Wednesday, March 16, 2011

03.16.2011




Silver breaks even while stocks get hammered!

The previous resistance area was roughly thirty-four fiat debt notes and today support is roughly thirty-four fiat debt notes. The market remains neutral over the last couple days in its primary intermediate trend of lower (last week or so) within' the primary trend of higher (long term). Breaking the lower band should give us a test in the $32.50 area and the upper band would be a test back above $36.50 of previous resistance. I used the word fiat to remind people that the price in which you are accustomed to with silver is that in fiat dollars which is best summarized as in money not backed by any real asset(s). The word fiat is an adjective which is used to describe a noun and should only be used when the description is needed for the reader or listener. It would be very pointless to say something like "I am going to run some wet water for the bathtub" with the word wet being the adjective. This is because this person should know that the water is wet and thus it is not needed. If I state a line like "Would you like a red apple?" with the word red being an adjective then that would make sense because it could be a green apple. The explanation for the word red makes sense. I know a lot of the people whom come to this blog know the currency is fiat and backed by nothing and that I am really more than anything just preaching to the choir but because there is new people coming aboard every day as well as not many humans in general understanding currency I feel its necessary. For if you avoid or not use an adjective that is needed than people will never know such a thing and when I was growing up I had no idea that our currency was backed by nothing, but I always wanted to find out. I found out over three years ago as the internet truth movement was starting to blow in full force and I realized the reason that the powers that be whom controlled the media for years intensionally missed this adjective was so that they could keep me dumbfounded and ignorant. I was for a while, but I am not anymore. Therefore I will not be shaken out of any sell offs unless there is good logical reason.


Short term the market is trading within' the fibonacci range which puts it level to neutral trying to find direction. The move earlier today where the market went above $35.00 and was not able to find support in the $34.50 area which would qualify this breakout to be a failed move. Often times when a failed move happens a fast move will occur in the opposite direction and the move thus far has not been big enough to be a fast move. Some people might claim the only reason that silver sold off from this level was because the stock market was losing over 200 dow points in a few moments. That maybe true, but at the same point the stock market could very easily continue it's down trend and silver to follow suit and thus completing the fast move lower. Finally if this fast move DOES NOT HAPPEN, then that would be a failure for it not to. Therefore if the $34.00 area can successfully hold then this could either result in the continuation of the sideways trend in between the key fiboancci levels or the big break higher. The long term trend has clearly stated that $50 per ounce test should be on the horizon and these moves where silver goes down 10-20% means absolutely nothing to destroy this trend and rather that of a correction on its journey northbound.



If you look at any main market it is very easy to notice a common thread. This thread is that some where in the summer of 2010 the markets bottomed. Whether this be the Silver bottom at $16.00 per ounce or whether it be the Dow Jones, Crude Oil, the price of cotton or anything else. All the markets are now topping together and we are seeing selling across the board. As I am typing this on the afternoon of March the sixteenth the Dow Jones is down 210 points for the day and silver is only up six cents or down eighty cents (over two percent) in around three hours of time. Overall Silver is holding up very well and the stats presented within' the image on the screen shows what the approximate lows and highs for these markets are and where they were trading around 2pm EST on this date. Silver has only given back 11.8% of its gains over this period of time and only Heating Oil can say that is has given back less. There are more other markets (yes I know this), but I wanted to track ones that Finviz covers that are big enough market. I missed out many other ones that have dropped more than one quarter of the gains over the last nine months or so. What this tells me is that this move down from close $37 per ounce in silver which is now testing the $34 level is only a dip and that silver is one of the strongest investment classes there is because of how well it is holding this. I still wonder what would happen if the Dow Jones crashes in nominal terms (this is a big if) what will happen to gold and silver. Will they find ways of holding their own, or will they sell of very massive? A pullback down to the $31/$32 area would be healthy and not make the physical versus paper silver market have that great of a disconnect. However, any moves that go well below the $30 level should cause such a case. The reason I say it is a big if for the markets to crash (lose over 35%) is because of inflation and printed money. When we had the crash of 2008 and the move that seen silver go from $20 to $9 in a few weeks, dealers were hard pressed to lower their prices that much. Many of them knew that the selling was not valid for the real supply and demand properties and thus many dealers were reluctant to reduce prices that much. On the way back up as Silver was back in the $18 area, I was able to buy nice generic silver for $22 and maples for $24 and thus a little over spot. Today the maples sell for $42 if the dealers even have any, but if we have a move back to $18 on the charts would I expect the dealers to sell generic for $22 and maples for $24? I doubt it and that is why the disconnect would happen.

2 comments:

  1. What's bugging me most about this market downturn is that it's become clear that the US dollar will again be the "safety trade" should we have a massive correction. For awhile I was starting to believe Gold/Silver would be the new safety trade this time around... but no! The market can't get enough of those paper dollars! Well I didn't understand it in 2008 and I don't get it now, but I won't argue with the market. HZD here we go!

    Btw, awesome site keep up the great work!

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  2. Gold/silver is still relatively unknown to the market. Until the general media starts talking about it - thats when we will see the massive gains.

    At the moment most people have no idea whats going on with the market and the USD.

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