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Tuesday, March 19, 2013

Bullish Earthquake In Silver

Confiscations, err bank taxes, tend to make people irate.  If big money, worried about too many hands in their cookie jar, moves to protect its own interests, how long does it take small depositors to do the same?  Ignorance of the masses to the rules of the game only buys policy makers a little extra time.

Small depositors, in general, cannot afford gold.  Silver, or poor man's gold, is their 'play'.  While gold is ready, silver, at least in DI terms, is still lagging (chart 1).

There's two ways in which silver will be realigned with gold.

  1. "Out the back door" through massive short liquidation into price weakness.
  2. "Out the front door on a stretcher" via forced short-covering rally into strength.

As long as stays above $1,600 and displays technical strength, the probability of "out the front door on a stretcher", or a fast and furious short-covering rally, increases substantially.

Besides, silver's money flow setup may not be lagging as badly as its DI suggests.  DI readings, a cumulative money flow measure, can hide setups within setups.  The long/short concentration index has generated what I call a bullish earthquake.  Bullish earthquakes, rare money flow setups, precede significant price rallies (chart 2).  Once the ball starts rolling, it won't be easily contained by paper attacks.

Chart 1: Silver London P.M Fixed and the Silver Diffusion Index (DI)


Chart 2: Silver ETF (Silver) and the Silver Long/Short Concentration Index (CI): 1 = Bullish Setup, -1 = Bearish Setup


Headline: Why Russia is irate about the Cyprus bank tax

NEW YORK (CNNMoney) Russian officials are up in arms over a possible levy on Cyprus bank accounts, which Russian president Vladimir Putin denounced as "unfair, unprofessional and dangerous." There's good reason for their concern: Nearly a third of all the money in Cyprus' outsized banking sector is Russian.

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