In Ted Butler's Archive


The best way of approaching silver is to hold it on a fully paid-for long-term basis, as I believe the gains will be dramatic enough to make up for passing on the lure of margin. I am particularly intrigued at this time by what I perceive to be the short-term set up in silver. We’re certainly not in technically “oversold” territory. Silver will surge higher, the only question is whether it first declines a bit more or marks time and dawdles a bit.  The full up move is far from complete. Every important indication is that the game has changed. The managed money traders are not loaded to the gills with excessive long positions in sharp contrast to how they have typically behaved on past price rallies. Ditto the big commercial shorts which are far from loaded on the short side, particularly on a concentrated basis as has always been the case on prior big rallies.

The recent CFTC and Justice Department finding against Scotiabank should severely discourage it and the other big manipulative banks from shorting on rallies, particularly after the financial beating the big shorts have taken over the past year. Throw in the fact that the master manipulator of all time, JPMorgan, is super long silver. It’s just a matter of time before silver explodes in price – which may be close at hand. Besides, that’s just how silver moves – big and fast, leaving most to gape in wonder, unless already onboard. I’m convinced that silver is going much higher, certainly in time. No one, including me, knows precisely in advance when silver will suddenly take off. I do know that silver has a history of sudden moves, seemingly out of nowhere. Silver will move sharply higher at some point and when the move does come, by definition, the move will likely be explosive. Therefore, one must always be prepared for a sudden surge in price, particularly considering all we know about silver (the manipulation, the market structure, the industrial users waiting in the wings, etc.).

Yesterday, I heard a commentator on TV opine that silver will grind higher in price. While we could all live with that, I just don’t see the grind higher. Silver certainly hasn’t ground higher to this point, unless a move from $12 to $30 in five months is one’s definition of a grind. Now that we are no longer overbought and there appears to be limited real potential selling from those which have sold on lower prices in the past, an upside surprise might be in order. And even if we do sell off first, that will only make the case for an upside explosion more forceful. I also can’t help but believe that someday silver might be a great “story” situation, where over-exuberant speculative interest pushes the price to completely ridiculous levels of overvaluation.

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