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Silver price discussion and analysis

Discussion in 'Commodities' started by RALPH5, Jan 14, 2005.

  1. RALPH5

    RALPH5

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    I don't know how many ppl here follow the commodities market
    but for many years now Teb Butler has been telling us of market
    manipulation in the Silver and to a lesser extent the Gold market.
    This is another interesting articule from him.

    Cheers Ralph


    TED BUTLER'S ARCHIVES

    WEEKLY COMMENTARY

    January 11, 2005

    Same As It Ever Was

    By Theodore Butler

    (The following essay was written by silver analyst Theodore Butler. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

    Repetitive, that’s one word. Another is manipulative. I’m talking about the price action in silver (and gold). Once again, significant price movements were dictated by the trading tango between mechanical technical funds and the New York dealers. This is what moves the markets. In the short to intermediate term, it is the only thing that moves the markets.

    Specifically, the dumping of thousands of contracts by the tech funds on the COMEX caused the latest drop in gold and silver prices. Certainly, nothing changed in the real world of metals that justified the price movements, just paper trading on the COMEX. Nothing new here.

    Also, there is nothing new in the lack of reaction by government regulators, Exchange officials or silver mining CEOs, who all pretend nothing is wrong with pricing being controlled by speculators. As I said; repetitive.

    But it would be wrong if you thought I was complaining. In fact, I’m ecstatic. The good news, of course, is that the dealers have been covering short positions aggressively. This, alone, is great cause for optimism about eventual higher prices. When the dealers have covered their short positions in silver, the risk is removed. I think we’re there.

    The latest Commitment of Traders (COT) report is revealing. First, there was massive, massive liquidation in gold by the technical funds, with commensurate dealer short covering. More importantly, the massive liquidation continued in earnest from the Tuesday cut-off. I would estimate that we now have much less of a tech fund long and dealer short position in gold, than we had at the bottom in September, when gold was at $400.

    From the top, I would estimate that the funds have liquidated 100,000 long gold COMEX contracts, with a big chunk coming in the current reporting week and the three trading days from the cut-off. It should be clear to you that this is what foretold and caused the almost $40 decline in gold from the top. That there are still gold promoters that don’t see this, or refuse to see it, is stunning. This sell-off should have been no surprise to anyone paying attention. On the positive side, gold should be cleaned out, or close to cleaned out, to the downside.

    In silver, there was an unexpectedly small reduction in this week’s COTs. There had been a 30,000 contract (150,000 million oz) reduction in the dealer net short position in the weeks prior to this current report, and I had been expecting a further 10,000 contract reduction in this week’s report, indicating a major low-risk buy point. Instead, the report indicated only a 2500 contract reduction in the net dealer short position and no decrease in the tech fund long position. Or more correctly, no decrease in the non-commercial gross long category, which is where the tech funds are classified.

    So what does this mean for silver? While the report could be correct in that the tech funds didn’t get completely liquidated yet, and we still need to witness further tech fund selling amid lower prices, my sense is that is not the case. Also, while it’s possible there may be errors in the current report (we’ve seen that before), my sense is that something else has happened that is of the utmost significance to the near term direction of silver prices.

    This is obviously speculation on my part, so please treat it as such. I think that the tech funds were completely liquidated in silver, but the reason the latest COT report doesn’t reflect that, is because some other large (non-technically oriented) traders took their place. I base my speculation on daily price, volume and open interest data for the time period covered in the report.

    If my speculation is correct, it could mean that some very strong hands have come into the silver market. This would be a sudden and very bullish development. Accordingly, I see very little reason not to embrace a full bullish tilt towards silver. This is another mother buy point, maybe The Buy Point.

    If you still have any doubt as to what really moves the silver market, I invite you to reread prior articles to grasp this Commitment of Trader market structure phenomenon. If you’re short on time, just start with skimming the articles describing the previous major lows in gold and silver in September, staring with, "The Set-Up?" when the dealers had a relatively small short position. This market structure allowed the resultant $60 price rally in gold and an almost $2 rally in silver, which were ultimately capped and reversed with historic dealer scale-up short selling.

    As happy as I am to be presented with another one of those "dimes to the downside, dollars to the upside" buy points, there is something even more compelling about the current set-up. It’s hard to pinpoint it, but there seems to be a confluence of factors suggesting that this silver buy point will be the "big one". The one that will make history.

