Sometimes it’s very frustrating being a Silver trader. If you love this commodity, I still think the best way to play it, is by acquiring actual physical bullion for betting against the debt. But for those who don’t mind the risk, we can trade futures, CFDs, SLV or whatever way you play Silver PAPER contracts. A lot has been said about JP Morgan artificially suppressing the price of Silver. Last year, JP Morgan was fined $1.26 Billion for manipulating precious metals. Just two weeks ago, JP Morgan paid $60 million to settle a precious metals spoofing lawsuit.
If you follow the Silver markets you probably already know this. One part of the Wall Street Bets Silver group is to shake out JP Morgan as short sellers. For those that do not understand how this can happen, it is very simple. Paper contracts and derivatives allow an institution to short the entire world supply of the commodity. We have seen this happen on many occasions on the Gold and Silver markets. When we go line up to buy physical Silver or Gold at the stores, our purchases are not impacting the commodity prices because they are determined by the PAPER contracts.
This is just my theory, but I have always thought that Russia, China, Iran, Turkey and other nations (Jim Rickards calls them the Axis of Gold), are stockpiling precious metals as a hedge against the fall of the US Dollar. If so, then it is best to stockpile with cheap prices. Some financial warfare here: these nation governments could green light offshore accounts which open trading accounts with these large US banks and put in major short sell orders through JP Morgan. Depressing prices while stockpiling record amounts in cheap amounts. But this speculation from me means that shorts need to be closed eventually (or have been almost perpetually rolled over), which would lead to many buy orders taking prices higher. Could be the set up, we’ll find out in the future.
Speaking about stockpiling, we are seeing nations come back into Gold. Singapore has bought Gold for the first time since 2000, while Ireland has done the same breaking a 12 year hiatus. How about Silver? India saw a spike in Silver imports recently with an increase in demand from private investors.
Silver and Gold have been taking a hit due to a rising US Dollar, and unfortunately, there could still be some more room to the upside here.
Silver prices have been smashed, but we are now at a major make or break zone. Back in September 2021, I spoke about this major zone and warned we were in for a big week for Silver. Well, let’s prepare for another big week or two. Silver is back at this major support zone.
Above is the weekly Silver chart. Huge support zone at $21. Notice how we bounced here back in September 2020, December 2020 and September 2021. Can we keep the pattern going and see a bounce here in December 2021? Let’s hope so.
A weekly close below this zone would not be too good. It opens the door to a move to $18, but the structure of the chart wouldn’t be very bullish. I really want to see Silver hold and bounce here. Right now, I am watching the daily chart. I want to see some range or a reversal pattern set up indicating buyers are stepping in and holding this support. I just like to play it safe, but I know many traders might begin picking up contracts here.
I will end off with some optimism. Remember, the Dollar and precious metals can rise together. How? When there is a confidence crisis. When people are losing confidence in the government, in central banks and the fiat currency. A lot of this is in its infant stages right now. We have the Fed up next week, and CNBC is already putting out articles stating the markets are beginning to question the Fed’s credibility. We seem to be at a point where central banks need to keep cheap money going, and kick rate hikes down the road even when inflation will be rising. Not sure about you guys, but from everything I am seeing and predicting, I would rather be holding precious metals and crypto’s rather than fiat currency. As Ray Dalio says “Cash is trash”.