Silver Hitting Escape Velocity?

A picture is worth a thousand words, so let's start there with a weekly chart of spot silver. (click to enlarge)

As previously posted on this blog, I think this is just the beginning, and anyone trading precious metals should continue to buy the corrections.  Anyone with any significant amount of savings should also be purchasing physical silver (and/or gold) as a hedge against a currency collapse.  Don't laugh and don't jeer.  Open your eyes and your mind.  Considering the current state of affairs, both here in the U.S. and around the world, the probability that we will see a major collapse is rising by the month.  If you don't believe me, surf over to Google and do your own research.  Here are a couple of questions to help you out...

If all is well with the US Dollar, other global fiat currencies, and the world economy...

1.  Why have central banks around the world been active buyers of gold in the past months?

2.  Why has China in particular become the largest buyer of gold over the past several months?

3.  Why have recently deposed, third world dictators been caught trying to escape their native countries with private jets loaded with gold and silver bars, and not bundles of $100 bills?  (as would've been the case in the 1980's and 90's)

4.  Why are the U.S. State Governments of Utah and Virginia engaging in serious debate over the topic of using gold and silver as a means to settle debt?  

Is it maybe because the power elite no longer trust the paper fiat currencies of the world?  One thing that is a given - the power elite in this country and around the world are privy to much more information than you and I will ever be, and they are positioning themselves for a future that will likely not include the Dollar, Euro, Pound and Yen as we now know them.  Perhaps we should be following their lead?  It's your decision to make, but I've been doing so since the crisis of 2008. 

As for silver...as I've said time and time again, the fact that this metal has value both as an industrial commodity and a historical medium of exchange means that as fiat currencies around the world continue to devalue and real inflation takes hold, the price of silver will sky rocket.  The chart above shows that silver has already doubled in price since last year.  Now consider this from the US Mint on 3/2/11:

Production of United States Mint American Eagle Silver Uncirculated Coins continues to be temporarily suspended because of unprecedented demand for American Eagle Silver Bullion Coins. Until recently, all available silver bullion blanks were being allocated to the American Eagle Silver Bullion Coin Program, as the United States Mint is required by Public Law 99-61 to produce these coins “in quantities sufficient to meet public demand . . . .”

Although the demand for precious metal coins remains high, the increase in supply of planchets—coupled with a lower demand for bullion orders in August and September—allowed the United States Mint to meet public demand and shift some capacity to produce numismatic versions of the American Eagle One Ounce Silver Proof Coin.

However, because of the continued demand for American Eagle Silver Bullion Coins, 2010-dated American Eagle Silver Uncirculated Coins will not be produced.

The United States Mint will resume production of American Eagle Silver Uncirculated Coins once sufficient inventories of silver bullion blanks can be acquired to meet market demand for all three American Eagle Silver Coin products.

Hmmm....looks like a supply problem really is developing, but as I said above, do your own research, and I am confident that you will come to the same conclusion.

Silver is poised to go parabolic....and I believe that this will happen between now and October 2011 based on what has been happening on the COMEX since December.  We will very likely see a COMEX default by October, and when that occurs, the manipulated price suppression will cease, and you will see silver rise in accordance with the normal laws of supply and demand.  If you don't already own silver by then, my feeling is, you will have missed the boat.

Just so everyone is clear - I am not gloating about my successful silver trades.  This is a wake-up call for anyone who still believes that all is well in the world and that the US economy is on the mend.  It's not, and things have the potential of getting really ugly in the not too distant future.  Prepare for the worst and hope for the best - there may not have been a more appropriate time for this particular statement in our current generation.

For the traders:
In the near term, I think we will see an intermediate top in both silver and gold sometime this coming week.  Silver may go as high as $37, but I would then expect to see a short term correction, and it could be quite violent.  It wouldn't surprise me to see Blythe and the JP Morgue take it all the way back down to $30.50, but we should see support at $34 and even stronger support at $32.50 first.  I will be a potential buyer at both of these levels, and if it does get all the way down to the $30.50 - $31 range, I will likely take a very large speculative position via forward month call options. 

For the investors:
Buy some physical silver now, and continue to buy an incremental amount every month, just as you would invest in your 401k or IRA.  Don't worry about short term price fluctuations...longer term, you will be in a very good place.