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Silver’s split personality feeds steep price drop

 

Metal’s set for biggest quarterly loss in almost four years

 

June 29, 2012

 

“Silver had more froth in the price to work off versus other commodities,” after its “’bubble-esk’ run up in 2011, where it almost doubled over the course of three months,” said Elliott Orsillo, co-founder and portfolio manager at Season Investments LLC.

 

Futures prices for silver (US:SIU2) peaked above $48 an ounce in April of last year. It traded above $37 at their peak this year so far.

 

But after the September contract closed Thursday at $26.29, silver’s on track for its biggest quarterly loss in almost four years, down 19% quarter to date, according to data from FactSet Research, as of Thursday. That compares with a 7.2% decline in gold futures over the same period.

 

http://articles.marketwatch.com/2012-06-29/markets/32458657_1_silver-prices-futures-prices-split-personality

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I wasn't sure what you were asking, can you elaborate?

You already answered my question, but along with a question didn't ask which I thought made me look a bit daft.

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Silver futures with volume profile - 1 year;

silver-2.png

 

The value area (where 68% of volume transacted) across the last year is between $26.7 and $35, with most of the last 12 months' trade occurring at $31.7.

 

Silver futures with Linear Regression - 3 years;

SilverLR.png

 

On this metric silver is nearly one standard deviation below mean, when it reached 1 standard deviation above in August 2011 strong resistance was seen at that level. 1 standard deviation below is currently around $25. It'll be interesting to see if it ever makes it back down that far...

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Silver futures with volume profile - 1 year;

silver-2.png

 

The value area (where 68% of volume transacted) across the last year is between $26.7 and $35, with most of the last 12 months' trade occurring at $31.7.

 

Silver futures with Linear Regression - 3 years;

SilverLR.png

 

On this metric silver is nearly one standard deviation below mean, when it reached 1 standard deviation above in August 2011 strong resistance was seen at that level. 1 standard deviation below is currently around $25. It'll be interesting to see if it ever makes it back down that far...

on your chart, you've drawn the linear regression line and the stdev lines above and below. i get that. i see that on this chart in the august of 2011 the price touches the stdev above the mean. my problem in understanding your point is that the regression line (and the stdev lines) are derived from data spanning 3 years to the present day ie, includes a great deal of data that did not exist in the august of 2011.

 

what i am trying to ask is whether or not you are talking about the price in august 2011 being 1 std dev above the regression line on a chart comprised from data three years up to august 2011, rather than to the present day.

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on your chart, you've drawn the linear regression line and the stdev lines above and below. i get that. i see that on this chart in the august of 2011 the price touches the stdev above the mean. my problem in understanding your point is that the regression line (and the stdev lines) are derived from data spanning 3 years to the present day ie, includes a great deal of data that did not exist in the august of 2011.

 

what i am trying to ask is whether or not you are talking about the price in august 2011 being 1 std dev above the regression line on a chart comprised from data three years up to august 2011, rather than to the present day.

 

The previous chart displays the price on 23rd August 2011 touching 1 standard deviation above mean line using data for 3 years up to when the chart was posted, therefore it does include data after 23rd August 2011. Silver touched $44.275 on 23rd August 2011.

 

Using a different system I've charted Linear Regression from 3 years up to 23rd August 2011 (note this is on SLV as I can't get futures on this other system);

 

SilverLRC23rdAUgust2.png

 

It's important to note that the upper/lower mid lines (light green) on this chart are not 1 standard deviation (not sure how to do that with this other chart system). These are 50% from mean. 1 standard deviation at that time would have been at around $45 on this chart of SLV (probably about $46 for silver futures).

 

The regression lines are calculated and drawn automatically by the system.

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Its a shame that it will not draw the stddev lines for this new chart.

 

I didn't mean for you to go doing loads of extra chart work. I feel a bit guilty now.

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Its a shame that it will not draw the stddev lines for this new chart.

 

I didn't mean for you to go doing loads of extra chart work. I feel a bit guilty now.

 

I don't class this as work! I love markets, trading and analysis. Yeah so you can visualise the 1st standard deviation line on the last chart as essentially being right in the middle of the two upper lines.

 

Some traders are chatting on TD Ameritrade live chat and seem pretty bearish, one talking of buying loads of SLV puts, another saying he is long gold and short silver right now.

 

The SLV put buyer;

 

"If we break $26 I make a bunch of money"

 

 

Makes me laugh, he's only $22 too late, lol

 

The guys a maniac, he's bought loads of SLV puts with a $20 strike price. That's just ridiculous.

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I don't class this as work! I love markets, trading and analysis. Yeah so you can visualise the 1st standard deviation line on the last chart as essentially being right in the middle of the two upper lines.

 

Some traders are chatting on TD Ameritrade live chat and seem pretty bearish, one talking of buying loads of SLV puts, another saying he is long gold and short silver right now.

 

The SLV put buyer;

 

"If we break $26 I make a bunch of money"

 

 

Makes me laugh, he's only $22 too late, lol

 

The guys a maniac, he's bought loads of SLV puts with a $20 strike price. That's just ridiculous.

