Monday, December 6, 2010

Silver's "Double Tap" is a Strong Sell Signal

Silver broke to record highs again today, screaming up to another 30-year peak and above the $30.00 / oz mark.

This is where I am going to take the opportunity to hedge against potential losses in the physical holdings I have accumulated for the past 8 years, as well as a great trade setup.

As of this moment, gold has not confirmed silver's high which is a telling sign of massive exhaustion in this rally.  While gold bugs and silver bugs the world over are sure to be proclaiming "this is it!", there is a backdrop of unfettered optimism towards their "sure gains" that raises the warning flag.

  • A smattering of recent DSI readings on gold and silver above 90%
  • Waning internal momentum on each new push higher
  • Most demand increases for the metals have come from the "investment" (speculative) side of purchases versus more practical and sustainable levels of demand
  • China's recent approval of a sovereign wealth fund to invest specifically in gold and silver ETF's around the world
  • COMEX's reserve requirement hike (similar to 1980 in silver's major top)
There are plent of other factors to consider, including this:

For the uptrend starting in 2001, silver has met this resistance line on 3 previous occassions and suffered declines of at least 30%, and each decline has been larger in percentage terms.  Silver "double-tapped" this resistance line as it shot to new highs two weeks ago.

As a hedge against losses in my physical holdings (I will use the proceeds of this trade to purchase more physical in the future), I am short in the futures market at $29.92.  I have also opened up several options trades on the SLV ETF with April 2011 and June 2011 expirations.

Initial trade target is $20.00 after which I will close out 50% of my futures shorts and 50% of my options plays, and $14.50 or a terminal price pattern after which I will close out the remaining portions.  I will keep you updated on this trade as it plays out.

My stop is at $32.25 pending another small spike for a potential total loss of roughly 7.5%, with upside potential of 32%.

Best of luck out there.

Derek.

67 comments:

  1. Wow you aren't mincing words on this one. I agree with you that the speculative buyers are losing interest at this level quickly. Yet the whole silver story as its been held in a tight community for years is finally getting the attention of retail investors. They are now plowing into buying retail coins and the slv/etf. I guess what you're saying is that this is exactly what will burn out and stop quickly once price starts to head the other way. And they are weak hands on the stocks, etfs, and futures.

    Are you counting on any particular move in the dollar to coincide with this metals correction?

    Any money to be made shorting oil?

    The S&P will correct also yet to a smaller degree?

    Thanks for your analysis and actually laying your trades out there for all to see. This is a big call.

    Ed in Jersey

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  2. "... I have also opened up several options trades on the SLV ETF with April 2011 and June 2011 expirations......"

    Please qualify - Calls or puts? 'Sold' or 'Bought' Options.?

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  3. Derek,

    You have been such a bear in this market the past 6 months... you have missed the whole bull move and to post Silver has topped? Brother... where is the deflation you were calling out?

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  4. Derek has a very common failing. He is far from alone in his analysis. In a word it is a'timing' fault.

    I've done this myself, in spite of the fact I have read the words of warning from Jessie Livermore, one of the world's famous 'bears' of the past.

    This is being able to see what you belive is eventually inevitable, but not waiting until it appears before taking a position.

    In other words - do not try to preempt (outsmart) the market by wanting to be first in at the change of direction.

    Markets do not dive from top to bottom overnight. You will have time to make a few bucks, unless you watch it all the way, just becaise you missed the start, until its too late and say OK I will jump on when it turns and goes the other way and this time catch the beginning. That way you continually miss out.

    The market decline of the great deptression took years. That was, I admit, a real 'biggy'.
    And how long did the bull rise in the late 90's

    Besides causing you to lose money if you short it too soon, which could cause you to only just get yuour money back, if you are lucky, when it does turn. It also stops you from riding the trend it is in.

    My name is Newton, so I have an affinity with the man (not an ancester, he died childless) So I evolved my system which I call the Newton Principle of speculating and it is based on applying (as in adapting), as near as possible, Newton's laws of motion, particularly No1.

    Briefly this is that an object (individual stock, market, or market) in motion (active) stays in motion with the same speed and in the same direction (Trend line) unless acted upon by an unbalanced force(money flow).

    You don't need a deeper explanation, figure it out.

    Stick like glue with your friend - the trend.

    Don't think bear, or bull. Just follow the money.

    Now, if and when you start to feel that the market forces are changing, and you have stashed a little pile there are a number of ways to play it. Withdraw some of your money and let the other ride, or, if you are really nervous, get out and wait for the 'unbalanced force' to act and turn the market.

    Some indicators for a down turn from an up, are falling volume, failure to make new highs, lower highs and lower lows, breaking lines of resistance. For going from a down turn to an up, reverse those indicators.

    BUT DO NOT TRY TO GUESS THE POINT OF CHANGE, and move in. That is for idiots.

    Down markets tend to fall quicker, than up markets rise. This is based on Newton's law of gravity. (smile)

    That's all from me for a while, unless I asked to respond, maybe I'll find a couple of minutes.

    If you dismiss all I have written, no skin of my nose. I have helped to reinforce sound market strategy I should not forget, by writing it down, again, (and again,and again.)

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  5. Must apologise for all the typo errors. I go to the eye hospital tomorrow for the start of some surgery.

    No cynical comments please, unless you really can't hold one back. Good eyesight is very precious, we just take it for granted it will always be there.

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  6. Ray,

    Thanks for the wisdom - always appreciated. Sorry to hear that you need surgery, but if it is necessary, best of luck. Cataracts?

