Sunday, September 25, 2011

Rubber band silver? (updated 900 pm HST)

2:49 am (Hawaii) Just playing around with numbers (hey, that's permissible now and then) with spot silver. A couple of weeks ago, I fiddled with the possible range of silver based on 21 to 9 to 49 to 32. Well, now that spot price has broken the resistance level of 32, it seems painfully possible that spot could follow this semi-logical pattern:

high 21, low 9
high 49, low 21

Each new high is met with a pullback of 57%. Each new proceeding new low is met with a gain of 133%. Based on this flimsy, whimsical equation, here's what could happen in a world based purely on repetition rather than puppeteering by the Wizards of Oz.

high 21, low 9
high 49, low 21
high 114, low 49
high 266, low 114
high 620, low 266
high 1,446, low 620
high 3,373, low 1,446
high 7,869, low 3,373

I don't even expect spot silver price to hit 100 this year, let alone 7,869 in the near future. But could this happen over the long haul? Why not? Once a new monetary system is in place, it won't be based on bitcoins, will it?

Nah.

Sunday night spot gold

Sunday night spot silver

Update 8:43 pm Did you wait? Or did you already buy more physical gold and silver this weekend? Of course, the thought passed my mind, but given the uncertainty of global markets, I decided to wait and see how much more puppetry would be on display. Tonight, we have an answer: The CME mafia and the rest of the puppeteers aren't done shaking down spot prices just yet. Silver is down to 26! Gold is at 1550! Am I going to unload my little sack of metals at these ridiculously low prices? Hell no. I'm not planning on selling them for a long, long time, if ever. I didn't buy them just to resell them any time the puppeteers get ornery.

Bloomberg: Banks splinter on Europe debt crisis (Sept 25)
Bloomberg: Euro, Asian stocks fall on debt concern (Sept 25)

I'm with Art Cashin. He thinks this might be a classic Thursday/Monday scenario, with a drastic turnaround coming mid-day Tuesday. Makes sense to me. I'm not going to bank on that, but I'll be ready and waiting in case the market turns then. Of course, with the G20 expecting a Greek default in early November, the market is quite sour. Dow Jones futures are -139, S&P 500 futures are -14 and Nasdaq futures are -32 (-1.45%).

Bottom's definitely not up. Not yet. 

Is the bottom in for gold & silver?

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