"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


Sunday, May 19, 2013

Japan's Economy Minister sets off Selling Cascade in Silver

News out of Asia is roiling both the gold and silver markets this evening. Apparently Economy Minister Amari spooked the Forex markets Sunday when he stated that further weakness in the Yen could actually end up damaging the nation's economy.

Obviously this is the FIRST sign we have seen out of official Japan that the level of Yen is now low enough for the powers that be there. Again, it is just one minister and there is no official change in policy but he is voicing concerns that the currency might have fallen a bit too far, too fast.

His comments are being used as a reason by some Yen bears to partially cover existing yen shorts and realize some gains. The downside to this as far as the precious metals go, is that Yen Gold and Yen Silver are taking a vicious beating as a result. Take a look at the following chart of Silver in Yen terms and you will see exactly what has happened to that market. It plunged over 8% at one point!

This is resulting in Japanese traders further selling gold and silver to minimize losses or to actually cover losses in their short currency positions, which caught some of them leaning a bit too heavily onto the short side of the Yen.

Silver  in US Dollar terms, has fallen to within 25 cents of MAJOR Chart support near the $20 level where it uncovered ferocious buying so far. Reports out of Asia are emphasizing the surge in demand this is uncovering. We'll see if that holds as we move into Western trading hours.

I want to note here that the volume on the collapse in price towards $20 is pitifully low. The selling appears to have occurred into a void which is the reason that the price fall was so exaggerated. The bulk of the selling is actually occurring in Japan, but there does not appear, thus far, to be the same appetite to sell silver in Dollar terms down at current levels.

Yen gold has confirmed the double top pattern shown on the daily chart with the significant breach of its former support zone. In classic textbook fashion, price rebounded to retest broken support, now turned resistance, and promptly failed. This evening's losses are pushing price back towards the spike low shown on the chart.

It really is quite uncanny; no matter how much money Central Banks continue to create, and Japan is certainly no laggard when it comes to running the printing presses, gold continues to fall completely off the planet, almost as if it is being sucked into an enormous black hole. No matter what it is, gold or silver, investors in general seem to want no part of the metals unless it is to SHORT them.

One would have to judge that the modern Central Bankers have completely redefined the very concept of money itself. It would seem that prosperity can be created at will, with no consequences whatsoever. Have we discovered the Holy Grail of human prosperity? My guess is that it is only a matter of a few more years of this and poverty itself will be resigned to the dust bin of history, a relic of an ancient unenlightened age. What's next - the elimination of death and disease??


  1. So the yen guys bought yen to cover there short positions and used their long silver and gold positions to do it? Must have been quite a panic. If that is the case, could there not be a lot more precious metal longs waiting to be liquidated? Excuse my ignorance...

    On another note, if the stock market were to get majorly spooked, where would that money flow? Do you think commodities could benefit?

  2. Dan, is it really the reason?
    Did you see that they just closed the HKmex?

    As I mentioned in a possible scenario, I'm a bankster bear and :
    - I short trillions of contracts on the paper side
    - Prices drop to the abyss
    - Problem is I have trillions of contracts to cover
    - Hey! I got a solution! I close the whole house and I cash settle the contracts at the lowest prices! Loool! Go home, long paper holders at Hkmex.
    Btw, seems that Rotschild owns the house?

    I don't know if this is BS or a real info, I didn't check, but it's put as a real news on silverdoctors...

    1. http://www.theasset.com/article/24345.html

    2. except that open interest on the HKMEX was 171 gold contracts and 10 silver contracts.


      so that is positively not a realistic explanation.

      a realistic explanation is that no one wanted to trade there, so they closed it.

    3. Apparently, it's true


  3. Right... so let me see, leveraged bets to the upside are all on the Nikkei which is up >60% YTD. Economy Minister says Yen weakness might not be that good of an idea...and what gets hit is precious metal that has been falling in price week after week?!? You couldn't make this stuff up if you wanted to.

    Ultrathin trading hours, no limit down circuit breakers, someone interested in moving the price dumped a boat load of contracts and cut 10% in a split second. I'm sure the CFTC is on it, don't worry folks. Meanwhile TA chartists will update their bearish forecasts, disregarding the time of day and volume with which the chart was painted.

  4. After all, before 2010, silver never was priced above 20$...

    I don't want to scare bulls further, but technically speaking, the basis of the downtrend channel coincides with a 100% retracement of the 18 $ - 50 $ move, and blue / green flag continuation potential reaches also the 18 $ area.

    I'll buy for VALUE on the long-term around 18 $ for sure, no matter the technicals.
    In the meantime...careful with the volatility.
    20 $ vs 50 $, we are now even deeper in % than the 2008 correction from 21 to 9 $...


  5. Since November 2012 Yen has fallen hard and so have precious metals. As Dan stated this morning Tokyo time the YEN rallies and precious metals get hit. We can't win!
    In order to get gold going what do the currencies have to do?
    Are we sure that if the US dollar index starts to break down a rally in gold and silver will eventuate?

  6. The month is not over yet, but at least the median of the monthly Andrew's pitchfork seems to be a support for Silver.



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