muses of the moment

May 3, 2011

The Silver Squeeze

Filed under: Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 8:57 am

Click here for Jesse over at Cafe Amercain’s comments regarding the latest silver margin hike and its implications.

Only someone talking their book, or in complete ignorance of market dynamics, would cite ‘buyer exhaustion’ for such a precipitous decline when the exchange continues to raise margins, and the bears hit the price repeatedly in the off hours trade.

This does not look like a market showing anything like classic buyer exhaustion. This is more like a speeding train, running higher in response to a short squeeze on a massive overhang of paper silver obligations that cannot be delivered at current prices. The exchange authorities are throwing everything but the kitchen sink at it to try and slow it down, to break its momentum. I obviously do not have a problem with that per se. But it would be nice to see the regulators and exchanges occasionally intervening on behalf of the broader class of investors, and not so exclusively for the benefit of their insiders.

The reason is fairly obvious. The Comex inventory is down to a new low of 33 million ounces of deliverable silver, at least according to their published records. It is tough to talk your way out of that one, without showing the metal to the market. Stand and deliver.

Click here for an important update from Ben Davies via He is looking for a possible consolidation from here in silver this year. he doesn’t think this is the run up to the final top (currently around $450 with real inflation rate), so a correction or consolidation is possible moving forward.

It sounds as if Jesse and Ben are coming to 2 different conclusions. This is a fight between paper silver and physical silver. It will not be the last battle, it is just the most intense so far in this 20-year bull market in precious metals. The government (who is printing paper money infinitely) wants a controlled ascent on the precious metal price. Anything else would signal to the world that fiat currencies are crashing. Be happy, this intervention buys you, the small investor, more time to position yourself in physical gold and silver.

As gg mentioned a few days ago, she is buying physical silver, but not the entire year’s investment right now. Volatility is the name of the game. The big boys will try and scare the little investor with big daily moves. Do not be shaken, $450 is the long-term goal for silver (could be higher, depends on how much money they print). Buy physical gold and silver and hold long-term.

Update on gold and silver

Filed under: Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 3:54 am

Long-term, physical gold and silver are a bargain at any price. It is insurance in the coming currency collapse.

But here are some short-term price charts:

From Dan at Jim Sinclair’s website, gold under pressure, click here.

CME hiking silver future margins…again. Click here. This is the third time in 3 days. From Jesse, click here.

As Jesse said today: “The big players are eating that short position in stages while they scramble to hold the markets under some measure of control. I agree with those who say that this will end badly.”

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