by Jason Hommel, Dec 13, 2005
“Jason, should I buy silver now, or should I wait for the correction? Because I don’t want to buy at the top, I want to buy on a dip.”
So many people seem to be expecting what they call a “correction” to happen to gold and silver prices. It’s no wonder that yesterday, a small, temporary, and ultimately failed, manipulation to the downside took place.
From Bill Murphy at lemetropolecafe.com (where you can get a FREE 2 week subscription to his daily commentary):
Silver, yesterday and today:
Bill, I was in a bit of a rush before so I couldn’t exactly explain what was going on in Silver today. To use the words manipulate would be a very large understatement. I have an issue attributing today with the unwinding of the silver/gold spread..here’s how today happened: Starting around 12:30 silver is about 9.18 on the floor. Out of nowhere somebody starts offering mini’s at 8.01!!! That’s right over a point below the market??? After his offers got done some more size came in at 8.25..8.50..etc. Immediately following this the pit broke and so did Gold. If anyone were responsibly unwinding a spread they definitely wouldn’t be doing it in this fashion. At the same time I was hearing rumors about the Silver ETF being rejected..obviously we know now this is false. I strongly believe this was the shorts last stand to move BOTH markets down. Gold broke right after silver…Any thoughts?? Seth
This is correct. Chris Jordon of Morgan Stanley, the most well known and successful silver trader on the floor, began to offer Comex silver a dime below some bids, which cratered the market. As mentioned yesterday, the personnel on the floor was less than usual and Jordon got his way as gold followed suit.
So that’s the report from the Midas report at lemetropolecafe.com.
It is rather easy to manipulate the paper price of silver, temporarily: Simply offer promises to deliver silver. That’s it. That’s all it takes. The hard part comes later, when delivery dates come due. This is why manipulation cannot work in the long run, when there is a shortage of physical silver. This type of manipulation is bothersome, but it also offers the opportunity: cheap silver!
But there is another kind of manipulation that is harder to detect. Why is the word “correction” used to describe a price move to the downside? Is a low price of silver somehow “correct”? Absurd!
Higher prices are obviously needed in order to encourage more production which is needed to satisfy the silver shortage. The word “correction” should be used to describe a price move up!!! The subtle bias that you hear when you read someone say, “the precious metals may see a correction” is that it is correct for prices to be cheaper… but that’s just not true!
Even further, it is a manipulation to even describe the “price” of silver in terms of dollars. We could more accurately describe the “price” of dollars in terms of silver. And the price graphs we are all following would simply be inverted, and what is up is then down. It would be rather more “correct” to see the dollar continue to fall, in terms of silver!
So let me address the common question I get when silver prices rise (which is nearly all the time). “Jason, should I buy silver now, or should I wait for the correction? Because I don’t want to buy at the top, I want to buy on a dip.”
My standard answer is that I only know the long term. Long term, silver will go up, up, up, much much further from here, due to the silver shortage caused by industrial consumption over the last 60 years. And I make investment decisions based on the long term.
I received a call from a broker the other day who was interested in learning about silver stocks, who asked me “What’s the deal with silver? I have a client who bought $5 million worth of silver, and delivery took 100 days!!! That can’t be normal, and something is wrong here.” Yes, that’s technically a delivery default! Delays are evidence of the silver shortage!
Who can predict the short term price of silver, and on what basic fundamentals? Can you look into the minds of the manipulators, and ask them when, and how far, they will push silver prices down? No, you can’t. There is no information you can find to determine the short term future.
And if you look at the long term past, then we ARE on a dip, if you buy silver anywhere under about $25/oz. Wait for a dip? What do you mean? We are IN a dip.
See the 600 year silver chart to see how undervalued silver really is:
We will still be in a dip, anywhere from $25/oz. for silver to $80/oz. for silver! Even $80/oz. for silver is stupid cheap, historically speaking. Why wait? There is no basis for waiting. Silver is now trending up, moving up, headed up, and the word is out about the silver shortage.
Silver Users Fear Silver Shortage
Important Article October 27, 2005
And if you were waiting for that little “correction”, you missed it. Silver was $8.01 for a few seconds on Monday.
People have been asking me if they should “wait for a correction” ever since silver rose from about $4.15 and crossed above $5/oz. What do you think they should have done? And what are you going to do?
Act now. Just do it!
For the types of silver available, and for a list of low-priced bullion dealers, see
A Brief Guide to Buying Silver
Silver stocks, then, why are they lagging? Are “cheap silver stocks” evidence that precious metals will “correct” down, or does this mean that the silver stocks will “correct” up? I think the silver stocks are headed, up, of course.
Silver stocks are now headed up. Last Thursday, I profiled (promoted) Canadian Zinc (CZN). The stock was priced at about $.50 Cdn, and today, the stock is at $.62 Cdn. There’s a substantial gain in there for my long term readers who have purchased the “look at my portfolio” who saw me purchasing CZN over a 4 month period at an average of $.45/share Cdn.
The precious metals are not running ahead of other commodities. Look, the recent rise in gold and silver is not an anomoly, not unusual. Gold and silver are LAGGING many other commodities, such as oil, steel, iron, molybdenum, selenium, iridium. And copper, zinc and lead are all roaring along with gold and silver, more than doubling from their bottom.
Today, most of the metals were down, yes, on a dip. But zinc hit new highs, to $.83/lb.!