Silver Undergoes 10% Correction As Dollar Poundage Resumes; Dollar-Backed Swiss Franc Now Flight To Safety

Tyler Durden's picture

And so the proverbial correction in silver may have well been completed in the span of 24 hours. As the attached chart shows from its Sunday night peaks to its Monday night bottom silver has dropped over 10%, what some call a mini bear market (which takes it to those depressionary lows seen on Thursday of last week). Is the climb now set tp resume, although not so much due to anything else (and there is plenty else) but because the USD pounding is back in full brokeback style. The EURUSD is about to break above the Sunday night heights in the mid 1.46s and while weak hands are vacating gold and silver, everyone is scrambling to load up in CHF. We wonder how long until those same people realize that Hildebrand is just as mortal as any other central banker with a balance sheet behind him, and as recently as 12 months ago underwent a failed campaign to halt the surge of the CHF in the process contaminating his assets with some seriously ugly currency assets (if one may call $220 billion of dollars on the left side of your balance sheet assets and thus implicitly "supporting" the SNB liability - the Swiss Franc) whose eventual unwind will not be too kind on the Swiss currency.


Dollar basket:

Amount of dollars held by the Swiss National Bank: at latest count, about 45% of GDP.

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Snidley Whipsnae's picture

Options expiry today... duh, could that have something to do with the shorts piling in? Haven't we seen this movie countless times?

Hephasteus's picture

Yup. It usually ends with a month of mountain climbing to k2 or something.

dlmaniac's picture

I smell BTFD in the air.

Hephasteus's picture

What good is a dip if the shelves are empty.

It's like an empty grocery store sending out thousands of coupons.

mogul rider's picture

It's not empty at all, there is silver everywhere in your quantities..

I'm not sure what planet people are on. Just because Turk says there isn;t any isn;t true people. He's talking about big volume. They just won't pay the price nor the premium.

Scotia Mocatta has them all. It is the big guys who suffer not you guys who buy 2-5 ounces.



Hephasteus's picture

Ya sucks to be a dinosaur. They make nice museums though.

MarketTruth's picture

Agreed, silver is still available in various forms at and plus others.

BTFD and always take physical delivery.

What we are seeing is normal high volatility... like a rat in a cage desperately trying to get out. This pattern we are seeing is the new normal considering contract expiry, which usually makes for a good entry point to catch the next leg up.

Xibalba's picture

tulving out. apmex out.  now what?

ZeroPower's picture

That 49.79 print was barely a real price. I guess comparable to the USDJPY flash-crash..

100% agree on the Chief, that sucker's done. How much pain will the shorts endure? It will be worth it if they can hold out a bit longer.

ivars's picture

I told you yesterday we are in correction ( crash) .  More to come:


Fred C Dobbs's picture

Turd Ferguson's prediction was closer.

ivars's picture

You mean the value at the top? I expanded it after some deliberation here to include the range 42-50 but  did not put into graph- too complicated:

Timing- I made the graph on March 13th, predicted top  22 days and 5 USD (45) early. My bad.





Snidley Whipsnae's picture

So you've made a ton of dollars in the silver trade? You're crystal ball is the best in the land? LOL... troll on clueless... wake me when the dollar strengthens. The fundamentals have not changed, the dollar is still being trashed by QE, and silver continues to be in backwardation.

akak's picture

Where is MomoTrader to gloat over all the silverbugs at how silver got "blowtorched" here --- and at the same time, how he brilliantly timed this move by selling at the 30-second peak and buying back in big at the 30-second low?

tmosley's picture

lol, he wants to know to, so he can claim he bought there as well, after having claimed to have sold his whole physical position yesterday.

eisley79's picture

yup, i actually sold 1201 ounces yesterday at the penny top.  Today i will do exactly what he does +1.  He is my new investing guide.  Luckily I have unlimited imagi-ounces to sell when he sells, and of course unlimited imagi-confetti to buy n+1 imagi-puts or imagi-calls that he sees fit.

my porsche also coincidentally is one year less used then is.  My mom's basement is also 1 sq-ft bigger. ..  what are the odds!

AUD's picture

What's happening with yields on Swiss Franc denominated bonds?

Falling yields might explain a rush to buy an obligation which is a promise to pay US$!

