STAY THE COURSE - THERE HAS NEVER BEEN A BETTER TIME TO BUY SILVER...

originally published June 10th, 2012

If you have ever been confronted by a mob, you will know that while they may be mindless idiots, collectively they can be very dangerous. These are the types who hang on the words of the likes of Ben Bernanke, when any thinking person knows that what Bernanke says is irrelevant. Bernanke is completely boxed in and now at the mercy of market forces - he has been granted breathing space by the mess and mayhem in Europe, which has - temporarily - provided support for the dollar and the bondmarket, but immediately the crisis in Europe eases - and we can expect it to as the highest priority of the Barons of Europe is to hang on to their cushy, high paying, status rich jobs - the heat is going to be back on the dollar and the bondmarket with a vengeance, especially given the ongoing profligacy in the US and flat refusal to address the core issues of runaway debt by all concerned.

We made the mistake of getting in the way of the mob on Thursday, who threw a tantrum and dumped gold and silver when Bernanke didn't promise them what they want - an immediate generous helping of QE, and got trampled, but it was a "storm in a teacup" for on dusting ourselves off by Friday night we found that gold and silver closed looking good as we can see on their latest charts shown below, with bull hammers on their charts, and they are still in position for the major advance that we are anticipating.

Much more important to us than the vacuous utterances of Bernanke and others of his ilk is what Smart Money - the big players - are up to. While the little guy was dumping gold and silver over the side (what he's got left to dump that is, after doing the same for many months) on Thursday and Friday as fast as he could, Big Money was happily vacuuming it up as fast as it could, which is why gold and silver closed looking strong on Friday. For the fact is that Big Money has never been more positively positioned with respect to silver, as the charts below make startlingly clear. We have already looked at the standard highly favorable COT chart for silver, but the chart shown below, which shows silver and also the combined gold and silver net short over open interest ratio, makes it abundantly clear that THERE HAS NEVER BEEN A BETTER TIME TO BUY SILVER. Look at the correspondances between the lows in this ratio and silver's lows in the past, and then look at the extraordinary low reading right now - the conclusions are obvious - SILVER IS AT A MAJOR LOW HERE AND ABOUT TO TAKE OFF ON A SPECTACULAR UPTREND. You will recall that we have and are maintaining stops beneath the September, December and current lows, which are about coincident - so what will it mean if silver does actually break to new lows, in the light of the evidence furnished by this ratio? - it will mean that it is probably a false move, a fakeout - so if you do get stopped out be ready to jump back in if silver then breaks back above the breakdown point. In fact, if you truly believe in the message of this chart, you might not employ stops at all, but that would require great fortitude.

The second chart shown below is simply the most recent part of the 1st one, but is annotated to show the correspondences between lows in silver and extremely low readings of the ratio.