Silver Price and iShares Silver Trust (SLV) Going to $12

octafinance's picture

We are silver bulls! Yes, that’s true. But before we make some money we will most probably lose some. Long-term we like silver. It’s good not just from an investment perspective but also from an insurance one. Kyle Bass, the manager of the $2 billion Hayman Capital agrees with us: “I’d Much Rather Own Gold Than Paper”, Bass said. Long-term silver is probably a buy but medium-term there is so much risk. The charts show that the support for silver lies at about $12 for futures and $12.5 for iShares Silver Trust (SLV).

 

The Price Chart of Silver Shows Long-Term Uptrend

We can’t miss to share what we see for the silver price. The big picture interpretations shows that the movement from $17.5 to the psychological barrier of $50 from 2010 to 2011 had only a small correction. It just played as a gigantic parabola. When the silver price went above the upper channel we knew we are in no man’s land and this momentum is good for short-term profits but not sustainable.

Silver Long-term Chart Parabola

Source: Octafinance Interpretations + Rightedgesystems

 

Experience proved to be smarter than nice parabola feelings. The silver price couldn’t break the barrier of fifty and CME increased margins. This forced the silver bulls to cover – sell and the bears to cover – buy. But the truth is that there wasnobody to buy as the bulls were 98% of the market as per the Daily Sentiment Index.  What was next is easy to guess. Silver, iShares Silver Trust (SLV) made several bear formations which always played without failure. The only chart failures were the bull breakouts. What we know from years of trading is that parabolas are reverted back below their previous channels. Based on the long-term demand line which was formed during a period of more than 12 years, the support for silver is around $11-$12.

 

6 Months H&S Silver Points to Target at that Long-Term Support

What we see on the chart now in the medium-term is a head & shoulders pattern of 6 months duration. If this H&S proves to be valid and breaks out we will probably dive to the $12 support. In case the right shoulder around $17.5 is penetrated, you can buy your silver protection and tight the stops.


Silver 6 Months Head And Shoulders Target 12-13

Source: Octafinance Interpretations + Rightedgesystems

Yes, $12 silver price per ounce is a real possibility!


Hedge Funds Wrong Again. Same as with Oil

We love the COT report because it measures sentiment so good. COT is tricky to use but we believe we know how to use it. Shown below, you can see that commercials aka producers (these with inside knowledge unlike the momentum hedge fund machines) are short silver, iShares Silver Trust (SLV). This is very important indication, they are the best informed players.


Silver Daily Price Chart And COT Report

Source: CFTC + Barchart

 

Investors, small speculators and hedge funds are still positioned for silver to skyrocket. All this looks very similar to the oil positioning just a year ago when commercial hedged and shorted barrels of oil as fast as possible (something that is saving many of them now), while smart investors and traders were long.

 

Oil COT crash positioningThanks to Zach Schreiber from PointState Capital, who alerted many hedge funds at the Ira Sohn Investing Conference, some hedge funds didn’t suffer much. David Einhorn for example covered his oil longs and even went short to hedge some oil stock holdings he had, right after the conference.

 

For the bulls left, the future was not so rosy. You know what happened next. Oil price crashed by 58% going to $45 per barrel of oil from $110.

 

Of course, we deal with possibilities and we can never be sure if silver / iShares Silver Trust (SLV) will play how we expect it, but as it has gone down 67% from its 2011 high, why couldn’t we see a 75% decline? The technical setup is here, the sentiment is here, the commercials knowledge is here, right on the chart.

Source: http://www.octafinance.com/silver-price-and-ishares-silver-trust-slv-going-to-12/32583/

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
teslaberry's picture

oh my god, this must be the first time in 8 years on zh that i've seen a bear call on silver. 

 

wtf is happening!!!!

q99x2's picture

At 12 bucks an ounce I'll be able to get my teeth fixed.

CarpetShag's picture

Shove it up your Bollinger band.

Dizzy Malscience's picture

Long gold  to 1,948°F

Short to 1,064°C

Liquidity is not important if you have any to melt.

Quinvarius's picture

I have a chart that says 95-100 by Christmas when I draw a line across the tops of it.  I like the odds.  So much for charting.

Dickweed Wang's picture

All of you who think silver is going down to something like $6/oz are a bunch of pecker puffers . . . .

The central planners's picture

Im going to make a joke hope you laugh: Ishares silver trust

robertsgt40's picture

This article omits the obvious.  The markets are manipulated.  Small oversight I'm sure.

JerseyJoe's picture

People who make a living playing with charts, can never admit the markets are manipulated because that admission would show that what they are doing is a complete waste of time.  

On top of that the manipulators know these dipshits will run like sheep when they trip up the moving average du jour.   So they play them like fiddles.  

AgentScruffy's picture

You can make money using charts with futures - even though the markets are manipulated. 

Crocodile's picture

Like talking to a PHD economist about fundementals and technicals and never touching the "interest rate swap" monster.

