Guest Post: Silver: Ready to Pop or Drop?
Submitted by FMX Connect
Silver: Ready to Pop or Drop?
Volatility is About to Expand
On several occasions in the past, we’ve alerted readers to potentially big moves in markets using our Trend-Vol alerts, Precious Metals being the chief focus. Trend-Vol is an early warning system that focuses on several factors to predict movement. Those factors include: historical and implied volatilities, skewness and Bollinger Band width. This momentum indicator warns when volatility is about to increase and directional moves can be large, quick, and profitable, even after the original trigger goes off.
Simply put, and stated here often; volatility breathes. We believe that it is about to exhale soon in the Precious Metals, particularly Silver, but Gold is on the radar as well. What we do not know is in which direction the markets will head…. yet.
A Silver Trend-Vol Retrospective
We can show some historical behavior in Silver when the signal triggers using the chart above.
1. Here Silver gave a mid-day signal that you might have bought and held with a stop at the top band line which also coincided with the 100 SMA. You would have been rewarded with at least $1.50 had you knew where to place trailing protective stops. This even if you only bought the close of the break out day and held for 3 days.
2. This was a quick 2 day trade that had you again bought the close of a very strong day, you’d have had an opportunity to sell $1.00 to $2.00 higher the next day.
3. This is where the CME margin raises just proved to be too much for the market to bear. If you sold the initial day’s close despite it being over a $3.00 down day, you’d have still had $5.00 left in the move the next day, and if you were brave with overnight orders, another $3.00+ the next.
To be fair, as in every system, devils lurk in the details. Like, how to determine what an entry point is and what is a fake out; Where to put your initial stop-loss and how to trail-stop winners. These vary depending on the trader’s style bankroll and VaR management. This may help:
- Risk 1 to make 2-3 on your trades.
- Use daily low/highs and the Bollinger Band line for trail-stops
- The lowest risk signals come at end of day, midday signals may reverse hard.
- Conversely, waiting for end of day to confirm a signal, often misses a good chunk of the move.
- The best daily alerts often coincide with a 60 minute B-Band widening from a tight position.
Get Ready
Silver and to a lesser extent Gold are poised to move. You can make a case for either direction. Today’s action was very constructive for commodities in general. But Gold and Silver were the weak performers.
The charts show bear-flags, but stochs are in the process of reversing. Fact is, we can see what we want based on our own bias. What we are much more confident in is that in the next week, the Precious Metals will have a move of their own.
If you are in the camp that Europe must print money to solve its problems, despite the evidence that Germany is getting its way for now then put on your buying shoes. Ditto if you see Helicopter Ben cranking out more greenbacks in response to a Euro debasing or political pressures from our Keynesian overlords.
If you believe that we are on a deflationary spiral, and that there simply isn’t enough money to buy anything at current inflated prices, and there will be no QE3 and that Europe will have enough (levered) money to solve their Grecian woes then get ready to sell Mortimer. Just remember that straddles don’t care which way the market goes.
Last week we told people to keep their powder dry. Now it is time to load’em up. We’ll update you on a direction when we see it in the markets. – Good Luck.
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Yes, any way it will be ok.
If it drops, BUY MORE!!
Pointless article!
Agreed.
I've been watching/tracking the inventory of 100oz silver bars at the major dealers for the last couple of weeks:
http://www.pmbug.com/forum/f3/physical-supplies-100oz-bars-drying-up-13/
Don't really care what happens with the paper futures market. The physical market is indicating growing scarcity.
from where, the pro pm websites? the ones that always preface the shortage argument with, "i just finished speaking with a big hong kong bullion dealer who said...."
No. I'm talking about the dealers like tulving, apmex, provident metals, etc. Many of the major dealers disclose inventory information.
so they sold some inventory down and will restock. So what?
Perhaps. Maybe it's just me but watching major dealers report no inventory for weeks at a time seems possibly significant.
I'm long physical silver, but I don't think I'd read all that much into what you're seeing there.
The only indication that I see that they're wanting more inventory is that APMEX is paying a couple of bucks above spot for eagles- but that in and of itself is not screaming "massive shortage" to me.
The way I see it, they've got an interest in not selling out their entire stock when the price is low. It's not like metal goes bad sitting in the vault. But then again, it has been a pretty consistant rumor- for my part, I've been seeing desirable silver get a little more hard to come by (ASEs and pre-65 dollars,) but there is still plenty of oddball metal around- stuff like commemorative coins and smaller pre-65 change.
Shortages may come, but I don't think they're here yet.
I am the president of a precious metals wholesaler of an equal size with Tulving (whose domain name seems to have expired). I can tell you that the massive drop in the silver price caused our order volume to spike up about 500% for about 1 week.
