Silver and Gold - Positioning for the Long Side

silver and gold

With incredible bullish and widely misunderstood fundamentals generally kept sequestered from the mainstream, it is easy to rationalize higher prices eminent at any point in time. This is certainly why so many analysts and many new investors arrive to the sector with an impatience driven by the accident (surging prices) waiting to happen any minute.

This is fueled, in large part, by the possibility which remains that a short covering rally in silver sparked in the speculative category could and eventually will spill over into the commercial category. This is where JPM and 3 other large bullion banks maintain there outlandish and illegal, though un-prosecutable, net short positions.

Gold and Silver Miners - Short-Covering Leading the Way to Higher Prices

Ultimately, for those in control of prices, it's about short term profits. If one maintains ultimate control over one market, then a loss someplace else can be made up easily.

Its shareholders share prices, quarterly bonuses that matter most. The long term matters less because across the board because there is no skin in the game (except for the taxpayer, though even that is diminishing to a certain degree).

Big banks are celebrated; the CEOs have become darlings wearing presidential cufflinks in a media show. One analyst after another paraded out, becoming background for an investing public addicted to the noise.

The large bullion banks have positioned themselves for profit in the intermediate term while still maintaining control over rallies. The recent move higher in gold and silver up and through technical resistance levels indicates tight control - as we have not violated any of the upward daily price limits that one could set a clock by.

Miners Leading the Way

The producer stocks have been moving significantly upward over the past week. Mining stocks are tethered via leverage to the price of gold.

Generally speaking, in a free market stocks tend to move ahead of the underlying growth in the main source of profit – gold and silver in this case.

Given the massive speculative short interest in mining stocks, it should be no surprise that we are seeing the aggressive covering ahead of a possible upward explosion in the miners.

All in all, while it is interesting to watch the change in price direction, until the big bullion banks extricate themselves from their concentrated positions in either metal they continue to run the show.

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