The Silver Christmas Present

This Christmas we are being handed the silver Christmas present.  Silver below $30 per ounce produces one of the best opportunities to enter the market in both physical silver and in the silver stocks that we have seen in some time. We should not look this gift horse in the mouth, because in a very short time we will be looking back at silver below $30 per ounce as one of the best opportunities that we have come across in a long time.

Why are both gold and silver going down when the physical demand for both metals is at an all time high? There can be only one answer, manipulation.

Both silver and gold have been hammered down lately because central banks have been attacking the gold market which has the ancillary effect of dragging silver down. What is interesting in this picture, is how the manipulation of both gold and silver has been achieved.

It seems that the bullion banks are working with the central bankers because they have to know how much gold, or silver is available to the market at any given time. There simply isn’t enough gold or silver available in the markets to take delivery in large enough amounts to move the price in the way that they have lately.

It appears that the central banks are taking silver from the stockpiles of the ETF,  SLV in order to get the amounts that they need to move the market.  This is a giant paper manipulation of the gold and silver market. If this is the case, there are share holders out there that think they have silver  in their name in the vault, when in actuality all they have is a paper IOU.  If there is any sort of market moving event, or panic in the markets this paper charade is going to come unraveled in a hurry and silver will pop significantly.

The London Trader is reporting, “This game is getting so stretched that it’s going to break.  You don’t think the Chinese know this stuff.  If we get a close above the 200 day moving average in the mid $30’s on silver, watch silver immediately pop $2 or $3.”  

The borrowed silver from SLV has enabled the bankers to keep silver down by $10 to $15 from where it should currently be priced. This is all about paper leverage in both gold and silver. By borrowing the metal from ETFs, they are able to artificially blunt what the demand would dictate for the price by shorting the metals.

They simply look for key support levels on the charts and short them as the price nears them, which turns buyers into sellers and pushes the price down. When this is done at key support levels like the 50 day moving average the 100 day and the 200 day moving average, it gets the attention of institutional holders and they start to sell which sets the whole process snowballing.

It seems obvious, that the central bankers must be desperate, because they are getting rid of physical gold and silver, with little chance of getting it back. When ever prices go down, both  China and Russia are buying up all that they can. Between countries buying precious metals and individuals buying, the central banks seem to be  sacrificing real wealth in order to forestall what could only be a total collapse of their fiat system.

I may be totally wrong on this, but what other reason would drive the central banks to risk real wealth other than the fear of a total collapse? Time will tell as this story plays out, but the events in the Euro zone are clearly pointing in this direction. I will be buying both physical silver and silver stocks while this silver Christmas present is still available.

Don’t look for this buying opportunity to be around for too long, because artificial manipulation like this usually does not end well.  When we hear the pop go out of this scheme, both gold and silver will go to their true value and beyond, very quickly. Take advantage of the silver Christmas present while it is here.

I am recommending, as I always have, buying either “junk silver”, U.S. coins that have 90% silver content or one ounce silver Eagles and Maple Leafs.  At any price point below $30, buy what every is available, whenever you can.There is little to no risk in this trade, as long as you can afford to hold the coins. If you will need cash short term, this is not a trade for you because the central banks may be able keep the charade going for six months to a year, but I doubt it.

The silver mining stocks have really been beaten up and there are great values out there that are ripe for the picking.  The follow list are miners to consider, including their closing price as of friday December 23:  Pan American Silver Corp. (PAAS), $22.33,  Silver Wheaton Corp. (SLW), $29.58,  SilverCorp Metals Inc, (SVM.TO), $6.52 and Silver Standard Resources Inc, (SSRI) at $13.46.

There is a whole lot of upside in these stocks and now is when you want to buy them, namely when no one else is.

Silver is king at this point in time because it has been beaten up ore than gold,  has much more percentage upside than gold in the mid term and because you can participate at a much lower price per ounce that you can with gold. For those with the money, gold is also a buying opportunity at these levels.

Just a reminder, for those of you that are new to the site, I am not a professional trader and what works for me, may not work for you. Do your own due diligence before you buy or sell anything. With that said, take a look at the silver Christmas present, you just might like what you see.

Till next time, Merry Christmas, good luck and good trading!