Weekly Review The last week of 2011 was a rough one for gold and silver, as has been the last quarter of the year, although both markets bounced off the extreme lows of Thursday morning. For the week, gold declined $41 (2.5%), while silver fell $1.25 (4.3%). For the year, gold ended 10% higher, its 11th straight year of advance. Silver ended the year down 10%, its first down year since 2008. The big price damage, of course, came largely in the last three and a half months of the year, when gold fell almost $400 (21%) from the highs of early September and silver plunged by roughly $16 (38%). As was the case in the May 35% price plunge in silver, both epic silver price declines occurred over a matter of days, something that has never occurred in a world commodity. As a result of silver's…

The Cure for Low Prices It's no fun for silver investors to have to live through the current slam down in prices. Knowing that the sell-off is intentional makes the pain more acute. The sell-off this week, in particular, has taken on the characteristics of an historic bottom. Since the predominance of the evidence indicates that silver is oversold on an absolute basis and relative to just about everything else, the most logical investment approach is to treat it as a bottom. A deliberately created bottom, but a bottom nevertheless. That means holding or buying, not selling. There's an old commodity market saying that holds that the cure for low prices is low prices. What this means is that if prices go or stay too low for a long enough period of time, it will increase demand and curtail supply, causing prices to rise. It works that…

Weekly Review/Christmas Letter Following a particularly rotten week in each last week, the price of gold recovered somewhat this week; but not so in silver. Gold finished about $8 higher (0.5%) this week, while silver declined a further 60 cents (2%). As a result of silver's underperformance, the gold/silver ratio widened out to just over 55 to 1, still within the trading range of the past two months, but up from the 45 to 1 where we began the year. On a longer-term basis, say the last 2, 5 or 10 years, silver has outperformed gold, but that is scant comfort to silver investors this quarter or week. The overall facts still suggest to me that this is a great time to switch from gold to silver or to deploy fresh funds into silver. (This not to denigrate gold in any way, as I hope to demonstrate in…

The Raptors Every market is multi-dimensional; meaning there are a variety of competing factors operating on different levels. Just like a three-ring circus, only with a lot more rings. There are short and long-term factors, as well as fundamental and technical trading forces all occurring simultaneously. Silver is no different. The trick, as an analyst or investor, is to distinguish which factors are most likely to influence prices over a given time frame. Likewise, the silver manipulation is multi-dimensional; meaning there are different forces involved in the manipulation. The two biggest manipulative forces, in my opinion, are the concentrated short position of JPMorgan and the excessive short-selling in shares of SLV, the big silver ETF. These are the lynchpins to the overall suppression of price over the past few years. Fortunately, it has been relatively easy to measure JPMorgan's concentrated short position on the COMEX and the level…

Weekly Review It was a particularly bad week for gold and silver investors (except, of course, for those looking to add to positions), as prices fell sharply. Gold finished $112 (6.6%) lower, while silver lost $2.50 (7.8%) for the week. The gold/silver ratio did widen out a bit, to just under 54 to 1, reflecting silver's slight underperformance. Truth be told, it was somewhat surprising that silver didn't fare worse, as big sell-offs like we just witnessed usually feature much more pronounced weakness in silver relative to gold. I think the prime reason silver didn't decline more is due to its relatively much stronger COT structure than had existed in gold. Regarding the gold/silver ratio, I'd like to share a new thought that has been bouncing around in my head trying to attract the right words for expression. It's an observation about the behavior of the gold/silver…

SLV Short Position Update The latest short position report for stocks was released earlier in the week for positions held as of Nov 30. This was the report that I had speculated would show a decline in the short position of SLV, the big silver Exchange Traded Fund (ETF). Contrary to my expectations, the short position for SLV increased by more than 2.2 million shares to 25.2 million shares. This represents almost 25 million ounces of silver. http://www.shortsqueeze.com/?symbol=slv&submit=Short+Quote%99 I had originally speculated that the short position in SLV would be lower in this report because the price of silver had experienced a fairly significant decline of roughly 10% ($34 to $31) within the reporting period. Most often, similar to what occurs on the COMEX, short positions expand on price increases and decline on price sell-offs. This is at the heart of the silver manipulation. To illustrate that…