Silver

[Hi Ho Silver]

My take is when the stock market crashes....and it will HARD....metals will explode. So when silver hits 100 buying at these premiums is still freakin cheap. Just sayin

[Tinbox]

My take is when the stock market crashes....and it will HARD....metals will explode. So when silver hits 100 buying at these premiums is still freakin cheap. Just sayin

I think metals will do well too, but the head scratcher is people buying 90% coinage at 20% premium over spot when they can get .999 for a 2% premium (kilo bars at provident for .59 over in any quantity) or 1 oz generics for for about a buck over at multiple places.

[Strawboss]

With the premiums on pre-65 junk, why in the heck are people buying it over generic 999?

In a true SHTF situation - junk silver will be the perfect bartering instrument. Easily recognized - perfectly sized for everyday transactions (as opposed to buying food with a GAE).

[Strawboss]

I posted this on another thread but thought it deserved to be posted here as well...

I was going to write a missive on how the Yen is at the core of all this - and how the impact of Abe's policies are shaking the very foundations of the world financial system. How banks and funds around the world are desperately attempting to rebalance their accounts/positions in the aftermath of what Japan is doing.

But - then the obvious struck me across the head.

If there was this big rush for liquidity - why is it that the dollar and euro are basically sitting there doing little/nothing - why are stocks not dropping 1000+ points - why isn't the sky falling?

Only commodities - and especially gold/silver.

Yes - I believe there is something very sinister afoot - what exactly - I have no idea. The logical assumptions are:

1. TPTB are in a life/death struggle to maintain control of their out of control system.
2. The banksters are doing this to flush everyone out of PMs so they can swoop in and collect them all on the cheap.

One might argue that if their intent was to simply buy up all the gold/silver - they could simply print money and buy it all - irrespective of how high prices went. That might work in other markets - but, remember that gold/silver act like Giffen goods and because of that - the higher in price - the greater the demand (competition) for them. Banksters can only accumulate PMs on price declines - not when prices are rising.

For those unfamiliar with what a Giffen good is - http://en.wikipedia.org/wiki/Giffen_good

Here is a ZH article from a couple of years ago discussing this - http://www.zerohedge.com/news/2012-1...ld-giffen-good

Here is what I do know (if you can believe what the COT says).

The commercials have built their largest long position in silver in recorded history. They have one of the lowest net short ratios in recorded history. It is entirely possible that as I write this - the commercials are actually net long (we wont find out until Friday afternoon). Another data point...with the incredible smashing of price the past few days - silvers OI is at 162,400 which is only about 2% below the alltime high. That means that whoever was long - DIDNT sell into the price smash - instead, the majority of the selling was fresh shorts. And that speaks volumes about the strength of the hands holding those long positions on the COMEX.

Historically - when the commercials are positioned like this - price is at/near a bottom and large price increases follow soon thereafter.

[Shortstack]

What I know for sure is that the safe haven status of gold has been damaged, at least in the eyes of the cnbc newsmodels, and the uniniated masses that hang on their every word. We all know that the newsmodels are happy to trash the metals, and are paid to do so by their advertisers. Kind of hard for ameritrade or scott trade to get new customers if the metals continued their steady rise.

When the metals recover and start to reach new highs, cnbc will only have to remind their viewers of this drop, and say the metals can crash at any time for no reason

[Strawboss]

A visual reminder of what is really going on...

[Strawboss]

Here is a quote from Harvey Organ http://harveyorgan.blogspot.com/

The OI for silver remained elevated again today despite the huge loss in price yesterday, one must believe that only a sovereign (maybe China) could withstand that much pain. The price of silver has declined from $35.00 to $ 23.00 with open interest rising. The loss has to be gigantic and only a sovereign could be that stoic.

I don't know who is behind this near record high open interest in silver. Whoever it is has very, very, very deep pockets. The shorts have thrown everything but the kitchen sink trying to get them to capitulate and sell - and whoever it is just keeps buying.

Ponder on that for a bit and let the enormity of that sink in nice and deep...

[bemac]

A visual reminder of what is really going on...

Holy crap, really, premiums were that high on US 90%? What's very interesting (probably why you posted it) is those two periods of extremely high premiums coincide with economic crashes. Right?

[Strawboss]

Sort of... significant bottoms in silver actually. The chart isn't completely up to date as the premiums on 90% are around 15% at present - which isn't near the peak of 2008 - but, much higher than "normal". That tends to suggest that while its possible we still have some downside - ala 2008 - it is more likely that we have seen the worst of it - for the correction I mean.

Holy crap, really, premiums were that high on US 90%? What's very interesting (probably why you posted it) is those two periods of extremely high premiums coincide with economic crashes. Right?

