Fibonacci Financial

Posts Tagged ‘SLV’

Yes Dear Reader, Silver and Gold rallied after the COT Sell Signal.

One of the advantages of following the COT reports is to help determine which breakouts are the beginning of a new trend and which are not.  With the COT reports providing a sell signal on Silver, I give this rally low odds.

Also, The Commercials (insiders) set up their positions early and against short term trends.  Patience, patience

The odds still favor a failed rally attempt in the precious metals and not the start of the next major leg up in a bull market move.

FYI – while Gold and Silver represent a significant part of the Core holdings in our portfolio right now, they were acquired at substantially lower prices.

What Are All Those XXXX’s and OOOO’s on the Charts?

( No Dear Reader They Don’t Represent Hugs n Kisses! )

Several readers have indicated that they are not familiar with the point and figure charts that I use for illustration purposes in the blog.  John Murphy (world class technical analyst) provides an excellent overview of Point and Figure charting on his web site StockCharts.com.  If anyone is interested in why I use these “old fashioned” P and F charts drop a comment requesting additional information.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

Flash – The Gold Silver ratio Broke Down ! The Scales Tip Towards the Inflation Camp.

Vide !

Given this Breach in the Gold Silver ratio, I will be looking closely at the COT (Commitment Of Traders) report this weekend and next (unfortunately the info is for trading only through tuesday).

Frankly dear reader I am skeptical.  Let’s look at the Silver ETF SLV action.

A price Break Out in SLV that prints an X at $14.50 would force this ole poker player to exchange some of his greenbacks for silver bars.  One of Jesse Livermore’s rules was never be afraid to buy strength.  Not every poker hand is a winner but you learn to play every hand unemotionally.  Remember its not about the hand its about the game.  That is where good money management (proper asset allocation, stops, Optimal F, etc…) comes into play.  If you don’t have good money management rules – before the game ends YOU WILL LOSE.  If you make money along the way without employing good money management, you were lucky and luck runs out.

As Paul Harvey always says – Stay Tuned For News.

The Inflation vs Deflation debate rages all over the Web – So who is right ?

Last years deflationary collapse was revealed by a break out of a 2 year consolidation of the Gold/Silver ratio.  After burning itself out temporarily and yielding to the current mini bail out bubble the Gold/Silver ratio has once again entered a consolidation formation.  The breakout should indicate which tide will overwhelm the markets over the next 9 to 18 months.  My guess is that you will not find this insight anywhere else on the web.

Vide !

How does this work?  Silver was demonetized a century or so ago and now a large part of its demand comes from the industrial/jewelry sector (although the monetary demand is growing again).  Therefore it is more sensitive to a deflationary collapse.  Although the central banks and governments of the world have worked tirelessly to demonetize gold, it still is part of the monetary base of most central banks.  In spite of blatant manipulation by central banks and governments it still is less sensitive to deflation.  If the Bernanke/Obama bail out/stimulus printing presses overwhelm the collapse of toxic debt and we head into another inflationary/hyper-inflationary period, gold and silver will both break out to new highs but silver will run faster.  As the price of silver outpaces gold on a relative basis, the Gold/Silver ratio will decline.

Why should you care dear reader?

The next tide of either Inflation or Deflation will have a massive impact on your investments and wealth.  Knowing which one will dominate should dramatically alter the composition of your investments and impact your financial decisions.

The Gold/Silver ratio is one of the key indicators that I watch.

We don’t have to guess or predict the outcome of the Deflation / Inflation tug-of-war.  We just have to be alert to what the markets are telling us and reallocate our portfolios accordingly.

You saw it here first.  So, Stay Tuned ! ! !

Silver & SLV  are about to break down similar to the move in Gold and GLD a few weeks ago.

If you would like to know how to generate the above chart at StockCharts.com let me know. That way you can follow the progress of price action.

When SLV prints a Red Goose Egg in the box between $11.50 and $12.00 it will have provided a screaming sell signal.  This may happen any time over the next few days or weeks (don’t be impatient dear reader).  Then over the next few months silver should march down to the BUY Me zone.  We have been waiting a couple of years for another opportunity to add to our core position.  Silver is the worlds best secondary media1 of exchange for most people.  Silver has been a core holding in the FF Investment Model of Asset Allocation since 2001.

But dear reader beware!  When Silver and SLV get down into their buy zone they may not be a buy.  We will do a thorough analysis at that time.  If long term trend lines are broken, the COT readings are negative and price action does not provide a clear buy signal, it may mean that the deflationary Tsunami that is sure to follow the current Bailout Mini Bubble is going to sweep silver much lower!

We won’t know till we get down to the buy zone and examine the battle field.  Stay Tuned

This is presented to provide a peek into how asset allocation decisions are made for the FF Investment Model.  I often use Point and Figure Charts (its all about price action) to provide timing signals that help in verifying what other tools are signaling.  P & F charts are a great tool for confirming the timing of Event Expectation Scenarios provided by Austrian Economic Analysis (Austrian Econ is not good for timing BUT excellent for modeling what to expect) and for timing of investments based on activity provided in the COT Commitment of Trader reports.

Want to be an insider and get my complete analysis when silver gets down into the BUY Me zone?  Drop me a comment

In the immortal words of Cap’n Flint “Pieces of Eight, Pieces of Eight” & ” Welcome aboard the FF Ship Matey”

PS: If you found this valuable or interesting PLEASE drop me a comment !

Notes

1 I will explain the praxeological difference between secondary media of exchange and money and its importance for investors in a subsequent blog  (hint for those of you that can’t wait look for it in the index of Human Action by Ludwig von Mises, free pdf of the book and study guide available at Mises.org).   Silver was demonetized after a historic struggle between the banksters and society in the 1900s and early 20th century.  Remember the Sin of ‘73!  The battle to debauch money & demonetize first silver then gold is one of the most fascinating intrigues in all of history (It would make a great historical novel starting clear back in ancient Greece) When the great fiat money con finally blows up, silver will be re-monetized by the market (you and I).

Fire Sale Soon

There is a Gold(xau) and Silver(xag) fire sale coming soon!

This will be the best time to accumulate gold and silver for several years to come.

Will you be ready? Preparation and Planning will significantly add to your net worth.

Take Action Now

Questions ? email me at: michael@fibonaccifinancial.com