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Crash Or Correction? SocGen Answers
Following last week's crude drubbing brought about by correlations gone wild, following the 5 sequential margin hike-inspired collapse in silver, many are wondering if the silver correction is over, or if the crash is just starting. Here is Soc Gen joining in a very schizophrenic Goldman (a month ago: sell; yesterday: buy) telling clients the coast may be clear now that all the weakest hands have been purged (following SLV 88% share turnover on Thursday any latent mania elements have been exorcised).
From SocGen:
Oil prices experienced a huge sell-off this week, plunging by $12 /b on Thursday (11% over the week). Other energy prices followed but the extent of the move was much less limited (between –0.6% and -3.5% over the week). This can be explained by a number of reasons – most of all it seems market participants were finally convinced by the economic newsflow that downside risk have become dominant and it was time to take profit. The question now is obviously if - after the usual technical rebound - this will continue next week and translate into a crash, energy markets in Europe following oil with a lag. Or if prices will stabilize close to present levels, in what should then be considered as the correction of excesses. Our view is that the correction, a violent one, could be over as overall fundamentals remain sound. Hence some prices will stabilize (coal and power), at least temporarily. Further drop for gas is however expected, coming from the continuing seasonal adjustment for which gas is late as compared to the other components of the power complex. Carbon should suffer from this gas movement, with limited downside risk.
Full note:
Energy prices collapsed this week. Brent month ahead contract dropped by a staggering 11%, moving from $125.89 /b to 112 /b, of which almost $12 /b in a single session (Thursday), a rare fact. Following this dynamics but with a much lower amplitude, gas prices (NBP month ahead) lost £p2 /th and closed on Friday at £p55.8 /th (-3.5%). For coal, power and carbon prices, the pattern was slightly different. They started the week with an increase. German baseload Cal12 and CIF ARA Cal12 reached €59.82 /MWh and $133.25 /t respectively on Monday and Tuesday, continuing on previous week’s momentum. Then they followed the oil prices and strongly retraced from Wednesday to Friday. On the whole, German baseload Cal12 and CIF ARA Cal12 lost €0.9 /MWh and $3.75 /t, closing today at €58.2 /MWh and $129 /t. For carbon, the early week increase was strong with Dec11 EUA closing on a new high €17.42 /t on Monday, at a level not seen since November 2008. The contract fell only by 0.6% over the week and finished
today at €17.04 /t.
So the energy markets brutally turned eventually. This comes after two quiet weeks marked by long breaks and holidays across Europe, delaying decisions – which might partly explain the brutality. Last week had finished on a rather bullish note, encouraging our view for this week that prices would still hold to high levels, and even increase for some of them (coal in particular). Fundamentals indeed had turned more supportive for prices, but sentiment made it all in the last four days.
What happened? The market had become nervous over the recent weeks on concerns that the emerging countries would see their growth reduced in H211 due to the difficult fight against inflation, which is leading some of them to tighten their monetary policy. China has been in a tightening cycle for months – without much success on inflation readings so far. When India surprised this week by raising interest rates by 50 bps instead of the expected 25 bps, the concerns heightened. As the most liquid commodities (oil, precious metals) have largely become a macroeconomic play, and an EM play in particular, these concerns had lead investors to consider commodities as increasingly risky assets, whose potential for appreciation had turned quite limited in the short run. The good Q1 corporate results in the US and in Europe, very often beating analysts’ expectations, had temporarily appeased these fears as they sent equity indices up to levels unseen since mid-2008 (for the US stocks at least). The enthusiasm over, operators have started to take into consideration the bad news again. And realized the dark cloud has been getting darker and bigger over the recent weeks.
Western economies remain fragile. In Europe the lingering risk of the sovereign debt crisis is in the news again, through the Portugal bailout and the talks of Greek debt restructuring. In the US, the debt rating downgrade is still in the memories and the end of QE2 in June leaves the market wonder if this means the end of ever more cheap liquidity around, hence the end of the golden period for risky assets. The rising topic of oil demand destruction due to high prices, the bad unemployment figures yesterday in the US (jobless claims increased to an 8-month high while they were widely expected to drop) and the bad German factory order figures exacerbated the worries on the state of the developed economies.
