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« Go Global, Before It’s Too Late | Main | A Bumper Day for Silver producers »

Volatile silver shakes out the weak hands

silver chart 28 Jna 2011.JPG

Silver has moved from $18.00/oz to $31.00/oz, a rise of $13.00/oz, so a $4.00/oz pull back is reasonable. The technical indicators are firmly in the oversold zone, but could stay there for a few more weeks as this correction runs its course. The upside is that the technical indicators are languishing at low levels that when silver prices do resume their trek north and they will, the next up leg could be astonishing. So, if you are not already 'in' this tiny market you should be preparing to make your move as you when you think the worst is behind us. We have a had a $4.00/oz correction and there may be some more to come, but then we will have an excellent buying opportunity presented to us. We haven't moved because we are tight and we also wrestle with which is the best place to invest, the metal or the stocks, but there is a good argument for bagging a few of your favourite stocks right now and sitting on them at least until the end of the year. When silver prices do change course the stocks should do well but we think that it is prudent to buy the physical silver first and take delivery of it, before you put on your adventuring hat and go a plundering on the TSX.

Taking a quick glance at King World News (you have book marked this site haven't you) they have just interviewed one of the top gold and silver dealers in the United States about tightness in the silver market.  Bill Haynes is President and owner of CMI Gold & Silver for and when asked about a shortage in  silver he stated,

“All of the major suppliers of 100 ounce silver bars are either weeks or months out, some will not even take orders.  I had some conversations with a number of people who buy from them, had to dig through the information and some of them revealed that they thought the refineries were having trouble and the manufacturers were having trouble getting the physical product which falls right into the silver shortage.”

Haynes continues:

“It’s starting to show up in the 100 ounce silver bar market which is a primary investment vehicle for individuals who want to buy silver for investment purposes.  It does surprise me because we did not see the buying that we saw in 2008, 2009 when our safes were absolutely emptied of 100 ounce silver bars, and that’s the type of buying I thought we would have to see in order for there to be a shortage of 100 ounce silver bars. 

So we have another snippet that suggests that the shortages are getting worse in the world of physical silver despite what the world of paper silver is telling us. The next few weeks will be interesting as this year has gotten off to a rather bumpy start, so expect the swings to get bigger and silver prices to move $1.00 to $2.00 in any one trading session. If prices are too rich for you at the moment you might want to consider placing stink bids at much lower levels on the off chance that these oscillations cause a sudden spike down, fill your order and then bounce back again, just a thought.

We are still confident that silver will take out the $30.00/oz level and gold prices will take the $1500/oz level, so much so that for those who sign up for our premium options trading letter we have offered to refund the subscription if gold does not make it. Its an offer that you cant refuse if you are a bear!

Over in the options trading pit we have just closed 3 more winning trades, so we now have 62 winners out of 64 trades, or a 96.87% success rate.

If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart Jan 2011.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

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Reader Comments (3)

Well I bought more on Fri. (AM) the 28th and by the time the day was over the premimum I paid was almost all erased.I bought locally. I had the hardest time to find a dealer that had any! None that I spoke to had 100oz. bars all but one had one oz. bars only.
I found a dealer that had a 10oz. bars. I bought all but 6 and after that he doesn't know if he will beable to secure any more.

January 29, 2011 | Unregistered CommenterBob

I am extending my target on shorts to 19.50 on Silver. I think my bottom projection at 22.5 this year is too optimistic. The downtrend is good, certainly nobody expects it to drop below 20. Sometimes in June I think. I am also expecting high volatility next month, to range from 25 to 28, so it should be good to accumulate shorts between 27 and 28 for a ride into 20s.

January 30, 2011 | Unregistered CommenterDi

Take care Di, this is still a Bull Market

January 31, 2011 | Unregistered CommenterSilver Prices

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