Silver Drops 10%. No One Cares.
Can you imagine if the ES or treasuries fell 10% on the Sunday evening Globex open? Good heavens! Ole Thunderlips might have a heart attack!
But I suppose that if you can bomb silver for 15% on a Sunday evening two years ago and not be punished, why couldn't you bomb it for 10% last night? Again, if the ES had suddenly dropped 10%, there would already be another worthless congressional hearing scheduled. Silver drops 10% and all you get is a video of some fool chewing on his hat.
And that same idiot now stands ready to make yet another bold proclamation:
SILVER (and gold) IS MUCH CLOSER TO THE BOTTOM THAN THE TOP.
Ya like that one? Really going out in a limb, huh? I regret that I only have but one hat to eat for TurdNation.
In all seriousness, I'm quite encouraged by the number of readers who are unfazed by all of this. Why? They obviously get it. Though it's fun to buy anything and see it's fiat-conversion value increase with time, that never has been nor will it be the primary reason we own and stack metal. These instruments are your insurance. As stated early and often...Gold protects your net worth and silver protects your purchasing power against the ongoing, never-ending devaluation of fiat currency.
"But Turd, but Turd! You dumb shit! How is my wealth being protected when the fiat-conversion price has fallen from $1920 to $1320?" Good question. The answer is, of course, a question: Why do you care what the fiat-conversion value is today? This "price" only matters to you if you are selling today. And who, in their right mind, is selling today? Oh sure, I read the occasional comment here from someone who apparently is in need of cash and...apparently...only has silver to sell. Look, if you only have silver to sell when you are in a liquidity crunch and you need to pay some bills...that's your problem and that's a pretty big problem. I mean, seriously! If physical metal is insurance and protection but yet you have to sell some to pay bills...what that heck do you actually have to insure and protect in the first place?? Sounds to me that you thought precious metal was instead some kind of get-rich-quick scheme and a ticket out of the poor house. Though for some long-term holders it might be, the rest of you who bought with this in mind are no different from those who thought that the pets.com IPO was the deal of the century.
I buy precious metal. (I used to trade for fiat accumulation purposes but, after the outright theft of my account at MFingGlobal, I gave that game up entirely.) I take delivery and I add to my stack. I bought silver all the way up to $49 and I've bought it all the way back down. I've been accumulating gold in the same way. AND I'M NOT SELLING. Why would I? What has fundamentally changed about the rationale for buying in the first place? And by selling, I'm converting my physical metal back into paper money!! I may be stoo-stoo-stoopid but I'm not crazy.
And I need to make this point again: All of the data indicates that the sellers here are the specs, both large and small. This has been documented ad nauseam on this site. But never forget, for every seller there is a buyer! And just whom is buying? The banks! Every time a speculator sells a long or initiates a new short, a Cartel bank is on the other side as the willing buyer. So I ask you again: With whom are you going to side here? The Specs who, from time immemorial, have been led by the nose from the field to the fleecing shed? Or The Cartel banks, who have dominated the metals trade for centuries?
Along those lines, I have this to share from our pal Andrew Maguire. After reviewing the CoT data, the GLD and SLV positioning and making some reasonable assumptions about current OTC positions, Andy has concluded that the Cartel Banks are now NET LONG GOLD AND SILVER. NET LONG! If he's right...and I certainly have no reason to doubt him...then we're done. Sure, price might continue to drift lower. Maybe even spike lower again. But, on balance, we're done. Again, QE∞ changed the game. It officially began the countdown to the end of dollar hegemony. Therefore, instead of an immediate moonshot, the metals were jammed lower against the overriding fundamentals. WHY? Because the Cartel Banks weren't ready. They were heavily short and covering into rising prices almost knocked them out in 2011. Instead, all of the price action over the past 8 months was initiated in order to create an environment where the Cartels could cover. And cover they have!! On just the Comex alone, they've reduced their net short liability in gold and silver by nearly 70%!
So, back to my bold proclamation. I can state with 100% confidence that we are very close to a dollar price bottom here. Again, could we go lower? Sure. Does that matter in the grand scheme of things? No.
For some additional perspective, here are some charts. First, here are two traditional, linear charts showing the price action for the past decade plus.
And just the other day, someone posted a logarithmic chart in the comments. Good idea. Sometimes log charts can be particularly helpful in that they allow the viewer to more easily understand the scale of the price movements being shown. See this: http://en.wikipedia.org/wiki/Logarithmic_scale. Anyway, when we look at the 25-year log charts for the metals, a different picture emerges...one where the current bull markets are clearly still intact.
OK, that's enough for now so I think I'll stop here. As I close, I see that the metals have continued to rebound, even after the London PM fix. This is a welcome change and perhaps portends a short-term bottom. Watch $22 in silver and look for a daily close sometime this week back above the Thursday-Friday highs near $22.75. That would be a very good sign. In gold, look at the daily chart and notice that, once again, significant buying emerged sub-1350. This is a very good sign but I won't get too excited until I see it convincingly back above $1390 and then $1400.
Have a great day!