Since then, however, order volume has dropped off a cliff... and this has been industry-wide. A great deal of the physically available silver inventory for immediate delivery was consumed during that week-long buying binge in the $28-$31 range. Most mints are a few weeks behind, but the government mints are keeping regular allocations to all distributors, i.e.: US Mint, Royal Canadian Mint, etc.
If people weren't so spooked about buying more silver right now, the shortages would be *much* more pronounced. If silver moves more than $2-$3 in either direction I would expect order volumes to spike up significantly once more and this will exascerbate the existing strain on the inventory.
Right now we have over 40,000 ounces of US Silver Eagles availabe for immediate shipment for $2.75 over REAL spot on 500 oz. or more. PM me or email me if you want credentials, at cdolson [at| treasureislandcoins [dot| com ... if you want, we're at 701-282-4747.
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The retail market tells a story however, I believe that the real physical (true price) story is to be found in the bulk physical market. There are more than a few indications and anecdotes that this market is extremely tight with prices for bulk delivery silver in size substantially above the retail market prices.
These statistics are from the London ponzi silver leasing market, however they provide some information in terms of silver available to hold for a while. A dropping SIFO gives indication of market tightening.
http://www.lbma.org.uk/pages/?page_id=56&title=silver_forwards&show=2011
ive used gainesville coins, and the only time there was a temporary shortage was during the mania when silver was at 49. you could call now and get as much as you want...
Gainesville is reporting that they are out of stock on all 100oz silver bars.
Gainesville coins has had my $745.00 dollars for three weeks and are not sending my order until th 31 st. Which means they will have stolen the interest on my money for a month. Fuck gainesville coins
They suck and I will never order from them again.
I have not purchased from Gainesville Coins yet but a few of my friends do and they seem to really like dealing with them. I looked on their site and earlier this month and they did have some stated delays on products so I chose to wait until all items were back in stock. I don't think you can get mad at them though if they stated there would be delays upfront. If you didn't like it, then you shouldn't have purchased. Just my 2 cents
Also with Tulving, I have heard some pretty nasty things about this company. He filed chapter 7 liquidation back in the early 90's. I don't care what his prices are, I wouldn't trust this person! I saw this article the other day and would never purchase from him: http://articles.latimes.com/1991-01-16/business/fi-266_1_coin-dealers
my buddy bought from g'ville.....3 WEEKS late on delivery AND the biggest bunch of BS you ever heard on the phone for those 3 weeks.....really....i don't have a dog in this race.
from where, the pro pm websites
no...you go to tulving.com...
@ bernorange
Tulving a couple of weeks (or so) ago advertised they had 500,000 oz of silver in stock. When I checked Saturday, they only advertised 400,000 oz in stock...
Also, one of the coin shops where I buy gold had little inventory (no AGEs).
DoChen, would you mind contacting me via the contact form on pmbug.com? I would like to talk to you about this privately if you don't mind.
Just did! But, I am not an expert on PMs, I follow them closely, but no expert.
Privately is OK.
Thanks. Sent you a response.
I would like to talk to you about this privately
but i wanna hear!
Damn right, when silver was around 25 dollars an ounce I was able to go on E-Bay and buy one ounce silver eagles for 27 dollars a piece and two silver eagles for 52 dollars + shipping. When silver was last 27 dollars or so, silver was upwards of 39 dollars an ounce on E-Bay. For the last couple weeks silver has been around 31 dollars an ounce. Unless you buy 10-100 oz bars or you buy rolls of rounds or coins you are paying a minimum of 37 dollars an ounce once you factor in shipping and handling fees. Even after silver went from 50 an ounce to 34 in just a few short weeks silver prices were still around 40 an ounce for quite some time. So yes, physical silver is scarce.
The supplier (a broker) I've been dealing with for years has a 35 day delay on virtually all silver. They've had delays in the past but nothing approaching 35 days.
As far as the price you are paying.. $37 when spot is around $30? You need to shop around my friend! As we speak my supplier has 100 oz JM bars for $3272 shipped to your door plus a $50 small order fee for orders under 500 ounces. 10 oz bars are almost identical in price. Rounds are a buck or so more.
if it doesn' pop with gold revaluation, then it will pop with inflation next year because i know it cost more than 30 dollars to get it out of the ground
It might go up or it might go down. Absolutely profound!
How much is this guy paid for these insights?
He is at least as smart as dumbo trader...
Neither of them gives a target.. thats a good start.
but to be fair to the article I think we are appraoaching an interesting move.
