While the average price of silver remains at a multi-year low, there are several indicators pointing toward a much higher price by the end of the year.
If we look at all three INDICATORS-SIGNALS together, we can see SOMETHING BIG is getting ready to occur in the precious metals market.

The first involves what appears to be evidence that JPMorgan has gone MASSIVELY LONG silver:

 



 

 

From the SRSRocco Report:

Currently, the average price of silver so far this year is $20.17, a few cents less than the $20.19 set in 2010.
I realize many gold and silver investors are a bit skeptical and worn-out from the same old BULLISH RHETORIC coming from many of the top precious metals sites.  However, it’s extremely difficult to stay positive when most investors are what I call, FICKLE TO THE BONE.
In the 12+ years I have invested in the precious metals, I’ve seen the “Highs” and “Lows” in market sentiment.  Through it all, I have never stopped trusting the long-term fundamentals of silver.  I truly believe the best is yet to come.
That being said, I have come across three indicators or should I say,  positive signals that point to a much higher silver price by the end of the year.  Of course this is speculation, but when we add them together… it makes for a pretty solid case.

The FIRST SIGNAL comes from the work of Gene Arensberg at GotGoldReport.com.  I have followed Gene’s work for years and I have to say, he is about as even-keel as they come.  Gene just puts out the data and leaves emotion aside…. no hype, just strictly business.

According to Gene’s recent article, COMEX Swap Dealers Hedging a Massive Long Play on Silver?   he stated:

I’ll tell you what, people, I like the action. I guess short-term anything is possible, but this looks like as bullish a setup as I have seen in decades.

For Gene to say, “this looks like as bullish a setup as I have seen in decades”, he must have good reason.  Gene shows in the chart below, just how many short contracts the Swap Dealers have added in just the past few weeks.

GGR Swap Dealer Short

The blue line represents the amount of short contracts and the pink line is the price of silver.  As we can see, the Swap Dealers short positions shot-up to a record 57,000 contracts.  The Swap Dealers are the bullion banks, but Gene believes a lot of the new shorts were added by Goldman Sachs and not by the typical player.

At the same time the Swap Dealers were adding a great deal of shorts, the Managed Money traders (large specs, hedge funds and etc) covered a great deal of shorts and added longs…. shown in the chart below:

GGR Managed Money Silver Short

Here we can see that the Managed Money traders short positions dropped from a massive 43,000 down to below 10,000 contracts.

Again, according to Gene:

That tells us a few things, not the least of which is that The Funds (MM traders) became convinced in late June that the downtrend which had been in place since February had ended and it had been replaced by a nascent uptrend. Otherwise the trend-following Funds would have had no reason to cover their shorts so fast.

Basically, what Gene is saying is that someone took the Long side of the Swap Dealers massive short positions, and he believes they have to be HUGE to do so… in his words:

If the combined Swap Dealers have used COMEX futures to HEDGE their Swaps Book, then who in the Sam Hill took such a giant long position via swaps? Whoever it is HAS TO BE HUGE and whoever it is – is NOT going to be run out of town by the paper sellers.   Not if I am right about who I think it is, and I am not saying yet. …”

Gene isn’t saying who it is, but I believe it’s JP Morgan.  Andrew Maguire discusses this as well in his most recent interview on KWN.  Maguire believes the big bullion banks such as JP Morgan are winding down their short positions due to the Volker Rule which forces more transparency.  Which means, the banks will have to provide legitimate hedging.

So, as the typical large bullion banks reduced their shorts, Goldman Sachs and other institutions in the Swap Dealers category added massive numbers of naked short silver contracts.

Both Andrew Maguire and Gene Arensberg believe the current situation in gold and silver markets are extremely bullish for much higher prices ahead.

 

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The SECOND SIGNAL is by the work of trader Bo Polny, who Jim Sinclair stated was one of the two traders who called the top for gold.  Not only did Bo Polny call the top in gold, he also called the top in silver within two hours.

Bo called a move higher for Gold in May & June this year, a low in the summer, and then a spike up with a huge move to $2,000 by the end of 2014.  Bo discusses this in a Kitco Interview:

Bo Polny Interview

In the interview, Bo says that gold is in a 21 year bull cycle and the next up-leg starts this year. Not only did Bo Polny call the top of gold and silver in 2011, but he also called the bottom for both metals in 2013…. according to records on his website: Gold2020Forecast.

To set the record straight, I don’t place much merit in TA – technical analysis.  However, I still admire those who can use them to trade.  Bo goes on to say that gold will hit $10,000 by 2020, after hitting $2,000 by the end the year.

