It seems that my two posts on silver earlier this week were timely indeed. Links to these are here and here if you haven't already read them. In this post, I will present the latest developments that I've come across and leave you to judge for yourself where we head from here. Let's begin with the charts.
As you can see, on Friday spot silver closed at the high of day ($29.39) while taking out the previous highs established in November. I mentioned in my previous posts that we may see silver take a run at $30 by the end of the week, and we got within $.60 of hitting that level. From a purely technical standpoint, this is looking very bullish for silver. We may sell-off a bit early next week, but then I would expect us to take out $30 in short order.
Now let's hit some stories from the blogosphere. In reality, these aren't just stories, rather, "calls to action", and they seem to be getting traction from a wide audience in both cyberspace and the printed media.
1. If you'll recall in my first post last Sunday, I told you that JP Morgan is one of the big banks currently under investigation for silver price manipulation via massive paper short positions on the COMEX. Well, last week...Nov 30th to be exact, Max Keiser, another outspoken champion of truth in the face of Wall St. corruption, called for everyone reading his blog to go out and buy just 1 ounce of physical silver. By his reckoning, if just 5% of the population were to do this, it would force JP Morgan to cover their naked short positions and potentially put them out of business. Just desserts for this corrupt group of bankers, in my humble opinion. A couple of days later, this story hit the mainstream media in UK newspaper, The Guardian, titled "Want JP Morgan to Crash? Buy Silver". Our friends over at Zerohedge have also been covering this topic, and here is an excerpt from their post on 2 December:
The campaign to buy silver and force JP Morgan into bankruptcy could work, because of the liabilities accrued by its short-selling
Here's how the campaign works: wealth tied to a fiat currency is easily overwhelmed by wealth tied to silver and gold. And the world is waking up to the fact that they have the ability, without government assistance or other interference, to create a new precious metals-based backed currency system by simply converting their fiat paper into real money.2. Next, on the evening of 3 Dec., Zerohedge posted another video - JP Morgan Silver Manipulation Explained. I'm not sure who is actually responsible for producing these cartoon-type videos using text-to-movie technology from www.xtranormal.com, but there have been a number of these videos hitting the financial blogs in the past several weeks, and though they are typically heavily slanted, they do have a way of laying things out that are simple for the layman to grasp. Below is the video originally posted at Zerohedge, and I encourage you all to take a few minutes to watch it, as it describes the JP Morgan short position, the 15:1 historical price ratio between gold and silver that I mentioned in my posts earlier in the week (actually, they say it is 16:1, but close enough), and finally, they too present a call to action. Buy silver.
This campaign has 100% chance of working; it falls into the category of a self-fulfilling prophecy. As more individuals buy silver and gold, all attempts to replenish the system with more paper money will only cause the purchasing power of the silver and gold to increase – thus prompting more people to buy more. Any attempts to bail out JP Morgan would have the same effect. If the US Fed was to flood the system with bailout money for JP Morgan to cover their silver short position (as they did after the collapse of Long-Term Capital Management), more inflation will ensue and the price of silver and gold will rise more, triggering more purchases. A virtuous circle is born.
3. And now, based on the call to action mentioned in the above video, take a look at this post, once again from Zerohedge: Silvergoldsilver.com Runs Out of All Precious Metals in Hours.
it appears that among the tens of thousands of viewers who have subsequently gone to the goldsilvergold.com website, there have been quite a few conversions. So much so that as of today, the company is not taking any orders and is sold out of all products. The company goes on to say that it will not be accepting any new orders until December 6.If you didn't watch the video, it specifically calls out going to the above website to purchase physical silver. On a whim, I decided to take a look at my precious metal broker-of-choice, apmex.com, and discovered that while not completely out of product, they are sold out of all 5 oz silver bars, and only have limited quantity of 10 oz bars. Here's a screen shot from the 10 oz page....note they are also selling for $1.19 premium over spot....this is up considerably over the past year, clearly based on demand.
Conclusion: At this point, it seems pretty clear that silver is getting ready to explode. If you believe what they say in the video, $500/oz is now a potential target, and there are others who are predicting that we will eventually see gold and silver hit parity. I think these two forecasts are both overly optimistic, but I do like our chances of at least hitting $100/oz in the near future even more than I did a week ago.
In closing, I'll leave you with a common sense caution. There's no such thing as a "sure thing", especially when you have power houses like JP Morgan and the Fed on the other side of your trade. They have the power and influence to change the rules mid-game, and really screw over the retail trader/investor like you and me, so if you decide to take on a silver position, please don't bet the farm.
I'll provide further updates as I come across new info.
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