    For one thing, there is a widespread tightness in all mineral commodities, thanks particularly to China that just doesn’t seem to be going away. Inventories of all the industrial metals continue to drop, some, like copper, to alarmingly low levels. In addition in copper, the COMEX delivery situation still appears critical. I get the feeling the exchange just barely made it through the December copper delivery process by the skin of its teeth, with behind-the-scenes jaw-boning and private workouts. The COMEX will be lucky if it can make it through the next few months without a copper delivery problem, in my opinion. I keep mentioning this, as a delivery problem in COMEX copper may quickly shine the light on COMEX silver, given that COMEX silver has the largest naked short position in commodity history; a clear invitation to an eventual delivery problem, for a commodity in a structural deficit.

    Further, actual silver deliveries to investors are still being delayed. The Central Fund of Canada will not be getting the silver it purchased a couple of months ago any time soon, and I have even heard reports that the other big Canadian institutional investor still hasn’t received all the silver it has been waiting for since early last summer. Remember, delivery delays are a symptom of shortage. While I can’t substantiate it, I get the feeling that the dealers are delivering silver to industrial users, ahead of investors to prevent problems from surfacing. Sort of like emergency room triage.

    Silver Eagle sales for 2004 were strong, at over 9.6 million ounces, making it the 2nd best year in the past 15, and 3rd best since the program began. All told, when you add in Proof Eagles and other coins and all the commemorative issues by the US Mint, the government is buying a million ounces of silver a month on the open market. This demand should remain strong as far as the eye can see; or at least until a price emergency occurs in silver.

    One final note – the gold exchange traded fund, GLD, has seen some impressive real gold accumulation on the gold price swoon, adding one million ounces in a few days. Coupled with the drastically improved COTs, gold could be set for an impressive bounce. As I’ve said before, if there was no such thing as silver, gold would be an attraction for me, particularly now. But with the COTs set up as I believe in silver, plus the always- improving fundamentals, why go fishing when you can shoot fish in a barrel?
     
  2. clowboy

    clowboy

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    SILVER

    Hey all

    Looking for some exposure to silver (bullion).

    I have been wanting to buy some silver for quite some time now but the transaction costs on bullion are phenominal.

    Anyone have any shares(silver co's etc) or other methods of gaining exposure to silver?

    Also an interesting chart on silver......

    http://goldinfo.net/silver600.html


    Thanks
     
  3. sam76

    sam76

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    Re: SILVER

    mmn
     
  4. Hanrahan

    Hanrahan Big Bear

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    Re: SILVER

    Or BSG
     
  5. crackaton

    crackaton

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    Re: SILVER

    Silver is out of control!! CUrrently sitting on 10.17 !!
     
  6. michael_selway

    michael_selway Coal & Phosphate, thats it!

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    Re: SILVER

    yeah I wonder why? Gold hasnt moved much

    t24_ag_en_usoz_2.gif
     

    Attached Files:

  7. crackaton

    crackaton

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    Re: SILVER

    Overseas bonds fell. Japan is moving rates up and Europe is following. The days of cheap free money are coming to an end. also EFT approaches for silver. Happy days ahead!!
     
  8. nizar

    nizar

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    Re: SILVER

    what do u think the japanese rate increase will do for the japanese equities market? It should fall initially, then recover u would think yeh? EVery1 had to expect that rate rises naturally come when economies recover....

    but of course, during last year, everytime interest rates rose up, market dumped by 100pts, even though people knew it was coming, funny how that happens...
     
  9. crackaton

    crackaton

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    Re: SILVER

    CORRECTED - COMEX silver settles up 4.3 pct, market eyes ETF
    Thu Mar 2, 2006 4:38 PM ET
    Printer Friendly | Email Article | Reprints | RSS (Page 1 of 2)
    In NEW YORK story headlined "COMEX silver settles up 4.3 pct, market eyes ETF," please read in paragraph 15, "June palladium gained $3.05 ..," instead of "June palladium gained 3.05 cents..." (Corrects amount)
    A corrected version follows

    NEW YORK, March 2 (Reuters) - U.S. silver futures vaulted to a 22-year high on Thursday, amid aggressive commodity fund buying that boosted the precious metal over $10 an ounce ahead of a widely expected approval of a silver exchange-traded fund (ETF), sources said.

    "I think the market certainly positioned itself for that and as we got closer to that $10 mark, it just became irresistible and the stops went off and some fresh buyers came in," said Bernard Hunter, director of precious metals at ScotiaMocatta.

