"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, February 21, 2011

Price Projections for Silver

Dear Friends;

The following chart details some potential levels of chart resistance for silver based on a series of Fibonacci projections. Keep in mind that we are basically working with educated guesses here since data from 30 years ago loses a great deal of relevance in my opinion. Does anyone really believe silver at $33 today has the same value as silver at $33 thirty years ago? In other words, we might as well be working with silver as if it is trading in uncharted territory and go from there.

Eventually the market will determine those new levels of resistance by its behavior as well as new levels of chart support, but for the time being, the levels shown on the chart, and the behavior of the silver market as it approaches these levels, will tell us a great deal about this market, much more than the analysts themselves can tell us.

Note also that I am using the weekly chart for the metal giving this chart a longer term perspective.


  1. Hi Dan,

    First of all thank you very much for your educational blog. It's excellent!!

    I was wondering if you could comment on the difference between PHYS and PSLV. I see one is a "trust" and the other an "ETF trust", and both are provided by Sprott. Why would sprott need to come out with 2 different services for trading silver? Why do they vary to NAV? What exactly is "NAV", and how does one identify the variance to NAV?

    Also what is your opinion on CEF and GTU?

    In general I am wondering which symbols for silver and gold you trade and why? In a end-of-the-world-hyperinflation, which of these various ETFs would remain liquid by not allowing the big guys to walk off with all the physical gold/silver that provide security to these ETFs? How does one identify the ratio of Physical Silver to the tatal $ cap of the ETF? For instance, is PHYS 100% backed by Silver? Or only 80%? Or only 100% as soon as Sprott gets the next delivery?

    Also what is the relationship between AGQ on the Globex and the spot price. How does AGQ affect the spot price?

    Also how exactly is spot price determined, is it strictly by the COMEX & LBMA? Does Kitco somehow have a real live feed into the computers at COMEX/LBMA to be able to track in real time?

    Sorry for the plethora of questions, but I think these are very important questions many newbiews like myself should probably better understand.

    Many thanks in advance!!

  2. Thank you very much for this outstanding chart.

    I have a funny feeling we may need a new one tomorrow however! It looks like that kind of week.

  3. Some people are saying to get out of paper. Would PSLV, PHYS, CEF be considered paper or are they equivalent to holding physical metal?

  4. California Woman, no they are not equivalent. Some of those ETFs can only let you redeem the paper for Silver IF you own very large quantities (not sure what the min is, but wouldn't be surprised if it starts at 5,000 OZ worth).

    I already own enough physical silver stored in various vaults. The reason I'm looking for safe ETFs to trade is that the problem with Physical silver is it can take days to exit large positions, possibly even a week or two. Imagine Silver goes up 3 to 5 times from here and you own a 1,000 OZ bar. That means that bar is worth $90,000 to $150,000. Which coin dealer in town has that much cash sitting around to buy the bar from you? Or even if they have the $, they may not want to buy it near peak since they may never find a customer who can afford to buy it and they may need to hold it for many weeks or months before they can sell it off. One might argue that holding everything in 1 OZ coins is better, but you may pay a 5 to 15% premium (shop around!) to get in, vs 1 to 3% premium for a single 1000 oz bar.

  5. just imagine "silversurfers" issues...not sure if he's bragging or complaining, but where's the "beef"? as in the point...

  6. @SilverSurfer

    PHYS is gold, PSLV is silver.

    Both are physical ETFs meaning all underlying assets are allocated physical metal and can be exchanged for the ETF shares if the amount is large enough.

  7. Siversurfer is asking some good questions and making some good points. I'm just a little guy and I sure would much rather have 10 100oz Ag bars than 1 1000oz bar. When you want or need to sell it's a liitle inconvenient to have your coin dealer beg off because he doesn't have the money or the inclination to buy. Also with physical Ag (silver for you non-chemists) the sheer volume and weight of the metal can be intimidating. I don't know how much a five gallon bucket weighs but its plenty. I threw my shoulder out one time pretty good moving things around. Beeman

  8. If you are talking about selling at the "blow-off" in the Bull market for silver, that period is characterized by panic buying, with people standing in line to buy. Selling is easy.
    If you are talking about selling bars, coins etc at a routine point in the silver market, you can sell them via phone, lock in a price to the reputable firm you purchased them from, (the same way you bought them).
    It sounds like surfer has a load of bullion, then i would guess his supplier, if he is still in business, has a buy-back spread price. Normally you buy coins at spot, and sell them at a discount to spot. There is a buy/sell spread in bars as well. If there wasn't, no-one would be in the business as no money could be made.
    Every transaction has its costs. Stocks, funds etc. And the gov gets its cut too.
    As far as I'm concerned, an ETF is a type of derivative. Some people have faith in "underlying value", some do not.

  9. Trader Dan:

    Stocks, options, (in the Juniors) are behaving strangely. Spot Silver up, stocks still asleep.
    Futures in backwardization. Uncharted territory indeed. Thinking about putting a straddle on for SLV, expecting some serious volatility ahead. But may have to sell some mining stock in the money to do it. Why am i so nervous when silver is charging ahead?


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