Silver – And Gold – Are Both Acting Very Bullish

Reader tesitmonial:  You’ve written a great report about the “Emerging Silver Producer.” The key is higher silver price but i am concerned about the price of silver though.

I hold my accounts with Sprott and as you know they are super bullish on silver. You have written a couple articles about silver with a positive outlook yourself. I still see the forces who is in control of the prices as too powerful, look what happened yesterday. The ability to drive prices down within one trading (below 17) and extremely negative corresponding move in the mining shares. Its hard to see how silver can be fairly traded in the current system. If you are a producer, you are completely helpless, their fate lies in the goodwill of a view entities who can destroy the business if it suits them.   

This person just read my “Emerging Silver Producer” research report but is concerned about the market manipulation of the precious metals.  This apprehension is very understandable.

However, after 14 years of full-time involvement in the precious metals sector, I believe the next big move – the second leg of the bull market, if you will – is  in its nascence.  This was my reply:

The key to yesterday’s price action was that silver held above $17 going into the Comex close.  Gold, and especially silver, are behaving differently right now (click to enlarge).
10minSilver
Whereas since their respective peaks in 2011, the market action was characterized by “short all moves higher and cover manipulated price smashings,” now it appears and “feels” like smacks are being bought and and rallies traded but not shorted (other than by the bullion banks feeding paper into the market to cap rallies).

Also, many of us believe that there is a supply issue with silver and gold.  12.7 million ounces of silver have been removed from the SLV vaults since April 27th.  55 tonnes of gold have been removed from GLD since Feb 5th.  This is despite the fact that both metals have moved higher in the time period.

The metals have been moving higher in that time period and the GLD/SLV inventories should have, worst case, remained flat.  The Comex gold o/i has shot up 107 tonnes since Feb 5.  This means there’s investor/trader demand.  It also means that GLD more than likely should have been adding gold.

For the last 4 years, the financial media has made a point of broadcasting “investor selling” in precious metals by pointing at the metal decline in GLD.  Why is the price going up, investor demand going up, yet the metal stock in GLD is going down?  Where is the media on this?

This is not supposed to happen.  Higher prices mean more investor demand.  More investor demand means that the inventories of SLV and GLD should be at best flat, but more likely increasing – not being liquidated.  Someone wants/needs that physical metal. 

Yes, the bullion banks are still somewhat in control of the price of gold/silver using paper derivatives.  But it appears as if they are losing their ability to cap the prices.  I was chatting with john Embry yesterday and we both agree on that.  We can’t figure out where the silver is coming from to make deliveries other than from SLV.  The massive withdrawals from SLV in the last 3 weeks would confirm that.

Is the next leg about to start?  Who knows…BUT, I vividly recall back in 2003 or thereabouts, right before gold was ready to launch over $400 and start an 8 year rally to $1900, Robert Prechter was overtly vociferous about calling for gold to fall to $50.

 Currently, Harry Dent – who for reasons unbeknownst to me has an avid following – is loudly proclaiming that gold’s next move is down to $700.  “The lady doth protests too much, methinks.”  Harry Dent, like Robert Prechter, is a scam artist who’s sole purpose is to sell research.  By the way, where has Prechter been lately on gold…

 

14 thoughts on “Silver – And Gold – Are Both Acting Very Bullish

  1. Demented Harry Dent. Now he is a piece of work of the first order.
    The guy has been around for a long time and for some reason has
    a following so if the intent is to drive PM prices lower it would be
    logical to drop enough cash on someone like Demented Harry
    to encourage him preach his nonsense to everyone everywhere
    which is what the fool is trying to do.

