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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/

 

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Thu, 04/30/2015 - 11:41 | 6047057 Al Huxley
Al Huxley's picture

Do you HAVE, in your possession, all the silver I want?  Because that of course is the beauty of options - if silver goes to 50, you just walk away from the trade.  How 'bout you just sell it to me now at 12 and we keep the derivatives out of it?

Thu, 04/30/2015 - 20:43 | 6048957 Agstacker
Agstacker's picture

Crickets from flaco...

Thu, 04/30/2015 - 11:52 | 6047096 Pareto
Pareto's picture

+100 Exactly what I was thinking.  If he doesn't have it - well then, STFU.  Cause its all fucking talk otherwise.

Thu, 04/30/2015 - 12:04 | 6047142 HenryHall
HenryHall's picture

What collateral would a commercial brokerage ask of someone proposing a three year short sale of silver?

Thu, 04/30/2015 - 10:37 | 6046835 kaiserhoff
kaiserhoff's picture

We love the COT report because it measures sentiment so good.

Enough said.

Thu, 04/30/2015 - 12:56 | 6047337 pupton
Thu, 04/30/2015 - 13:31 | 6046830 JohnGaltsChild
JohnGaltsChild's picture

Silver at 12 is only a strong indication that JP Morgan wants to buy.

Thu, 04/30/2015 - 10:29 | 6046815 DirkDiggler11
DirkDiggler11's picture

Food and ammo come first, followed by increasing the stacks slowly each and every month.

I know I will always need my storage food in the future and I can trade with ammo right now to get almost anything. Gold and silver, it's very hard to determine their "value" over any finite period of time, but I do know that value it has always been > Zero, more than I can say for fiat.

Fri, 05/01/2015 - 11:37 | 6047622 Pickleton
Pickleton's picture

" I can trade with ammo "

 

 

It boggles the mind that morons think trading AMMO, aka that which can be used to take everything from you, including your life, is a good idea in a life threatening situation where you're bartering.  Just stupid dude!  Please don't advertise it.

 

 

Thu, 04/30/2015 - 11:17 | 6046965 KnuckleDragger-X
KnuckleDragger-X's picture

Yep, basic survival comes first. Look around at the 1001 little thing you use daily/weekly/monthly and break them down into needs and wants, food, water, medical, ammo will have a high value if/when civilization hits the wall. I hold PM's not because they will be useful during the disaster, but because they will be useful later when its time to put society back together.....

Thu, 04/30/2015 - 12:47 | 6047299 Dickweed Wang
Dickweed Wang's picture

Yep, basic survival comes first. Look around at the 1001 little thing you use daily/weekly/monthly. . . . .

Don't laugh, but I see a time in the near future when the "just in time" delivery system for food and essentials breaks down and stuff like toilet paper becomes more valuable than gold, silver and ammo.  Who gives a hoot about gold and silver when you can't wipe your ass???

Thu, 04/30/2015 - 13:02 | 6047372 KnuckleDragger-X
KnuckleDragger-X's picture

You obviously don't know the joy of corn husks... :-)

Thu, 04/30/2015 - 15:14 | 6047856 Dickweed Wang
Dickweed Wang's picture

You obviously don't know the joy of corn husks... :-)

Yikes! I don't think my 'roids would appreciate that at all!

Thu, 04/30/2015 - 15:59 | 6048019 delacroix
delacroix's picture

colloidal silver can help with those

Thu, 04/30/2015 - 09:52 | 6046687 Thalamus
Thalamus's picture

How do you read charts with the administration manipulating prices. Ever since the 800 point Dow plunge in one day the fed/gov has massively manipulated everything

Thu, 04/30/2015 - 09:58 | 6046722 christiangustafson
christiangustafson's picture

Evidence, please.

Thu, 04/30/2015 - 13:24 | 6047462 lunaticfringe
lunaticfringe's picture

Evidence- the 1987 formation of the Presidents Working Group. The plunge protection team.

The banker controlled Congress that lifted all banker regulations by 1999.

No bankers ever went to jail in the greatest mortgage fraud ever.

The CFTC raised margin 5 times to stop the ascent of silver.

How much evidence do you need?

