-- Posted 3 March, 2007 | | Source: SilverSeek.com
The Greed and Fear afflictions of being a silver perma bull have passed.
We’ve passed the Greed element on to the Shorts! It is now they who must determine how low to go before covering and buying back their “sold” silver. Of course, most of you know by now it wasn’t real silver they were offering, but paper silver. Their Fear will return when silver reverses and threatens their ill-gotten conniving profits, only made achievable by collusion of the handful (5-8) of key short players whose any losses are covered by the US Treasury and the Fed with any amount of millions necessary. All of this under the “watchful” eye of the CFTC whose vigilance and monitoring is supposed to prevent such illegal practices.
Anyway, the Shorts don’t have the physical silver. We do. And that they need desperately to keep their game going. When we finally get the upper hand, we can expect the “paper silver market” to be shut down by the CFTC declaring a loosely-defined force majeure to protect the key short players from bankrupting the whole system. A force majeure was declared in natural gas deliveries in 2005 during the Katrina crisis. The Silver ETF's presumably escrowed silver "hoard" would be used to partially compensate promised deliveries, except the players would only get US dollar notes in settlement! Everybody's happy, except those desperately needing the physical for production and export commitments. They'd be on their own to find silver wherever they could from any source. The London nickel exchange contractural delivery defaults of last year are clearly explained by Ted Butler. Just a handful of larger hedge funds moving to silver out of the more than 50,000 could set off a stampede to buy silver and enough to bring about a tipover. Who's going to be first?
The whole scam would be open for all the public to see, an event that even Congress could no longer ignore. The existence and continuance of the Fed itself could even be questioned. Tragically, history shows that it will take blood in the streets for this to occur. And, what form of political phoenix would rise from the ashes would not be encouraging for the restoration of individual liberties in America.
How America's domestic mining industry would fare is anyone's guess. Under FDR the gold mines were left alone until WWII. Shortly after the start of World War II, gold mines were closed by the War Production Board and not permitted to reopen until 1945. Gold was considered "non-essential to the war effort". This action was a de facto removal of the US$ from a gold standard while the printing of banknotes continued unabated. The post WWII Marshall Plan (foreigners only) increased the claims, further aggravating the drain on our diminishing gold reserves. There is nothing to prevent our government from decreeing any variation or combination of controls over silver (or gold) mining production. In the "national interest", of course.
But, for now - - the Silver Sun will be soon be rising once again! Here’s a snapshot of the paper silver market. This is the playground for gamblers, a field where the Bully Boy Shorts have been fleecing the Speculators for years. This time the Bullies have to go paper short this time as many ounces as they did in May of last year before they could bring down the good guys. And these numbers are only good through last Tuesday! With a blank checkbook they can throw as many shorts into the pot as is required to rake in super profits. They have been consistently short and never long for years. (See for yourself here). Those downward red bars are the scammers (Commercials). The scale to the left is the number of contracts short for each reporting week. With each COMEX contract being 5,000 ozs., the Commercials are offering up 365,265,000 silver ounces. The entire world's silver production in 2005 was 641.6M ozs. Even the COMEX warehouse inventory only shows a fluctuating amount of about 100M ounces. The commitments to deliver are in serious violation of the CFTC's own rule of "Deliverable Supply" as explained to you on 2/26 which the CFTC itself defines here. If I err in my understanding in any portion of this report, please let me know so I can correct and revise for our subscribers.
But, now on to the Silver Sun Rising -
As is evident by the SLV chart following we have fallen through all the near term moving average support lines. But now considered must be the 200-dma. That support area right now around 12.26 is our destination, and save for several days at the most below, it will send our silver back to the bullish mode. I should have considered this in context of the bigger picture and past corrections. Those "staircase" swing highs (peaks) you see at 132.25, 141.70 & 147.00 are about 20% above the corresponding 200-dma's. Last September's correction brought the silver price back as low as 6% below its 200-dma. But, otherwise I am seeing a bearish reversal at the 200-dma support area.
However, note the distinct likelihood of a 'double bounce' whereby the price does a feint back above the 200-dma & then dips again as a final shakeout before it runs higher in the next expansion. The final price low will be evident before the 8-dma gets down there itself. Where you re-commit is up to you. In fact, we may get that 'double pump' as soon as next week, cross back over its 8-dma, and then drop again, going to or below the 200-dma before it makes its bona fide resumption to the upside. Lots can happen, but I do not see a 6% below the 200-dma being exceeded. This full process may take up to two weeks to consummate, so again, patience is called for. A turn in the 8-dma will be your leading indicator. The thing us silver bulls can never know is how high is up. Will silver's next launch take us up to a 60% expansion above the 200-dma as it did in May, or shall we have another step up in our staircase and fall back at 20%? Only with hindsight will we know.
And here's the juicy part: it'll be the paper Shorts who have to know when to cover and go long to lock-in profits, or stem their losses. The Greed right now is with them, but soon, when the price reverses near the 200-dma, Fear will take over as silver's price begins to hint of a reversal.
We should be alert for this event in conjunction with the free Commitment of Traders Report, linked above. We may have seen evidence of covering as soon as this past week from 2/27 forward which we, as Outsiders, won't know until next Friday.
In a bull market of anything it's very hazardous to short any participating component. You may want to sell and wait for a re-entry point at a lower price, but I would caution anyone not to go short with precious funds. As for gold and silver there are just too many imponderables out in the world today to think they will ever go down long enough for you to move in and out briskly.
- - Charleston Voice
-- Posted 3 March, 2007 | |