My (guess), as thats all it is. First the metals get pole-axed as Greece goes down.
then bond's euro bank runs etc, sell everything not bolted down if you have margin out. Panic & riots in the southern EU
Then we head into the total and final "Crack up boom" as the system heads off the cliff, and confidence is finally smashed. (QE = ?)
At this stage it will be "Tangible assets only" or you will be screwed.
But what the heck would I know?
I keep waiting for Dumbo trader to give me some more "Hot stock tips"
I actually enjoyed this post as my thesis is recognized: Euro talks fail; big sell-off on sentiment if not earnings; gold sells off to cover margin calls incurred in this run up; gold bottoms with a sharp move to 1485 or so; turns around on a dime with smart buyers....
Thus the post is useful to me as confirmation of a planned trade.
Thanks Guest Poster.
i.
He said he would let us know when the direction is evident. You can use the info then and make a call one way or the other. Or since this blog is free you can decide not to come to this site at all and make your own mind up. Lets not bite the hand that feeds us.....
Being ahead of not behind the move is what pays. The only useful point of this post is saying there will be great volatility. That's not much news.
Now that's reassuring.
It is a golden opportunity to have a silver lining, I guess.
MANY SAY SILVER WILL BE HEADING LOWER, BUT THE FUNDAMENTALS POINT TO HIGHER PRICES
1) COT Commercial Net Short percentage lowest since 2003....even lower than when silver was $8.90 in OCT 2008.
2) Largest Commerical Short Position against the Dollar I have seen in years. 59,000 Commercial Shorts compared to 9,000 Commerical Longs
3) Wholesale shortage is taking place when industrial buyers have to wait for delivery after buying at $30 an ounce
4) There is no GLOBAL SURPLUS of Silver....that's pure bunk....and there will be no surplus in 2012 or there after.
5) GFMS stated global slver supply would increase 7.4% to over 790 million oz in 2011 compared to 735 mil oz in 2010. Mexico's silver production was at 60.4 mil JAN-JUN, while last year it hit a total of 128.4. Peru's silver production is down 9% JAN-AUG. BHP Billiton just came out with their Q3 and they are down 25% YOY for the Q3 and down 20% for the first 9 months of 2011. Chile's copper production is down 4.3% in the first 8 months so you can figure their silver is down about the same percentage. Finally, the USA is down 10% JAN-JUL. 2011 will show a DROP not an INCREASE in global silver production
There is a great deal of MISINFORMATION in the media about gold and silver. Without the constant manipulation of gold, silver, oil and US Treasuries, the DOLLAR WOULD BE DEAD.
You could also add the recent passage position limits by the CFTC, ongoing lawsuits against JPM, ongoing investigation by CFTC into Silver manipulation all leaning on the on the side of bullish. Also remember CME Silver margin requirements are higher than years ago with Silver holding ground around $32 per oz which by the way is still up for the year.
The position limits only go into effect for the current month each month, and that doesn't start for 60 days. Anybody can still short to infinity on future months to suppress the current price. They won't be ready to implement position limits for all months until after the dollar is dead and they don't need to suppress the metals. Silver margin requirements still have a long way to go before they reach 100%. This vote is all for show unless Chilton really does speak out.
@SRSrocco
Good points for why silver should eventually go higher, but it's a manipulated market and it can go lower in the meantime. It probably will only because they are desperate to convince people to stay away from it. At the current rate of depletion there will be no more above ground available silver at current prices within 6 months.
Bring back Turd Ferguson. His picks are probably no better but the big yellow cowboy hat he wears he probably takes a dump in it.
That cute little Canadian reporter was right. Gold isn't backed by anything.. except faith..
Sometimes I wonder what's backed that cute little Canadian reporter. Got a smoke, eh?
and the 'cme'
Rafter's Cliff Notes:
Silver may rise, or fall. Gold, the same.
difficult to read charts when the cme can still raise margins but SI looks like a pennant a la early may...if the pattern repeats then may get a run to 36ish followed by a hike but that game can only go on for so long...still wary about pm sell off that follows equities...be ready to turn on a (silver) dime...devil's metal after all
silver and gold are way over-priced.
Unless you think there is something nefarious about oil being up $6 since Thursday - > 7%
oil is cheap. gold and silver are damn near worthless.
silver is useful
it was once used for coins, silverware, photography, etc.. Now it is a useless relic.
silver is useful - all sorts of uses like photgraphic film and paper
oops
ok, ah, gold is very shiny and i like shiny things - there!
i surely do love silver
i surely do love gold
they'll be as they are trusted now
and since the days of old
http://thepeakoilpoet.blogspot.com/2011/08/i-surely-do-love-silver.html
silver is like, well, doomed.
a bazillian disempowered righteous types bought it up big when it was way over its value - when all of those people suddenly. en mass, decide they've been duped (by themselves and otherrs playing to their foolishness), the price will fall to like $12
nothing is sure
except the foolishness of people
pop
You could be right...I've been thinking along these lines. If/when they physical buyers that bought on the way to 50 dump nearly all at one, price could easily half.
