level, but I would be surprised if it could push through the intermediate term resistance near the 52 price level on its first attempt. A pullback here would be quite healthy, but Mr. Market may not offer that opportunity. Right now the gold miners clearly have a strong valuation argument to consider them at a value presently.

In addition, we are seeing the US Dollar Index futures start to roll over while gold and silver futures are trying to form bottoms and build consolidation bases to move higher from. If this is a major top in the dollar, then gold, silver, and gold miners are on sale as we speak. The next few months will tell the real story, but in the longer term this may go down as an unbelievable buying opportunity that most investors will miss entirely.

Read more: http://www.minyanville.com/sectors/precious-metals/articles/s2526p500-gold-gold-futures-silver-silver/6/6/2012/id/41525#ixzz1x1enJZj8

The Time to Invest in Silver is Now: Precious Metal Silver Edges Near the 'Buy Now Spot' - PR Newswire - The Sacramento Bee

The Time to Invest in Silver is Now: Precious Metal Silver Edges Near the 'Buy Now Spot' - PR Newswire - The Sacramento Bee

www.TheSilverPrice.info

The Time to Invest in Silver is Now: Precious Metal Silver Edges Near the 'Buy Now Spot'

Precious Metal Silver is near that sweet spot; making right now the prime time to invest in silver. Emerging macroeconomic trends point to silver's possibility of reaching new highs in the near future; coupled with some low barriers to entry for investor

Silver Stock Report

Silver Stock Report

www.TheSilverPrice.info

Silver Headed to $75-$125/oz. in 1-2 Years

(An Educated Guess for a Short-Term Price Prediction)

Silver Stock Report

by Jason Hommel, June 2nd, 2012

My experience and the charts tell me that silver prices are likely to head to $75 to $125/oz. in the next one to two years.  That's about a 150% to 230% gain for those who buy silver under $30/oz.

The reason why is that we are in a bull market for silver, where silver prices will likely continue to increase until and unless something major changes.  There are many fundamental things driving this bull market in silver, such as:

1.  Runaway government spending that is devaluing the dollar due to socialism.

2.  Instability in paper currencies around the world due to socialism.

3.  Central banks buying gold to protect their national currencies and to protect the value of their foreign exchange reserves which are all going down, due to failed socialism.

4.  The tiny size of the silver market, under $3 billion/year worth of investment demand.

5.  The unknown and unpublicized supply and demand figures in the silver market (point 4) and unpublicized ten year bull market in silver.

6.  The huge short positions in the silver market, up to $200 billion worth of paper silver sold to silver investors who are too lazy to take delivery, and continue to trust the untrustworthy banks who don't have the silver that they sold to clients.

Until and unless all of those things change, silver prices will continue to go up, as they have for the past ten years.  Silver prices will thus continue to increase for probably the next ten years also, at about the same rates, or even faster than they already have.

The prior peaks for silver have been reached every 2 years or so.  Each peak price, from $8 to $13 to $20, has been about 50% greater than the last peak, except for the most recent peak of $50/oz., which was 150% higher than $20, and took 3 years after the prior peak.  The last peak was nearly $50/oz. around April, 2011.  The next peak is thus due in about 1-2 years, and could be from $75 to $125/oz., or higher, as bull markets tend to move up in a parabolic way, moving up in ever faster rates, as silver is already doing.

Prices move up in a parabolic way, probably because people, I mean investors, like to jump on the trend.  In fact, American investors are mostly trend investors, not value investors.  (If most were value investors, silver would not remain the undiscovered low value that it is!)  The issue with silver is that the silver market is so tiny, that by the time even 1% of the public jumps on the trend to buy silver, the silver price will be $500/oz.  How so?  Because the world is nearly out of silver, and consumes nearly all that is mined each year, leaving so little left over for investors.  Also, there is so much money in the banks that if even 1% of the money in American banks tried to buy silver, which is $180 billion of buying power, that if that money tried to buy about 350 million oz. of silver available (about half of annual mine supply), that would drive the price to $500, as follows: $180,000 million / 350 million = $514/oz.

Now that silver has put in a ten year positive price trend, the silver market will be increasingly difficult for the financial world to ignore.  Silver will inexorably, inevitably pull paper money into itself like a magnet, destroying the false and fraudulent value of paper money. 

See, the problem with all frauds, is that they tend to end rather suddenly.

