Wednesday, April 13, 2011

04.13.2011



Update 11:30pm EDT


The market is holding up well and its making a nice pattern of higher lows as it is battling well with the key resistance level at $40.75 to $40.80 level. Watch out for a nice move to the upside. There is some fibonacci resistance around $41.12 if we can make another run higher. What would be ideal is to make a move to the $41.10 area and come back and find support at $40.80 where previous resistance can be support. Market's don't always trade that easy but often times they do. For now, I like how the market has used the one day average as lift off support on this chart. Have a good night or day (whenever or wherever you are) and thanks for stopping by the blog. Enjoy some other posts down below. Any image you see on this page can be enlarged by clicking on them.



Comparing 1979/1980 again with today


When I was first looking at this chart earlier today I was thinking of two roller coasters. One of which is that adrenalin rush we get that is so spectacular that it will bring memories one can savor for life. The movements were massive as it took around five weeks for it to break it's barrier to $40 and well over five months to get past $32 (let alone $40 or $50). Bottom line is the movements we are having right now are very much the opposite of wild which is tame. The move where Silver went from $42 below $40 in a few hours would be laughed at for the 1979 and 1980 traders who seen the wild volatility. What I get most out of this is the reason for the tame moves today is because when Silver was moving to $50 back then it was going wild as it entered a top. This is normal topping action for any kind of chart that goes sky high. We are not sky high right now and there will be no need for me to even consider a longterm high until at least (key word at least) the future movements can be in the same league as 1980. We are in the minor leagues right now as of April 13, 2011.




My Comment on the $25 Silver News!


I don't think we will see much of a serious retracement until it has gone to the moon as some people like to quote. The current gains achieving over 140% are very light in my opinion and I am not saying this because I am a silver bug. I am only a temp silver bug because I am a math bug more than anything. At some point I will be very bearish on silver, but that time is not now. The price of silver on a mathematical level tells me this might be one of the greatest investments in the history of the world and thus it's been my choice for top investment. You can say I have grown to love it over the years.

Many people see this gain over the last nine months to be up way too much and by using the math strategies I like it seems we are only getting close to being up way too much as the $48.36 level which the long term fibonacci has confirmed a breakout test on two different occasions seems extremely likely to occur this spring or early summer.

The previous longterm range was between $8.00 and $20.00 for a 150% bottom to top move. 150% again from twenty takes us to that significant fifty dollar level. The length of the rally to get nicely above 100% only occurred in a few months which is not normal and this should give alerts for something brewing pretty fast. You could be living in a cave and have access to the silver charts and realizing somethings going on this world with these solid up moves. Because this is going really fast this tells me we are entering such massive levels that it might be best advised to buckle your seat belts.

If you compare 70s low/high levels with todays you can see that the prices have been suppressed for some time. The low back in the 70s was in the early part of the decade at $1.25 and the low from this break was $3.97 at the end of 2001. Therefore my question would be "Is it safe to say that during the last three decades of the 20th century inflation was 217.6%?" (3.97/1.25) I know for certain it is easily much greater than that and thus the only factor on this debate is only leading to how much greater it is above 200%. CPI says from 1971 to 2001 has 337% gains and if we go by that level and by using this standard we are the $9.27 silver using the 1970s levels. If we were to look back in time to the 70s, it seems as if fair value was over $20.00 per ounce. As Mike Maloney mentioned in his book that when we went to large levels at the end of the 70s bull market we had a chance to back the currency by gold and silver. Instead they choose not to and decided on raising interest locking higher debts and thus went on manipulating the precious metals. If $20.00 was fair for 1979 and we use a 337% rate increase on this number for inflation we come with $87 as fair value. When you add on that 337% is an incorrect rate from 2001 to 1971 with the CPI numbers being more a CP-LIE as well as variables for higher prices on the supply versus demand curve the fair value comes much greater than one hundred dollars per ounce.

If we use ShadowStats we can come up with around 650% inflation and this suggests that we would be a little over $5.00 based on the 70s levels and the fair value being over $150.00. It is not to fair to compare the 2001 lows with the 1971 lows because it seems more evident that it was a fair bigger bargain in 2001 than it was in 1971. For The Silver price at $4.00 in 2011 is like being able to buy silver in 1971 at fifty cents maybe.

The breakout patterns within' the charts are looking very close to signify that we are in line with the 1970s as far as price action is concerned which can give us guidelines to previous technical direction. We know for certain that a move of 700% in a year is possible because it happened before. I've heard all the stories from people about "The Hunts" and how they cornered the market trying to tell us that the move was not real. The price was real and the market stayed above $30 for many straight days and weeks and these moves can only happen when there are something big to trigger such an event. When I ask myself if there is anything big enough to trigger this again I'll chuckle for a little bit and only have to consider millions and millions of people waking up to how currency is created can be such an event. The mayan calendar co-incidentally is at a point in time where changes are to occur quick and fast that would take us to a new world and what will not happen if that is correct is the same old antics we have endured for many decades.

However with all this being said, $25 is possible. I think this whole option put deal is nothing more than a scare tactic of lies like the 1980-82 Hunt Brothers deal. They put out one million dollars (Oh no, its hard to mine those digital numbers, LOL) and place it on the option and then they want to make investors switch their mindset from bullish to bearish. Meanwhile as the market goes lower to 30s (if it does) slowly but surely these big game players will sell portions of their options for profits. People will buy it for 40 cents a share and they will sell it after paying around a dime for it. The problem with $25 silver would be a massive disconnect in the physical market that would crush the comex and because of this I would venture there is a good chance will never go under $30 again. I expect a big move to happen where silver will lose over 50% and this could be from $140 to $70 or $700 to $250. I don't know, but if the price goes to $25 it will not be there long as long as the currency keeps getting debased. It's easier to bet on the long side than the short side on bull markets and I personally want nothing to do with making any decent size wagers yet for silver to go lower. If others choose to short silver through speculation or exit core positions based on price action then that is their choice and I would not make that one.

4 comments:

  1. Has anyone thought maybe this is because they see they see the end to the SLV? Maybe they know some big news is going to come out that the SLV doesn't have real silver and the paper starts defaulting.

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  2. Its sounds interesting the way the ppls sentiments play in such a big market .We are bullish on silver. How to protect our dounside incase of a 30$ or 25$ price ? Please advise !! I bought futures @ 42.00 US$ !

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  3. Thanks for an interesting read. And I agree, for silver to fall below $30 it currently would have to correct by 25%, highly unlikely. It appears supply is tight and investment demand is simply too strong for the dips to be allowed to cascade down the chart.

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