Darth Silver's picture

its a good day to buy.  i just bought 300 oz at a hair above $46.  pumped.  physical. 

feels GoooooooooooooooooD!

Moe Howard's picture

Can we get it to $35 - I have a truck and I hate to move it unless I can fill it.

Snidley Whipsnae's picture

You didn't pull the trigger and buy before... Why do you believe that you will have the nads to pull the trigger on a short lived decline? This market is not for the faint of heart and not for weak handed paper market players.

Moe Howard's picture

No paper only physical and have you heard of income before? I stopped buying in bulk in the mid 30s', start again there.I switched my main purchases to physical gold past that - and kept it small.   FRNs have been accumulating. Why wouldn't I buy at $35 - I'm long physical. I really don't get your comment. Why would I buy on a short term rise? When I buy the dips, I want it to be a real one, not this shit from yesterday/last night. Dealers are buying and price is declining - hmmm.

SWRichmond's picture

This market is not for the faint of heart

+1.  Gold is how I will move wealth into the next currency regime.  Silver's gonna make me rich...or kill me, one or the other.  Silver is the embodiment of greed and fear in the PM market.

fredquimby's picture

I can see 'em breaking it down to $39.20 before this blip is over.....unless it goes straight back up to $51.50 of just incase: Quick, buy some silver!!!

AmazingLarry's picture

Hey, that's my price target! This locomotive needs to blow off some steam...and daddy needs to reload.

nontaxpayer's picture

Bot some silver between 44.90-45. Will try to sell @ 49+.
Easy and riskless ;-)

j0nx's picture

Where do you buy from and to whom do you sell when you want to take profit? I am thinking of getting into PMs finally and need some input from an expert.

Jack Donaghy's picture

Guys, could someone possibly explain what just happened here in layman's terms? I'm a bit confused. Serious question.

ZeroPower's picture

Surge from sunday night into monday morning was due to very little liquidity. Easy to move markets then as not many players involved. Also, by pushing the price as high as they could (and towards the target as youll notice of just under $50) this no doubt triggered stops all the way up to there before the short squeeze ran out of steam. Also enabled some fresh shorts to be piled on. Weak shorts got stopped out/ran over.

And even yesterday, the LME was closed so you still didn't have the full depth of the market you normally do on a weekday. Look for further interesting action (i.e. volatile) today. Finally, futures expiry today and most times big boys try and pin (move) the stock right where they want it to benefit most from failed options positions.

Last interesting tidbit, check out the daily volume on the SLV compared to its ADV. People accumulating a shit load of shares either for the epic dump OR higher follow through which should occur shortly. See what happens.


Jack Donaghy's picture

When you say liquidty what exactly do you mean? That there was little cash moving around on stocks? 


As for CHF, is that taking over from silver because of the volatility witnessed this weekend? 

ZeroPower's picture

Silver spot is in the futures market and has zero to do with stocks, but yes the point is there - little money supporting either side of the price (bid/ask) so any orders entered cleared out all the offers (to sell) and thus moved the price higher in a silly fashion. This is how securities move - if theres no more offers to sell silver at 4800, it goes to 4801, then 4802, and etc etc.

Read this to grasp a bit better:


I dont know if CHF is exactly taking over from silver but its considered the new safe haven currency due to its (supposed) gold backing and tighter fiscal constrictions (Swiss CB can make their own rules with respect to rates, devaluation, etc).

Clycntct's picture

ZP very helpful.

Thanks Much.

Snidley Whipsnae's picture

KWN has a story, citing an unnamed source in London, that asian buyers are accumulating gold and silver.

stopthenewworldorder's picture

the london source is the 'man' btw

he say weakness this week then 'when doors of opportunity open wide, confucius he say jump right in'.....

Spigot's picture

Typical bull market behavior: Grinding higher day in and day out with much nay saying in the broader press, with short, sharp corrections.

Typical bear market behavior: Grinding lower day in and day out with much happy talk in broader press, with short, sharp rallies.

You get to decide if silver/gold are in a bear or bull market.

bingaling's picture

Silver is dropping because asian buyers are stepping away from the table until Bernanke talks . (they probably believe that the threat of china dumping 2/3rds of its USD reserves will make him change course it wont). top it off with options exp .and JPM/HSBC gunning the pedal down here you get a pretty niced sized correction. After the exp and no change of course from the FED (finish of qe2 in june /more than likely qe3) watch Asian buyers pull the trigger on silver like never seen before . I dont think to get above 50 is going to be a battle if nothing changes .

