Merrill Lynch consultant David Bowers explains, "the decision by U.S. authorities to enforce a ban on short-selling on 17 banks and financial institutions has set in motion a massive short-squeeze forcing hedge funds to unwind their short positions in these stocks. And since these short positions were used as funding for long positions in oil and other commodities, the unwinding of these short positions in banks also meant unwinding the long positions in oil. The unwinding of these short positions in financial stocks also at the same time forced these hedge funds to buy dollars (as financial stocks are bought back with dollars), which contributed to the dollar rally, a rally which further depressed the oil price."
I believe this is the cause of the dollar rally. Hedge funds being forced to liquidate their speculative long positions in commodities, and forced to buy dollars. It's only temporary, and creating one hell of a buying opportunity. As I write this Silver is getting killed in the overseas markets. It's down to $12.65.
Which one of these things is not like the other?
August 14th 10:58PM
Pacific Time
Gold 792.10 -1.69%
Silver 12.60 -10.89%
Platinum 1459.00 -2.37%
Palladium 301.00 -1.31%
Gold/Silver ratio up to 62.87
Since the NY close, Silver has lost almost 6 and a half times as much as Gold, percentage wise. Telling me that Silver was the much proffered investment for these banks and investment firms. Duh!! Take a look at the prices listed above. It doesn't take to much brain power to figure out which one has the most price potential. The historic ratio of Silver to Gold is 15 to 1(Back before industry devoured most of the worlds Supply.) Tonight the ratios up to 63.
Whatever is causing the price of commodities to drop, when they should be going up, and the dollar to go up, when it should be going down is irrelevant to my next point. As of July 1st 2008, the 8 largest Silver traders on the COMEX were short 353 million ounces, or approx. 196 days of world mine production. Given that the prices are temporarily being violently suppressed. I think it is likely that we could see these 8 traders begin to try and buy back their positions. If and when they start buying, Look out above^
One last point. Being that there is a disconnect from physical Silver, and the paper silver markets, This fall in price could continue down farther than one would think. If silver drops down to $8 or $6 an ounce, Coin shops could very well sell out, or begin hoarding(if more silver isn't readily available.) Physical Silver could become hard to find. My suggestion is Buy Physical Silver now, and if the price goes down tomorrow, buy some more.
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What's Happened To The Price Of Silver...
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Posted - 08/15/2008 : 02:53:19
