Wednesday, July 13, 2011

Round mound of rebound

11:15 pm (Hawaii) It was not more than three days ago when Spot Silver was tumbling downhill, dipping below 35 and looking weak as heck. Spot Gold, not so bad. But now, with gold at a new high and pushing 1600 in overnight/Asia trading, and silver back at 39, the psychology of round numbers is upon us.

I learned from trading gurus like StockGuy22 that people have barriers in their minds that often will trigger selling no matter how good a stock is. In marketing terms, this is known as anchoring, when a specific number dominates the decision-making of consumers. 40 is a major point of focus for silver. It won't linger there long, I believe. The price will pass 40 and not take long to spark a run back to 45 ... or it will teeter at 40 for a short while before selling pressure is applied. Would people who bought at 40 or higher opt to get out once silver returns to that point?

I tend to think they'll hold and see where spot silver goes. But if it does rip through the low 40s, how long would it be before the CME mafia inflicts the market with another round of margin increases? They could certainly to this to silver again, but gold? I don't see them corralling gold, not when so many gold owners are actually banksters themselves.

Of course anything is possible, which is why I'm not overly excited about this latest PM run. 31 to 39 is a fair range considering the remarkable gain in silver over the past two years. There's no need for greed. There is value to be made if your hand is patient.

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