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As we watch yet another day of
deterioration in the economic/financial/political situations across the
Western World, and another day of the Cartel/PPT/ESF (Exchange Stabilization
Fund) desperately capping gold’s rise at 1% and the Dow’s decline
at double digits, I wanted to briefly address a topic that has brought on
much consternation among Precious Metals investors, who as a group have been
conditioned to anticipate the worst thanks to a decade of non-stop Cartel
attacks.
And that topic is SILVER, more
specifically the ramifications of May 1st’s SUNDAY NIGHT
PAPER SILVER MASSACRE. Many investors worry that, because silver moved up
sharply and then crashed suddenly that, manipulation or not, somehow this
means a “major top” was reached that will be insurpassable.
And my response to that is…..HA HA HA!!!!!! Watch $50 get taken out again later this
year, never to return EVER AGAIN (certainly not in 2011 U.S. dollars)!
To start, I cannot scream louder how
SHORT-TERM CHARTS ARE MEANINGLESS in a rigged market, particularly gold and
silver due to the heightened use of PAPER derivatives (including GLD and SLV)
to suppress prices. In fact, as I continue to pound home week after week, the
more that short-term suppression tactics are utilized, the more powerful the
longer-term charts become. In others words, once a major short-term
RESISTANCE level is broken following a long-period of capping, it becomes
major SUPPORT that has little chance of ever being pierced materially in
terms of the long-term bull market in progress ($1,550 gold is a perfect
example, IMO).
Second, if you look at the medium-term
silver chart below, covering the past three years, you’ll see that
silver price action following the SUNDAY NIGHT PAPER SILVER MASSACRE of May 1st
has been nothing short of spectacular, enabling the short-term overbought
situation to be alleviated, building rock-solid support in the $33-$35/oz range, and allowing the 200 DMA to rise to the low end
of that range (currently $32.85/oz and rising).
So not only has support at the $33-$35
plateau held strongly, but is building a powerful base for the next launch
attempt above $50/oz, which I put a 99% probability
of occurring later this year (perhaps much sooner than most think). If you
look at this chart closely, you’ll see that already the late April
surge doesn’t look out of place at all. Furthermore, those of us that
experienced this surge first hand know very well there was NOTHING frothy about
it. It was a methodical rise of $1.00-$1.50 per day, with all the same
capping/attacking tools that we are used to watching every day (TODAY is a
PERFECT EXAMPLE), with not a single day of real EXCITEMENT during the entire
move up from $35-$50/share.
In fact, per the charts below, you can
see the HUI actually peaked in early April, nearly four weeks ahead of the
silver peak. Thus, not only was there little froth in the silver rise (the
kind you’d see at a market top), but stock investors LOST significant
money in the sector during the rise from $38 to $50 an ounce, with the HUI
falling from 610 to 570. GOVERNMENT COMPUTER ALGORITHMS, such as the ones I
am watching today in major silver stocks such as SLW and SVM, are the reason
I sold ALL my large-cap mining companies this spring in lieu of BULLION (95%)
and a few, selected juniors, permanently changing the composition of my
portfolio (I will NEVER own a large-cap mining stock again!).
In other words, I am very thankful for
this episode in Cartel history, as it permanently taught me to avoid ANY and
ALL investments that the Cartel can attack with GOVERNMENT COMPUTER PROGRAMS.
You cannot lose with GOLD and SILVER BULLION, no matter what the Cartel does
to attack PAPER investments such as futures, options, ETFs, and large-cap
mining shares. And if you are a very careful and diligent investor, you might
be able to make a few bucks in junior miners. HOWEVER, juniors are inherently
very risky investments, so be VERY careful when considering putting money to
work in this manner.
As for the long-term, many worry that
since silver peaked at $50 in early 1980 (again due to blatant government
manipulation), and then again at that same level earlier this year, that
somehow this means the $50 level is insurpassable.
This thesis is patently absurd, trying to equate what happened 30 years ago,
on frankly another financial planet, as if the trading back then has even the
slightest relationship to what is happening today, with a global money supply
(on and off-balance sheet) AT LEAST 10x larger and growing exponentially!
Moreover, as immaterial as I consider
SHORT-TERM charts is how material I consider LONG-TERM charts. In fact, I
believe long-term charts to be EVEN MORE IMPORTANT than EVER thanks to the
massive resistance/support phenomenon described above, PARTICULARLY when
occurring at a MAJOR ROUND NUMBER such as $50/oz.
Looking at the below 37-year silver
chart, I see perhaps the largest reverse head and shoulders/cup and handle
formation of all time, one with such an incredibly powerful base that I
believe a move to hundreds of dollars per ounce is IMMINENT, even without
looking at the aforementioned money supply figures.
Perhaps it will take a few more months
to break through $50 for good, and perhaps the “consensus” will
be taken off guard if it blows through $50 later this summer, which as noted
above I place a high probability on.
To conclude, all I can say is that the
Western World financial system is coming down all around us in rapid motion.
Whether the Cartel/PPT/ESF can engineer a “soft landing” during
the second half of 2011 is still in question (I do not believe they can), but
irrespective PHYSICAL silver and gold are poised to move up markedly, if not parabolically, during this period.
If you own PHYSICAL gold and silver
and REAL ITEMS OF VALUE such as FOOD and LIFE NECESSITIES, the evil forces
CANNOT BEAT YOU, NO WAY, NO HOW. And at this very
dangerous period in American history (i.e. the end of the dollar as reserve
currency), your financial goals should be very defensive, i.e. to PROTECT
YOURSELVES from a massive economic downturn coupled with accelerating, and
potentially hyper-, inflation.
And by the way, this morning, after
rising ALL NIGHT for GOOD REASON, gold and silver were violently attacked at
EXACTLY the COMEX open at 8:20 AM, and as I write this, just MINUTES after EXACTLY
12:00 PM EST, like clockwork, gold was mauled again (see below), replete with
the early Cartel signal of smashing the HUI that always happens beforehand.
Remember, the monthly COMEX options expiration is tomorrow, so the bad guys
need to make sure that all the $1,600 gold call options and $40 silver calls
expire worthless, as well as to repel the key $1,600 and $40 ROUND NUMBERS,
respectively, for the THIRD TIME in FIVE DAYS. And don’t forget the
debt ceiling debacle, as the Cartel will do EVERYTHING in their power to try
and hold PAPER gold and silver down until it is resolved….
But don’t worry, Tyler Durden at Zero Hedge won’t consider the chart below
worthy of publishing, even though I have pointed out (and PREDICTED) these
attacks as often, and accurately, as the world famous whistleblower Andrew
McGuire!
Andrew Hoffman
Andrew Hoffman was a buy-side and sell-side analyst in the United
States (including six years as an II-ranked oilfield service analyst at
Salomon Smith Barney), but since 2002 his focus has been entirely in the metals
markets, principally gold and silver. He has worked as a consultant to junior
mining companies, head of Corporate Development and VP of Investor Relations
for different mining ventures.
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