    So far Derek has nailed this one. Lets see what kind of follow through develops but he is well in the money and sentiment has shifted in his favor for now.
    having said that, momentum can shift back quickly, and many things could shock the market back into resuming the climb, plus there are a lot of scared metals buyers waiting for a pullback so it shouldn't fall too far.

    Great call Derek.

    Ed in Jersey

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  7. Still waiting for $20. Derek is wrong he said it would go to $20 like today (Dec. 8) and then to $14.50 tomorrow.

    I can say this and that he was wrong in November.

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  8. Hannukha ends tomorrow. Watch the market over the next few days, after tomorrow. So far, this is a very mild correction, and I mean VERY mild

    Don't take a down position until it breaks below the resistance. You will have plenty of time to make money. Play it safe. Play the TREND - ALWAYS!

    Thanks for your kind words Ed

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  9. From Rob Kirby of
    Kirby Analytics:

    Here’s the link to CME silver data:

    Open interest is 135,876 contracts – by definition ALL PAPER

    5,000 oz per contract = total ounces 679,380,000 [which happens to be roughly one year of global output from mines]

    679,380,000 x 30.00 per ounce = 20,381,400,000

    **silver option open interest is roughly 17,500 contracts [I haven’t even added this]

    Now, remember, NY is not where the REAL ACTION is. The big volumes are traded on the LBMA

    Here’s what the LBMA claims they are doing – as of Nov. 12, 2010:

    Clearing Turnover Statistics: October 2010

    Release Date: 12 November 2010

    Clearing statistics for gold and silver rose across the board in October.

    Gold ounces transferred rose 2% month on month, to an average of 17.1 million per day. The number of transfers rose by 8.9% to a daily average of 1775. The average fixing price rose 5.6%, boosting an increase in the average value of transfers to $23.0 million, a rise of 7.8%.

    Measured year-on-year, gold ounces transferred fell by 17.8% and the number of transfers by 7.0%, but the continual rise in price pushed the average value of gold transferred up by 5.7%.

    Silver ounces transferred rose 4.2% to a daily average of 92.2 million. The number of transfers rose 13.3% to 441 per day. The month on month rise in ounces transferred, combined with a 13.8% rise in the monthly price, saw total value rise 18.6% to $2.16 billion, the greatest daily average value since August 2008.

    So, the LBMA claims they are “transferring” amounts roughly 1 / 7 of World Annual Mine Supply – EACH DAY. So, every seven business days the LBMA “transfers” world annual mine output.

    There are 261 business days in 2010 – So the LBMA “transfers” world mine supply 261 / 7 = 37.29 times per year on their published “run rate”.

    So, to specifically answer your question about BIS “chit chat” about 200 bln of silver shorts – if they know this – I wonder why they don’t show it in their OWN derivatives publication? [the silver numbers are buried in “other” in the table below]:



    I suspect this is done ON PURPOSE to obfuscate the true nature of the numbers which become glaringly apparent when you publish them in a transparent fashion. IMO, EVERYTHING in the world of precious metals is kept obfuscated by banksters – from the BIS on down the line.

    The Fed admits they have done gold swaps – GATA has done FOIA requests in this regard – but won’t give any detail.

    Lars Schall is having the same difficulty getting detail from the Bundesbank and their gold swaps.

    Rest assured – the silver market is more polluted than ANY OF US can imagine.

    Best,

    Rob Kirby

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  10. You will observe, I NEVER quote so called 'facts and figures as in statistics,'World Gold Council, SEC etc., . This is not because I couldn't find them, and quote them just as easily as anyone.

    So why don't I, you all love them, and accept those who quote them as being more informed than one who doesn't.

    It is because the ones that could be useful to us are there to deceive. Those who really know the truth see that we don't get them.

    The art of war, is the art of deception. And if you believe that anywhere where big money changes hands is not a war zone, then you have much to learn, and until you learn it, stay out of the markets.

    The only figures I will trust in the PM's is the price I, personally, can buy it at, and the price I, can sell it at And the price that top professional dealers will buy it at, is the one that tells me its worth, in monetary terms.
    (as opposed to sentimental value should there be any)

    Trend lines based on what prices a 'good' has been traded at over a period of time (otherwise it isn't a trend) I accept, and, with a little reserve - quoted volumes. Outside that, the only use they have for me is that they could indicate how, and where, the dumb masses will
    place their money because they have swallowed those 'facts and figures' like a mackeral will swallow just about any bait that catches its eye.

    Have a nice day

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  11. J.P. Morgan and the Great Silver Caper
    By Eric Fry

    12/08/10 Laguna Beach, California – There’s a lot of rumor, buzz, innuendo, chitchat and scuttlebutt about the precious metals markets these days. Most of the chitchat is about J.P. Morgan and silver. Rumor has it that J.P. Morgan has amassed a whopping short position in silver.

    The scuttlebutt, according to SFGate.com, is that “J.P. Morgan holds a giant short position in silver. Furthermore, some observers are accusing the bank of acting as an agent for the Federal Reserve in the market…I.e., a lower silver price helps maintain the relative appeal of the US dollar…

    “By selling massive amounts of paper silver in the futures market,” SFGate continues, “J.P. Morgan has been able to suppress the price of the precious metal. It is believed that these short positions are naked (i.e. they are not backed by any physical silver).”

