Why People Are Buying Silver Now

Silver Being Silver

Posted: May 04 2011     By: Jim Sinclair      Post Edited: May 4, 2011 at 9:42 pm
Filed under: General Editorial

My Dear Extended Family,

My daughter was hospitalized yesterday. She is fine now, but it was dicey last evening.
This note is being written in the hospital to tell you to please relax.
Margins will continue to rise on the COMEX until it reaches the cash price of silver. This works for the shorts as their hammer on the silver market reduced the equity of low cost positions. The efficacy is short term and made no difference whatsoever in 1980 as the silver market made its highs. What broke silver in 1980 was a unilateral change (novation) of the silver contract which went to "sellers only." Under contract law that is simply not permitted. They got away with a violation in 1980, but the corporate changes in structure at the COMEX that have occurred since 1980 makes the COMEX less able to pull that trick off successfully in 2011.
Silver is simply being silver. Silver did help gold therefore the 25% drop in value has to pressure the gold price.
The USDX is simply having a weak rally off a totally oversold on every internal indicator short side trade. The dollar has no future. The supply wishing to diversify is simply too big to allow any rally to have legs.
I have told you silver is a game. That being said, it it is a great game. Certainly as the silver price approached the 1980 high, you might have considered selling 1/3.
The high trade on silver was $54 in 1980. Silver’s round numbers are at $50 and $100. Both will function as such in trading.
Silver is not money. It is simply too bulky to be freely and universally fungible. After this short play, which had to follow the spike intermediary top, silver will rise as fast as it did again.
The Hedgies are having their way with the gold shares, but logically this is coming to an end. When you can buy companies whose resources are three times the company’s present capitalization, the share is getting unreasonably cheap.
The ratio of GDX versus GDXJ is starting to favor the juniors which is a major heads up event.
What you have witnessed is not at all shocking. If you traded 1968 to 1980 you would know this is just silver being silver.
Relax. Put a french curve on silver and you will see the bottom change in trend event.

Respectfully,
Jim

 

 

Paper silver market doesn't care about physical market, Norcini tells King

 

 

Special Report: EU = USSR Redux? 

Submitted by Tyler Durden on 05/04/2011 20:57 -0400

Tuur Demeester submits this comprehensive special report which analyzes the collapse of the Soviet Union, focusing on ten core crashes of the once "evil empire." Subsequently, as he submits: "I make a point by point comparison with Europe today, and come to the conclusion that its situation does not differ all that much with that of the imploding USSR. As a matter of fact, the parallells are often startling. There are plenty of disquieting evolutions going on in Europe today: the riots in the PIIGS countries, the appearingly permanent crisis in the banking world,... Maintaining the status quo is no longer possible, that much is clear. But what will the change look like? Will it be a steady reform, or on the contrary a sudden crash of the European Union and the euro?" For a very original take on the future of the European Union, read on.

Atlantic Capital Musing On Radical Money Policies And The Radical Adjustments That Must Follow 

Submitted by Tyler Durden on 05/04/2011 22:16 -0400

Atlantic Capital Management submits the following extended report on recent developments in the monetary arena: "The Federal Reserve System operates monetary policy as if economic activity during the asset bubbles was representative of true economic potential. To the Fed, the Great Recession has pushed economic activity so far below that potential it can stimulate with zero interest rates and quantitative easing well into the future, even after two years of it already. We believe the Fed is mistaken for the reasons contained in this report. Chief among them is that The Great Recession actually brought the economy back down toward its true potential. Further than that, it is likely that the current weak recovery is still running above true potential, and that is leading to a wide array of problems. Inflation pressures are the biggest."

Hong Kong Real Estate Transactions Plunge 

Submitted by Tyler Durden on 05/04/2011 21:54 -0400

A month ago, Zero Hedge observed the collapse in March real estate prices and number of transactions in Beijing (here and here), speculating that this could be the beginning of the end of the Chinese real estate bubble. Today, courtesy of the Hong Kong land registry service, we find that the drubbing has shifted from mainland China to Hong Kong. "The number of sale and purchase agreements for all building units received for registration in April was 10,386 (-23.1% compared with March and -27.4% compared with April 2010). Among the sale and purchase agreements, 7,635 were for residential units (-27% compared with March and -37.6% compared with April 2010)." This number of transaction is the lowest since March 2009. As for the actual money changing hands: "the total consideration for sale and purchase agreements in respect of residential units was $39 billion (-24.8% compared with March and -26.8% compared with April 2010)" - another low, as this is the biggest Y/Y drop since June 2010. Yet, not too surprisingly, the actual prices of real estate remain sticky. As Bloomberg reports: "Housing prices in the city, ranked the world’s most expensive place to buy a home by Savills Plc (SVS), have gained more than 55 percent in the past two years on record-low mortgage rates and an influx of buyers from China. The government in November increased property transaction taxes and pledged to boost land supply amid public protests that housing prices are becoming unaffordable and as the central bank warned about the risk of a “credit-fueled property bubble.”" The reason for this is that despite the cash-n-carry scheme described by Sean Corrigan recently, credit was suddenly become so scarce that it is only available to the wealthiest, who in turn are not, for now, in urgent need of hitting bids, thus preventing prices from attaining market clearing levels.






China To Purchase $1 Trillion In Gold; Price May Reach $2,000/oz This Year

 

 

 

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