Now, though, it's well into the trading day and I really don't mind. It's all good. Spot Silver is 36.35 after dipping below 36.00 within the past 30 minutes. Spot Gold is taking a beating, now 1481.50.
My regular watch list is 33% green. AAPL is down. AGQ is at 202, a drop of nearly 50% in the past few days. My metal watch list is 11% green. That's the fugliest I've ever seen a watch list, and the greenies are bear ETFs. Incredibly, ZSL is up another 22%, it's best one-day move in a week of insane gains. There is no doubt in my mind that ZSL and the massive naked shorting of silver has made new millionaires and possible some new billionaires of some hedge funders and bankers. It was at 14 on Monday. Now it's at 22.32, off its HOD of 23.15. Incredible.
In addition, the dollar is up massively. UUP is at 21.22, its high of the day. A gain of 1.2%. That explains the collapse in the metals market. UUP opened at 21.07, up from yesterday's close at 20.95, so something politcal and/or economic, something big happened overnight. The cost for a 10-ounce bar of silver has dropped $15 at one site. Other 10-ounce bars have gone out of stock at these prices.
With all this in mind, I'm glad I didn't buy any physical silver yesterday. The discount keeps getting bigger.
Update 7:26 am (Hawaii) UCO down 12% (to 51.60). (Note: Mike Maloney had called for $30 crude oil several months ago. Hmm..) There goes my theory that miners are in relationship with the cost of crude oil. If oil goes down, miners should go up due to lower energy costs. But no . . .
ZSL is climbing back to its HOD, now 22.50 while all metals tank. It's fine for those of us who are 100% cash, but painful for most PM longs. If ZSL gets to 23, a daytrade may be in order. There is no catalyst that can reverse this trend, or is there?
The dollar move smells more like short covering than anything to me. All the talking heads seemed to be short, though there were one or two guys who were long. Contrarians. Steve
There goes ZSL. 22.86.
Update 7:39 am (Hawaii). ZSL touched 23 (again) briefly, then sold off. Can't blame traders for booking profits after a 60% run in 3 1/2 days.
Certain silver/gold sites have problems with enormous traffic, it seems. Sometimes in the past, Kitco would get overloaded on its Spot Silver live chart. But now it's Scottsdale Silver's site that's struggling. I was looking at prices, which were discounted today (finally) to comparable levels. But then it started freezing up.
Looks like the physical market is bullish with prices this low. I think Spot Silver will gain from here, but not for long. It's too hard to buy physical here, then sell it if Spot goes back to 40. These metal dealers ask a premium from buyers, but their buyback prices are really low. They've got to make money, and physical owners aren't in position for quick trade profits — unless they happen to live in a town that deals globally. Not the case here in Honolulu.
Update: 7:54 am (Hawaii) EXK at 8.89. Major discount. There's a reverse greed involved with all these cheaper metals plays. EXK is among the first in any run to go from 9 to 12. But if PMs are toast/dead money for awhile, a buy here is risky in a different way. Worse yet if the hammering of silver is not done yet. Patience is key. There are people who nibbled at AGQ yesterday and the day before at 250 or 300. They could've opened a position here at 195. I'm not convinced the slide is over. I'd rather be late on the bounce and ride back up.
Price of 5-ounce Chinese Silver Panda coins is $647. Think I'll pass.
Update 8:27 am (Hawaii) Le Fly calling for a bounce in silver, noting that ZSL is extremely overbought and has a history of reversing to the tune of 10.6% on average in the 5-day period after peaking. I'm not bullish on AGQ like he is, but he could be right by tomorrow. AGQ was 203 at the time of his blog post; it's now 193.89. He also likes AG, PSLV and EXK. He's got big bucks to dabble with. I'm going to pick my spots, being a lowly peon with limited fiat.
Comex/JP Morgan/Fed know that silver bulls are a hard nut to crack. They know that the weak hands are just looking for a crack in the door of opportunity. They'll be looking to destroy the market, obliterate it to smithereens. After the 5th margin requirement hike takes effect on May 9th, I expect another couple of grenades, but only after Spot Silver bounces a bit. They're going to suck bulls in just enough to make them kablooey again. All that will be left is a crater bigger than the eye can see, a remote, lifeless environment resembling the moon. That's the worst-case scenario. The best case is Spot Silver bleeds out here at 35-36 and gradually returns to 50. Order. Maybe that's all the banksters want.
Yeah ... right.
Update 9:09 am (Hawaii) Had my chance to enter ZSL at 23.12 or so, thinking it's going to 25. But I passed. Too dangerous for me and I remained 100% cash. Since then, ZSL has run to 23.88 and isn't done. That's what happens when billionaires like Carlos Slim short the silver market as a hedge. I wish I'd been smarter about this on Monday or Tuesday when the news about Slim came out.
SLV now 34.16 (-10.8%). SLW 34.48 (-7.1%). EXK 8.38 (-16.2%). That's a 50-cent drop in one hour or so. AGQ 184 (-21%). Incredible.
I thought by now the bear ETFs would start selling off, no different from bulls getting punchy when the market is ultra positive. Eventually, they all take profits. Not the case here. ZSL now above 24. The naked shorts are stampeding in silver. UCO now 47.27 (-19%).
Update 9:16 am (Hawaii) In the past two minutes, finally some selling in ZSL, now 23.74. It hit a HOD of 24.13, which is more than $10 from its low of 14 on Monday. More than 70% in less than four trading sessions.
Update 10:09 am (Hawaii) Sure, silver bulls are being chastised for being narrow minded and not taking at least some profit near or at the top. But come on ... should ZSL really be this high? It traded up to 24.64 a moment ago in afterhours dealing. That's 27% in one day! Double bull or bear ETFs have their place, and if I'd gotten in on Monday or even yesterday at the close, I'd be singing a different tune, no doubt. But ZSL has climbed 75% in four days. If anyone stays in this trade much longer, it would take guts and insanity both. To stay in much longer would be far greedier than any of the silver bulls have been.
It's a wacky market in metals and commodities. UCO at 47.92 is down 17.9%. The dollar ETF, UUP, is at 21.27, +1.5%. Considering I'm completely flat and have been since Monday, it surprises me that I feel strongly about these moves.
More than one talking head chirping that Spot Silver will bottom at 30-33. I'll believe it when I see it.
Update 10:59 am (Hawaii) Another talking head, a hedge funder (I think), talking about commodities going back to "square one" now that the top is in. I think not. I think a 50% retrace from the start of the rise is sensible. For Spot Silver, that would be a retrace of the nine-month ride from 19 to 49; at 50% of that 30-dollar run, that would be . . . 34. (Spot is trading at 34.76.)
I'm not stepping in. I don't need to be right. But I don't see Spot Silver back to 19 unless the dollar goes to 76 or 78. I agree with Trader Dan Norcini: if the Fed and Comex heads are in collusion (no, really?) as it seems, their mission has been accomplished for the short term. But beyond that, there's no way to stop the collapse of the dollar, and in turn, the rise of precious metals and crude oil.
I wonder what Mike Maloney thinks about today's action. He has said that oil can go to $30, $20, even $10 as PMs soar. I also wonder how long it will be before India, China, Russia, Brazil, etc. step in and scoop all the metals they can. When that begins, the run back up could be as severe as the one that took metals down.
Dan Norcini: Collusion by Fed officials and Commodity Exchange heads has its intended effect (May 5 2011)
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