Snidley Whipsnae's picture

KWN interviewed James Turk, who seems to think investors are losing confidence in the dollar.

ivars's picture

True. And Bernanke may signal tightening, keeping those buyers out for some more time.

bingaling's picture

If he doesn't tighten I think the word "parabolic" for the past price moves of silver has been misused . There will be an explosion to the upside never seen before IMO. 

ivars's picture

Worse so, USD will tank, and with that, hyperinflation is here.( in the USA, I mean, and worldwide USD being world reserve currency). A big risk to take with gas riots already coming. Also, one of things FED is supposed to do and can defend politically is price stability-easier than stock market and asset push it has performed so far, misquided by whatever theory, or intetionally to protect insolvent banks that has accumulated worthless assets.

I guess switching to austerity is short term less painful ( as the real austerity will only begin with 2012 budget, a lot of time to go).

I in fact expect him to be pretty clear on tightening of some form to protect USD and debt ratings. I do not know- rate increase, or clear statement there will be no QE3.


tightening would also solve JPM, HSBC etc problems with silver shorts.

Id fight Gandhi's picture

Ok shtf in eurozone, the eur could/should dive so money would likely go to chf metals and usd right?

But the usd is shit, who wants to hold that going into the budget showdown and qe.

What's the likely trend if eur and usd are passed on for something else?

ViewfromUndertheBridge's picture

ivars...I'm just going to try here:

"tightening", would have to take real interest rates (after inflation) to positive, not negative as they are now, to be effective. To convince people who eat and drive that real rates are positive (so as to affect their expectations and behaviour) guess is Bernanke would have to signal an intention of at least a 500 points increase tomorrow...maybe more...and seeing that the last FOMC used the words "for an extended period" then the chance of this happening is indistinguishable from zero...oh, and it would crash the world and blow up JPM's derivative book...unless the FASB can see a way around that I am not trading on your suggestion, thank you.

The last time the US did this it resulted in a 30 year bull market for bond prices...

My best estimate of the reason for the enthusiasm for silver is all those people who suddenly understand that the debasement of US currency is for real, they feel they have missed the train on gold (because all the shills say it is overpriced)... and that leaves "the poor man's gold" which fortunately for them has been suppressed (confirmed by Maguire/Chilton) and as silver is re-monetised it is re-setting to its monetary ratio with gold.

I believe that re-set is what we are witnessing now. It is going to be a rocky ride and it is regrettable that it has come so far so quickly but the beach-ball underwater is a good analogy.

Parallels with 1980 are suspect because you had one player with more than 30% of silver, so the longs were very concentrated and vulnerable. Comex and CBOT enforced position limits and then Comex banned new long positions....just imagine Comex enforcing position limits now on the concentrated shorts and then, for good measure, allowing only new long positions...if that sounds insane to you then you are starting to understand what happened in 1980....and all the shills trot 1980 out as a cautionary tale as if it were an efficient and normal market reaction.

Buying physical silver is one of the very few ways that people can signal their disgust at the corruption of Wall St and politicians, and at the same time attempt to secure their own future.

For this reason I believe individuals will continue to buy physical silver for years, and by doing so will ultimately force accountability back into the financial system.

I believe it is an idea whose time has come. I hope this helps.

Bicycle Repairman's picture

"gas riots already coming"


Snidley Whipsnae's picture

Chances of Ben tightening? Slim and none.

You think Ben is going to destroy the equities mkts that he has trashed the dollar to buoy? Better put your thinking cap on.

swissaustrian's picture

Gold actually LOST in the last 12 months in CHF-terms - so much about a gold-bubble.

Silver obviously didnt. But it cost me 1,5 % of my physical metal holdings worth to hedge myself against dollar devaluation. It was worth the effort. Otherwise i would have lost about 25% to fx losses.

Quintus's picture

Indeed.  Yet narrow-minded 'Analysts' in the US who imagine that there is no other currency in the world will still maintain that there is a bubble in $Gold rather than seeing the truth which is that the bubble in the USD itself is bursting.

ivars's picture

Gold is in no bubble, silver is.

Id fight Gandhi's picture

How? Inflation adj. High would be 100ish right?