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Archive for 18/01/2011
Post-holiday strength
18/01/2011 by Philinje.
After some of the US took off Martin Luther King Jr day yesterday, traders are back in the markets and gold and silver have bounced.
Looking at the recent decline with fresh eyes, it’s possible an ABC correction ended on Friday with a decline to immediate support levels. The C leg was slightly shorter than the A leg. Actually, in gold the A leg was a ludicrous vertical drop followed by a modest B leg and then the C leg dropped a short distance to the same level as the A leg.
In silver, the decline looks more standard: the A leg was a normal decline, followed by a normal retracement, followed by a normal C leg that is onlly slightly shorter than the A leg - but it dropped to a new low at $28 yesterday (during a market holiday). In short, the decline in silver has much more of a classic shape and continued straight into yesterday’s thin market conditions. Gold got whacked by a baseball bat, tried to stand up then fell to the ground again.
This speaks volumes about the ability of the bullion banks to perform bear raids as time goes on. It’s become quite obvious that they have not been able to whack silver around like they used to. Instead, they are acting desperate with gold and hoping silver follows suit.
As proof of this view, here is an excellent article by a noted authority on precious metals, Adrian Douglas:
https://marketforceanalysis.com/article/latest_article_011511.html
Note the very clear signs that silver’s price is becoming more resilient. The author states that this is certain proof of a shortage of physical silver. This will cause a massive short squeeze long before the CFTC resolves the controversy over position limits.
In terms of mainstream articles, the following from Rich Dad, Poor Dad author Kiyosaki appeared in Yahoo Finance last week:
http://finance.yahoo.com/banking-budgeting/article/111838/sell-gold-buy-silver
This piece is not bad for explaining most of the situation with precious metas in layman’s terms. And obviously the message is to buy silver.
Finally, the Canadian authority on commodities Murray Pollitt offers this free summary of 2010 on the GATA website. It’s worth a quick read:
His conclusions for 2011 and beyond are very simple and straightforward - and quite likely spot on. Currencies are in a death spiral and gold is the answer. Well, silver is a better answer.
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