Hi Sinbob!

I think silver retests $40 and then breaks higher next week. I think the 'bubble' crowd is hoping all out that we get another massive sell down spike, but my observations say otherwise. For starters, the open interest in the COMEX is much more bullish and not suggestive at all that a huge sustained selloff is possible. There simply is not the same amount of speculative longs that could be spooked into selling here. Meanwhile, there are indeed many buyers that have anticipated a selling climax at this op-ex window and are lurking in the weeds ready to buy the bargains. We may see a V-bottom selling event that will end badly for any shorts dumb enough to try and create another meltdown.

The silver juniors are not projecting any great weakness here either. Consider that with silver down by $2 on the day, EDR and FR barely dipped. Most of the other sector leaders were down by 3% or less. Again, in previous selling climaxes that would have been blood in the streets for this group.

I have read numerous reports of bullion shops that are sold out of physical metal, and also of heavy physical buying pressure coming from Asia. Sure there will be the usual margin increases announced in the next couple of days to discourage specs, but for those that fully intend to take delivery of metals it is of no consequence. Let the Cartel punch an empty paper bag if they wish. I do not fear a major meltdown this time around and I think we recover quicker than most people expect.

I had a short on ELD today that I closed already and another on GSS that I will cover tomorrow. I also sold a few PM stock longs that are now much cheaper and I will buy those shares back in the next day or two. I doubt I am the only one playing this trade.

My opinion is that many of the bearish analysts that have been calling 'bubble' will look like complete idiots when the sector recovers very quickly and establishes new highs. It could not happen to a better bunch of jerks and I love the idea that some of these blowhards will be exposed for the clueless shills that they are. Ned Schmidt, go pound sand...

Even if the correction does last more than a day or two, I am betting the farm that new higher highs will carry the day and I have no trouble sleeping at night with nearly a million dollars on the line.

cheers!

mike