Silver Eager to Settle a Score

The white-collar thieves who manipulate bullion appear to be losing their grip. Silver bulls have long wondered how prices could languish even when demand for physical appeared to overwhelm dealer supplies. Blame paper proxies for precious metals, since many if not most investors would rather store and swap the stuff in virtual form than pay to insure it in a rented vault. Bullion bankers love it that way, since they can sit on actual bars and ingots, loaning them at interest, or borrowing them for next to nothing, while everyone else trades up a storm of near-gold and near-silver pledges and IOUs.

However, the steep price rise lately has threatened to upend this arrangement by increasing demand for actual bullion. Ordinarily, the thieves, a sleazy cabal that includes some of the biggest banks in the world, have relied on ‘Mr Slammy’ to rescue them.  He appears on the scene whenever they pull their bids and let prices plunge to relative bargain levels. Within the last month, we’ve seen downdrafts in gold of $80 and $130 respectively, and similar moves in silver. Unfortunately for the bad guys, prices have rebounded too quickly in each instance to allow them to replenish their doubly hocked inventories on-the-cheap.

Short a Billion Ounces

Now it looks like they’re about to get creamed. Last week, July Silver broke out on the weekly chart with enough force to imply it will reach a minimum $37 an ounce. That would represent a 16% move on top of the already impressive 28% gain achieved since late March. The chart would seem to allow little respite for the bullion bankers. (If any of you ass-bandits are reading this, the ‘hidden’ resistance at 32.419 shown in the chart could be your last chance to get ’em back below $37. (Note: Just one player alone, Bank of America, is short a reported billion ounces).

Gold’s chart differs significantly and suggests bulls could struggle at $2489, basis the June Comex contract. That is just $69, or 2.3%, above Friday’s close. Please be aware that if June Gold hits that ‘Hidden Pivot’ at the same time July Silver touches 32.42, it could spell trouble for bulls. However, my hunch is that silver’s more bullish chart will prevail, and that gold will enjoy further gains comparable to Silver’s expected 16%. That would put June Gold at $2807, exactly $388 above Friday’s settlement price.  [Although gold stocks can be bought and held for the long-term, silver stocks are different. Read why by clicking here for a free, two-week trial subscription with instant access to the Rick’s Picks chat room. No credit is card necessary.]