lyb

I would be tempted to start adding up now.

The reason is that Eurogold support at 1040 seems to hold i.e. eurogold has started increasing although

the price in dollars declines, currently at 1375$

Silver currently at an incredible 41% above the 200DMA. Normally would expect sharp correction BUT

1) Latest COT reports indicate commercials are reducing short position on every significant pullback. Still

51000 contracts net short.

2) Most important, gold is NOT overbought sitting at 10% only above 200DMA. As we know, silver normally

follows gold.

3) Winter months are strong season for PM.

4) Gold/silver ratio still declining currently 47.1

I am not selling yet any of my trading position.

I do not believe charts are so useful in predicting tops.

@ Pixel8R

Your graph is in error.

It does not show for instance the collapse from 725$ to 565$ that occured in May-June 2006.

See ktco.com for the data at that time.

30 !

for a fraction of a second.

Momentarily over 1400.

Correction over.

1000 Euro is now support.

I expect gold and hence silver to be supported by euroinvestors, who have seen the gold price

finally rise late last week over the barrier of 970 Euros/ounch. Currently 1012, not too far off from

base support.

I expect this correction to be small and brief.

""Yes, don't touch SLV. Get the real stuff"".

I have too many shares of SLV, so this summer I started diversifying in other ETF's like SIVR.

I can only do this gradually, since I only trade a small part of my holdings.

I have also started using closed end funds like CEF, to hold some silver.

Physical, almost impossible to obtain, where I am, and I have been burned by silver mining shares

(PAAS,CDE,SSRI,HL) only PAAS has fully recovered, except SLW which was a brilliant choice (thanks Dr. Bubb !).

Volume over the last few days on SLV is enormous

Today so far close to 26000000 shares (3 month average 14000000)

SLV will need to obtain more physical silver to back some of those shares.

I am a little apprehensive.

at G:S 47 yes, I will sell another 5%.

I have also sold 5% at en even worse price 23!

Thankfully I reinvested immediately in GDX, doing well.

OK, time for some comments on silver.

1) I can't see the price ever approaching 20$ again. The reason is we are still in the strong season,

until January at least. The 200DMA will have zoomed past 20, by then.

2) It is fair to say, that this rise is beyond the experience of everybody in this forum.

Even the rise in 2005-2006 which led to doubling of the price 7.5-15, was not as sharp as

the present one.

I have to admit, I sold a tiny teeny 5% of my silver yesterday. I bought some gold with it. We'll see how that pans out. I will re-buy silver on a dip in ~3 weeks' time (payday) and if there is no dip, will buy some more gold. My Silver position was largely accumulated at G:S >80, around $10/oz, so I am taking a little profit in gold. Also helps a bit with capital gains.

 

I am still absolutely convinced silver will go over $30, but the last few weeks seem extreme. I will not sell any more silver until G:S is well below where it is now, but I think we may be in for a G:S pullback from ~52 to ~60.

 

Sorry if I have offended the silver crowd! - it's just a little bit of G:S-ratio-trade profit-taking coupled with a bit of capital gains liability management.

27.35

Who else wants to sell some silver?

Zoellick, the head of the World Bank is seeking debate on a new gold standard, according

to a FT article.

I watch silver's rise with disbelief.

Having jumped in heavily in 2006, when the SLV ETF started, and having waited for 5 long years,

I was still in the red in summer 2009. The October 2008 drop from 21$ to 8.5$, forced me

to stop looking, thinking, it was a nerve shattering experience.

I did expect a rise, as usual, this autumn, but the force of it is incredible. Currently 40% up since late July and

still the strong season ahead.

I believe the investment decisions that each of us makes may be different, although we all appear to share a bull market view of the precious metals.

In perspective, I still participate in blogs trying to convince people that the real estate market is dangerous and that PM is a good investment. The difference in views in this case is enormous.

I am aware of the danger of deleveraging and even more aware of the increase in silver commercial shorts in the most recent COT report. Still, I hope that September, as is usually the case, will provide strong demand for physical gold that will limit the scope of any correction in both PM.

53% gold

28% silver

13% PM stocks

6% cash

It's all about liquidity. Yen, gold and treasuries go up on safe haven demand, and assets such as Dow goes down on risk aversion. Two sides of the same coin.

 

This makes perfect sense when thinking of gold as a currency and not an asset. It also makes sense when you consider the Dow should continue down in a deflationary environment while gold benefits as a safe haven currency.

 

During the deflationary scare of October 2008 and Dow collapse, PM followed the decline with gold decreasing from

900's to 680. The reason stated at the time was that hedge funds were forced to sell gold in order to fund liabilities

elsewhere. After Bubb's warning about impending Dow collapse, I expected gold and in particular silver to

be under selling pressure. During 2008, there was good correlation between silver and the Dow.

Yet, yesterday both PM in particular silver were exceptionally strong and reversed course to finish on the

upside. The 60c move of silver in particular requires some explanation.

1) Is silver finally perceived also as money?

2) Is the huge short position of large commercials being covered?

3) Are expectations of the strong autumn season driving investor interest?

Where is the truth? Perhaps, it is futile to understand short range fluctuations. I do understand the long term

inverse correlation between gold and the Dow, but what about silver's correlation with the Dow?

Surely, if a deep recession is expected, industrial demand should be expected to decline and silver should have followed all other commodities down.

Does anybody understand the increase of the gold price from 1209 to the current 1234$/ounch, in spite of the

decline in the Dow?