  2. Harry Dent has had a very poor track record for over a decade. He had one good market call 20 years ago basically.

  3. hard to believe how bullshipish silver has been the last 2 days..down 60-70 cents yesterday & up zero today..does it get anymore ship-ish? gee whiz. amazingly bullshipish really..
    & then wait till the 26th of MAY..option expiration day..then you will see some real bullshipishness. A $1 SMASH on the 26th WOULDN’T BE THE LEAST BIT SURPRISING & ACTUALLY i’M Betting on just that..$16 spot silver by the end of day on 26th

  4. Hi Dave. I’ve been an avid reader of your blog for quite a while and value your insight. Unfortunately though I bought physical in 2012/13 and currently I am sitting on quite a loss. I’ve recently been reading harry dents latest book and was shocked to read his forecast of $700. The problem is, I’ve watched my investment drop and drop for 3 years despite almost daily commentary saying that the metals are on the verge of going up or going parabolic etc etc. Also the uk has just gone into deflation (not inflation) despite massive QE. I wonder how long it will take to recoup the losses from my so called safe haven assets ? Harry Dent may just be spot on.

    1. Fuck Harry Dent. He’s a sleazy snake oil salesman. See my comment in today’s blog post. He and Robert Prechter can go buttfuck each other.

      You should getting as much of your money as you can OUT of the system – especially banks and money market funds – and buy more gold, silver and lead – I’m dead serious about this. Don’t believe me – google “Ray Ralio Zerohedge gold economics” and see what he says.

    2. Robert Prechter correctly identified a deflationary outcome in his book Conquer the Crash some years back. Where he is mistaken is on the deflationary impact on gold prices.
      A wave of deflation is upon us. We are only seeing the beginning of it with falling commodity prices but it will soon lead into debt default. Debt default will mean that not a single financial sector entity will be safe from the investor/saver perspective. It doesn’t take a lot of grey matter to understand how important gold will be under those circumstances.
      The deflation won’t last very long because widespread financial panic will give the Fed the mandate to “call out the helicopters”. The Fed has been creating currency like “Scottys” is making toilet paper. The problem they face is getting that stuff into the hands of consumers. Even the Council on Foreign Relations has called on it’s membership to come up with a means of getting “cash” directly into the hands of consumers.
      The deflation won’t last very long but it will level many financials before being reversed. I expect gold to post gains throughout but not exceed the $3,000 neighbourhood. Gold at $3,000 at the the bottom of a deflationary collapse will likely be the best gains for gold we see in real terms for the course of this gold bull market. Gold will hit much higher prices with the onset of inflation but the gains in real terms will likely be quite modest as people can hoard consumer products in lieu of very expensive gold.
      Essentially Robert Prechter nor Harry Dent understand the implications for gold demand (and it’s price) in a deflationary environment.
      Also…don’t be fooled because some prices are rising. Prices are moving based on supply and demand and a great deal of supply of many commodities is lost through government intervention in the markets.

      1. You are not discussing deflation. Deflation and inflation reference the relative supply of money. Where do you see evidence of deflation? The falling price of oil? Wrong. The falling price of oil is collapse of demand relative to supply. You think housing prices are deflating? Healthcare costs? Insurance costs? My electricity bill sure isn’t “deflating.” The price of almost all groceries are going higher. How about the prices of collectibles? I guess you think that the price that Picasso went off is deflationary? Go price up collectible cars and tell me what you discover. “Deflation?” ROFLMAO.

        Commodity prices – ANY prices for that matter – are the result of changes in the money supply relative to the marginal output of wealth. I think that was Econ 201 in college.

        The dollar as devalued 97% since the Fed was founded. THAT’s what causes inflation. The value of the dollar is not going up relative to a basket of everyday necessities. That would mean I could buy MORE of everything I use everyday.

        If you want to talk about deflation of assets. That’s a different story. The value of what most people consider assets, like homes, has been driven by the enormous build-up in the amount of debt used to finance the purchase of homes. Ditto with stocks, although a lot of the money the Fed has been printing has been the culprit, nothwithstanding the fact that margin debt is at record levels and corporation are now issuing a record level of debt, the proceeds of which are primarily funding stock buybacks.

