Skip to comments.Silver's Shine Is Fading Fast. Tumbles in the Last Two Days, Quickly Losing 10 percent.
Posted on 05/04/2011 6:27:30 AM PDT by SeekAndFind
Silver's shine is fading fast, and the market for the precious metal may have reached a top in a speculative, mad dash by ETF investors.
"The last move higher over the last month or so has really been driven by the strength of the retail investment demand, so the levels up here are not supported," said Suki Cooper, precious metals analyst with Barclays Capital.
"At levels above $40, we've seen some concern rising on the industrial demand side. The last leg higher has been investment-driven, rather than fundamentally supported. In that respect, the correction was due. I would say from a demand support point of view, we have levels that have been tested in other metals, but we haven't had a chance to test that in silver," said Cooper. "I think now prices are going to test where physical support comes in."
Silver [SICV1] has tumbled in the last two days, with Comex futures losing 10 percent on Tuesday alone, and the July contract finishing at $42.585 an ounce. Silver came within reach of $50 an ounce last week, and its all time nominal high, just above that level. The popular iShares Silver Trust ETF [SLV] lost more than 5 percent Tuesday, on volume of more than 211 million shares.
Moves by the CME to curb speculative buying with three increases in margin requirements in the last week have helped cool the metal's run.
"When something's on fire, there's lots of finger pointing. You've seen it in oil, and you're seeing it now of course in silver," said John Stephenson of First Asset Investment Management, in an interview on "Fast Money," in response to a question on the increase in margin requirements.
(Excerpt) Read more at cnbc.com ...
Minor blip. Silver will continue to outperform the progressively devalued dollar. Dollar’s headed for the 60’s. Silver will be over $50 in shot order. When all sell, that’s when it goes up.
Yes, I read yesterday he is dumping his load.
Sorors wants you to sell your Silver. So do the Ghouls at CNBC.
Not so fast my friend. There is a belief, that there will be NO QE3 and rates will rise.
I've been saying for some time that a good way to curb commodities speculation would be increased margin requirements and imposition of position limits on investment banks. We can see here that increasing margin requirements is curbing speculative price increases in silver. We saw how much loose margin requirements could screw up the financial system elsewhere. Why is it allowed in commodities - driving up the price of goods central to day-to-day existance?
Yep. This isn’t about the price of silver. It is about the collapse of the dollar. And now they are basically trying to “badmouth” silver to get it back down. But too many of the people buying it are in it for the long haul.
Dream on, Patti. Meanwhile, I’ll continue to trade my dollars for silver coins. Let’s re-examine the situation in a few months.
There is a basic problem: the amount of physical silver available to be delivered by the COMEX is only enough to fulfill 6,600 contracts.
If they stop QE, the market collapses. They will not do that with Obama’s re-elction coming up. The Fed’s between a rock and a hard place. They had to support the bond and trash the dollar. No change there. Silver to $60 by June.
My thought also. A classic bait move by a big investor like Dr. Evil so he can buy some more metals at a discount from the chumps. CNBC wants you to buy GE, GM, T-bills, and a few 0bama bumper stickers.
Time to buy?
China and India are buying gold and silver like there is no tomorrow. The short attack was done this week because the Asians took a holiday. When they get back, they will buy. The demand is worldwide—and it’s increasing.
. Now I'm wondering about a good point to jump back in? What do you think is a good floor?
Silver has had its margin requirement raised three times in last couple of weeks. When that stabilizes you will see silver continue its rise, albeit, at a slower rate.
All I can say is fundamentals.... Do you see anything regarding our fiscal and monetary policy that tells us that our government on the Federal level is going to CUT SPENDING?
If the answer is no, the next obvious question is this -— if they don’t cut spending, how are they going to FUND what they spend? THis year’s deficit is a humongous $1.6 Trillion and our debt to GDP ratio is fast approaching 100% of GDP!
I can only see the following choices:
* Grow the economy ( It has to be AT LEAST 4% and we’re not even close to getting there ).
* INCREASE TAXES ( why do you think the government have been hiring IRS agents like crazy?). But how do you grow the economy if you do this?
* PRINT MONEY
All evidence I see is this — BORROW and PRINT have been dominant. Will it stop ?