I think O'Brien's error is the assumption that deflation is bad for gold.

 

The idea is deflation will bring the price of commodities down ergo gold will come down. The error consists in not seeing that gold is now effectively monetized and acting as a currency not a commodity.

 

This will happen again, when everything is screaming deflation, and gold will come off a bit. Because many gold holders have bought gold out of inflation expectation, they may have a moment of revelation, panic and sell.... right at the wrong moment.

I agree.

The October 2008 deflation scare DID bring the gold price down from the 900's to 680, temporarily.

If there is a stock market crash again, I am sure that gold will once more be sold from leveraged

investors for the cash that will be needed, to cover losses and financial demands elsewhere.

The difference this time is that investment interest in gold worldwide has increased substantially since then. Evidence arises form the fact that the gold price has refused to drop below the 200DMA for 2 years.

This is the fundamental reason, that the price correction this summer has been small. I note that jewellry industry

interest resurfaced at the 1160$ level. I expect this level to hold once more in a stock market crash. The decline

of the Euro will provide support to the gold price.

Personally, I completed the repurchase of all PM sold in spring, on Friday.

I had great doubts about a serious correction of the gold price down to 1100$, which I expressed in many

posts.

The low I believe was 1160$ and I heavily invested at that point.

Usually, when $ rises, $-priced gold declines. However, euro is currently falling (eurogold low was 890) and is

not allowing a decline in $-priced gold. How can confidence to the Euro be improved? The problems in Greece and

elsewhere have not diminished.

My feeling is also that silver will exceed 20$ this winter and remain above that level. Certainly this is the

first time silver was not smashed during the summer (keep fingers crossed), which I think is a most unusual

event.

Certainly a buy time for Eurogold investors .

Buy zone 890-920 Euro/ounch. I am buying physical with Euros, gold stocks with dollars on every dip.

Must complete purchases by the end of the month.

Physical is also getting harder to find in my part of the world.

Visited three bank branches to accumulate 10 ounches of gold.

Well, we've bounced nicely off the 200DMA.

Did not even touch the 200 DMA, currently at 1151 according to the following site http://www.scotiamocatta.com/scpt/scotiamo...ec/pm_daily.pdf

Usually gold falls below the 200DMA during the summer, however, over the last 2 years it has been

a very strong market.

I hope there will be a low during this month to complete my purchases.

I do hope silver holds the 17.50 level. If is doesn't there may or may not be a large drop.

Certainly if gold falls below 1100 as Bubb suggests, silver will drop substantially.

However, since I do not claim to know the future, my strategy is to gradually buy back the silver I sold

at moderately lower levels. Every 40c drop another 500 ounches. Last purchase on 17.45 level and have already

bought most of it back (another 1500 ounches to go). The reason I started buying back 'early' is the COT report for gold/silver, indicating commercials were covering their gold shorts at tremendous pace even with gold at 1190 level. I recently came across an article stating that technicals are more important than the COT report, but again I am no expert.

I just feel that with the increased central bank interest in gold and the large number of contracts still to be covered ,

the drop in gold may not be as large as expected.

A repeat of 2008 in unnecessary for silver to go lower.... it went to $15 in Febuary this year. The kind of deleveraging panic seen in 2008 would probably take silver back to $10 briefly. But to capitalize on these dips, it would be best to be in dollars [the Euro price is kind of irrelevant since the Euro has depreciated so much recently]. I value my dollars quite highly these days... and would only swap them for silver at a lower price. My core bullion holding is in gold.

 

Sounds like you are having some success in trading silver. My strategy may be quite different to yours and hence my tactics towards silver. I only trade silver against US dollars to increase my dollar holding [confident to make the trade because I think silver will stay volatile and relatively strong]. My rather large dollar holding serves as a hedge [for lower gold prices] against an equally large gold holding.

Your strategy makes much sense.

I sold some gold and some silver for dollars but also for Euros and the latter is mostly underwater.

I thought Euro was weak and live in the Eurozone. But after sinking below 1.20, the only trade that appears to be successful is selling silver for dollars, as your strategy suggests.

My strategy this time was to sell 10% before summer and buy back during summer. However, I am still 84% invested, Eurogold and Eurosilver have increased dramatically in price over the last 9 months, and have held over Eurosilver for 5 long years, a period when it has greatly underperformed gold. I needed some profits, in Euros.

How low can silver go?

Past COT reports suggest big commercial short covering when silver goes to the low-middle 17's.

Silver is at the 200DMA right now and seems to be a better buy (in the long term) than gold.

Yesterday I started buying back some of the silver I recently sold. I will continue doing so

during this price correction.

Romans Holiday. Note that silver priced in Euros is still at very high level and there is increased interest

by German buyers. This may NOT be a repeat of October 2008.

So, if you are Eurogold investor, where is the expected summer correction?

After 5 years of watching this market, I do not remember ever behaving like this?

Are we ever going to approach the 200DMA, neat 1110, as we normally do during the summer?

Or is this going to be a hot summer?

Yet, silver continues crashing down and refusing to attain the 20$ level.

I know the fundamentals, but I have now decided to sell at least 15-20% of my silver holdings (in the

form of shares) on every major opportunity.

Silver has not shown the stability of gold, over the last 5 years and the silver/gold ratio keeps on climbing.

Selling Eurosilver does not seem a bad idea at present, perhaps after the next peak.