That'll be the time to buy.
I could be wrong (often I am), but it does make sense.
I doubt very much the people that went to the hassle of buying physical will sell. I know I won't. I didn't buy as a trade or investment. I bought because at soem stage in the next 2 years, probably in next 6 months, the whole world of paper is going to burn.
There's 7 billion oz of Au above ground, 1 billion of AG. Every year they mine less Ag than demand, scrap has to make up the difference. Most of the primary silver mines are played out. The USGS says we have a decade or two of silver left. Then what, for all of those high tech industrial applications? Platinum or palladium? Silver will 'run out' long before oil does. That depletion is supposed to buoy the price of oil, but silver's going to crash?
The price is only as low as it is because no one can slug it out with the big boys. The run up to $49 was probably them sitting out for a bit. We know what the sentiment is, and it's driven by a financial picture that deteriorates daily.
Really, well here is one for you, Silver is used in cell phone manufacturing. Did you know that or is that a dying business?
that's all you've got? cell phones? let's see, silver is so rare and useful that they put it in disposable cell phones destined for the landfill? They couldn't make cell phones without a smidge of gold and silver?
Silver and Gold provide the ONLY counterbalance to fiat currency printing gone wild.
Gold is the ultimate store of wealth/value. Silver, as it is also an industrial commodity, isn't taken seriously as a pure bread currency. I own both but can tell you that I'd take gold all day long over silver as the next global currency. Silver is recycled, used in phones, etc. etc.
Gold is king of the hill. And besides, you'd only use gold for your party tooth, right?!
2010 industrial demand was 487 million oz. Most of that is used in amounts too small to recover. Most scrap comes from old coins and antiques, and accounted for 215 million oz in 2010, about 1/5 of total demand.
http://www.silverinstitute.org/supply_demand.php
Quaid... open your mind... silver has over 10,000 industrial applications, second only to oil at roughly 30,000. Above ground available silver is estimated at 300 million ounces by MONEX, the lowest on Earth in the last 700 years, and half as much as we started the year with. Silver's molecular weight causes it to exist primarily at the surface of the Earth's crust and therefore is becoming increasingly difficult and expensive to mine.
Silver is the best conductor of electricity, ever, it is the best thermal conductor, ever, it is the most reflective metal, ever, it cannot be produced except by a red giant going supernova unlike oil which isn't even fully understood as to how it is created, but it is known to have come from organic material and therefore there is a way to replicate it given the proper understanding.
As for why it's wasted in landfills, the price is suppressed, it's not profitable to recover it. Money rules all, and silver is what they manipulate to ensure fiat is what you place your value in. Gold is too large of a market to manipulate, but the tiny $30 billion silver market is a snap.
silver is so rare and useful that they put it in disposable cell phones destined for the landfill?
yes, because "they" are idiots. it is all about profit, you know, nothing else.
every bunkerbuster bomb sends a monster box of silver to silver heaven.
No, Buzzsaw.
That's not all it's good for.
Whatever you like to believe about the fair value, silver is quite a lot more useful that you probably think- it's just used in relatively small amounts, so there isn't a thriving scrap industry for the stuff.
It's the most conductive metal, so it's used for any application where tiny traces with minimal resistance is required. It's used for any appliance, the abovemention cell phones included, to create printed traces for circuit boards that use web switches or require a degree of flexability. They use it by impregnating ink with silver particles, which makes it nearly impossible to recover- and the quantities are miniscule.
Less miniscule are the amounts used in missiles. The low resistance is a must for weapons systems.
It's also antibacterial, which is why it used to be used for flatware and things like tea sets. But that's not the primary value now- silver solder for medical instruments is. Because of the nature of the medical industry, it's extremely valuable for a company to be able to replace worn parts rather than an entire assembly- and that often means soldering the components together. That solder has to be silver, not much else will work properly- and that actually often does use a meaningful amount of silver, which is almost never reclaimed when parts are replaced. This is also the case with things like public water fountains, where the use of silver in the assemblies helps prevent massive viral and bacterial outbreaks.
And, it is the only way that you can make your own anti-viral and anti-bacterial agents at home. Yes, it will turn your skin blue, especially around the eyes and other thin areas, but given a choice between an aqua hue and death- or risking the complications of trying to culture and refine your own antibiotics from a spore print (assuming you can even get one,) that seems like a small price to pay.