Well, we’ll have to see what this current congress does with the debt ceiling. If they RAISE IT without any fundamental change in SPENDING, then I don’t see how our currency won’t devaluate. And if people lose faith in the value of paper money, where else can they go?
Answer : Stable currencies like the Swiss Franc, Aussie, Canadian. If investors STILL don’t trust these fiat money, I can’t see why they won;t flock to Gold or Silver.
Just my humble opinion.
Regarding what price of silver to get back in, I’m as much in the dark as you are.... BIGGER SPECULATIVE FORCES ARE AT PLAY.
I bought the Silver based ETF, SLV at $18/share and have put a stop limit to sell at $36.00. As of this writing, the price is just above $40.00. If it crosses the $40.00 psychological level, all bets are off, the downward momentum will start.
I’d buy again when a sure upward trend is present. It won’t be these next few days though.
Generally I agree with you—but because of the swift manipulated downdraft, expect a V-shaped first move back up.
Excellent analysis. I agree completely.
In stock trading circles it’s called a correction. After the correction take how much it corrected and add it to the peak and you have the new target, say $59’ish........
I just started reading the T, sent there by errant.
what is a contract of silver? One (1) 100 oz englehard bar?? I wouldnt mind a contract being delivered if it crashes or dips ;)
RE: After the correction take how much it corrected and add it to the peak and you have the new target, say $59ish........
Just curious, how did you come up with this formula?
THe same way turd did, it’s in the text books for the test....same way he picks the support levels.......
Also, now that it broke 40, which should have held better the next support level is the 50 MA which is $38.67’ish...
If it reaches there then out that $11.00 on top of the 49.75 and it gives us a new target.
Gold is less volatile, since so many foreign governments have hedged their currencies with it. China and India are just two among several doing this.
Silver is the most volatile since it is mostly traded by private and industrial interests.
Exactly. I don’t buy PMs to “make money” but to preserve buying power.
In 1948 one silver dime would buy you a gallon of gasoline. That same silver dime today converted to dollars would buy you about one gallon of gasoline.
That's fairly instructive right there I think.
The Fed can easily stop accommodating the re-election of Obama and his Obama-bots if what the banksters want starts diverging from what Obongo wants
Then who’s gonna buy all those treasury notes?
If it breaks below $38.80’ish next support is at $36.50’ish
I just sold outright y'dy AM, hoping to take as much profit as possible. Now I'm looking at moving averages and I'm thinking it might drop to thirty.
That would be true in normal times.
The gas prices today are near $4,
and that silver dime is worth $2.88 today.
Again, it’s a good theory to look at, but gas prices are outside the norm at this point.
Sorry before support t $36.50’ish there is support lite support at $38.00
QE’s sole purpose was to lower interest in US Treasury Bonds and increase activity in stocks and also, increase the cost of Treasury bonds to discourage investment in them. Banks and Industry quit “investing” in (Loaning to) the Government, so Burn-yank-me printed 600 Billion new greenbacks and flooded the market with worthless cash created out of thin air and gave it to the banks. That increased Stock Market activity. (Loaned to Large Banks at .025% who loaned to investors in the market) The decreased value of the Dollar also raised stock prices which gave the false impression of a rally.
Uncle Ben did this to keep Interest rates artificially low to keep inflation “low” and prevent a panic. Add to that serious blunder, the National Debt, the interest on that debt and the further decline of the Dollar, Ben boy will have no other choice than to do more of the same. He started this nasty trend and it cannot be reversed without a complete economic collapse.
All he is doing is throwing what ever he can at the wall to see what sticks. He clearly has no clue what the hell he is doing.
Although, good suits are a lot cheaper than they used to be. And the gas prices reflect worse things than inflation.
You know, we should come up with a solid comparison object or commodity. I can't think of one right now. Pound of hamburger? A whole chicken?
A gallon of milk might be good--fuel drives up the price of milk, but in a way that it drives the cost of everything else, so the variable would be flat.
Any other ideas?
I’ve used loaves of bread as the constant. Everybody’s gotta eat.
Next support level is $38.67...........imho
I think we will find that today was our bottom. Now look for a breakout to higher levels. I’d say a long tail down which is a blowout bottom. Then moving higher the next 8-10 days.