Silver .. Decisions, decisions.




Anyway back to the subject we all really care about here.
http://www.financialsense.com/contributors/carl-swenlin/silver-still-soaring

It's the last paragraph that is worthy of note when he looks at the Net Asset Value (NAV) premium as a means to measure froth or exuberance. The author doesn't mention Sprott's funds though which by his own measure would be considered very frothy or as Harvey would say they are simply real price discovery.

There is another good article here;
http://blog.afraidtotrade.com/look-at-these-etf-charts-slv-zsl-before-calling-a-top-in-silver/
and he makes the point that typically lines of resistance are based on the notion that long term bag holders will try to unload from where they bought in at the high. In this case he is talking about the $48 previous high back in the Hunt Bros. days. He asks "what is the likelihood of someone unloading after decades of waiting?

On the whole it looks like we are still in a short covering rally. At some point that exhausts itself and we come down and it's usually fast in Silver. Being a degenerate gambler I have decided I am going to ride this puppy higher before trading my Silver for Gold. In a perfect world that means about $120 in Silver adjusted for inflation.

Oh yeah, If you haven't done so already you really should bookmark this terrific spread sheet created by Robert Leroy Parker.
https://spreadsheets.google.co/ccc?key=0Ajiwv0ic6RUtdGR1d2k1VXVLZEd0UG10QWxkalIwb2c&hl=en&authkey=CNzzi40L#gid=0

Edit: Just to add the pic below. As you can tell Warren has some travel plans.



5 comments:

Warren said...
This comment has been removed by the author.
Warren said...

Just what I needed Louis. Yes, I too think that we have a different animal here. I would expect to see the silver fiat price to whip back shortly to the trendline gradient (right terminology?) which started last September and then continue on its merry way, defying all explanation. I have decided to trade some for physical gold as a 'lock in profits' with the view that gold will be less volatile on a longer range - but planning to do this in small amounts only, over the next few months (maybe 4% at a time).

I'm still looking for a shape of what happens when derivatives unwind but hit the glass ceiling ... my guess - we'll see the same movement in silver as we have in gold for the last decade. Perhaps not as steep a gradient as the last week all the way, but a slow, steady incline all the way up - $30/oz/year average (minimum) for the next 30 year or more. In theory that means one hellava correction very shortly, with JPM et al. still laughing all the way to the bank (sic). In all my search for patterns it would seem that the modern markets have lost all link to reality so we're in for some crazy movements.

I re-read a bit of the Benton claims reminder stuff - ouch ... what happened to that $36-ceiling JP Morgan feels pain-level? We're $10/oz above that now. Anyway, if the powers-that-be wanted a bubble blown, they sure got it.

RLP, I keep mentioning the 30-year timeframe because I have some retirement funds in bullion now. So I think that long term (30 years) silver will be trading over $1000/oz. But trying to decide silver over gold for that timeframe is agonising (adopting a 'set and forget' approach) - I have settled for a 50-50 allocation. For you Aussies, that's a SMSF (self managed super fund), cost a little to set up but worth every penny.

Have a good weekend!

Louis Cypher said...

It's a tough decision to make. One decision is easy though. I won't be exchanging any metal for pieces of paper until that paper is worth something more than unicorn farts and pixie piss.

Great pic btw. I busted out laughing when I saw it.

Vincent said...

Warren,
Great post.
How many questions will actually be answered this week? Who knows.

I've also considered the possibility of a sharp pullback. The next few weeks may clear things up a bit. Although I'm not expecting it, I've seen the possibility of 30-32 AG. A return to the normal trendline could put it there.
Few believe this will happen. I shall stay tuned. Thanks for the post

/SleepingVillage/ said...

I've already traded my silver(at $42 CAD) for gold. It turned out to be a bit, ahem, premature, but I'm more than happy with my decision. I'd love to see one more big pullback in early summer, just in time for me to go all in.

DDT