    If the silver price were falling, Morgan’s (alleged) short position would be lauded as a stroke of genius. But since the silver price is soaring, Morgan’s (alleged) short position looks much less laudable.

    “In recent days,” SFGate notes, “rumors have been swirling on the Internet that J.P. Morgan’s massive short position is about to blow up in its face in the form of an almighty short squeeze and potential COMEX default, as large traders demand physical delivery of silver that COMEX does not have in its vaults.”

    Based on some of the latest conjecture, Morgan’s short position totals a whopping 3.3 billion ounces. If, therefore, the buzz about J.P. Morgan and silver is even half true, the prestigious investment bank could be cruisin’ for bruisin’.

    For perspective, 3.3 billion ounces is roughly equal to:

    1) One third of all the world’s known silver deposits;

    2) Two times the world’s approximate stockpiles of silver bullion;

    3) Four times the annual mined supply of silver;

    4) 30 times the inventory of silver at the COMEX.

    To repeat, short positions – even titanic ones – are no big deal, as long as the price of the underlying asset is falling. But if, inconveniently, it is rising, the spaghetti can hit the fan in spectacular and gruesome fashion.

    The silver price is rising…a lot. From less than $10 an ounce two years ago, the silver price has more than tripled. Therefore, if J.P. Morgan does, in fact, hold a 3.3 billion ounce short position, every one-dollar increase in the silver price would produce a loss of $3.3 billion…at least on paper.

    Unfortunately, Morgan cannot simply unwind this trade with a couple of mouse-clicks in an E*trade account. The position is too large, both in relation to the world’s physical supplies of silver and in relation to the paper “supplies.” (Morgan holds almost half of all short positions on the COMEX, which is essentially a “paper market” – participants rarely take delivery of physical silver).

    To make matters even more dicey for Morgan, the supplies of physical silver are disappearing rapidly from the marketplace. Increasingly, the kinds of folks who invest in precious metals are also the kinds of folks who distrust intermediaries. These precious metals investors want to know that the shiny stuff is in their personal possession.

    Meanwhile, the ETFs that hold precious metals are soaking up massive quantities of physical metal. Over the last 12 months, the silver ETFs around the globe have increased their holdings by nearly 100 million ounces – or almost as much silver as the entire inventory of the COMEX. The trend in gold is identical.



    Therefore, as a result of soaring demand from both individual investors and ETFs, the physical stockpiles of gold and silver are atrophying in relation to the paper claims on both metals. This is not a pleasant picture for a short seller of silver.

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  12. Where's $20 dollar silver? Where's $14.50?

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  13. hi Derek,

    when will be $700 gold as you predicted in the beginning of this year?

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  14. Hi $700,

    HAHA, so you missed the run up and even probably shorted it. This only blog that Derek actually gave any stop losses. HE never told anybody else how he was trading until this blog.

    All can say is Crash JP MORGAN AND DEREK buy silver!!

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  15. Stop listening, or if you must listen, STOP HEEDING these 'predictions' based on 'stockpiles' of whatever. 'statistics' of any kind, who's buying this' who's selling that, what Bernanke said, JUST WATCH THE TREND, and the MONEY.

    Ignore Academic theory, it is total rubbish, which can only deceive. Why? You should not need to ask this. The evidence is all around you. If only half of Academia's brand of economics had any relevence
    other than for managing household budgets, or getting an economics diploma to stick on your wall, the world would not be managed as it is.

    Newton's laws of motion state that an object in motion will continue in its direction and at the same speed until acted upon by an unbalanced force' He did not say until it is
    thought, or expected, or prophesied by some scientist (analyst) is likely to be acted upon.

    In other words STICK WITH THE TREND until something actually ACTS upon it to change it.

    Once it breaks the trend line, and holds, then YOU CHANGE. WHEN IN DOUBT, STAY OUT.

    Go back. look over all your really bad trades, I mean ignoring 'pink sheets' which are for idiots, and I am sure you will find the cause was by trying to swim against the tide.

    Adios Ray Newton

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  16. BTW if you want to know a nation that will boom over the coming years, and is a congenial place to live, then it is AUSTRALIA.

    Her Royal Highness of talk shows, Queen Oprah's
    royal visti with her huge entourage, is not just media entertainment. There is more behind her giving it her royal assent. But you have to have the imagination, and ability to read the small print to see it.

    If you are Austrralian, lucky you, stick with it, you have a great future.

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  17. many of the pink sheets contain great canadian and australian mining stocks.

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  18. You have got to get the odds on your side as much as possible. You won't do that rummaging through the pink sheets. But, if you like that sort of thing - go for it.

    I've been there, done that, bought the t shirt.

    Now I've matured.

    It's tough enough when the odds are on your side. I'm talking about consistantly making money, not pulling one-off jobs through a stroke of luck.

    I'm still holding two in my 'archives' that I take out and dust off once in a while, hoping that one day they may surprise me (now it's become 'shock' me).

    But that is no way to treat speculation like a business, and that is what it is, or should be if you want to make it pay.

    Prove me wrong and I'm happy for you - really.

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  19. Ray, can you point me on how to best identify trends out of prices? any good book or website you can consider your bible for trend identification?
    Thanks,
    M.

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  20. (contnued from previous)
    In other words, the trend line of your trade chart will ascend, while the trend line of the actual market, or segment of the market you are trading is going down. For example, look at symbol 'DOG'. That is an ETF that bets against the DOW. At present the trend line of DOG is downwards, because the Dow has been rising.

    Got it?