The reason why I believe Bo Polny may be on to something is due to all the other factors converging in the precious metal markets discussed above.  Not only will the bullion banks be forced to hedge gold and silver in a more legitimate fashion due to the Volker Rule, the Asian markets will start trading precious metals on a more 1 to 1 physical basis this fall… according to Andrew Maguire in the linked KWN interview above.

This will put severe stress on the PAPER COMEX-LBMA MARKET.

It will be interesting to see if gold hits $2,000 this year.  If not, no big deal… I have time to wait.  However, Bo Polny put his neck out on the line and with it, a great deal of paid subscribers.  So maybe he knows something I don’t.

One last thing.  Bo also went on the record to say, silver would move higher in percentage terms than gold.  He believes silver will see a new high in 2014 as well.
The THIRD & LAST SIGNAL is due to the stock purchases of a well-known Billionaire trader.  In the Motley Fool article, Bet Like George Soros and Cash in on a Silver Rally, the author Matt Smith stated:

Billionaire investor George Soros has already made some big bets on precious metals and silver miners in particular. He invested $9.4 million in precious metals streamer Silver Wheaton (TSX: SLW)(NYSE: SLW) and $10.7 million on miner Pan American Silver (TSX: PAA)(Nasdaq: PAAS).

Not only did Soros purchase Silver Wheaton and Pan American Silver he also bought some of the top gold shares such as Barrick, Gold Corp and Yamana Gold.  While these are not huge purchases, they represent a step in the right direction.  I would imagine as the prices of the mining shares move higher, Soros will be adding more to his portfolio.

If we look at all three INDICATORS-SIGNALS together, we can see something big is getting ready to occur in the precious metals market.  As I stated before, I am in gold and silver for the long-run, but it’s nice to speculate on what may take place as these market conditions converge in the short-term.

I believe Gene Arensberg when he says the indicators for gold and silver are the most bullish setup he has seen for decades.   Lastly, it will be interesting to see if Bo Polny’s widely bullish call for $2,000 comes true by the end of the year.  Heck, I would be impressed if we hit $1,750.

I still adhere to the long-term fundamentals.  Gold and silver will be some of the best investments and stores of value in the future due to PEAK OIL, the decline of NET OIL EXPORTS and the FALLING EROI.

Those are already BAKED IN THE CAKE… we just have to let them cook for a while longer.


    • “As long as the manipulators have control over the paper prices nothing will change until physical over take the paper price.” It’s not that simple. While they do manipu

  1. This call of $2,000 gold is only achievable if the FED supported banks stop slamming the precious metals market with massive amounts of derivative paper shorts.  I always laugh at these commentators which make grand predictions but ignore the elephant in the room.  Anyway we’ll see but I’m not holding my breath on this prediction. 

    • “I always laugh at these commentators which make grand predictions but ignore the elephant in the room.”
       
      They are merely profiting on the weakness of the economy. They are not controlling the economy.

  2. I don’t have a clue who this Bo Polny is except that Sinclair has taken a liking to him.  I guess that is all SRShrocco knows about him as well.  If he truly has a lot of subscribers he is putting his reputation on the line and will likely lose a lot subscribers if he is wrong. I like the fact that we will know if he is going to be right or wrong fairly shortly.  We need to see a Summer low.  We seem to be in a holding pattern right now.  How much longer do we have in the Summer?  Another month?  Maybe we have already seen the Summer low?  In that case, we need to start seeing some meaningful upward movement in the metals.  We need to basicly see manipulations of metals come to a halt very soon so gold has a chance of seeing 2000 dollars per oz.  A move from 1300 to 2000 in 6 months would be truly spectacular and even unbelieveable to see happening right in front of our eyes.  And, silver would move even more spectacularly, blowing us away and surprising the world.  Anyone who has been following this market for the last several years is probably very skeptical about this Bo personna, and rightfully so.  I seriously doubt that Bo will be right on this one.  He will be the laughing stock if he is wrong.  He will be the talk of the town if he is right. Good luck sir, because the naysayers are waiting in the wings for you to be wrong on this.

    • On the day the $USD swooned below the .80 mark, a few months back, Bo Polny announced on Jim Sinclair’s website “The dollar will never rise above the .80 level again!”
      Bo Polny wears no clothes. 

  3. I’m sure the Peanut Gallery here will have much to shite on about any and all optimistic forecasts. Let me just put this here so anyone reading will know all comments below this are from a cynical self hating lot who stack begrudgingly, yet when the day comes for the rocket ride they’ll all squeal like little girls because the Silver Beiber arrived.
     

    • only Ranger!

      the constant hype does get annoying… but when your job is selling silver, do you really want to post much negative news?

