Gold vs. Silver

I'm bullish on gold but kinda bearish on silver, short-term. So, I'll be proven right and wrong.

Gold looks poised to test $1700 in the next two weeks based on this chart:

But now silver. Starting with the old weekly chart, note the 34-wk MA (pink) has entered the channel at $35, so we can expect that level to be very strong support from here. And that's good news, because if silver stays in that trend channel, broken in 2008 and resumed in 2011, it's doing really well.

But now look at his daily chart starting from last August, when silver started its explosive ascent to $40. The blue trend line was strong support until mid-June (only one daily close just beneath it, in early May). We've tried to get back over it several times but it's proven to be strong resistance. So, my gut tells me that a test of the $35-$36 level (which would still keep it in the long-term trend channel of the weekly chart above) looks more likely than not. Wynter Benton, call your office, basically.


Warren James said...

Ahh, good to have a dose of GM TA :)

Stumbled on an a few folk at tfmetalsreport who are kicking the Benton story around When they say IP Address, I think they mean link. The link I check every other week will show any new Benton messages [link].

But I too would like to know the IP Address they are using because it could help us identify the region they're calling from. That's something we never pinned down. My guess is Canada, for various reasons put forth by Jeanne d'Arc, but that's a story she can tell.

Given the curious relationship that silver has with the USD, then maybe silver's fate is also tied up in oil (a ratio triangle also discussed on Turd's blog recently).

Unfortunately the only way any price action in silver will help bolster Benton's legitimacy is if JPM DO have a haemorrhage after the 60-day duration of silver above $36. One would suspect that if the Benton claim is true, then TBTB have a really vested interest in making sure that Silver pulls below $36 at least once before the 60 days are up, so we'll see if even if it's in the form of a mysterious flash crash in silver.

In the same forum thread at Turds, one pundit projects the 60th day to be a 3-day weekend based on the last $36 crossover.

Does the price action in silver look like a bear trap to anyone? i.e. the real parabolic move is about to start? I have to say all the price action bothers me less these days now that I've shifted into 'just-accumulate-metal-dammit' mode. :)

GM Jenkins said...

Ha, yeah, WB's latest was strange. "The Leader has a new team" ?? What happened to the old team - last we heard from amber she said their enterprise was a great success. Also, as you point out - the latest claim is interesting because in itself it doesn't really encourage buying vs selling. Maybe on the 55th day over $36 (or so), buying would seem like a good idea (but then why don't they come out on that day with the claim). But this early in the 60 day span, the more you believe in the claim, the more likely you are to sell silver, since you gotta imagine if JPM is facing a silver apocalypse they wont go down with a massive fight. So what's the point of the message? And no further clarifications. Weird however you look at, whatever level of legitimacy you grant WB.

I hope silver is in a bear trap. I haven't sold any of my positions, though I wrote this post as when the market closed, I felt regret at not taking something off the table.

And wtf is going on with 10 yr yields. 2.79! Are people really looking at treasuries as a safe haven from ... default? Boggles the mind. Anyway, the 10Y/silver ratio fell a lot today, but not the way i liek to see it fall: I prefer an increase in silver brings it down, not yields. Looking forward to next week (famous last words)

Warren James said...

The treasury thing makes sense to me when I consider Exeter's pyramid (this time I'll link to Adam's work). It seems it's not so much a flight to safety but just a standard movement of real wealth in the system. But yes, irony notwithstanding.

I'll be interested to see the shape of whatever next week's debt ceiling drama brings. FOFOA's idea of getting the treasure to mark-to-market their gold reserves would be a decent solution in my opinion. I get the impression that this is to be the plan based on the new $100 note design the FED has not yet released (which is old news these days). Maybe they are just waiting the last shipments from their various 'cash for gold' programs or something.

Warren James said...

..oop. 'Treasury', not 'treasure'. FOFOA's latest is here, anyway. It's a weird moment when you can nod your head and agree with Ben Bernanke that gold is not money but it is a financial asset (store of wealth), but everything makes better sense every day.

Brian O'Flanagan said...

I think the rally in treasuries had more to do with the deflationary factors driven by the horrendous economic data we've been seeing lately. It's an interesting dynamic, sovereign debt risk vs deflation risk vs potential QE3. There also had to be some short covering going on too.

The Big Setup said...

You removed my comment because I stated SILVER is going to go UP from here?? What?

Louis Cypher said...

@The Big Setup ... Sometimes google blogspot doesn't post comments for some reason. I don't even need to ask GM, Warren etc. to know they wouldn't remove a comment because you disagreed with something.

GM Jenkins said...

Thanks Brian - yeah i thought maybe short covering.

LOL- Big Setup - thanks for commenting, but you posted your comment in the post below this one - Bill Downey's charts! you might be happy to know that Mr. Downey in his letter has said he bought safety puts on gold going into the weekend but not on silver (he found thhose too expensive), so he probably wouldn't disagree with your prediction which was: ""Probably wrong on silver. each time the comex expiry date passes, SILVER goes up. Look at the charts. EVERY TIME." I hope you're right.

For the record, we don't remove comments here unless there's a personal attack vs. attack of ideas. And we might even let those slip now and then.