    Books I like are two - 'How I made $2000,000 in the Stock Market' by Nicholas Darvas (He really did). from modest beginnings) He was investigated by Barrons who could not believe it. And the other book is 'How to Trade Stocks' by Jesse Livermore. I have others, but those are my favourites and I refer to them often.

    Why I like these books is because they explain things in simple clear terms and expose their own errors. They show how you must treat it as a business and apply strict discipline to yourself, and control your emotions which are your enemy.

    Re-reading them helps you not to forget, which is so easy to do. As,when you read them, you will see that they themselves did more than once. In the case of Livermore, failure to keep to his own advice brought him disaster.

    Good luck

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  21. Sorry to those of you have appreciated my posts, but I will not contribute here any more.

    Derek does not want anything he sees as a challenge to his doctrine.

    I challenge many of the most well known analysts on the net, and they accept my comments with grace. One even aired my views on his radio program.

    Take care all of you, but, to make Derek happy, and one or two to others. I refuse to waste my time here. I'm making money, and that is all that matters to me.

    I guess you will rempve this Derek. Fine, it shows an insecure personality.

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  22. Ray,

    You saying new. I listen to Max Keiser, Bob Chapman, John Stadtmiller, Gerald Celente, etc. you are joker compare to these KIngs. You ramble on and on. Furthermore, you don't educate the people with your ramblings.

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  23. You stick with those 'Kings', get on your bended knee to them. You deserve them. I guarantee they won't help to make you a dime.

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  24. And Derek your god has made you money. I have a bridge, you want it?

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  25. Ray, given that your post was deleted. Can you email me your answer?
    Do you contribute to any other forum?
    M.

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  26. For the record, no posts have been deleted in the past unless they are extremely offensive and/or graphic or if they are spam. No posts have been deleted on this article, period.

    Derek.

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  27. My posts have never contained anything offensive in anyway, not even to the most delicate minds. However, they have challenged commonly accepted 'financial, economic, and sometimes political, analytical. dogma.

    And, if anyone who sets him/herself up as an analyst and felt the cap fit, they were fully entitled to wear it.

    I have never claimed I am right, I merely presented another view which could be; and certainly one I have found from hard earned, sometime costly, experience is one I now try to follow, personally.

    As for the deletions - I had two deleted yesterday - one of them was part of the whole as I had to continue it due to space. It was a post in which I was replying to a question posed by another poster.

    They were posted, and I read them quite clearly, however, when I went back shortly afterwards to post another - they had been removed.

    Perhaps there is some malevolent spirit like entity embodied of which you are unaware Derek, if, as you say, it were not you.

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  28. Ray, where else do you contribute? any email address i can ask you a couple questions?

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  29. How much silver and gold are in fact waiting for a physical delivery in Dec 2010?

    If no owner of Dec 2010 Silver Futures change his mind and don’t settle contracts for cash by the end of Dec 2010, then 17,208 contracts have to be delivered.

    As a comparison, in last delivery month for silver in Sep 2010, this figure on a day before First Notice Day on Aug 30th 2010, was 3,002 contracts.

    Since each contract is for 5,000 ounces of silver this means that Comex dealers should deliver by the end of Dec 2010 exactly 86.04 million ounces of PHYSICAL silver (compared to 2,519 contracts = 12.595 million ounces of silver delivered in Sep 2010).

    So, in Dec 2010 almost 600% more silver (compared to Sep 2010), should be delivered by Comex dealers to buyers of silver futures.

    And next delivery month for silver Mar 2011, has currently open interest for potential delivery of another 350 million ounces of silver.

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  30. Ray,

    What is the best tool to watch the money flow?

    Thanks,

    Kiley

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  31. Kiley, The only way, I have found, is to watch where the strong trends, backed by solid volume are. For example, when, as now, gold maintains a strong consistent trend, that means money MUST be flowing into it.

    Money is the life blood of markets, without it, they die.

    The ETFS are great for giving us a collective view of a market. In the past we would have had to look at a number of companies in a group to see how that sector was doing. Now it is all done for us. And, big money uses those ETF's, so you are in the right company.

    And for Anonymous who has said he wished to ask me a question. Let me say I am not sure with which 'Anonymous' I am communicating.

    I will try to answer any question here, if you elucidate, but if it gets deleted by that malevolent spirit again............

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  32. Just remember this, I mean take it in, absorb it, and understand its significance.

    In all the history of the United Stares, and I mean IN ALL its history, there has never been another nation so huge, and economically powerful, and with a totally different ideology as there is today with China.

    China is like no other nation, not even India which has a population only slightly less.

    Do not listen to rubbish about 'bubbles' in China. There are none, except perhaps in some housewife's washing machine. China has balloons - they can be inflated, or deflated slowly. They can be controlled.

    It is building new towns like we build houses. There is a powerful reason behind this. Forget that many of these houses, and towns are, as yet
    only partly inhabited. That is the essential part of the plan, and is contrary to our way of doing things. If you don't figure it out,like you should, I will explain later.

    What is IMPORTANT to us, and our money, is, it is changing old concepts, of both politics and economics. And that means how business is done - hence the markets.

    No, we don't get rid of them overnight, we have been conditioned by them for centuries. That is why so many (as in most) analysts, and economists will get it wrong.

    China will be a good influence in a general sense, though changes will affect some in a negative way. But these changes had to come one way or another. We have lived a lie for far too long.