BoredRoom's picture
BoredRoom (not verified) Apr 30, 2015 12:34 PM

SLV IS GOING TO ZERO because that's the true floor for paper

lunaticfringe's picture

This was simply a chart analysis- some educated guesses based on the past. 

Silver has been so manipulated and so depressed- I cannot even imagine where true price discovery is. Remember when they raised the margin requirements FIVE tmes to stop silver from penetrating 50? That's when I knew the markets were rigged.

Secondly, charts are historically based and people behave emotionally. They don't behave according to some chartist theory. When they feel threatened- as every depositor in Greece should feel- they run on banks and into assets that cannot be easily stolen and converted- that type of behavior is not predictable with any chart.

Thirdly- 12 dollar silver doesn't matter. Personally I hope it goes there. I will buy a shit ton. Silver is a finite resource which costs more than 12 bucks to produce. I am in awe that the metals miners, unlike OPEC, big oil producers and retailers, dimond miners, and even media- dont ever attempt to price fix their commidity. They just continue to take it in the ass from the paper manipulators. One wonders if they will ever wake up, form a cartel, and demand a decent price for their commodity.

slowimplosion's picture

If silver gets to $12, I will be getting several hundred oz to add to my stack.  So bring it.

Conax's picture

Me, too.

I wonder why they don't lay off everyone except a maintenance crew, take the payroll money and buy silver bars to hand over as production.

They could turn a profit as they drive their product's cost upward and preserve their unmined ore.  Why get dirt under the fingernails for nuthin?

bluskyes's picture

I think it will be hard to source physical at $12.

Fred Hayek's picture

Oh, no problem at all, as long as you pay the 50% premium.

zenon's picture

I think silver has already bottomed. The same applies to oil, commodities and commodity currencies. The reason is that the dollar has peaked as the hype related to a tightening is more of a damp squid. Even if the Fed tightens, it will be a token increase and not the beginning of a cycle of rate rises. Further, all the money that has entered the mainstream stock markets is bound to rotate into the commodity sector as the markets have peaked and valuations for commodity producers are much more attratcive. Just my 2 cents.

OpenThePodBayDoorHAL's picture

The correct term is "damp squib". A squib is slang for a firecracker. Though I do wish the "Squid" would get damp, too...

Full Nelson's picture
Full Nelson (not verified) Apr 30, 2015 11:52 AM

What?!  No mention of the cost to mine the stuff?

FlacoGee's picture

SilverCorp:  $11.32 (AISC)

Silver Wheaton:  $9.57  (AISC)

First Majestic Silver (AISC):  $13.61

Pan American (AISC):   $17.69

Miners are poorly run businesses...  but even the above shows that prices have a lot further to go.   

Bullionaire's picture

Red troll flag no. 1 - SLW is not a miner.

 

Duh.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) FlacoGee Apr 30, 2015 12:53 PM

My damn fool. Don't you realize how much phony worthless fiat money is buying every stock and bond on the planet while shorting gold and silver massivly on paper?

 

                Its like the chart of a sagging ass receiving daily lipo suction. Your ass is firm only because central bankers suck ass.

BoredRoom's picture
BoredRoom (not verified) FlacoGee Apr 30, 2015 12:42 PM
FROM THEIR OWN REPORT, .....FMS q3 2014 All-in Sustaining Cost per Ounce (1) $19.89  

 

DO YOU HAVE ANYTHING ELSE TO OFFER OTHER THAN LYING AND NAME CALLING?

Al Huxley's picture

It's paper, the marginal cost of producing futures and options contracts is almost 0.

FlacoGee's picture

Silver will overshoot to $5 ot $6 and settle at $7 before trudging upwards   It could take another few years to get there, but it will happen. 

When looking at gold and silver you need to look at very long term charts as the rise and declines happen over a decade with a blow off top mania and then reversion to mean.

http://www.kitco.com/charts/popup/ag3650nyb.html

Blow off top was 4/2011 and then a rapid deflation of the bubble and the resulting slow grind downwards as the remaining holders lose all hope.     The process from bottom to blow off top to bottom is about 15 to 20 years.

In reality, it takes 15/20 years to get a new batch of (suckers) buyers.

 

 

 

TXsodbuster's picture

Water, food, shelter, family, freinds, cash, gold, then silver.

Guns and ammo just assumed, this is Texas by the way.

Deathrips's picture

GunS, Ammo, Water, Food, Community, Shelter, Silver, Gold, Cash.....cash is tied with spiderman towels in a collapse of confidence.

FIFY

RIPS

TXsodbuster's picture

Agree, stop buying and wait for $8.

BoredRoom's picture
BoredRoom (not verified) FlacoGee Apr 30, 2015 12:20 PM

I'm sure that's why JP Morgan is buying silver hand over fist.....but what do they know, right?

FlacoGee's picture

You do realize that part of the deflating bubble process is the mountain of stories that claim suppression of the price, "major buying", etc.?

