"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


Thursday, August 16, 2012

Silver Quietly Sneaking Higher

Silver has managed to rally right to the top of its consolidation pattern without any fanfare and I should add, the participation of a great deal of managed money flows. In other words, without the benefit of the momentum crowd. CAll it a type of stealth rally.

I find this very interesting as it is occuring against the backdrop of rising Treasury yields and a rising equity market. Clearly, for whatever the reason, something seems to be occurring on this inflation front that is moving below the radar screen of many investors. Could silver be sniffing out the first whiff of an inflation play?

Take a look at the following chart and note that the shorter term moving averages, the 10 day and the 20 day, are now trading either ABOVE the longer term 50 day or near par with it. This is a big change that has not been seen on this chart since early March of this year! That is quite astonishing! Keep in mind that hedge funds, while they remain overall net longs, have drastically reduced that position and had actually been adding some fairly large short bets. EVen with that, someone is buying this metal and very quietly pushing it higher.

Let's keep a very close eye on this as it could portend a strong upside move if it can solidly clear the overhead resistance noted on this chart, especially if it does that to end a week of trade.


  1. Hi Ho Silver Away! Now if the bullion banks just play fair with the paper...And stop shorting the etfs too. Thanks Dan!

  2. I think its not surprising as silver rises in tandem with gold amid falling US dollars as equities rally.

  3. If you zoom out to a 3 year chart, we are sitting on lower trend line which coincides with the 38.2 fib and flat macd with poor volume. If this level fails then no support till ~$18.

    On the bull side, descending wedge reversal pattern and the long sideways pent up energy.

    My completely inexperienced (amateur TA) guesswork: not as much enthusiasm for silver here despite the incredible fundamentals. If the downside was less ominous this would be a no brainer long.

  4. On COMEX the open interest in silver is still too high, which could be used to trigger a nasty sell-off. I'd like to see a OI of maybe 100K contracts, not the current close to 130K one. There are just as many naked longs as naked shorts in the future market.

  5. I dont think there is such a thing as a naked long. A naked short means the seller doesn't have the actual metal for delivery

  6. Wouldn't a naked long be someone who owns the contract on leverage without the money to purchase the whole contract. Someone who is gambling on a rising price.


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