    There will be no war. If anyone was foolish enough to start one, you can forget gold or anything, I won't give it a passing further thought. Threats and rhetoric we will have as this spreads fear and makes us more servile.

    China is the big mediator mostly from behind the scenes She holds all the trump cards, and knows how to play them. China will keep Korea in check -both sides of the divide.

    Changes in how the US behaves are being brought about by China. China has been winning 'hearts and minds, as fast as the US has been losing them. The difference being that China has done it without firing a shot.

    I know the world seems violent at present, but much of this is because of media, and the fact that there population is growing, along with communication.

    But we are moving to a more peaceful world than it has ever been. Few want to don a uniform to day, and they certainly don't want to risk their lives.

    The US has had to change it laws on 'gays' in the military to help recruitment.
    Girls are not impressed by men in uniforms, they want the glitz and glamour of big bucks celebrities.

    WE ARE SICK OF WARS - AT LAST!

    But now take this in. Nations are emerging out of the dark ages in all the dark continents of the world. They all want some of the good life - that means lots of 'material' benefits.

    It was always claimed that it was Americas home market that was behind its success. China has one just waiting for breaks off, four times that of the US, and it has the money, and means of production to spread the good life among its own people over many years to come.

    If the gold price was manipulated down by TPTB and the dollar rose, China doesn't mind it has the dollars.
    If the dollar crashes and gold rockets, China has the gold.

    If the US market crashes and the US goes into deep recession so that US company 'caps'go down to 'boot sale' prices. China can snap up what she wants cheap. But China prefers stability in the world - because that is what the masses want, and life is more agreeable, and less costly.

    Commodities, natural resources and those nations who have them are the ones to be favoured for a long time We are a long.long' way from saturation yet.

    Just something to think about over Christmas

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  33. hi Derek,

    please comment your prediction a year ago of soon gold falling to $850.

    Where you wrong then, or you maybe still expecting it's falling soon? When?

    Sergey, Ukraine

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  34. Sergey,

    Maybe the fall will occur in 2018-2020. How much money did you lose waiting for $850 in 2010?

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  35. While I admire Derek's youthful enthusiasm towards his market theories, it's been terribly obvious that he doesn't understand the PM markets. At what point do you concede ignorance and focus on what you're good at? Derek's a poster boy for what not to do in a bull market. Ultimately he'll claim victory with the gains in his "physical stash" while top calling prior to big rallies all the way up.

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  36. A poster boy for a Loser.

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  37. Derek we need an update. Is today's $1 plus move up in silver a "triple tap" on the resistance line? And if so, what does that mean? I fully realize you are still in the thick of your most recent trade and not in any immediate trouble of getting stopped out. Although 2 more days like this without any pullback and you are out with a 7% loss. This may be normal market noise, yet the intensity of the talk about JP morgan covering their shorts is hitting a crescendo. My take is that someone could do well buying both puts and calls on slv. It could just as easily jump to $50 with the amount of shorts JP has to cover. Help me with the current chart for silver. Isn't it a classic bull flag since August?

    Ed in Jersey

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  38. Forget about JP Morgan, or any other big name. They do not get caught. Yes, sometimes they APPEAR to. If and when they 'go under', which is rare, it is all part of the deal.

    However there are many 'shorts' in there. People who follow so many analysts who have been predicting a market 'crash'; a PM pull back - especialially in silver. 'The guy who runs 'The True Contrarian' has been shorting SLV for months in what he calls 'ladders'.

    I pointed out to him that had he bought 'long' when he started promoting shorting SLV he would now have a gain of at least 70% instead of a loss.

    If, and when, there is a 'pull back' he, and so many others will have a huge loss to make up before they can see any gain (If any). But they will only talk about their 'ability' in calling the turn.

    NEVER, NEVER, NEVER, fight a strong trend. Let the turn happen before joining the move, or just stay out where the economy tells you the true bull run has not yet run its course.

    If you like to be in, but nervous, take a small option with little at stake, but it will help to keep you focused. It's amazing how even a few dollars at risk helps you to take in what is going on.

    Watch more what China does, than the US. If you do not see now, you will, eventually.

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  39. Just in case there are some out there who may misread what I am saying, while anything can happen, I would not advise ENTERING the market generally or in PM's with SLV or GLD with a 'long' position AT THIS STAGE. The odds are in favouring a 'correction' over the coming few weeks. It could come soon in the New Year.

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  40. The UK's largest supermarket chain, TESCO's and which is now international and growing, has just started a facilty for its customers to sell then their gold for cash.

    That should perhaps tell you where gold is going in the long run.

    The TESCO image of being a smart traider is well established.

    Take note.

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  41. Always be ready to listen to proven successful traders who are prepared to put their money where their mouth is. Providing, of course, their offer is open to you. This way, you know its for real.

    Never forget, THE TREND IS YOUR ONLY FRIEND in the markets. I would love to hear from, or about, ANYONE who has made good money, constently, betting against the trend. I don't mind being proved wrong. I don't want to go through life under false illusions.

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  42. That word should have been 'consistently'
    (But you guessed that didn't you)

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  43. Be aware of the significance of China buying up 'debt' of certain nations - latest is that of Spain. China is holding an abundance of US debt.

    China is becoming the world's money lender. It is never good policy to upset the guy to whom you owe money. (get the picture)

    Spain is important to China because for one it is a key member of the EU, but also it has great affiliation with South America where China is becoming well entrenched both as a market for China's goods, and South America's natural resources.