At the same time the threat of inflation is also getting more precise in the US and Europe, which eventually is no good for growth either, as it will lead to rate hikes. For oil, the bearish inventory report mid-week (see our US Petroleum Report dated 4 May) showing unusual stock builds even as the Driving Season is coming near, combined to news OPEC was considering raising formal output limits when it meets in June, pushed in the same direction.
Much has been made about the impact of Bin Laden’s death. While it might reduce terrorist risk, it is not completely clear why this would lead to lower risk of oil cuts in the Middle East – for this, the less commented demise of one of the Libyan leader’s son over the same week-end could actually bear more impact. The big “Abbottabad news” was for us used more as a pretext to the first profit-taking, which was actually short-lived on Monday. But the date will for sure be remembered as the turning point for the oil market, even if the real fall in oil actually trailed losses in precious metals later in the week. The bearish reaction was compounded by the ECB’s press conference yesterday, during which Mr. Trichet dampened the expectations for a rate hike in June. This sent the Euro rapidly down, EUR/USD retracing from 1.48 (up to now seen as a pause before 1.50) to 1.45, which is also bearish commodities.
It is to be noted however that the astounding drop in oil prices fails to be reflected into other energy commodities, which fell only by 2% to 5% so far. This for us stems from two main reasons: barring oil, energy commodities are little invested by non-commercial players, whose behavior is evidently fuelling the movement for oil; and the stronger fundamentals for thermal coal or power in Europe also helped limit the downside compared to oil.
Seen in retrospect – as usual – we can see the energy prices had to go down! What was doubtful before becomes so clear afterwards… Hence, the real interesting question for next week is: will prices stabilize and rebound, or continue falling? Was this a correction, or is this the beginning of a crash, the explosion of a “bubble” that will take off the classic 30% off the (oil) prices? In each case, which levels will the prices reach?
Our view as a team was that a correction was to be expected but that Brent prices should for now remain in the $110 /b - $125 /b range. See for instance our Commodity Strategy - Brent 1x2 Put Spread at zero cost to benefit from tactical correction dated 4 May, where the following paragraph appears: “In conclusion, there seem several reasons to expect a correction lower in Brent prices over coming weeks. The key question is then how deep and long lasting such a correction is likely to be? We believe that any correction is unlikely to drop below $110 and any drop below $115 is likely to be short-lived.” We also think that solid fundamentals do not warrant a full-fledged crash (the -30% guy who would take oil back down to $85 /b), and that energy prices had not reached a “bubble-like” level. Hence the room for downside exists but is not massive. Economic fundamental first, are not that bad. H211 will be weaker, which is what the market is rapidly pricing now. However according to SG Economic team central scenario the theme of double-dip is behind us and the economies are recovering for good.
More precisely, on the energy commodities we follow two views are possible. Either the more inert, less investor-driven coal, gas, carbon and power markets will more heavily come down next week, after a 2-day lag. Or they are close to finishing their correction, even if it can seem limited. In this case they would stabilize next week. Actually our view is that they have probably finished the part in their consolidation that corresponds to the unavoidable sympathy with oil prices. But that they have not finished their seasonal adjustment, at various levels. Hence some of them will stabilize next week (maybe temporarily as there is still some time for the season to play before summer), while other will continue coming down due to a higher gap with what seasonal conditions would justify.
For coal, prices are undergoing the spring adjustment we have been expecting, but could be supported in the short run by continuing Chinese buying. Low inventories and Chinese domestic prices come closer to international ones are the main reasons behind this resurgence. For gas on the contrary, the market (wrongly we argued in our 19 April European Gas Special: five reasons for NBP gas price to go down this summer) thought lots of LNG would be diverted from UK to Japan to make up lost nuclear supplies but on Thursday the UK was in fact receiving more LNG than could fit in the pipelines at MilfordHaven, home of SouthHook and Dragon LNG. Dragon and South Hook were together flowing over 70 mcm /day into the national transmission system, about the maximum combined flowrate that has been seen in recent months. The high LNG supplies should continue to compensate for any other problems that could arise in Norway. Please refer to our equity Statoil note explaining that Statoil production in Q1 11 has been lower than Q1 10 and that Q2 and Q3 11e should also be below 2010 levels. We remain bearish for next week, especially in light of the rising temperatures. For carbon, our view is that the drift of gas prices lower will weigh downward, and that prices could suffer a bit. However there is little in the present price dynamics that could herald a significant departure from the €17 /t – its new average. For power, we think that coal prices are still price-makers in the German system, so that power prices will be relatively supported. However we think that NewC will be more resilient than CIF ARA (see our Thermal Coal trading idea dated 5 May Long NewC /Short CIF ARA) so we see risks more biased to the downside.