  4. Rosh Hashanah starts Sept 24 or so and that’s only 7 weeks away and something aways happens within a month or so before and after Rosh Hashanah. Its election season. IMO to predict $2000 gold by year end requires someone knowing something is going to happen. or is BS. Like COMEX not having enough physical silver to meet physical silver delivery requests. War with Russia could easily break out between now and 2015. Some kind of mess could happen in the Far East. It has not been mentioned in the US media at all but the PM of Ukraine installed by Nuland, Yat, quit, a big, big deal. All I’m saying is there is Do Do out there that could happen. Maybe Bo Pony is in a loop that knows the silver vault is going to run dry. Everything I do is based on logic and having been screwed in silver for 28 years. I just hope the parasites do something that gets their heads cut off.    

  5. You’ve got to admit, some weird things are happening so if things are changing from manipulated down, the only other direction is up :-)  Today there were July futures that sold for 1305-1310 while August was under $1300, very strange.
     
    Oil and gas are falling, I think that is to take revenue away from Russia.  Maybe manipulation is rotating from gold to oil/gas, I guess even the manipulators have limited resources to fight only limited fronts.  The press loves to talk about strong 81 $USA but that is really just another ratio to the $EU.  It’s nice headline news but it isn’t a global picture.  Nice propaganda point to sell it as global picture when it is mostly just the $EU.
     
    This crowd is hard on Bo but at the same time I think he’s done surprisingly well, I don’t see the point in commenting about +/- 2 weeks unless you are playing options/futures.  But I also don’t think technical analyses has much meaning in a manipulated market.  So if TA starts to become effective, that would be a nice sign of the manipulation diminishing.  I still think TPTB would be smart to back off slowly to $1400 and draw a new line in the sand.  With their control they could make a fortune giving up the ground and then use the wealth to defend $1400 for a long time.  $1400 would take a lot of stress off supply/demand and buy them a lot of time.

    I think peak oil is a bit overstated and how ever long it takes to be more meaningful, current energy options being developed will take up a lot of the slack. Remember, everyone in the business knows where huge excess supplies of energy are, they just aren’t worth pursuing at $100 oil, $4 Nat Gas: Solar, tidal, nuclear, coal, geothermal, wind, fuel cell, etc. There is absolutely no possible shortage. And there is no shortage of oil for chemical needs, especially considering chemical processing of nat gas and coal. I’m not saying diesel won’t get more expensive for the miners, but it won’t be peak energy, just a little more cost for that sector of the energy pie while other sectors get a little bigger to help keep diesel from getting even more expensive. Many of those technologies require special metals. So gold won’t be the only metal absorbing investment money so that will hold gold back a little while the others share the move up.

    • Gold needs to rise on average more than 100 dollars per month from now till the end of the year for Bo’s call to come to fruition.  I personally have never seen gold rise this fast while I have followed the markets and I doubt that many here can remember the last time it did this.  At any rate, gold needs to start rising and rising convincingly very quickly.  I don’t see it happening.  But, I am no market oracle either.  My gut tells me that the PTB want gold to stay right where it is.  Sideways to lower is where gold will stay for awhile.

    • “Gold needs to rise on average more than 100 dollars per month from now till the end of the year for Bo’s call to come to fruition.  I personally have never seen gold rise this fast while I have followed the markets.”
       
      You will this time. You are merely stating that the first couple waves didn’t go up at a fast pace, ok, but the third wave tends to go up much faster.

  6. For gold to reach $2,000 by the end of the year we are talking about a $700 dollar rise in about five months. In order for that to happen something catastrophic would have to occur like a major dollar event or a large war. While either of those scenarios is certainly possible I think both are highly unlikely over the next five months. With that being said Eric Sprott is also on record calling for $2K gold by the end of this year. I respect Sprott’s calls a lot more than Bo Polny’s but I just don’t see that kind of a price rise happening in such a short period of time. 

    • In 2011, gold got $600 in 7 months. Why not $700 this time?
      We do have an oversold price now and that recent ATH is tempting to reach for.

      A small but vital event in teh gold market could really throw fire on all this powder.
      I am not holding my breath though and really like prices now. Will be happy to keep them here another 2 years. But that top in 2020 would be nice on time. Make it so.

    • To gogetter1132
       
      In 2011 gold did rise substantially to over $1,900 in a few months and this happen without the threat of war with Russia, the trillions of dollars in bank derivatives, a dollar collapse and before QE to infinity so it’s possible. However many predictions has been made since the high in 2011 and they all have not come true.

    • @Panther – I remember that epic price rise in 2011 but we are in a substantially different environment right now in terms of how much control TPTB have on the price. With all of the crap going on in the world right now gold can barely hang onto the $1300 handle. For all intents and purposes we should be at $2K gold right now but the criminal elite are still in control. 