    China is making all the right moves to ensure its economic growth for a long time to come. It is using its great wealth to advantage.

    No nation, in particular with a different ideology has ever been able to do this before in all the history of the US. There are no precedents. It is, and will continue to, change the world as we have known it.

    Most US analysts base their theories on what has been in the past when the US pulled all the strings, they refuse, or are incapable of seeing the change. So - take care.

    There is a very mild correction at the moment in gold, but as yet only mild. It has a long way to go down before the strong uptrend is turned. And as yet, I see no visible
    'unbalanced force' on the horizon
    against it.

    We are certainly living in 'interesting times'.
    The real fun has not begun yet.

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  44. Anonymous said...
    Sergey,
    Maybe the fall will occur in 2018-2020. How much money did you lose waiting for $850 in 2010?
    ----------
    Derek predicted fall in 2010, that is why i'm asking what was worng in his theory.

    It's not about losing money, I just want to know why he was wrong. But he doesn't answer.

    ReplyDelete
  45. He was wrong, like so many have been wrong, because they are influenced far too much by the so called 'technicals' and do not see the other changes taking place in our world, also they fail to heed that too many are following pure technicals which can be used against them.

    It predicts very clearly to those who can manipulate how the mass will behave when certain aspects are presented. If it does not
    stop an inevitable change, it can determine the timing. AND IT IS TIMING WHAT COUNTS.

    That is why I keep saying, stay with the trend until it is clear it has changed. If you are with the trend and you unfortunately buy in just as it starts a correction, you will eventually recover, when the trend line continues even if it takes a month or so.

    If you do not beleive me, look at the trend line (chart) for GLD or SLV for 12 months.

    ReplyDelete
  46. Hi Ray, do you think gold/silver ratio is going up or down? Its at 48 today.

    M.

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  47. Sorry M but I don't follow 'ratio' of gold/silver. Reason? To me it is not meaningful sufficiently especially in these changing times.

    I do watch the relationship of the 'three caballeros' Gold,Oil, US Dollar. As I explained in previous posts.

    There is a slight correction taking place in gold and silver. It may only be a breather. The long term uptrends are still well in place.

    I have found that all analysts, it seems, are unable to see the vast change which is taking place in our world.

    It is making old yardsticks obsolete.

    China is 'unique'. It is unlike any other nation. Do not see it as just another 'communist 'nation. IT ISN'T!

    If you want to understand China, and how it will move our world (as it is) then learn about Confucius.

    This is not a religion, it is a way of life and is buried deep in the psyche of the Chinese from birth.

    It governs their politics, economy, education, and social relationships without them being conscious of it.
    They do not have to work at it, or think about it.

    It cannot fail to change the way we do business.

    Those who control our world, and whom Disraeli described as 'the personages who govern our world are unimagined by those not behind the scenes' and who London's mayor addressed in Switzerland recently as 'Master's of the Universe' (they didn't flinch) are 'international'.

    They are moving our world into one more easily controllable unit as far as politics and economics are concerned. All nations will be equal, except as Orwell would say, some more equal than others.

    This is what we are living through NOW. China is merely
    another, but very important new, but powerful, tool to them in bringing our world under one roof.

    No, it will not be completed in our time, no matter how young you are. BUT PLEASE UNDERSTAND HOW IT WILL RE-SHAPE OUR LIVES (and market behavior).

    Sorry if that goes above anyone's heads, but one must tell it as it is. (I'm not sorry really)

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  48. I agree with that view Ray. Are you reading any other blogs or news sites you can recommend?

    M.

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  49. It appears that silver topped out and is heading strongly lower. SLV broke through $28 and ended at $27.74 on Friday (1/14). The parameter, rSilver (day price/200dma), topped out at 1.46 and has dropped to 1.21 on Friday (1/14), appearing to strongly confirm the turn in momentum. Also, outflow from the SLV has been significant, further confirming the momentum shift. I am awaiting your further post. I have puts in place and would like to see your predictions of a bottom.

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  50. Sorry 'M'. I have tried three times to answer you but I get so far and everything shifts and my words I write just disappear.

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  51. "Also, outflow from the SLV has been significant, further confirming the momentum shift."

    SUPER BEARISH SINGAL, BUY BUY BUY!!!

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  52. Trying something new. writing my post in open office then cut and paste here

    Chinese New Year starts on February 3rd. It is the year of 'the Rabbit'. Some of you may say – so what. That's your privilege. However, to those of you who are more aware of powerful influences, and see what is going on, take note.

    If you have not taken in the growing influence of China which is changing 'patterns of behaviour' in business, and world affairs – for example, China is now lending more money than the world bank.

    Money power, is real power.

    The Chinese are influenced by Confucius and embedded traditional beliefs. They are highly superstitious, so much so that it accounts for their behaviour, especially in business, and love.

    So, what of the Rabbit - A placid year, very much welcomed and needed after the ferocious year of the Tiger. We should go off to some quiet spot to lick our wounds and get some rest after all the battles of the previous year.

    Good taste and refinement will shine on everything and people will acknowledge that persuasion is better than force. A congenial time in which diplomacy, international relations and politics will be given a front seat again. We will act with discretion and make reasonable concessions without too much difficulty.

    A time to watch out that we do not become too indulgent. The influence of the Rabbit tends to spoil those who like too much comfort and thus impair their effectiveness and sense of duty.

