So long as the PM fundamentals remain bullish, the wise hedger and professional investor is one that buys these dips. The charts might scare the crap out of you, but that's just the way of our world. The PM sector is not like most markets. The charts are "painted" by the management actions of powerful actors with every incentive in the world to support the global, leveraged inverted pyramid fiat system (including fear of outright system crash and French Revolution scenarios; the end game period is here and the powers that be are going "all in" because they have few, if any, alternative options).
I agree with Doc's analysis in full with one small exception. At this stage of the game, we do indeed have organic weak hand selling that comes in after the table has been set. Thus, today's action isn't strictly an artifact of Cartel direct action. There are indeed many traders scrambling for liquidity, and many traders are also placing bets on an incorrect (in the intermediate-term and long-run) view about a deflationary spiral in Europe creating consistent downward pressure on precious metals, in part, because these traders do not see these metals as representing true no counter-party risk money. They view the US dollar as the only "safe" form of money to hold during deflation. Heck, even gold as money is debated and questioned by the majority of the people that make up the individuals controlling short and medium-term money flows in the financial system. That worldview is the extreme "bubble" view, which has taken hold in the last forty years in the West.
Obviously, I disagree with these brainwashed money managers and history is on my side. Never mind the 5000+ year history of precious metals serving as real money. You need only look at the PM sector rebound out of the 2008 deflation scare as but one example of counter-party risk free "real money" showing it's true shiny colors during a time of deflation.
After reading the above the Doc would probably agree with me. I only make this point because there are many "trolls" showing up, bit**ing and complaining. There are bound to be many folks here that are genuinely scared as well.
Know this: It's not possible to call a bottom with exact precision, but the fact that we now see traders pushed to sell for liquidity and other traders placing bets on further downside momentum and the "deflation spiral" bet is part of the phenomena that creates the swing in sentiment and the bottom in the metals. We're close to that bottom and if I had to call it, I would say it happens this week.
When it comes to the investment picture beyond the next 30 days, there is only one thing that concerns me with respect to holding gold (and to a lesser extent, silver): a coordinated global currency system reset following a crash, where draconian measures are applied to precious metal holdings in a great many countries simultaneously (most likely capital controls and taxation, NOT outright confiscation). Even with this risk factor identifiable, a rational argument still exists for hedging by owning physical PMs.
The monkeys on TV can screech all they like about falling demand for gold and silver (counter to reality in the physical market on both the supply and demand side of the equation). The 20 through 40-something year old money managers that control 80% of the global money flows in a 30 day period can foam at the mouth about chasing US dollar momentum on the ill-conceived safe haven trade all they want. The dollar will not prove to be a safe haven in a true contagion situation. Truth be told, these money managers are making a bet on limited contagion because up to this point we've lived in a world were governments and central banks have been able to play the game of "saving" the debt bomb world with more debt, thus proving the money managers "right." That game is not sustainable and indeed, you need only look at the documents published by the think tanks and monetary institutions (BIS, Fed, etc.) to see that the powers that be are openly talking about how to develop the next global monetary system. And never mind the question of when the end game will arrive. I would argue that we're now far enough along that the Greece CDS situation will either cascade into a global contagion or we will see the can kicked down the road on a global basis for many more months to a few years. The likelihood of some middle of the road situation where all hell breaks in Greece but the US dollar remains unscathed is very unlikely, which brings us back to the question of what will govern the short-term trading decisions of these money managers currently moving towards the "safe haven" trade of the US Dollar? I think the sentiment shift will once again come when the dollar index is around the 82.5 level at the highest. Everything will likely turn around and reverse unless a real black swan flies out of the CDS market next week with respect to Greece -- and again, if a real global contagion erupts, it will eventually hose the US dollar too and leave gold [and silver] as "the last man standing." The momentum traders betting on the dollar will take profits no higher than at about the 82.5 level. Meanwhile, their trader friends making the safe haven dollar bet will see the end game for the Greek CDS situation unfold next week.
Again, the dollar will not be a safe haven if indeed the CDS market really does launch a flock of black swans (gets back to Jim Sinclair's observation about gold as the "last man standing").
So, could silver fall into the high $20s in the next few days? Sure. But the fundamentals remain in place for much higher prices and those fundamentals are not going to evaporate even if all hell breaks loose in terms of global economic activity. Industrial demand is not going to be cut in half -- even though the metal sometimes trades like that is what people fear. Meanwhile, investment demand for real, counter-party risk free silver will continue to grow at a strong rate on a global basis while fresh mine supply will contract during a true global economic crash (because 70% of the silver pulled out of the ground each year is now the byproduct of production coming out of base metal mines like copper mines).
I dislike these sell-offs as much as anyone, especially when the sell-offs are initially set-up by the Cartel's actions, akin to pushing a boulder over a ledge and then letting predictable market actions play out like Pavlov's dogs. But the reality is, the precious metals bull market hasn't been in a bubble and the bull market is no where near over.
So long as the PM fundamentals remain bullish, the wise hedger and professional investor is one that buys these dips. The charts might scare the crap out of you, but that's just the way of our world. The PM sector is not like most markets. The charts are "painted" by the management actions of powerful actors with every incentive in the world to support the global, leveraged inverted pyramid fiat system (including fear of outright system crash and French Revolution scenarios; the end game period is here and the powers that be are going "all in" because they have few, if any, alternative options).