    Silver for May delivery surged 4.3 percent, or 41.8 cents, settling at $10.208 an ounce at the COMEX division of the New York Mercantile Exchange, after dealing from $9.76 to $10.225, its loftiest level since early 1984.

    "There was some more talk around during the day that the Securities and Exchange Commission is over its supposed guidance period for passing back comments and there was no news, so people were thinking maybe a decision must be imminent," Hunter added.

    Investors were anxious to build long positions above $10 an ounce in expectation that the proposed silver ETF would be approved by the Securities and Exchange Commission, following the end of a 21-day public comment period on the ETF, ordered by the SEC.

    Spot silver shot up to a 22-year high at 10.23 amid fund buying that was tied to the gains seen in the copper market, dealers said.

    It last fetched $10.18/10.21, well above $9.75/78 late Wednesday. The daily spot reference rate was fixed at $9.7875 in London.

    George Gero, vice president at RBC Capital Markets Global Futures noted that the metal has turned respectable and has attracted institutional interest since it had passed the 100,000 open interest mark.

    As of March 1, open interest in the silver market was up 263 lots at 128,102 lots.
     
  10. crackaton

    crackaton

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    Re: SILVER

    MEXICO CITY -(Dow Jones)- Miners returned to work at Mexico's Fresnillo silver mine Thursday after a one-day walkout that was part of a nationwide strike called by the National Mining and Metal Workers Union.

    Fresnillo, in Zacatecas state, is the main silver mine of Industrias Penoles SA (PE&OLES.MX), the world's biggest silver producer with annual output of 80 million ounces. The mine also produces zinc and lead.

    Penoles spokesman Luis Rey said 400 of the 600 workers at the mine voted to end the strike, which the 250,000-member National Mining and Metal Workers Union called late Tuesday in support of boss Napoleon Gomez Urrutia, whose leadership is being challenged.

    Rey said the company was hopeful the decision by the Fresnillo miners would influence strikers at its MetMex metals refining facility in Torreon.

    The Labor Ministry has declared the walkouts illegal.
     
  11. crackaton

    crackaton

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  12. nizar

    nizar

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    Re: SILVER

    agree

    gold has been trading in the 545-555 range for a while now, seems to be lacking direction or any incentive to go up further. It doesnt help that the us dollar is rallying....
     
  13. Smurf1976

    Smurf1976

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    Re: SILVER

    Unlike gold which is largely used for investment, ornamental uses etc, silver is absolutely critical in many silver-consuming applications at ANY price. Add that to the supply deficit and IMO you have the setup for a real move higher in silver.
     
  14. michael_selway

    michael_selway Coal & Phosphate, thats it!

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    Re: SILVER

    Hi whats the supply deficit atm?

    is there a site like LME supplies for base metals?

    http://www.kitcometals.com/charts/lmewarehouse.html

    thx

    MS
     
  15. rederob

    rederob

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    Re: SILVER

    MS
    COMEX warehouse data will give the best proxy.
    However, be aware that COMEX warehouses not only store for industry, they store for private investors. So, where you might notice warehouse stock levels rising, do not assume it is because nobody is buying and taking delivery; they may have bought and simply stored atthe same location.
    All data has interpretive issues that can sucker lay observers into wrong conclusions.

    This site may have the answers you seek:
    http://www.silverinstitute.org/
     
  16. crackaton

    crackaton

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    Re: SILVER

    Thx red good link
     
  17. crackaton

    crackaton

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    Re: SILVER

    20$ not far away!! go MMN and BSG and any other silver speccie or holder!!!

    Silver Superspike
    Clive Maund
    As long-time subscribers to www.clivemaund.com are aware, I have a marked tendency to recommend the sale of things that become extremely overbought, which is generally a reasonable stance as I also have a similar tendency to recommend them long before they get to that state, in accordance with "The Prime Directive", which is to buy low and sell high. Thus, a wide range of silver stocks were recommended for purchase last year and early this year on www.clivemaund.com when they were on the bottom, including Avino Silver & Gold, Coeur d'Alene, ECU Silver, Excellon Resources and Silvercrest Mines.

    There are occasions, however, in the markets when humongous "once in a generation" superspikes develop, which are very hard to predict but stand out on the charts for years afterwards like monoliths. In the earlier stages of a superspike it is tempting - and normal - to take profits due to overbought limits having been attained, or exceeded, but these superspikes have no respect for normal parameters, and it is galling to make what seems to be a prudent sale, only to see the item you have sold go from one seemingly crazily overbought extreme to the next.

