This is an edited version of what David Morgan sent to his paid subscribers on March 3, 2008.
March 3, 2008
Today Silver closed over Twenty Dollars up 50 cents closing at $20.31.
Gold is very close to the $1000 level. What I just wrote in the monthly still applies, we are moving up rapidly and in our view nearing a temporary top. However, some cautions are in order. Please listen to the Silver Update I provide on our website each Monday morning with the exception of when travel takes me outside the country.
(Note: You may keep up with David Morgan’s weekly articles at SilverSeek.com)
In my view silver could keep moving up for several more trading days, but "normally" buying pressure exhausts at some point. Please listen to the audio update because we always must be aware of the fact that at some point, someone may call the silver bluff. Meaning, someone, some entity, some Sovereign Wealth Fund, stands for delivery of physical silver.
If or more likely when this takes place the whole dynamic of the silver market will change, from being a paper based derivative market (Comex) to one based upon the true physical demand for silver. I have predicted this to take place "at some point" but do not think we are there yet. However, I want to get this memo to you so you can be prepared.
The market is trading in a short squeeze fashion, and I think it best not to chase the market here, especially if you use leverage. The shorts must be sweating here and maybe just maybe they are going to feel much more pain during the next several trading sessions.
I did my Silver Bullion Dealer survey, which I have not done for some time. I personally phone most of the major physical dealers in the U.S. and ask how the orders for silver bars, rounds, and bags are doing? What I found was that most dealers reported that February was the biggest month they have had for physical silver in a very long time, additionally it was almost all buying very few sellers.
We even spoke to a few dealers that were having trouble filling large orders. I want to remain objective here. We do not find this to be the case all over the country.
Some of the stocks are starting to pick up life, but there is not enough volume in this area to excite me yet. In other words, the buying is still in the Silver ETF’s, Futures, and physical market. This is another subtle clue that we are probably approaching a momentary top.
Bottom line-- Be Bullish but realistic, we are far above the 200 day moving average and when there is this much excitement in the market, it is usually best to stand aside. Very aggressive investors/traders might consider selling some into this rally. Final words, I am usually early, when silver finally broke the $5.50 barrier to the upside so many years ago I sent out a similar email when silver had closed above the $7.40 level, it opened higher and eventually traded a full $1.00 higher, some were upset I did not call the exact top (Who can?), but when the market started down and orders had to be matched there were large gaps in price where orders could not be matched. I do NOT expect that this time because there is so much more interest in the silver market however I do not rule it out entirely.
The Silver Investor