I had this conversation on the FOOL about silver.
Rien:
I hate to say so, but you are right about the action in POS. I do think the action in the miners is slightly better though.
Silver is weaker than gold right now, and gold is linked to the USD. If the USD can mount another rally, the POS could really drop.
Sigh,
Best,
Rien (remaining a silver bull for the long term)
Mish:
Watch that 6.66+- area like a hawk.
Note that even with a RISING Euro we broke 6.70 on Friday.
When silver rose back to 6.80 I bailed.
That was that.
Could Friday have been a headfake?
Sure why not? OTOH we have tested that 6.70 area lots of times now. There will now be a lot of stops if it breaks and someone can easily try and run them. Also scary to me was the COT report that showed no small spec liquidation. My guess, they are buying the dip too. Of course I did not know that until last night after I exited. Unlike gold, there is no spec short interest at all. Gold probably has stops above and stops below this area which makes a short covering rally more likely in gold IMO.
Here is that COT report again.
cftc.gov
Compare the spec reports on gold and silver.
Huge difference IMO.
Although the specs are net heavily long gold, spec disbelievers are short 91,870 contracts.
Gold has 214,668 spec long contracts and 91,870 spec short contracts.
That is a lot of disbelief in gold IMO. That is a 43% short to long ratio.
Silver has a total of 10,088 spec short contracts vs 77,050 long contracts. Silver has a 13% short to long ratio.
Silver can easily give up the entire rally IMO. I do not see gold falling back to 380.
Note too, this is the middle of the "strong period" for silver. Did we have an early anti-Bush blowoff top in silver when the US$ got pounded?
We are making a flag of some sort here IMO.
Is this a bull flag or a bear flag?
futuresource.com
If it breaks down we probably see 6.20 then what?
That chart also looks like an enormous double top, and suspiciously like a violent 3 wave correction UP as well.
Perhaps someone cares to comment.
Here is a weekly continuous chart.
futuresource.com
If we are starting a 3 of 3 down this can get really, really ugly. That is of course a big "IF" but one I am stepping aside on this for now. I would expect another correction anyway, at the end of this "strong period". The odds of being able to get back in at prices close to $7 or even substantially below are pretty good IMO, even if it blasts off again.
Mish |