Go back to the 80s blow off top and the subsequent decline...  Same shit, same bubble, and same bullshit stories.

Come back and let's discuss this after the price drops abother 50% over the next 2 years.

 

 

Crocodile's picture

Probably won't be allowed to discuss much in 2 years.

robertsgt40's picture

FlacoGee-  We were still solvent in the 80s 

lunaticfringe's picture

Not true.

The Hunt brothers were trying to corner the silver market in a period of commodity inflationin tha late 70's-80's- they failed and demand tanked. We did not have the President's Working Group on Financial Markets and banks were regulated.

All that changed in 1999. A banker controlled Congress introduced a whole new banking animal. All of the regulations were lifted, uncontrolled leverage was employed and in a period of 8 years- banks did what they do best- speculate and destroy- collapsing markets just as they did in 1929. This time it was something entirely new- QE and ZIRP. Commodities rallied thinking those programs would be inflationary- they weren't. Banks did not allow any of their newly printed capital into mainstream America. Instead they used capital to buy bonds, make easy interest, lie about their balance sheets, and try to become solvent once again. They raised margin 5 times to suppress the price of silver- and gold followed. Investors began to realize that these bastards now have the mechanisms in place to suppress precious metal prices whenever they choose. Investors and speculators cannot invest in any sort of rigged game where the rules can change over night. PM markets were essentially destroyed.

Here's where your same shit different day- every 20 years- they gotta find new suckers story fails.

oh and btw flacco, I put my money where my mouth is. If you wanna make a little wager that silver doesn't get sawed in half in 2 years- I'll be more tha happy to take your money.

You've been living in a USA vacuum where America has essentially done and controlled anything and everything. That's all about to change. You will either recognize that or you will deny that. That's how life sorts out the winners and losers. In a month or two we are gonna find out just how much gold China has been accumulating to support a new currency and free themselves from the petro dollar. I can't wait. I think there's a decent chance they have more gold than the US does. 

BoredRoom's picture
BoredRoom (not verified) FlacoGee Apr 30, 2015 12:36 PM

I'm sure that's why JP Morgan is buying silver hand over fist FOR THE LAST 3 MONTHS.....but what do they know, right?

 

DODGE DUCK DIP DIVE AND DODGE!

oddjob's picture

In reality the chances of somebody commenting, and then you finding, reading and responding to that same comment all within the same minute are slim, but congrats you did it.

quasimodo's picture

Rest assured, another troll who is very well adapt at hitting the refresh button between jerking off to the skin flick on the other screen.

 

BoredRoom's picture

SELL SELL SELL SHEEPLE....AS JP MORGAN BUYS BUYS BUYS!!!!!

Ding(BAT) ding(BAT) ding(BAT)!

the grateful unemployed's picture

i call that bad charting, h & S formations tend to occur in the context of the trend, which is lower, and at tops not bottoms. that much said $12 seems to be a likely expansion of the channel, silver has already had its crude oil moment. but for my money i want so say there has never been a bull market in gold and silver, sure there have been some parabolic rises, which are usually followed by long BEAR markets, but never a BULL market of any duration. and when it happens no one is therefore going to believe it is happening.

Motasaurus's picture

Please, please, PLEASE let silver drop to $12. I can easily afford those prices, even with my "too bad you live in Australia" premiums that I have to pay.

Silver_K-9's picture

Seriosly man... I moved here from LA a few months ago and the Premiums are ridiculous...

FlacoGee's picture

I'll sell you some 3 year options.

I will sell you all the silver you want at $12 per ounce in 3 years time.

Warning:  I fully expect silver to go to $6 in that time frame...

 

Agstacker's picture

But Twitter will be around $120, right?

Fred Hayek's picture

Steve St. Angelo, the guy who runs the SRS Rocco Report site, looked at 12 of the largest primary silver miners and determined that the average of their break even costs for producing an ounce of silver was at least $19 per ounce.

If you buy silver at $19 per ounce, they don't make any money.

The refiners don't make any money.

The bullion dealers don't make any money.

But you think the actual price will go to $6 per ounce.

Riiiiiiiiiight.

Fahque Imuhnutjahb's picture

I'll make you a sweet deal on a unicorn that comes with a leprechaun trainer/jockey.  Just hola for the terms.

lunaticfringe's picture

Send me your contract and address now!!

Dickweed Wang's picture

I fully expect silver to go to $6 in that time frame...

BULLSHIT!  In your dreams . . . . .

neidermeyer's picture

I neither agree or disagree with $6 Silver , In the great depression actual cash shortages distorted markets, barter was very common... My family lived in NYC and had steady jobs so they survived easily... My favorite depression quote was "The finest steak was a nickel a pound but nobody had any nickels." ... my father bought a 1 year old Buick convertible for $50 in 1938 ... weird stuff happens ,, a dollar today , even after inflation/deflation may be worth more or less in someones hand than the numbers would indicate.