We’re going lower…
TND Market Commentary: Eric Dubin
The following juxtaposition is just too comical for words. Silver overtook its Friday same period level and witnessed meaningful accumulation as the London trade proceeded. You want to know what sentiment for precious metals was like before the raid? Silver tells the story, very clearly:
Silver is a much tighter market than gold, and it’s also much more volatile. From the start of this particular precious metals upleg that began in late January, we have seen silver lag gold. This has been due to a number of factors, including but not limited to fears of a global economic downturn crushing silver industrial demand (which I have argued will be dwarfed by replacement investment demand, and later, will in fact spike as well as manufactures begin to get nervous about investor demand making it harder to source industrial supply).
But now that the precious metals bull market re-boot is more visible to Western-based momentum chasers and conventional financial world money managers are increasingly aware that central bankers are starting to break things, it is no surprise that the catch-up phase of silver relative to gold is ripe and ready.
Through the raid that we are witnessing now, silver will take a bigger percentage beating. But when we get on the other side of this nonsense following the completion of necessary repair time, the Gold Silver Ratio is going to start falling as silver begins to rise faster in percentage terms than gold. Naysayers will scoff as they read these words, but within ONLY about a month, the GSR is going to start trending in favor of silver in a way that will add further confirmation to those that need further confirmation that this new precious metals market bull is alive and well.
The cartel is acting aggressively this week on top of the mountain of paper-based gold issuance into the COMEX market they’ve been shoveling into the short side already – for weeks – in an effort to slow momentum. Now, as you see today, with traders getting nervous considering sky high commercial short positions and an FOMC meeting starting tomorrow, is it any wonder that the cartel was able to get some traction to the downside?
All things considered, this is a piddly raid, but they’ll keep pounding throughout this week as the FOMC runs its dog and pony show otherwise known as determining interest rate policy (at least we will not be treated to goofy, totally staged introduction sequences this time around because FOMC meetings are “private”, as I discussed on my Facebook page – click here).
We’re going lower for the time being. The commercial short position levels for gold and silver reached very high levels by the end of last week and momentum was sapped enough to execute this week’s cartel capping. Craig Hemke at TFMetalsReport.com whimsically tweeted this weekend:
— Turd Ferguson (@TFMetals) March 12, 2016
One hundred bucks downside on gold is certainly doable. But odds are reasonably high that we’re not going to sustain that much damage. More importantly, a very strong case can be made that the small amount of time necessary to repair whatever damage cartel dogs inflict will in fact be THE story. This is just noise.
For more commentary and analysis on precious metals, click here to check out this week’s Dr. Dave Janda’s “Operation Freedom” broadcast. Rob Kirby and I were guests. I have tremendous respect for Kirby’s discernment.
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About the author:
Eric Dubin is the Managing Editor of TheNewsDoctors.com. He has 25 years of experience as an independent buyside securities and global macro analyst. He has well over a decade of experience as a financial journalist, editor and political analyst. He’s primarily an autodidact, but his formal education includes degrees in economics, international relations and MBA. He welcomes feedback on his articles and will make an effort to respond to comments. Email Eric by sending to “Eric” and then @TheNewsDoctors.com. He can also be “followed” on Facebook: https://www.facebook.com/EricDubin