        Prechter and Dent can take their “deflation” theories and shove them up their ass and then go have sex with each other. They are not economists, they’re newsletter subscription sellers.

        When the credit markets and stock markets start to collapse a large portion of that money will flood into gold and silver.

  5. If I may, Dave, I would like to point out some very important details for those who have bought silver and/or gold and have seen the prices drop- When you invest in a stock mutual fund* or invest some of your 401K money in the market * volatility is part of the landscape. The market goes up, the market goes down, but over the long run of two or three decades** investors end up with respectable gains.
    (*=investing in stocks was great when we had markets that were only 60%-70% crooked instead of today with markets 100% crooked. **=At least this was how the markets used to work, now it is all pump n’ pump n’ pump n’ pump n’ pump still more and have the Plunge Protection Team preventing any drop in the markets.)

    With the exception of gold and silver miners, are there any major stocks that are not being pumped and hyped by Wall Street like some fly by night penny stock?

    Getting back to physical gold and silver, you have to ask yourself “Why did I buy precious metals?” Was it for quick profit, a moonshot to sudden wealth, or wealth protection?
    Do you want a precious metal life boat in a storm of fraud paper or a rocket ship to uber profitability?
    What is your time frame to sell your gold and silver, a year from now, five years from now or a decade or longer from today’s date?

    For myself and many other buyers, our gold and silver is a PM IRA that I own 100%. You don’t raid the retirement account when things look bad, and you don’t cash out on a whim or in an act of fear.
    Yes, buying too soon or buying at the ‘wrong’ time can make an investor feel like a fool, but ask yourself what is the alternative to buying and holding gold and silver, invest in the crooked stock market where profits and dividends are considered passé while the stock price is all important a la 1929, buy a CD that pays over one per cent if you are lucky, buy a bond that pays well below the real life inflation rate, or buy something that has never been made worthless in 2000+ years of human history.

    Me, I am buying silver (and gold when I save up enough) I don’t worry about the paper price because the COMEX/CRIMEX number, just like the BLS/BS numbers, has no bearing on reality. Besides, the good people of India and China are buying gold and silver, and their combined population is over three billion, so it is kind of nice to be in the majority n this one.

    Last detail, we can and have had inflation and deflation at the same time, it was called stagflation and was the bane of consumers in the 1970’s, some things went down in price but many things went up. Expect gold and silver to go up as demand increases while supply decreases, and don’t fret over the CRIMEX prices, if the powers that be were rally as powerful as many claim, silver should have been forced down to a buck an ounce and gold down to $20 a gram, but worldwide demand would swamp those prices in a day or less.
    It will be a wild ride, but those with gold and silver will end up on the other side a bit bruised and beaten up but no worse for wear, while those holding paper will get murdered, figuratively speaking.

  6. Hey Dave looks like you caught yourself a couple of trolls happens when the truth starts to make them uncomfortable…Dents harry ( as in Dense) continues to prance while in the shuck and jive but his stuff is only intriguing for the simpletons. You are in many ways a face of the revolution/revelation. Take it to the limit.

  7. Hey Dave looks like you caught yourself a couple of trolls. Happens when you start making them nervous with the truth. LMAO Dents Harry (as in Dense) is a sorry example of shearing the sheep. He keeps pitching stupidity but people like it cause its easy. You bring the truth Dave…Thank you, Keep it up and Take to the Limit….

  8. Steve (and others),

    Regarding your worries about deflation (instead of inflation). I read this back sometime and cannot give attribution, but this:

    Hyperinflation is NOT really bad inflation. Here’s why. 5, 7, 12, 18% inflation really still represents some confidence in the monetary unit. Witness the US 1970s. Hyperinflation is a fundamental confidence crisis in the monetary unit. It’s a discontinuity in the inflation/deflation graph. People simply stop believing in their monetary unit and will convert their money into ANYTHING tangible from land to art to eggs to metals.

    Steve, hang tough. You have not invested. You have converted. Congratulations.

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