RANTING ANDY – As we watch yet another day of deterioration in the economic/financial/political situations across the Western World, and another day of the Cartel/PPT/ESF (Exchange Stabilization Fund) desperately capping gold’s rise at 1% and the Dow’s decline at double digits, I wanted to briefly address a topic that has brought on much consternation among Precious Metals investors, who as a group have been conditioned to anticipate the worst thanks to a decade of non-stop Cartel attacks.
And that topic is SILVER, more specifically the ramifications of May 1st’s SUNDAY NIGHT PAPER SILVER MASSACRE. Many investors worry that, because silver moved up sharply and then crashed suddenly that, manipulation or not, somehow this means a “major top” was reached that will be insurpassable.
And my response to that is…..HA HA HA!!!!!! Watch $50 get taken out again later this year, never to return EVER AGAIN (certainly not in 2011 U.S. dollars)!
To start, I cannot scream louder how SHORT-TERM CHARTS ARE MEANINGLESS in a rigged market, particularly gold and silver due to the heightened use of PAPER derivatives (including GLD and SLV) to suppress prices. In fact, as I continue to pound home week after week, the more that short-term suppression tactics are utilized, the more powerful the longer-term charts become. In others words, once a major short-term RESISTANCE level is broken following a long-period of capping, it becomes major SUPPORT that has little chance of ever being pierced materially in terms of the long-term bull market in progress ($1,550 gold is a perfect example, IMO).
Second, if you look at the medium-term silver chart below, covering the past three years, you’ll see that silver price action following the SUNDAY NIGHT PAPER SILVER MASSACRE of May 1st has been nothing short of spectacular, enabling the short-term overbought situation to be alleviated, building rock-solid support in the $33-$35/oz range, and allowing the 200 DMA to rise to the low end of that range (currently $32.85/oz and rising).
So not only has support at the $33-$35 plateau held strongly, but is building a powerful base for the next launch attempt above $50/oz, which I put a 99% probability of occurring later this year (perhaps much sooner than most think). If you look at this chart closely, you’ll see that already the late April surge doesn’t look out of place at all. Furthermore, those of us that experienced this surge first hand know very well there was NOTHING frothy about it. It was a methodical rise of $1.00-$1.50 per day, with all the same capping/attacking tools that we are used to watching every day (TODAY is a PERFECT EXAMPLE), with not a single day of real EXCITEMENT during the entire move up from $35-$50/share.
In fact, per the charts below, you can see the HUI actually peaked in early April, nearly four weeks ahead of the silver peak. Thus, not only was there little froth in the silver rise (the kind you’d see at a market top), but stock investors LOST significant money in the sector during the rise from $38 to $50 an ounce, with the HUI falling from 610 to 570. GOVERNMENT COMPUTER ALGORITHMS, such as the ones I am watching today in major silver stocks such as SLW and SVM, are the reason I sold ALL my large-cap mining companies this spring in lieu of BULLION (95%) and a few, selected juniors, permanently changing the composition of my portfolio (I will NEVER own a large-cap mining stock again!).
In other words, I am very thankful for this episode in Cartel history, as it permanently taught me to avoid ANY and ALL investments that the Cartel can attack with GOVERNMENT COMPUTER PROGRAMS. You cannot lose with GOLD and SILVER BULLION, no matter what the Cartel does to attack PAPER investments such as futures, options, ETFs, and large-cap mining shares. And if you are a very careful and diligent investor, you might be able to make a few bucks in junior miners. HOWEVER, juniors are inherently very risky investments, so be VERY careful when considering putting money to work in this manner.
As for the long-term, many worry that since silver peaked at $50 in early 1980 (again due to blatant government manipulation), and then again at that same level earlier this year, that somehow this means the $50 level is insurpassable. This thesis is patently absurd, trying to equate what happened 30 years ago, on frankly another financial planet, as if the trading back then has even the slightest relationship to what is happening today, with a global money supply (on and off-balance sheet) AT LEAST 10x larger and growing exponentially!
Moreover, as immaterial as I consider SHORT-TERM charts is how material I consider LONG-TERM charts. In fact, I believe long-term charts to be EVEN MORE IMPORTANT than EVER thanks to the massive resistance/support phenomenon described above, PARTICULARLY when occurring at a MAJOR ROUND NUMBER such as $50/oz.
Looking at the below 37-year silver chart, I see perhaps the largest reverse head and shoulders/cup and handle formation of all time, one with such an incredibly powerful base that I believe a move to hundreds of dollars per ounce is IMMINENT, even without looking at the aforementioned money supply figures.
Perhaps it will take a few more months to break through $50 for good, and perhaps the “consensus” will be taken off guard if it blows through $50 later this summer, which as noted above I place a high probability on.
To conclude, all I can say is that the Western World financial system is coming down all around us in rapid motion. Whether the Cartel/PPT/ESF can engineer a “soft landing” during the second half of 2011 is still in question (I do not believe they can), but irrespective PHYSICAL silver and gold are poised to move up markedly, if not parabolically, during this period.
If you own PHYSICAL gold and silver and REAL ITEMS OF VALUE such as FOOD and LIFE NECESSITIES, the evil forces CANNOT BEAT YOU, NO WAY, NO HOW. And at this very dangerous period in American history (i.e. the end of the dollar as reserve currency), your financial goals should be very defensive, i.e. to PROTECT YOURSELVES from a massive economic downturn coupled with accelerating, and potentially hyper-, inflation.
And by the way, this morning, after rising ALL NIGHT for GOOD REASON, gold and silver were violently attacked at EXACTLY the COMEX open at 8:20 AM, and as I write this, just MINUTES after EXACTLY 12:00 PM EST, like clockwork, gold was mauled again (see below), replete with the early Cartel signal of smashing the HUI that always happens beforehand. Remember, the monthly COMEX options expiration is tomorrow, so the bad guys need to make sure that all the $1,600 gold call options and $40 silver calls expire worthless, as well as to repel the key $1,600 and $40 ROUND NUMBERS, respectively, for the THIRD TIME in FIVE DAYS. And don’t forget the debt ceiling debacle, as the Cartel will do EVERYTHING in their power to try and hold PAPER gold and silver down until it is resolved….
But don’t worry, Tyler Durden at Zero Hedge won’t consider the chart below worthy of publishing, even though I have pointed out (and PREDICTED) these attacks as often, and accurately, as the world famous whistleblower Andrew McGuire!