 

Thu, 04/30/2015 - 20:52 | 6048993 Deathrips
Deathrips's picture

I like your style dude.

 

I knew you were out there

 

RIPS

Thu, 04/30/2015 - 12:52 | 6047321 Dickweed Wang
Dickweed Wang's picture

Evidence, please.

That the markets and PM's are manipulated??? Are you serious or have you just lived in a cave in New Guinea for the last 50 years?

Thu, 04/30/2015 - 12:21 | 6047202 Bastiat
Bastiat's picture

Read today's zh article on the Swiss bank's position in foreign equity, for instance.

Thu, 04/30/2015 - 15:37 | 6047929 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Everybody using analysis based on a world that no longer exists, we used to have markets, investors, central banks. We've replaced CBs with highly-leveraged hedge funds that can "never" get a margin call. We've replaced markets with giant rigged casinos. And we've replaced investors with algos. "Invest" accordingly.

Thu, 04/30/2015 - 12:21 | 6047201 ParkAveFlasher
ParkAveFlasher's picture

There is support at $12, see?  I drew that line with a ruler.  Because it's straight...yeah, there is the support.

Fri, 05/01/2015 - 10:07 | 6050401 Clever Name
Clever Name's picture

No shit, that first chart is absolute bs. Pick two random points on the chart and draw a line and thats a 'long term trend'?

Thu, 04/30/2015 - 11:07 | 6046931 Thalamus
Thalamus's picture

The veil is thick for you. Stop your sycophantic drooling over people in power and you'll see clearly.

Thu, 04/30/2015 - 10:52 | 6046877 the grateful un...
the grateful unemployed's picture

nonsense, first the sentence and then the evidence, the Red Queen, Alice in Fed Land

 

Thu, 04/30/2015 - 09:50 | 6046666 christiangustafson
christiangustafson's picture

/GC gold has a similar head and shoulders with a neckline near the $1150 level, pointing to a test of $1000 later this year.

Once $1000 gold and $12 silver are breached, deflationary unwind takes metals much lower.

Yes, there will be a time when you should stack in earnest. 

Now is not that time. 

Be patient, you mooks.

Thu, 04/30/2015 - 19:48 | 6048792 Fred Hayek
Fred Hayek's picture

Silver lower than $12 per ounce?

In what way?  What does a supposed price mean if you can't purchase anything at it?  Only an idiot would think he's going to be able to buy silver at $12 an ounce.  What happened in 2008 when they manipulated/monkey hammered the official price down to $8 per ounce from $16 per ounce?  Every coin shop and bullion dealer started charging an $8 per ounce premium and you couldn't get anything delivered for a couple months!

Telling people to wait for <$12 per ounce silver before buying is either stupidity or mendacity.  Either way no one should listen to such moronic counsel. 

And what if you try to be Mr. Tricky, Mr. I'msosmartfortimingthemarketperfectly! and you end up not being able to buy the metal you want as a result of it?

Thu, 04/30/2015 - 13:25 | 6047471 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

"Once $1000 gold and $12 silver are breached, deflationary unwind takes metals much lower."    This may be true, but it's hard to imagine the prices staying there for a protracted period of time, unless we have a larger bout of de/dis-inflation.  Energy costs would have to take another big leg down, and wages would need to contract, and mining equipment & parts would need to contract-- or the miners would go tits up; unless they are significantly, long term hedged.  Also, these lower prices would be predicated on low political and economic volatility.  You may be right though, but my advice would be dollar cost averaging on self held physical, because at those prices China, India, Turkey etc... would probably increase their hoards, and at some point supply constraints should rear its' head.  Then the premium of non-paper silver should go up significantly.

Thu, 04/30/2015 - 13:46 | 6047532 Captain Debtcrash
Captain Debtcrash's picture

I hope so. This is the calculator I use that helps you to buy dips:

http://debtcrash.report/entry/debtcrash-metal-purchase-program

It's a free download.

Thu, 04/30/2015 - 13:52 | 6047554 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

Thanks.

Thu, 04/30/2015 - 12:24 | 6047208 BoredRoom
BoredRoom's picture

Silver much lower than $12?

 

I think we can all see why you had to throw in the Zionist jew Saul Alinsky Rules for Radicals 101 at the end.....it's really all you have to offer

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