Overall, we expect coal (CIF ARA Cal12) and German baseload Cal12 to remain above $128 /t and €57.7 /MWh. On the contrary, gas (NBP month ahead) should continue its consolidation to £p54 /th. Finally, carbon should to be traded in a range €16.7 /t - €17.2 /t. Given this configuration and without strong downward move of the EUR/USD, German dark spread should remain stable while German spark spread will continue increasing (see our European Gas and Power Strategy dated 3 May Long German Spark Spread). We anticipate slight steepening of the CIF ARA forward curve with Next Quarter – Next Year spread decreasing to $-4 /t. For the NBP forward curve, the seasonal adjustment will weigh on the shortterm maturity contract and timespread will accentuate their drop.
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And I'll go on record and call a bottom in uranium this week. Wasn't that long ago I was the authority on the topic.
http://www-pub.iaea.org/MTCD/publications/PDF/P1288_web.pdf p 17, 131.
Uranium? I would wait after June to call it a bottom:)
If BB is looking at QE3 the worry will be the run up of commodities and oil again. I am just wondering then in addition to the current take down if he will delay any further QE until things tank a little more creating a bit of extra breathing space for the next QE.
But then again that may tank equities as well and wasn't that the point of QE, the wealth effect of a rising market?
What he really needs is troubles in Europe to strengthen the dollar in readiness for the next QE3.
I suspect each QE will have a magnified effect on oil and PM as fear quotients rise.
If you believe in QE3 then you would have to believe in rising commodities and PMs. I also think you would have to believe in an acceleration in the rise of PMs as each QE comes with a deterioration of confidence of the Fed/Govt to deal with the economy.
I also now get teh feeling that every time they feel the USD is on the verge of collapse you may see some major issue arise in Europe to hopefull stall a collapse. But there comes a stage when that wont work either and may exacerbate the problem.
Really, I think PMs have to be an essential part of any portfolio.
Anybody believing in God should have his head examined.
Even more so anybody believing that by wearing a:
1. silly burka
2. silly beard
3. silly hat
4. silly curl
5. silly coat
6. silly rosary
or any other silly and meaningless prop
or by
7. cutting your foreskin or labia,
or any other silly way of mutilating your own body,
an allegedly almighty entity that you may call God would somehow THEN regard you as
A. more valuable
B. more worthy of entering an alleged paradise
C. more deserving of having your soul rescued
D. belonging to the chosen few
I sincerely ask you:
WHAT KIND OF A GOD WOULD THAT BE,
that could by swayed by any of this above mentioned silly and oh so anthropocentric behaviour ?!
There is no difference between a mental illness, called schizophrenia, and the belief in God.
Hearing voices, that nobody else can hear,
seeing people, that nobody else can see,
whose existence cannot be proven,
is a medical condition commonly referred to as schizophrenia.
Have you never watched "A beautiful mind", bitchez ?
Oh and if you say God's non-existence also cannot be proven, then I tell you, that this claim is wrong.
I can prove that God doesn't exist.
I can even prove it in a way, that is neither based on hoodwinking you,
nor forcing and pushing it on you.
The proof is very elegant.
...no no no...I said I believed in Gold !
These two headlines from RT. I love that site.
American CEO pay exceeds pre-recession levels
US Unemployment on the rise. Again.
Amerika....enjoy your stay in the 3rd world.
Cheapest puts out there are on GLD.
Buy them now... It will be the next shoe to drop after silver.
I've junked you many times in the past but you have been playing the market very well, if you actually own puts on SLV like you claim. I think the reason many junk you here is they don't play the paper game, when there is lots of money to be made in that space, especially recently with all the heightened volatility. I think both sides are partially correct. You think silver will hit $20 this summer, and the paper price just might. This pisses off the buy and hold crew, and they claim physical won't be that low. But if you're talking strictly paper then who gives a fuck about APMEX prices. I'm thinking of putting a small amount of $ into the paper game just as a speculative play, I'll keep scooping physical coins all the while, but I do think paper prices will be quite volatile in the next few months.