    Law and order will be lax; rules and regulations will not be rigidly enforced. No one seems very inclined to bother with these unpleasant realities. They are busy enjoying themselves, entertaining others or simply taking it easy. The scene is quiet and calm, even deteriorating to the point of somnolence. We will all have a tendency to put off disagreeable tasks as long as possible

    Money can be made without too much labor. Our life style will be languid and leisurely as we allow ourselves the luxuries we have always craved for. A temperate year with unhurried pace. For once, it may seem possible for us to be carefree and happy without too many annoyances.

    The Chinese president is just visiting Washington, and this time they are going to give him a state banquet..............

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  53. This year, watch for 'trading ranges' and play them.

    But always watch out for break outs from those ranges, just in case. Only that one day we will die is set in concrete. Some can even escape taxes, bu not the other.

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  54. I am starting feeling that correction may never come as demand slowly cover that gap. The more news talk about gold the more this correction take a form of a small smooth variation.
    Anybody here with this idea? Or anybody seriously expecting a big correction here?
    M.

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  55. I think gold and silver is not a news maker as in the past since the news media has focus on commodities like corn and other soft commodities. Every day CNBC's focus has been on commodities which means a top (correction)should be coming soon for these softs sometime after Feb 15 but I see it in March. Own gold and silver for your old age.

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  56. Now 'M' really. What if someone responded to your post and said 'yes I am expecting a big correction'. What would you do? Would you make a market move on that response?

    Bet most of you ignore that information of what the year of the rabbit means. Yet, one country alone plus all its nationals spread throughout the world who represent a population that is over four times that of the United States, and with a growing wealth.
    will know that information by heart.

    It will influence how they behave and spend their money from the highest to the lowest. It is their way of life and nothing can shake it.

    That will tell you more about the market than anything I can say, or anyone else.

    I say, watch for the trading ranges, don't look for a crash or a rocket to the moon. No one is in a position to do anything dramatic. Consolidation with creeping inflation is the name of the game. Interest rates will be coming later in the year.

    If the market comes down it will be slow enough for you to take what action you desire by spotting the trend in good time and getting on board in time to make money, or save your hide, depending on where you are in the game.

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  57. Watch carefully. The mines tend to lead the price of the metal up, or down. Not always guaranteed but it generally happens.

    The gold mines are falling at the moment even though the metal is rising. Need for caution not panicking.

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  58. Derek,

    The momentum is firmly downward in silver. A new post with your forward-looking analysis would be most welcome.

    Fran M.

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  59. 'Momentum FIRMLY down? Is it? Yet?

    There is a need to understand percentages. The higher a price climbs, a come back can look high but the percentage fall can be much less than a smaller 'looking' fall on a chart pattern occurring earlier when the price was lower.

    Go to Big Charts, look at SLV over three years and see how wrong those were who got out at some of the earlier 'pull backs'.

    Look at the chart for ZSL that is a fund that 'bets' against SLV, See how much you would have lost over the past three years betting against silver.

    I am not saying that silver can't or won't drop further. But there is no panic to bail out yet. Big money will not chase the price up without shaking out the weak.

    Also, the higher the price goes the nervous start to put in stop losses. There are 'those' who know exactly where the bulk of these stop losses are and once reached can trip of further down stop losses. So they drop it to touch them off.These are usually over quickly and the shorts take their profits, and those looking to pick up cheaply (before the shorts buy back in) scramble to get their orders filled.

    This can all sound, and look. very confusing, but it needs to be understood if you want to survive.

    Now let me really give you nervous ones cause to wet your pants. There is a war going on. With Russia, some years ago, you had what was known as 'the Cold War'. It involved a very costly arms race,
    China is not playing that game. It knows it has to be an economic one that is being forced on her.

    The 'establishments' on both sides, I do not say governments, the force is beyond the government puppets, know this, if you do not.

    The 'West' is trying to force up inflation from commodity prices in China which will force China to increase interest rates, which will cause social unrest.

    Unfortunately, we also suffer then from rising prices. Like the cold war with Russia, it will depend on which side breaks first before the streets start running with the blood of the masses, and regimes fall.

    Get wise. Watch what's going on all over the world. Think of Newton's laws of motion, and when two forces collide – somethings gotta give, somethings gotta give......EVENTUALLY! BUT NO ONE KNOWS WHEN! Meanwhile, back at the ranch...................life goes on.

    There is money to be made once you have figured it out and see the much bigger picture.

    ReplyDelete
  60. I should have said for China to revalue up the Yuan to make here' products less competitive. China's 'edge'
    has to be broken, at least from the West, led by the US, point of view.

    That is where it all hinges.

    And that is what will dictate our markets behaviour for the present, and future.Forget the rhetoric. Talk is cheap. But remember what the American Indian said about its government's words - 'Paleface speak with fork tongue.'

    Those Indians knew knew score.

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  61. Derek,

    You're in the money so far. It's not feeling like precious metals want to go much lower. All this talk about JP morgan trying to cover short contracts may be supporting the prices. Do you expect a quick drop maybe with a triggering event or more of a grind down?

    I am nibbling at some of the pure silver plays that have gone ballistic as of late and have now pulled back 25-30%. They are a steal if the POS goes back up, obviously very painful if it continues down.
    It would be great to get an update from you to hear what you are thinking.
    How about that move in Uranium? apparently those stocks are getting excited about a good run with the POU price of Uranium going from 40 up to $70 per pound. Of course its the chinese, they are building a boat load of nuclear reactors based on new french designs.
    The chinese are pushing all these markets around aren't they Ray?