[Strawboss]

Here is a wild ass guess (purple lines) of price action the next few months.

[Strawboss]

The most bullish silver COT ever was 29 July 1997. The commercials were net short 4,770 silver contracts. Commercials have never been net long. Last week they were short 17,924.

Waiting to see what has changed since last week with the price smash.

[Strawboss]

Here is an updated chart of the current premiums on 90% silver in relation to historical premiums. As you can see the current level of premiums is the 3rd highest in the past 20 years - last seen during the meltdown in 2008.

I think this data is a good proxy to illustrate the amount of stress in the physical market for silver currently.

[Silver Buck]

Here is an updated chart of the current premiums on 90% silver in relation to historical premiums. As you can see the current level of premiums is the 3rd highest in the past 20 years - last seen during the meltdown in 2008.

I think this data is a good proxy to illustrate the amount of stress in the physical market for silver currently.

My LCS keeps his spread about the same ($2.50, currently buy at spot, sell at $2.50 over) regardless of the price. Therefore, when the price goes from $35 down to $25, the percentage of PoS increases accordingly (7.1% to 10%).

Basically, if the spread stays the same, but the price of a metal fluctuates wildly, you will have wildly changing percentage of premium. Currently, that $2.50 of $23.29 is 10.7%; however, a couple of years ago (4/28/11) it was only 5.2% of the closing spot of $48.48.

While your chart does give a nice graphical representation of what is going on in the market, it is a bit skewed and a bit misleading in its exaggeration of the amount of stress in the Silver market.a

Let's consider though a changing premium, one where the dealer does vastly increase the amount one must pay in order to acquire physical. If one is desperate enough to want to accumulate physical at this low price, a good dealer would increase the premium due to the higher demand. A business man would want to maximize profits at such a time and as long as the buyers are willing to pay the higher premium, the dealer will continue to sell at such a premium.

Just plain basic business sense, not so much a stress on the market.

Or perhaps I'm missing something here?

[savvydon]

My LCS keeps his spread about the same ($2.50, currently buy at spot, sell at $2.50 over) regardless of the price. Therefore, when the price goes from $35 down to $25, the percentage of PoS increases accordingly (7.1% to 10%).

Basically, if the spread stays the same, but the price of a metal fluctuates wildly, you will have wildly changing percentage of premium. Currently, that $2.50 of $23.29 is 10.7%; however, a couple of years ago (4/28/11) it was only 5.2% of the closing spot of $48.48.

While your chart does give a nice graphical representation of what is going on in the market, it is a bit skewed and a bit misleading in its exaggeration of the amount of stress in the Silver market.a

Let's consider though a changing premium, one where the dealer does vastly increase the amount one must pay in order to acquire physical. If one is desperate enough to want to accumulate physical at this low price, a good dealer would increase the premium due to the higher demand. A business man would want to maximize profits at such a time and as long as the buyers are willing to pay the higher premium, the dealer will continue to sell at such a premium.

Just plain basic business sense, not so much a stress on the market.

Or perhaps I'm missing something here?

I think this is more than just plain profit taking. By 'stress' I take it to mean the shift in supply and demand that the market appears to be experiencing. Look at a larger operation like Tulving. His spreads haven't changed that much, it just seems that he can't get his hands on material and he is needing to offer more to pry people's hands off what they already own and sell to him. His junk is selling for $4.99 over (more than 20% above spot) but he is offering $1.90 over, which is also a big increase over the norm. On the Eagles side he is offering $3 over which is more than he usually sells for. He still has none to sell as apparently no one is selling at $3 over. It does appear to me that this is a new development and an aberration from the norm and certainly could be construed as 'stress'.

[REO 54]

Silver Is Having Its Best Day in 15 Months
Submitted by Tyler Durden on 04/25/2013 14:25 -0400


Fibonacci


In all the excitement over gold, silver has been largely ignored or forgotten. Today, it was the "poor man's gold"'s turn to stae a dramatic comeback posting its biggest single-day jump in 15 months. Having now retraced the Fibonacci 38.2% level of the record plunge, it appears $25 is th enext target - which is around 50% retracement levels.

Best day in Silver in 15 months...





with a target for 50% retracement at around $25...





Charts: Bloomberg


Charts at link ....http://www.zerohedge.com/news/2013-0...-day-15-months

[southfork]

Here is a quote from Harvey Organ http://harveyorgan.blogspot.com/



I don't know who is behind this near record high open interest in silver. Whoever it is has very, very, very deep pockets. The shorts have thrown everything but the kitchen sink trying to get them to capitulate and sell - and whoever it is just keeps buying.

Ponder on that for a bit and let the enormity of that sink in nice and deep...

Problem is we need them to stand for delivery and break satans back.