Never thought I'd ask you this, but seriously-why do you think gold is next? Do you think it's coming soon (like in the next few hours-days) or over the course of the summer? I could easily see them hike margins on gold and crash the paper price down to around $1250. GLD has weekly options which could provide a huge hit if you happen to time it right. I saw last week the SLV/GLD options were soaring, some of them went from like 5 cents to $1 or something crazy. Your strategy of "lose small a few times, hit really really big sometimes" is the right one with options. The only problem is that you say things like "it cost $5 to dig out of the ground" and those are just retarded. Also if you hit big on the options what do you buy with the profits? More options? Stocks? But yeah I'd like some insight on when/how you think they will take down (paper) gold. Thanks /non junk
ETF Liquidations, bitchez!
The futures market led the plunge, but SLV is keeping it going!
People aren't focusing enough on the role that SLV and the commodity ETFs had in this move. When they catch on, it's going to be really fucking ugly. There may be an PM ETF bubble more than anything.
SLV bought 366 million ounces of silver since '06, but bought nearly 20% of it during the run! It then proceeded to sell 36mm ounces in around 2 weeks. More than the 35mm Silver Eagles the US minted last year! (And that is a good year - prior to '08, they only minted around 20mm/year)
In terms of purchases by ETFs, Gold ETFs have been even bigger buyers over the last few years (as a percentage of annual supply) than Silver was.
I'm not really sure what is going on in the commodities market and with DXY right now, but if it continues, I think there is a chance is could trigger ETF selling and force gold to be arbed out of GLD. And if that happens, watch the fuck out! Gold got crushed in '08, and a lot of that was driven by the arb mechanism removing Gold for the ETFs. I'm looking for the repeat.
Gold is a lot bigger and more sophisticated market, so my thesis may be a somewhat low probablility event, but the implied vol on GLD puts is so low, and the profit potential so high, you'd almost be stupid not to buy puts on GLD. I actually like this trade MORE than the Silver put buying. I was buying July 130s on GLD for $1 last week during the sell off - and posted about it. Even a modest 15% correction in the Gold price makes them worth almost 10 bucks. And you don't even need a large move to have a huge return - even just an uptick in volatilty will pay of handsomely.
And for the record, it does only cost $5 an ounce to dig it out of the ground. Cash costs on Silver are only $5 an ounce.
"Primary silver mine cash costs remained relatively flat year-on-year, falling by less than 1 percent to $5.27/oz. from a revised $5.29/oz. in 2009."
http://www.silverinstitute.org/supply_demand.php
Silver mine supply will continue to increase over the next few years. Look at the data - almost 80mm ounces of production were added from '01 to '08 with average silver cost of around $10. Zombie 'to the moon' ZH readers are so blind to the obvious.
The other thing is that the retail market coin market is so small that it almost doesn't even matter, another fact the readers of this site ignore. You may continue to see shortagaes of Eagles... Only 2-3% of silver supply is actually turned in to Eagles each year. But if you're an industrial user who needs shot, you can buy as much as you want.
Moron on this site continue to complain about not being able to find COMEX bars and eagles, but there is a ton of silver available. Problem is they are going through the wrong channels. It's like trying to buy a Ferrari, but only calling the Chevy dealer. You can't buy it if you're not going to the right store.
It only costs $5 bucks to dig it out of the ground! (tm)
I guess I'm being a bit "results oriented" but you called the recent action in silver spot on. Wish I could unjunk a few of your posts. I still think if you only deal in paper, you're dumb and will end up broke eventually. It's a big enough gamble just trying to book paper profits (esp with taxes, commissions, and transfers), but then what happens if the paper world comes crashing down? I do think a solid 5% or so of your assets in gambles like paper silver/gold isn't a bad idea, after all, most here agree that we are all speculators now to some degree. Holding cash isn't safe, stocks aren't safe, nothing is safe anymore to buy and hold, at least in the short to mid term. Over time, physical will trump all, but who knows how/when/if we will get there before something like WW3 or another confiscation hits. Plus there are storage/security risks with physical that need to be paid either with time, planning, or money. I repeat-physical WILL TRUMP ALL, but no one knows when (except maybe TPTB). In the meantime speculation is a good way to try and make some cash, in my case, to convert to more physical.
