Silver has made an initial move over the 14 level, to challenge the March highs. The gold price has rebounded, but not enough to cause as much enthusiasm. The reliable respected Adrian Douglas has spread the word that both Goldman Sachs and JPMorgan Chase have been building option call positions on both gold & silver futures contracts. Normally, options are the contrary indicator of naïve money piling on, after a segment of the game has concluded. Not so with option futures, which is the province of insider trading. Both GSax and JPMorgan are kings of insider trading, with full impunity, all for the greater good (of private profits). The other inside story comes from overseas. The Germans have demanded the return of all their gold bullion held by US bankers in custodial accounts. The Arabs are accumulating gold, platinum, and silver. The Chinese admitted their gold accumulation. The Russians have not permitted any gold mining output to enter the markets in three years. Precious metals are being looked upon very favorably as the US$-based financial structures continue to dissolve.

The silver price is moving up the most rapidly, in lead fashion. The reasons are many, but they include the fact that the shortage in silver is far more acute. Both industrial demand results in depletion, and investment demand is growing quickly. The six billion ounce stockpile in silver once established by the USGovt has been long gone for at least five years. The next stop for silver is 15, which should occur easily, and then 18 in another easy leg up. The cyclicals are both nicely aligned in a positive direction. Enrico Orlandini demonstrates that the Point & Figure chart method indicates a 26 price target for silver, although the method has a timeless element in its elegance. Those investors who averaged their unleveraged silver positions since last autumn will be greatly rewarded. Silver has always sauntered in the shadow of gold, but it will sachet soon with a smirk and a wag.

One can pore over a gold chart, compare it to a silver chart, resolve some confusion, and unassuredly attempt to make some conclusions. The easier analytic step is simply to observe the gold versus silver ratio chart. One strange price factor is the lease rate. The one-month silver lease rate is under 0.5%, but the one-month lease rate for gold is stable and negative. So the criminals running the US gold treasure into the ground (see ‘Deep Storage’ gold on its accounting) are paying insiders to borrow it, in order to dump it on the market. They simply do NOT have the silver to give away. The ratio of gold to silver has finally favored silver again after three months of consolidating. Notice the 200-day moving average that supported the ratio. Some give little credence to technical chart support and resistance theories. They matter less during times of serious dislocations, to be sure, but they are evident even in the most obscure of ratios like this. Hedge funds and Wall Street firms both employ complex trading strategies. Their monitor and usage of the gold/silver ratio is definitely a tool. Notice the absence of support in this ratio, down to the 52-53 level again. The snap conclusion is that silver is bound to recover quickly toward the 18-20 level, while gold makes its smaller move back to the 1000 level.