Fellow Stackers, Have a read of this - just appeared a day or so ago - By David Levenstein Now that silver has backed off a bit after blasting through the $30 level, I expect to be hearing comments such as "it is overbought, asset bubble, major pullback etc." While it is normal to see corrections, the fundamentals for silver remain extremely bullish and anyone predicting a major correction has, in my opinion, little understanding of what is going on in this market. This time last year the price of silver was trading at $15 an ounce. The year-on-year gains we have seen with silver have been spectacular, and even at the current levels I urge investors to add some physical silver to their investment portfolios. From April to the end of August we saw the price suppression of silver continue at around the $18.50 level as the bullion banks, especially JP Morgan continued with their strategy of price manipulation. But, when the prices finally broke through this level of resistance, and as the allegations of price manipulation were taken seriously by the CFTC after more than a decade of being in denial, the playing fields began to change. It is now widely known that J.P. Morgan holds a massive short position in silver. Furthermore, some observers are accusing the bank of acting as an agent for the Federal Reserve in the market as the price of silver edges higher it undermines the confidence in the U.S. Dollar. A lower silver price helps keep the relative appeal of the U.S. dollar and other fiat currencies high. By using the futures contracts offered on Comex, JP Morgan has been able to suppress the price of the precious metal by selling massive amounts of paper silver in the futures market It is believed that these short positions are naked (i.e. they are not backed by any physical silver). While the COT reports indicate that the net short position in silver has been around 300 million ounces of which JP Morgan probably hold around 80% new reports indicate that JPM is short more paper silver than physically exists in the world. In an article by Max Keiser which appeared in the Guardian on December 2, 2010 claims that the size of the short position is 3.3 billion ounces of silver!! As I have no idea of how he has calculated this position, I cannot say if this figure is correct or not. But, to me it looks grossly overstated. But, if Keiser is correct, the implications of this for silver are going to be very disturbing for JP Morgan, but highly rewarding for investors on the long side of the market. Recently, there have been rumours circulating around the world that this huge short position held by JP Morgan has the potential to cause a major short squeeze and potential COMEX default as large traders demand physical delivery of silver that COMEX does not have in their vaults. But, even if we disregard the potential of a short squeeze in the market, the demand/supply dynamics for silver are looking incredibly bullish. It now appears that significant physical silver shortages are developing in the marketplace and the metal is being sold well over spot where it is available. And, as I have mentioned on numerous occassions, silver has many industrial applications which will underpin demand. And, if you add the increasing demand from investors around the world, it is logical to assume that the price has huge upside potential. In fact, I think silver is going to continue to be one of the best performing assets during the next 5 fives.
I'm loving this silver stuff. I just bought 20oz for $650 off ebay and was doubting if I did the right thing and if I should buy more? That answered my question. Thankyou for a good read. The hunt goes on. Lunty
Once you understand the fundamentals of Silver and I mean REALLY understand the full story of Silver in all it's forms from money to an industrial commodity, you don't need to 'sold' on buying the stuff at all. Silver is a long term investment with incredible fundamentals. This period of history will be seen as a lost opportunity for the majority of the population in years ahead, mostly through simple ignorance. Stack your little hearts out I say. Every ounce counts.
It's all about being patient. The trouble is that most people want it all, and they want it now. Anyone with kids already knows this Those who stack now and hold will be handsomely rewarded in the future.