Thanks for your reply, I agree that GLD as well as physical gold and COMEX gold have been a lot less volatile than silver, but that's always been the case. However, it could all change in an instant if they start hiking margins, or even a rumor of a gold confiscation was circulated to scare some weaker hands to "take profits" before Obama comes a'knockin. Of course it would all just be a stupid shakedown with no teeth, and wouldn't affect physical holders that have strong hands, but again, if you're playing paper, who the fuck cares why it happens if GLD drops by, say, 20% in a week? You can get paid 10-1 or more, possibly way more if the volitality does increase as you said.
Also agree that the rumors of a physical shortage are a TAD overdone on this board. If we ever saw APMEX or Tulving run completely out of Eagles, with a month+ backorder, then I might tend to agree, but there is a shitload of silver for sale just on APMEX. When you factor in all the war nickels, 90%, 40%, generic rounds and bars, Eagles, Maples, Libertads, Pandas, there really is a lot of silver still to be had. But, things can change quickly, and now is still the time to add to your positions, because you can never have enough physical. One crazy rumor or quote about COMEX going belly up could send things into severe backwardation and could send premiums skyrocketing again and could cause a run. No one here really knows how close COMEX is to going bust, it's all speculation. I tend to agree that eventually they will have to default in some shape or form, and you can argue that they already have if the rumors of cash settlements are true. But I'm not really buying that argument 100% yet. If COMEX really can't deliver, and someone wants to stand for delivery, why don't they simply ask for $500/oz? $1k? $50k? And if they don't pony up you simply go public with the info and cause an insane short squeeze. You'd truly have them by the balls with no way out, and if any of those players already own a good amount of physical they could easily see their wealth triple or more overnight by simply going public with the info that COMEX cannot deliver. That's a pretty huge incentive. Also that can't really go on forever, eventually they would run out of cash to pay the high premiums, they would literally be getting raped every single month by the same people.
I don't agree that just because you can't find COMEX bars online that means there is a silver shortage. There certainly is more of a shortage in some areas than others, Eagles being the prime example. But there are lots of Maples floating around. 90% silver is still silver, APMEX coins and bars are still real silver, even 40% is still fucking silver. If you're not a silver yuppie you can have as much as you want. Hell, I found $120 face value of 40% at my local bank 6 weeks ago, people are still so in the dark they are trading silver coins in for face value! That's why I think this bull market will continue to run, long term, because once people wake up even a bit then the jig is up, if the demand goes up it will make things a lot harder to find.
I do think silver and gold bugs are stupid for calling short term prices and trends, especially those who "don't play the paper game." Right now the paper price is highly volatile, and if you're not playing that game then why comment on it and make predictions? Silver probably SHOULD be a lot higher, and I think it will get there, but saying something like "$50 silver by August" is dumb. The events of the past week have shown how easily silver can be beaten down, and for the time being TPTB are still very in control. Hell, how many people got burned by shorting the piss out of the dotcom stocks back in 1997, 1998, 1999. You would have been destroyed, even if you were later vindicated as being 100% correct that those stocks were complete dogshit. TheStreet.com wasn't worth what people were paying, yet you would have lost everything shorting it all the way up. Same could go for silver, it may turn out to be worth $1k/oz or more in today's dollars, but it might take 2-3 years or more to get there, and it might just plummet again in the short term.
I actually buy real estate. And that is where my 'paper' profit from my SLV puts are going - Rental properties. In terms of an inflation protected asset, it doesn't get much better. Inflation = higher rents = higher cash flow for Math Man.
On a side note, I will probably also buy some more jewelery for my wife. If ZH readers are right and the shit ever really hits the fan, we can sell it or use it to barter.
Meh, I've always been curious about what it would be like to be a landlord. My uncle and a family friend own a few properties and are always bitching about deadbeats, taxes, higher water/sewage fees, or not finding someone to rent out to. There are a lot of things to like, but also some drawbacks. I don't think real estate values have found their true bottom yet. Also the higher taxes possibly coming down the line could become a huge problem. It also is a lot more illiquid than silver or gold, and in a true SHTF situation I'd rather have gold and silver than real estate. If housing prices come down a lot, which I think they will, there will be tons of great deals to be had, but I think it's a bit early to be buying.
Also I'm curious which GLD puts you're buying-what strike price and expiration? Would also be good to have your picks here before you can claim you made or lost money, this way people can see how you do. Maybe if you post a winning pick people will be less likely to junk you.