:-) sounds like a lot of fun over there. Do you have to have an ameritrade account to read the forum? Obviously, as you know, I'm not a technician so I wouldn't open an account. I have a TDdirect account for my simple stock transactions.

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How on earth has PSLV dropped 4.3% today whilst AGQ is only down 1.7% !?

 

I'll answer my own question:

http://blogs.barrons.com/focusonfunds/2012/07/12/ignore-todays-noise-in-sprott-silver-fund/?mod=yahoobarrons&source=email_rt_mc_body&ifp=0

 

"The Sprott fund is down 3.8% in mid-Thursday trading at a time when the iShares Silver Trust (SLV) is up 0.3%. What gives! You ask. Sprott priced a follow-on offering of 18.1 million shares at $11.05, for proceeds of about $200 million, or $230 million if underwriters exercise their over-allotment option. Judge the offering by its relationship to the net-asset value, which stood at $10.71 as of yesterday, or a 7.2% premium to the market value, according to CEF Connect. The offering priced at 3.2% above last night’s NAV.

 

In plain English, Sprott turned some of the fund’s premium into cash it can use to buy more silver in the future. And it got a better price for the shares than the value of the underlying assets."

 

Ended up buying a teeny bit more at $11.01! :unsure::)

 

AGQ actually closed the day up 0.68%

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I'll answer my own question:

http://blogs.barrons.com/focusonfunds/2012/07/12/ignore-todays-noise-in-sprott-silver-fund/?mod=yahoobarrons&source=email_rt_mc_body&ifp=0

 

"The Sprott fund is down 3.8% in mid-Thursday trading at a time when the iShares Silver Trust (SLV) is up 0.3%. What gives! You ask. Sprott priced a follow-on offering of 18.1 million shares at $11.05, for proceeds of about $200 million, or $230 million if underwriters exercise their over-allotment option. Judge the offering by its relationship to the net-asset value, which stood at $10.71 as of yesterday, or a 7.2% premium to the market value, according to CEF Connect. The offering priced at 3.2% above last night’s NAV.

 

In plain English, Sprott turned some of the fund’s premium into cash it can use to buy more silver in the future. And it got a better price for the shares than the value of the underlying assets."

 

Ended up buying a teeny bit more at $11.01! :unsure::)

 

AGQ actually closed the day up 0.68%

 

I got into PSLV 4 days after the debut (low premium) and sold it (too early) for about a $2k profit.

 

You know although I sold that too early I sold half my physical silver at the top and bought puts and rode them down to $35/$33.75 (covering way more than the remaining physical) and yet although I've done amazingly well with silver I still wish I bought more puts. It was the perfect trade, it would have been even more perfect if I'd bought more puts though...(that's hindsight of course)

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Not heard from David Morgan for a while...

 

 

Need to forward to 40 secs in

David Morgan runs a paid subscription newsletter with optional trading notification services. It would not go down too well were he to blab his views into the mainstream too regularly.

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Au:Ag ratio very steady. I wonder ther are lots if people with their eye on 60:1. I certainly am interested in selling gold for silver at that ratio, if I can do it safely. That is another matter.

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Some traders are chatting on TD Ameritrade live chat and seem pretty bearish, one talking of buying loads of SLV puts, another saying he is long gold and short silver right now.

 

The SLV put buyer;

 

"If we break $26 I make a bunch of money"

 

 

Makes me laugh, he's only $22 too late, lol

 

The guys a maniac, he's bought loads of SLV puts with a $20 strike price. That's just ridiculous.

 

sub 20 silver is looking possible. Who now believes in the hyperinflationary holocaust that was supposed to happen with QE?

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sub 20 silver is looking possible. Who now believes in the hyperinflationary holocaust that was supposed to happen with QE?

anything is possible. i can tell you that i would buy a hell of a lot more silver in that event.

 

i can also tell you now the hyperinflation will not be a surprise to anyone when and if it finally comes to pass. hyperinflation is the end result of indefinite continuation of current policy - ie, print money to finance government and whatever other insolvent institution they decide need to be bank rolled.

 

think of the situation a bit like watching paint dry.

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despite the text and nature of the site, my eye is drawn to the final result - I note no change on the totals or a slight increase. Hence waiting for Comex default may take more years, one is best off looking at fundamentals........ or charts(?)

http://www.silverdoctors.com/massive-paper-inventory-volatility-in-comex-silver-warehouses-hiding-physical-tightness/

 

 

 

prev total new total

 

TOTAL REGISTERED 28,739,484.115 596,062.170 0.000 596,062.170 5,285.120 = 29,340,831.405 - Slightly up

TOTAL ELIGIBLE 110,806,595.226 712,855.670 734,127.990 -21,272.320 -5,285.120 = 110,780,037.786 - not much change

COMBINED TOTAL 139,546,079.341 1,308,917.840 734,127.990 574,789.850 0.000 = 140,120,869.191 - Slightly up

 

 

 

Although the site cannot resist mentioning

While the CME is now reporting inventory levels to 3 decimal places, strangely enough- once again, NO MENTION FROM THE CME OF THE MISSING 1.4 MILLION OUNCES OF REGISTERED SILVER THAT SIMPLY DISAPPEARED IN THE AFTERMATH OF THE MF GLOBAL BANKRUPTCY!

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