Silver Paradigm Shift: Devil’s Metal Hits 19-Month Low As Funds Eye Quarter-End Position Shifts
By the end of the day Thursday, silver has crossed below its 18-month bottom of $26.25. It broke through this on the bid before 11:30 AM Pacific Standard Time, west coast United States. Therefore, expect possible further weakness tonight on the Globex. Silver fell quickly down to $26.13 for a spike-low that might be the bringer of warning for the future. Calls are being made for a weaker euro, such as is covered here. More pressure is being put on the United States financials, and thus the stock market, as $9 billion is reported lost at JPMorgan. Both of these signal bearish for precious metals, including silver.
With $26.75 now a memory since the metals fell Thursday and Friday of last week, and $26.25 barely hanging on, if at all, it is reasonable to conclude that the most recent medium-term paradigm for silver has broken down.
Will silver bounce off this low? It very well might. But, finance capital has, through their manipulation of the silver market, demonstrated their awesome patience. Look at these charts below:
We can see on the commitment of traders chart that slowly, over the long term, commercial hedgers have been moving away from their considerable net short positions. Many presume that this is part of their overall pattern of paper-silver neutrality, and perhaps ultimately, a long position in silver in the futures market. If this is true, we can see that they have been in no rush to achieve this. They have been extremely patient – in a lot of cases more patient than long-term silver bulls. In the second chart, you see scantily a move in their position from day-to-day, and even over weeks. These positions are walked away from over the long-term, thus portending better price management and profit-taking along the way over years and not days or months. This is their market longview.
But, now the assumptions and premises of financial institutions will begin to weigh on silver. These assumptions will be similar to what is explained over at TFMetals Report – that once this $26 price point is broken through, there is no bottom and silver could fall then to its fall-winter 2010 price of $17.50. Not wanting to hold a losing position at the quarter’s end, funds will begin shedding their positions, thus making silver a potential loser due to end of quarter position shifts.