Browsing APMEX is very interesting. They recently were completely out of many years of Silver Eagles, with a backorder of May 13 on the 2011s. Now I'm seeing they got almost all years back in (with high premiums of $6+ per coin), but the backorder for the 2011s is May 31st. Lol. Will there even be any silver/gold eagles in 2012? I'm thinking they will announce 2012 is the last year for both coins, due to "volatilty" or some nonsense. Maybe once they strip the nickel and copper out of the nickels they can mint copper and nickel eagles. Actually I've seen copper eagles for sale on some sites, made me laugh.
Got some verrry good news last night. Ran into a former coworker, she's in her early 20s and just got a job at a local coin shop that I didn't even know existed, about 10 minutes from my home. She said they have "tons" of eagles/maples in stock and lots of silver bars and gold coins. Said they bought a lot when prices were $45+ and now the owner (who I see about once a week, didn't have a clue he owned the store until yesterday) has a limit of 10 coins per customer since he is losing money on them right now. She said they buy eagles for $2 under spot and sell for $3 (!!!!) over spot. I told her I would definitely be in this week to take a look and pick up some coins. She said she can even get me some kind of 10% discount but wasn't really specific on it. My first thought when she mentioned the 10 coin limit was to start calling friends/family and pay them $5 to simply walk in and buy me 10 coins. Beats the hell out of APMEX, I save about $4 per coin plus shipping, if what she's saying is true. I have no reason not to believe her. I also told her I might have to look into getting a job there, she said they were hiring and I told her only if the owner would pay me in silver/gold, she laughed and said "he probably would!!" Girl is also a solid 8/10. Made my night, and we'll see what happens when I go in this week.
Also does anyone have experience buying at flea markets lately? I used to buy/sell a lot at a bigger one near my home, prices were generally in line with the major sites, silver was about $20, buy price on eagles was $18 sell price $21 or $22. I heard from a neighbor who went about 3 weeks ago that silver was $42ish, he was buying at $40 and selling at $44. Seems like some people don't know about the rising premiums, or maybe they are just getting tons of people selling and don't care. Seems a bit odd and I'm curious what kind of deals are floating around. One way to find out, I guess I'll have to hit up the flea market next week as well.
Flea markets are infested with Chinese knock-offs. So it's only for seasoned hands. You either get clipped coins (say 0.88 ounces in a 1 ounce coin) or you could get lead coated silver coins. You would need to carry the entire testing lab with you to sort through the stash and identify the legitimate ones.
Not true at the one near me. There are at least 3 reputable dealers that have booths on the "inside" portion of the flea market. There is an outdoor part and an indoor part. They have been there for 10+ years, are all old timers in their 50s or 60s at least. Also I have bought silver coins from the one dealer, and then a few weeks later an emergency came up and I needed cash, so I sold them back to him. So if he really is in the business of selling knock offs, he's also in the business of buying them.
He always is friendly, he gives you good deals, and is nice to talk to. He also showed me a print out of an ebay complaint he filed because someone sent him a fake coin. He showed me exactly how to tell if one is fake, what to look for etc. Tons of people use him and they all said good things about him when I asked about him. I also went to his home, where he works via appointment to buy and sell, and sold him all sorts of coins-40%, 90%, and some gold and his prices were very reasonable. He carries a huge wad of cash and basically taunts people to sell him huge volumes of coins, claiming things like "unlimited cash" and "we pay the highest premiums on silver eagles." He really does pay the best premiums at that market, and he really will buy $10k of silver with $100 bills if you have it. He is just a great person to deal with, if the math works out to an odd number (like silver dimes melt value is $2.29) he always gives you the good end of the deal and rounds to $2.25 or throws in an extra if it brings your total to a round number.
Also I trust my ability to spot a fake eagle, maybe not a morgan or peace but I'm sure if I asked him he could point out the common faults in the counterfits.
The Fed attempted to lure retail back into stocks for two years so they could be sheared to bail out the banks. Retail is hiding in cash. So the Fed just gave up and is creating bubbles anywhere they can and popping them, once again, to bail out the banks.
That's my take on it. It has nothing to do with where silver or gold or oil has to go in the future, it's about what the powers that be want right now. They want your money to bail out the banks.