We are at the point where if 1% of paper money buys silver, it will destroy 94% of the value of the remaining money that was too foolish to buy silver at prices under $30/oz.  The math is as follows:  $30 to $514 is a gain of 17 times greater.  When money loses that much purchasing power, the other way to say it is that the remaining money that now must buy silver at over $500/oz. to protect itself from total destruction, rather than $30 which is the price it could have bought it, represents a loss of 94% of the value of the dollar.

There is no way to stop this process.  It has repeated itself again and again throughout all of history.

See, the problem with socialism is that you eventually run out of other people's money to steal to prop up the welfare state that tries to give handouts to the insatiably greedy and lazy people.  We have long passed that point, as the government now collects $2 trillion to fund a $3.5 trillion budget, spending (and printing/borrowing) an additional $1.5 trillion per year.  That's $1500 billion. 

And I was just talking about the dangers to the dollar, and the rise in silver to $514/oz. if only $180 billion tried to buy silver.  See the problem?  The solution is simple.  Buy silver before the next guy does!

See, the math shows that there is no possible way that the brokerage houses have bought and are holding people's silver for them.  If they did, the silver price would be $500/oz. already.  And it's not.  Being defrauded is simply one penalty for being bad at math.  That's life.  Sorry.  I didn't make up the rules.  Don't shoot this messenger.

=====

Now, those are the prices that experience and the charts predict.  My gut and the fundamentals of the math tells me a bit more.  This is a manipulated market, and the math shows that the manipulation is failing, but still in place.  I expect there to be an epic battle at around $50/oz., that might last 6 months to two years, because they won't want headlines that say "silver moves to an all time high".  That's bad for business, the business of printing fraudulent paper money. 

Also, since it is a manipulated market, they try to create prices and short term trends that are unexpected and discouraging.   They will paint the tape with any price that puts a damper, or discourages, physical silver buying.  If higher silver prices will scare off physical silver buyers, then higher it will go.  If lower prices will do the trick, then lower it will go.  Physical silver buyers are creating this market, but in a counter-intuitive way.

I'd thus expect to see large and sudden price jumps, both up and down, in order to create the illusion of instability of silver.  Volatile silver prices are also a function of the tiny silver market.  But they are also a function of the instability of the dollar.  The sudden price changes of 10% in one day that we used to see only in silver stocks are now seen regularly in major stocks valued in the hundreds of billions on the major exchanges!

Conversely, stable silver prices also discourage physical silver buyers, because investors at this stage of the market are trend investors.  If there is no clear trend up, people today tend to lose interest and forget about the fundamentals, or they foolishly think that the manipulations can continue forever.  Not so.  The fundamentals are so out of balance, I'm surprised that prices remain this low.  My problem is that I over estimate the intelligence of the general public.

I feel that we have hit a bottom in silver prices for several reasons.

First, it's time.  Low interest in silver, and moderate price changes, can't last forever.

Second, we recently ran out of 90% junk silver, both in our shop, and at the wholesale supplier level.  This indicates renewed investor interest.

Third, if they push silver any lower, they will create extraordinarily fantastic gains for the next group of value investors who jump into silver, which will also create extraordinary losses for the bankers who manipulate prices, and the bankers, such as JP Morgan, are hurting badly as it is from the housing crisis, and Euro crisis, and "hedge book" problems. 

If I were the one manipulating prices, I'd let silver jump up to about $49 nearly overnight, and then try to slowly grind prices downward for the next year or so, back to about $35, if I could do it.  That would be the way to create the greatest kind of discouragement among silver investors, because it would create a short term downward trend.  Then, let silver explode again super fast, over some fake semi-positive silver news announcement, almost like a vertical line up, to nearly $75, and then do the slow grind down again.  These are the kind of counter intuitive moves I'd expect in a manipulated market, designed to keep physical silver investors away from the major trend.

But enough about short term price predictions.  Another point to keep in mind is that in the last bull market, in the 1970's, gold prices stagnated below $200 for 4 years.  So silver may be a great investment for fast major gains, but you also need to be patient.  Sometimes, it takes a while for others to see what is obvious to us

Silver Prices Tumble 10.5% in May, yet American Silver Eagle Coins Rally | Silver Coins Today

Silver Prices Tumble 10.5% in May, yet American Silver Eagle Coins Rally | Silver Coins Today

www.TheSilverPrice.info