    Best to all here,

    Ed in NJ

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  62. There is a 'gathering' of the clans taking place in Davos Switzerland at present. This is where the world's leaders are briefed (in order to be made to feel part of the process) on how much they need to know
    by those who decide what they need to know of the next stage forward.

    Confusing isn't it? Not really if you have an open mind.

    Any important market changes, if any, will take place a few weeks AFTER, but keep a sharp watch on the trend lines for any 'signs'.

    This is a time for holding cash in one form or another.

    China, Ed is the key player with all that CASH (in one form or another) it is holding - 'over a trillion' - an amount you could never count if you lived three life times plus and never slept, or took even a coffee break.

    NOW THINK ABOUT THIS:

    If the US market really falls and wipes off millions in value of key western companies, especially American 'Tech' companies, China could (and would) pick up the ones she is currently watching.

    But how does the US keep the market moving up. Most of these companies are way over priced now? Answer: printing more money. Talk about pouring oil on troubled waters.

    Watch how China will move if those companies come down in price.

    It sounds a sort of war, and in a way it is, but you have to be able to peer behind the scenes. Stop seeing 'nationalism' and nations as we have always seen them in the past. There are those pulling all the strings (behind the curtain) with ONE REAL OBJECTIVE. That is – to bring all the 'parts' into one 'whole, where the the whole is greater than the sum of its parts, and......EASIER to MANAGE (CONTROL).

    This on going process is shaping our present and our future. Well, Obama rode to victory telling you he was bringing CHANGE! On that, he did not lie.

    Here is something else that is VERY important. China is building a strong 'middle class' which is a 'buffer zone' between the 'haves' and 'have nots'. We are now eroding ours. That is why we dare not
    squeeze the belt too tight, too quickly – especially the US with all those guns in the hands of the masses. Would you say some problems lie ahead that must be resolved in the very near future?

    Its all in the hands of 'brinkmanship'. Who, and what, gives first.

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  63. Come on Derek, what are you thinking about? Are you just being patient? Ever more confident that prices will fall and doubling down?
    You certainly aren't shoveling snow, we got all your snow this year down here in NJ.

    I want to buy a quantity of physical silver, but really don't want to now if we are in for a significant pull back. I really think time is running out for a good correction. The US mint continues to set records for silver sales month after month. I beleive the speculation that supplies are getting tight. We may see a serious short squeeze on physical by early march when it becomes clear that the comex can't deliver on its obligations. Price will explode.

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  64. Anonymous and any others out there who have similar thoughts.

    If Derek answered you and said he was confident any correction was over and that silver was going north, would you go out and buy in quantitey?

    Or vice versa?

    And that is just not because it is Derek. It would apply whoever said it - even me.

    I am making money out of silver and I don't really like the stuff, and know very liittle about it. I know all I need to know. I know what I can buy it at, and what I can sell it for - quickly, without anyone kicking tyres.

    I also know its trend, and heart beat (fluctuations). I look at the chart trend and volume like a doctor looks at the patient's chart at the end of the bed.

    But I also see everything in context with the whole of what is going on in the world. I also know who is pushing us where we are going, and I know where we are going come hail rain or shine whether we like it or not.

    None of this is private, nor secret, knowledge. It is there for all to see.

    When there are two powerful economic forces squaring up and playing the brinkmanship game – anything can happen. Up until now, China has been able to block every move the US establishment makes. They are at present two conflicting idiologies. All I know is that one, eventually has to unseat the other – to me that is a FACT!. When it will happen I do not know, only that it will.

    I know this (and so should you) China has only to continue doing what she has been doing for a decade or so and her economy and standard of living will continue to improve. China is doing something else which the western press ignore. China is paying considerable attention to its people's
    moral development so that as the mass become wealthier that will have the moral fibre to handle it.
    I can tell you how if you wish. Here is a clue. She has just erected a statue to Confucius by Tiananmen Square. But that is only a clue.

    What does the US do? It destroys little by little what moral fibre it had. It promotes greed, wars, and licentious behaviour , interfering in other nation's affairs, especially ones that don't do what America tells them, aided by its all powerful biased media.

    So the US has only to continue what it is doing and..........well, you fill in the rest.

    All that is fact not fiction because we can see it, every day WITH OUR OWN EYES!.

    When engaged in the markets, nothing can be taken out of context, all is interrelated.

    I'm happy, as I have said, I am making money out of silver and the quantity of the actual stuff I own is very little, and most of that I found metal detecting.

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  65. Ray, any thought about wikileaks and 40% overstated reserves? Do you think gold skipping correction with this news?
    M.

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  66. Anonymous

    If I ever 'think' about 'released' 'facts and figures' by official, or unofficial sources, my thoughts are usuaually connected to how the naive masses may view them, and act upon them.

    I note the small 'news' items that usually get little attention and then try to figure out what they indicate in the greater scheme of things.

    China is doing something that is getting very little, if any; attention in the western media, certianly not in the financial media, but it tell me a lot.

    I watch what the market is doing and go with it. I long ago abandoned trying to 'out guess' the market.

    Here is a formula to follow. If you must look at the news, before you do ask yourself - what do they want me to believe today - and WHY?

    Everything is geared to deceive. It has to be. If they ever told you the truth, there would be a bloody revolution. Sometimes the 'deceit' is wrapped up as revealing to you the 'real truth'.

    If they do it in wartime to deceive the enemy, why can people not see it is done against them in war, and peace.

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    ReplyDelete