    • typical call with nothing to substantiate it but gut opinion.  JP has been a net issuer of futures in july, one has to be short to do that.  Could be the backwardation play as someone mentioned, sell July today and buy August that is due later this week and earn the backwardation.  Maybe not a bad play, but it is a largely price neutral transaction.

    • “so, it use to be “buy silber, crash jpmorgan”, now it’s “buy silber, because jpmorgan is buying”.
       
      i don’t even know if we all should laugh or cry…”
       
      Why do either? It’s a wise investing decision to follow the money.

  7. Hey Stackers, how about if everyone lists their gold and/or silver prediction for end of year!?  Either Dec. 30 or 31, I don’t know which will be the last day of business, and we’ll say the closing price of the highest vol. month traded that day.  Doc. can tabulate for people to watch as the date appears.  Maybe even list the date they guessed to kind of handicap the guesses.  List what ever number or range you think is meaningful and no problem guessing the same as someone else.

    And you know there is group study theory that says a high enough sample pool can make a very accurate prediction. Usually better than a single expert. Doc can tabulate the running average.
     
    Here’s mine for Au: $1,400 – $1,550/oz, sorry Bo I think you’ve already run out of time for $2,000.

  8. http://www.cnn.com/2014/07/29/politics/us-eu-russia-sanctions/index.html?hpt=hp_t1

    U.S. President Barack Obama and the European Union raised the stakes on Tuesday, announcing long-threatened sanctions that target Russia’s state-owned banks, weapons makers and oil companies, along with top cronies of President Vladimir Putin.
    When you listen to this speech. Listen to how many times banks or financial is mentioned. Like Russia is feeling the pain. The just imported 6000 tons of Gold last month alone. 

    • @NetRanger808
       
      These sanctions on Russia will last right up to the point when Russia says, “OK, Europeans, I am ordering the Russian gas and oil pipelines to the EU to be shut down until these sanctions are lifted.  If they are not lifted in 90 days, ALL of Russia’s energy resources will be sold to Asian customers.  You guys can huddle together in the dark for warmth”.  He could do that.  Russia does not HAVE to sell their oil and gas to the EU to do well.  It is convenient for them to do that but sanctions could become pretty inconvenient if this continues for much longer.  Russia has what the EU needs to prosper and they both know it.
       
      6,000 tons of gold imported in ONE month?????? Where did that number come from? That is at least triple what China imports per month and more than 50% above the world mining total + scrap recycle of about 4,000 tons annually.

    • @ netranger .. check your figures, I believe the official number was 600 tons … we’ll call it a typo … i’m pleased to announce that for the time being I’m leveraging up .. Been buying super cheap miners instead of physical. While I add 10 rounds of physical every 2 weeks, I’ve just dumped 10 000.00 into a tax free savings account. I live in Canada, this is a perfect set up. Any profits are free of capital gains. For any Canadians out there, this is a super deal and I’m frankly surprised the US testicle licking Canadian Gov. would even consider giving ordinary Canadians a break. Unless of course they were hoping we would all lose our shirts ? Perhaps … this is a  break because remember, canadians pay in US dollars, so there is the US carry trade which affects our pricing and then .. the physical premium, so of course … the US dollar goes down, our profits evaporate. This US carry trade is a raw deal for Canadians and anyone not living in the Continental U.S. But profits are coming. In any event, if you want leverage .. buy miners in safe jurisdictions. Timmins and Balmoral are a steal … Good luck and God bless ! and Go russia Go … !! Putin is a man of extra-ordiany composure … not like his evil nemesis Obama

  9.  
     
     
    “Not only did Bo Polny call the top of gold and silver in 2011, but he also called the bottom for both
    metals in 2013…. according to records on his website
     
    no one can verify Bo’s claims expect himself … don’t believe the BS folks 

  10. Congratulations to MR. POLNY and his customers.  His July forecast from it’s high ($21.05 on 07/01/14) to it’s current low ($20.50 on 07/29/14) has recorded a total move of approximately $0.55. 
     
    NOTICE: His DISCOUNTED price of $13,000 p/y expires on 08/15/14 and returns to it’s REGULAR FULL PRICE of $20,000 p/y.
     

    He might remind somebody of an overpaid YUGO car salesman.

    If you don’t remember the famous YUGO, reference the book below.

    The Yugo: The Rise and Fall of the Worst Car in History by Jason Vuic

    Six months after its American introduction in 1985, the Yugo was a punch line; within a year, it was a staple of late-night comedy. By 2000, NPR’s Car Talk declared it “the worst car of the millennium.”

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