    I'm not easily astonished these days, but I was pulled up sharp early this weekend by a truly astonishing chart sent to me by a very learned and experienced subscriber in California. This chart is reproduced in two sections below - it had to be split in half as an attempt to reduce its size to fit on the page resulted in serious loss of picture quality. The chart is self explanatory and reveals that, although silver is seriously overbought, it is in a similar technical situation to that which prevailed before the incredible superspike in 1979. Could we see a repeat performance? - well, yes, and if what is written about the fundamentals of silver by people such as Ted Butler is true, then we have fundamental justification for it, and some would argue that it could go significantly higher than in 1979.

    With special thanks to Claude in California, the annotations and commentary on the chart are his.

    Alright, so how, as speculators, do we handle this extraordinary situation? We know we are looking at a market which is already very overbought, but which has a fair chance of generating a super-spike, in defiance of normal overbought parameters, resulting in huge gains. I believe the correct way to handle this situation is to put ourselves in position to make massive profits should this market go ballistic, but, should silver turn tail and go into reverse, losses are kept at a modest and acceptable level.

    The correct speculative vehicle for maximising profit potential from this situation, and minimising damage in the event that the silver does not continue higher over the short to medium-term is call options in selected silver stocks. Options have the supreme advantage in the current situation in that they provide massive leverage on capital employed, while strictly limiting losses to the "stake money".

    Coeur d'Alene is viewed as the large silver stock with the most upside potential, as it is still at a relatively modest price, and is arcing away from a massive Pan & Handle base, which it is important to note that it hasn't broken out of yet - when it does its rate of advance can be expected to accelerate significantly. This base area was identified a long time back and it was strongly recommended on www.clivemaund.com before the high-volume January breakout from the base. It was recommended to take profits in Coeur about a week ago on the site, but it has not reacted significantly which was considered a danger at the time, and is thus in position for rapid acceleration in the event that the silver spike intensifies. A recommended Traded Option in Coeur is the September 7.50 at 0.75, a good price. The strike price of this option is not much above the current price of the stock, so gains should be immediate if the stock advances. Furthermore, a silver superspike, should it happen, can be expected to occur before the expiry of this option.

    Other attractive Traded Option contracts in the large silver stocks are described in the full version of this article in www.clivemaund.com in addition to several silver stocks that look relatively safe here and set to do very well indeed should a superspike develop.

    Does what is written here represent an about-face from the cautious stance adopted by the writer some days back? Well, partly, because I don't KNOW whether silver will react here or whether it will continue to accelerate to even more extremely overbought levels. Most reasonable people would agree that a cautious stance at this juncture is quite understandable in view of the fact that the superspike scenario described here is a very rare occurrence - a once in a generation event. The purpose of this article is to outline an effective way to put yourself in position to capitalize on a superspike BIG TIME should it occur, without having to "bet the farm" on it. If you follow the strategy outlined here you will make huge gains if the superspike occurs. If it doesn't, it will cost you, but not very much.

    Clive Maund, Diploma Technical Analysis
    support@clivemaund.com
    www.clivemaund.com

    Kaufbeuren, Germany, 16 April 2006


    http://www.gold-eagle.com/editorials_05/maund041606.html
     
  18. michael_selway

    michael_selway Coal & Phosphate, thats it!

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    Re: SILVER

    Wow those 2 have been doing very well!

    Below is an old intersting article

    thx

    MS

    ---------------------

    Silver lining for white metal producers

    Date: 21/3/2006
    Author: Robin Bromby
    Source: The Australian --- Page: 30
    Like gold, the price of silver has been rising steadily. In March 2006 it is trading at more than $US10 an ounce. Australia is the third-largest silver producer in the world, but there are few opportunities for local traders to invest in the market. BHP Billiton is Australia's major silver producer. Substantial producers, Perilya and CBH Resources, are locked into contracts. The only specialist silver miner is Macmin Silver, but production is not due to begin until later in 2006. Meanwhile, Barclays Capital Investors is planning to open a silver-backed exchange traded fund and the Dubai Gold & Commodity Exchange will shortly give the go-ahead for a silver contract
     
  19. nizar

    nizar

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    Re: SILVER

    Which of the two are closer to production?
     
  20. crackaton

    crackaton

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    Re: SILVER

    I'll toss a round fifty and see!!
     
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