Silver SOARS to $21, Forcing Bankers to Fight an Epic Battle
This is Big, Brothers
Remember how several months ago, I wrote a piece asking if silver’s moment had arrived? In that piece, I cautioned at the time that silver hadn’t yet shot through important resistance points. I said that $18 seemed the ‘line in the sand’ for our banking friends, and that when $18 was broken…it could lead to $20 very, very quickly.
Well, brothers: did I call it, or did I call it?
For as soon as silver broke through and closed above $18, a powerful move has taken place. All this has happened in a week too, by the way. From the outside, it appears that silver’s gap up to $20 seems unjustifiable, but really, it’s very normal and reasonable, here’s what seems to have happened.
Mind the Gaps
Really, what silver(and gold, to a lesser extent) are simply doing, is filling the downward gaps that the banks created with them several years ago. In spring of 2013, the banksters met with Obama at the White House, in a closed door meeting, and several days later…
Silver was taken from $28, and broken through key “support” of $26 with great fury, as you can see in this chart.
Then, just a few days later, silver was driven through more “key support” at $22, and from there, $20 fell before very long.
$18 ended up being the new ‘floor’ for a year or so.
The point in all this…is that gaps usually have to be filled, and silver’s gaps downward through 26, 22, and 20(being artificial and manufactured), just beg to be filled upward almost as quickly. So, the gap up to $20 has been filled. The gap to 22 is next…and when 22 falls as decisively as $18, anyone wanna take a stab at what happens next?
Let’s just say, another move as quick as the one we just saw(but bigger) could take us back to $26 very rapidly. Now, the enemy has thwacked silver and gold since the initial move higher to $21+, and at this moment a tremendous battle is being waged by the shorts! They must keep silver under $20 and change. They must. If they lose this battle at this juncture, then we will most definitely fill the gap to $22, and then $26 will be a slam dunk, and it will happen in a blink.
Watchman, I get that gaps are being filled on the chart, but what changed so quickly to make silver soar so violently?
Good question, here’s what seems to be happening.
First off, we know that our banking foes have been perennially short silver, to the tune of hundreds of millions of ounces, that’s nothing new. What IS new, is that they were steadily building up their short positions again to hammer silver during an options expiry week, only to get a stunning, enormous surprise: the British vote for a Brexit from the EU.
Here’s the now famous chart showing the trend change, post Brexit.
Brexit seems to have caught many players, even large players “flat footed”. Even George Soros lost over $1.5 billion in his long position in the Great British Pound, initially. Many traders have egg all over their face from that event, and it appears the same rings true for JP Morgan and friends.
This market event has now left those commercial banks holding the bag, with hundreds of millions of ounces in their commercial short category now bearing down upon them with crushing force.
Since the moment Brexit occurred, some very big players seem to have realized that they got caught with their pants down in silver, and that silver’s next move was higher, not lower. Many of those big players are now either fighting for their lives around a very key level, or they’re running for their lives. It is now looking as if it might turn into a classic short squeeze(not simply in the futures buying, but also perhaps in physical IF the East steps up its massive silver imports), as the latest video from BrotherJohnF illustrates.
The problem for the banksters, is that the market forces bearing down on them now are heavier than ever, and the momentum is on the side of the longs. Brexit was the event of the year. It will color everything else that comes after it(from bank bailouts, to currency interventions, to interest rate policy), and many market players now understand that Brexit means the central banks are gonna print a ton of cash!
This has now brought silver and gold to crucial resistance while filling their 2013 gaps. Silver recently crossed through this important line of resistance, but has been initially beaten back. There’s an epic battle now being fought between the commercial shorts, and a bajillion Asian longs(specifically in China).
Here’s a great chart from SRS Rocco showing the current line in the sand:
Glorious isn’t it? Watching the big banks struggle for once?
Now, there is a chance they’ll successfully rebuff silver from this level, and take it to prior resistance, but remember, prior resistance is $18. That’s not very far. I’d almost prefer a bounce off of $18, as it would give extra strength to silver for the coming move higher. That doesn’t mean we’ll get it though.
There is one more crucial thing working against the banks in the short term, as well.
Supply is Sketchy
They are having enormous supply issues! While silver got off to a slow start in India at the year’s beginning, thanks to a huge jeweler strike, they are now returning to the previous levels of demand for silver last year. This has put pressure on the Comex silver stocks, as turnover there remains highly elevated. Take a look at the latest numbers:
While the numbers have come up about 2 million ounces, the total registered Comex silver stocks remains highly depressed, at roughly 24 million ounces.
I’ll remind everyone, that at the moment when the 2011 Comex silver short squeeze was getting truly deadly for the banks, the lowest point for registered silver was 26 million ounces! Higher than we are right now!
The deficit worldwide has grown much, much deeper as well, with the US and Canada now having to important a quarter billion ounces!
Folks, demand was already stellar for silver(and gold), but throw in a new price bull market, and these banks suddenly have a serious problem.
How many of you were buying new silver over the past week, or thinking, “should I buy more now, in case it keeps rushing higher?” Trust me: many folks who haven’t even thought about silver in awhile, were thinking these things, because silver is a ‘Giffen Good’: the higher(and faster) the price climbs, the more folks wanna have some!
This is why the banks are fighting an enormous war here, and why they fought so long to hold $18: a $20 handle for silver has incredible psychological influence.
I hope our shield brothers also see again, how quickly silver can turn around. One market event + 10 trading days’ worth of action = the highest print for silver in over 2 years. If the banks lose the fight to contain silver under $20, watch out….things are gonna get crazy.
If they hold the line, and take silver back to $18, no worries, load the boat at a price $3 under the recent spike, and be thankful.
I recently had an online interaction with Chris Duane, and his thoughts pretty much mirrored mine. Part of him wishes that the banks would hit silver pretty hard again, but another part of him is well past ready for this silver vindication spike to occur.
I wholly agree with that.
While another dip to the mid teens wouldn’t bother me in the least, our faithful warriors have not only held the line for 5 long, grueling years, but they’ve bled the enemy’s nose in the process. Each time, faithfully counter-attacking, and taking ‘silver trophies of war’.
I thank God for the last 5 years. While I would’ve had a large windfall ‘profit’ if silver had hit triple digits in 2011, and not looked back, I must admit I didn’t have the number of ounces that I wished to have at that point. I’ve tried to look at the MayDay Massacre as a 2nd chance, to reach even greater ounce targets that I’d set for myself.
All my personal targets have now been reached, as I’ve more than tripled the number of ounces that I held back in 2011. I’m ready. Whether immediate spike, or a small wait/dip, and then the spike, I don’t care.
I hope all of you can say the same.
While it is fun to pick up treasure for next to nothing, we have all patiently waited and planted, in the drenching rains for 5 years.
It’s now time to glean the Harvest!
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