When I started [Wednesday's column], silver and gold were steady, only to sell off suddenly around 10:30 AM (EST). This sell-off was followed by a sharp rally, particularly in silver, only once again to sell-off as I complete this piece. Although I am adamant about reading too much into price movement to gauge what’s going on under the surface, there’s something about this volatility that is encouraging. I’m still of the mind that the COT structures in gold and silver are exceedingly bullish and it appears to me that this unusual price volatility may be due to JPMorgan and the other big commercial silver shorts shaking the tree to flush out as much outside selling as possible so that these big silver shorts can buy. I can (and have) look dumb in the very short term, but it feels to me like we can move up sharply at any moment.
The more I contemplate the four month price decline since mid-July in silver (and other commodities) increasingly it looks like the setup of all setups. There was an almost unmistakable deliberate intent to the decline and this has been proven out in the futures’ positioning changes. While unexpected by me, the recent double-crossing by the big silver shorts of the smaller raptors fits in perfectly with the mother of all setups thesis. And while the big traders on the COMEX can bomb the price at will in the short term, it’s hard for me to see what category of traders’ remains that can sell significant quantities of futures contracts. Instead, all I see are the many categories of potential big buyers.
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Ed Steer’s Gold & Silver Daily.