That isn't to say that the bottom can't fall out of the price- but it's not quite so useless as you may think.
Many many kilograms in each cruise missile...
NOW YOU'RE TALKING!!!
Flat screens, solar panels, medical, cars, Many uses, in fact 55% of silver each year is used up and gone from production.
PI- the silver is not gone. It is just stored in different form. Photo stuff is recycled all the time.
True, but in most uses it is in a form that is uneconomical to recover, so it is "gone" for all practical purposes.
How long before they start recovering it from the poopy-ponds?
Colloidal Ag and AuShlager, Bitchez!
Buzzsaw, I've been here for a few months, and your avatar and posts have always made me retch like I just drank soured OJ.
You've gone too far this time- why do you post here...wait, I just realized- YOU'RE A FUCKING TROLL! I get it now!
I love the fact that your posts get junked 99% of the time, since you have nothing to contribute to the conversation. How's that job at Goldman Sucks as their new social media specialist working out for ya?
Which in turn is used to "liberate" more of it from their barbaric occupiers..
First come the missiles then come the CATs..
The Chinese buy it by the ton, grind it up and spray it into the clouds for rain, never to be seen again.
technically, it is a dying business.
http://quwave.net/EMF-Pollution.html
Haha. You really have a VERY sarcastic sense of humor don't ya?
If not, silver is no relic. You should try sitting on it sometime after a long hard day at work. Feels mighty nice next to a tight anus.
how the hell would you know what a tight anus feels like?
Your avatar gives us all a good idea of what a loose one looks like!
+1
Too much tequila and acid is bad for you buzz.
Sorry for the bad news bloke.
his avatar suggests that there's a magic button somewhere
all we need is a (traditional, macho, vocab challenged) hero to push it and not only will we all be saved but we'll have a whole new world to rape and pilliage
there is a button - but it's the button that will wipe out 90% of city life - same net result kindof except that gold and silver will indeed become relatively plentiful and cheap
pop
lol!! great exchange!
You mother was asked how did that feel......after giving birth to an ass clown,she soon changed her name to Lucy.
yea, but when your big brother is gold your in pretty good company - eh ?
That's what we will say about the USD pretty soon.
if i were you i would sell.
Buzzsaw, I'm going to give you the benefit of the doubt and assume that you're just trying to be contentious, but really, this post is a tired rehash of anti-silver rants from back when digital photography was just starting to take off. Lots of people proclaimed silver "useless" at that time, (when it was under $10/oz), and the their arguments seemed at least plausible.
Now? The useless relic is finding new applications practically every day (e.g. photovoltaics, antibiotics), and price is a multiple of what it was. I hope your trading decisions aren't based on your fact-free opinions.
Too true. The antibiotic properties of silver alone make it more industrially valuable than it was 20 years ago. By 2025 every surface in a hospital, every "sterile" piece of clothing, every medical instrument, etc. will be nano-coated/impregnated with silver, and soon after so will almost all household surfaces.
The effect that such action will have on our already medically over sanitized systems is debatable, but at least in sterile environments it will be useful.
(as an aside, I think the prevalence of auto-immune disorders in kids- asthma, allergies, etc. -is directly correlated with our "over-sanitization" of their environment. Let them eat dirt, and don't give them shots every time they get a cold or cut themselves! Were breeding a culture of wimpy kids!)
silver? You on crack? Silver is amazingly useful and has more industrial usage than it does for all of the rest of those combined.
Buzz must be in a Down Rank contest
these same type of dumb fuk echo chamber circle jerkers were all screaming "BOND CRASH!" right along with Bill Gross last spring. I make money, and I stand by my record. Yeah, I'm a troll, but I will enjoy watching this bunch of self assured smug bugs lose their shirts in the coming months when PMs go into the toilet.
I won't lose anything if PMs go into the toilet. In fact, I'll actually own more!
BTW - But maybe, silver might go into the toilet if it is snuggled up against a tight anus and forgotten for awhile.
Buzz, I can understand your desperation for a little schadenfreude. I mean if you've been bearish on silver and gold the last two years and twelve weeks; IE since you opened your ZH acct. Ouch.
Especially if that is the record (loss) you want to be standing by...
you think paper fed reserve notes have intrinsic value? glad your here, you help make me feel smart!
Of course oil is up $6. Iraq is now under sharia law and Hillary Clinton is on a giggling high on Gadaffi's death. The people at the top of US government are behaving as if they are playing some Nintendo war game where they can just halt the outcome by turning off the switch. Their arrogance and manipulation is frightening.