Manipulating the Silver Market

If someone were manipulating the silver market, you would see exactly what has actually occurred in silver over the past several days. 

To manipulate the price you would use your buying power and accumulate long positions until you force silver above resistance in the high $18.40s and thereby trigger all the buy-stops sitting there, including the one we placed.  You would then sell your long positions into those buy-stops and keep selling until (1) you became short and (2) your selling drove prices lower. 

I have just described exactly what has just taken place in silver.  What we have seen is a classic textbook case of market manipulation.  We have seen it so many times before in recent years, it is the reason I warned on 18 August: “Let’s see if silver can hold this level, particularly with option expiry coming soon.” 

I expect that we will see the rest of this repetitive pattern of manipulation play out over the next few days until this month’s options expire.  I also expect that silver will remain under $18 during this period.

There may in fact be another bout of selling pressure by the shorts to shake out some more weak-hands.   It would give the manipulators an even bigger profit when they buy back on even lower prices the short positions they established on the breakout above $18.40.  Consequently, I will not be surprised if the 2-year uptrend line in the following chart is broken this week.

I don’t think that uptrend line will be broken, but don’t panic if it is.  And don’t be distracted from the big picture – both technical and fundamental.  Technically, silver has nearly completed a huge accumulation pattern, and the ‘head-and-shoulders’ pattern in the above chart is far more important than the 2-year uptrend line.  Silver is approaching an important upside breakout.  It is the breakout that I have been anticipating for months.

The fundamental picture for silver is just as bullish.  Monetary debasement throughout the globe is causing astute people everywhere to carefully look for prudent alternatives.  It is inevitable that they eventually discover what countless people have already discovered over the past decade – that gold and silver are safe-havens from monetary debasement.

Thus, everything remains in place for an upside explosion in silver.  With each passing day, week and month we are getting closer.  Be ready for that breakout by not losing sight of the big picture.

For my specific trading recommendations, see Trading.

About the Free Gold Money Report
James Turk began publishing the Freemarket Gold & Money Report in March 1987 as a subscription-based investment newsletter focusing primarily on precious metals and national currencies.  In August 2009, the newsletter completed a total transformation to become a free, web-based commentary.  Accordingly, its name was changed to the Free Gold Money Report.