XAU/USD & XAG/USD - Gold & Silver Traders Thread

I went to the Cheviot Sound Money Conference in London last week, with speakers including James Turk, Max Keiser, Hugo Salinas Price, David Morgan and Chris Powell of GATA.

The fundamentals for gold and silver are off the charts bullish. We are down to the 144 MA on gold and silver, to me, is looking a lot more resilient than it has done in the past when being slammed down. It's like a fresh tennis ball.

Ted Butler makes a great point that the big banks have been covering at a LOSS, for the first time ever, on this smackdown. One has to doubt whether they will be so keen to layer on new shorts to keep a lid on things when the rebound happens - when they've been so keen to get out on this downleg. It's been new territory for them on this journey down, which implies that there could be new behaviour next time price challenges resistance.

With no JPM lid anymore, the next leg could shoot straight to $36-38 or higher. When will it begin? Lots of rumours of ex-JPM traders encouraging big Asian buyers to put on a short squeeze at the end of February.

Consider this:

The British pound sterling was originally a pound (16 normal ounces) of sterling (92.5%) silver. So that's 419.95g or 13.5 troy ounces of pure silver. At the current oversold price of £17.64, the original, literal value of £1 is £238.14

From the Coin Reform Act of 1816 until the UK began debasing its silver currency in 1920, the UK's monetary system operated thusly: £1 was comprised either of one gold sovereign (slightly less than a quarter of a troy ounce of gold), or four silver crowns. Each crown was almost exactly an avoirdupois (normal) ounce of sterling silver. So now, £1 was comprised of 92.5%x(4 x 28.276g), ie 104.6g or c3.36 troy ounces of silver. At a silver price of £17.64, the 1919 British pound was worth £59.27 in today's money.

If we calculate the value of the pound based on gold, then the 1919 British pound was worth 0.2354 troy ounces of gold or (at current value of £843.13) £198.47. We can clearly see here how the ancient 15:1 monetary ratio between silver and gold, formalised in predecimal hard money sterling and reflecting their relative abundance in the earth's crust, has become skewed into an aberrantly high ratio as of today (high 40s), even after silver's relative outperformance of late.

From 1920 to 1946, British silver coins were only 50% silver, giving the British pound of that period a measurable current value of £29.64.

Since 1947, British coins have had no precious metal content at all. The result being that whilst in 1919 £1 "purchased" 104.6 grams of pure silver, in 2011 £1 is worth 1.76 grams of pure silver.

In the year 1900, there were 1bn ounces of mined ("above-ground") gold in the world. A year or two ago this was estimated to have risen to around 6bn ounces. Gold is, by and large, not consumed but merely accumulated, as a unit of exchange and a store of value ("money").

In the year 1900, there were 12bn ounces of above-ground silver in the world. The 12-1 ratio reflecting, slightly more accurately than the monetary ratio, the relative abundance of silver to gold in the earth's crust (the monetary ratio applied a slight premium in gold's favour).

You might think that there are therefore 72bn ounces of silver above-ground as of today. But this would be to forget that the silver:gold ratio is no longer 12:1 or 15:1 - it is about 48:1. This would imply that there are 250-300bn ounces of global above-ground silver as of now.

In fact, there are somewhere between 1bn and 2bn ounces of above-ground silver as of today. Accessible stocks of silver bullion are two to three times rarer than accessible stocks of gold.

Why?

Because around the same time that gold and silver were being demonetised and many thousands of years worth of hard money stockpiles were being created, silver began to be consumed - and permanently lost -in industrial quantities, as the best reflector, conductor and biocide out of all the metals, bar none. More patents are taken out each year referencing new uses for silver than for all other metals combined.

The decimation of the stockpile that existed in 1900 was totally unfelt and unpriced by the market because there was a buffer in the shape of thousands of years worth of useless ex-coinage to consume.

We are now facing a situation where that buffer is reaching critically low levels. Anyone who has tried to buy physical silver in any quantity will be familiar with the "out-of-stock" signs and three month delivery delays. And it is coinciding with the re-awakening, for the first time in 100 years, of investment and proto-monetary demand for silver and gold.

In nominal terms, silver is currently less than 50% the price it reached in 1980. Can you think of anything else that's on half price sale from when John Lennon was alive? In real terms, adjusting for official CPI, silver will have to reach $140 before it matches the level it reached in 1980. In let's-get-real terms, acknowledging that CPI is a load of rubbish compared with money supply growth, silver's inferred price target is several hundred dollars. And that's before the fact that on a scarcity valuation basis, there's more than a hundred times less silver than the shorted-to-death Comex price signals are telling us there is.

In 1900, there were 1.6bn people in the world, and the majority lived subsistence lives disconnected from the financial world. There were more than 7 ounces of silver per person, before discounting the non-economic majority. Today there are almost 7bn people, of whom the percentage with economic exposure is rapidly rising. Now there are only 0.3 ounces of silver per person.

I think that it is reasonable to apply a 20x multipler to get an idea of where silver will be once the market prices in the fundamentals. 20x is probably a lowball mutiplier, taking into account both monetary hyperinflation (QE1, QE2, QE3...) and supply/demand realities, the latter of which alone justifies a 20x uplift. It gives a price projection for silver of about £350 or $500. I am pretty confident that in a free market both of these targets will be hit within this decade.

on my view we still have a room to fall a bit before another upmove


this is edited chart from other member.

I will buy onnly from white line and recomend it to others, it is the best bet, cause gold may continue to dip further

is a shame that Oanda removed weekly long time ago from chart, right?

well I don't even had weekly when I started with Oanda. And that was a long time ago

BUT its about to change

This year some time they will offer a MT4 option

http://www.safehaven.com/article/198...-market-update


http://www.safehaven.com/article/198...-market-update


enjoy


beeb

That was a week to forget... I lost all my profits from January during that dip. Not due to my system (it worked perfectly), but because I made two stupid mistakes exactly on that day - one of them being withdrawing 70% of my account I was forced to close all my longs (they were 500 oz!) at 1313 in order to avoid "real" losses. If I had courage enough to reopen only 1/10th of that long position, by now I could have recovered everything

How comes that I can be so unlucky? Whatever, February is there and it's time to start over...

I do not like mt4, it is not as precise as OandA main platform where you can adjust start and beginning of week and see many things what other do not see, the trend lines which are broken on mt4 mostly are rejected on OandA's main. I never see such precise platform for charting as OandA.

theres a nice bullish pin bar on the silver weekly chart, this is the first thing that makes me consider longs, but not yet, it hasn't pulled back far enough in my view. will however consider opportunitys as they come along. short or long.

as well, I see just nice unconfirmed upmove,
sure, bought on last dip and closed as well before weekend. I still do not believe that was beginning of other wave, will buy again only on deeps.



on daily is a nice bullish flag actually

here is my current daily channel chart.

Still around the bottom. This is a large trading zone with room for highs and low dips.

1300 may not break - and what I was trying to express in my chart is in the event it does my price projection has moved from 1250 to 1275.

I am looking for longs currently.

I would like to say thank you for your answer to my question

but it realy seems, the inverse relation between $ and gold has fallen apart

even comparing the € and gold correlation

That's EXACTLY how I analyzed the daily chart yesterday. Your light green line is the support, but 1310 was not really broken and the resistance on 1300 will be even stronger - very, very hard to break. In case it would break, the next support would be around 1275.

Scalping mode ON, as usual.

Positions added 1330. Had set 1325 but failed to get filled.

Looking forward to new high by late MAR11 based on seasonals.

Will add more on break through 1355 or so.

Well..I also use fxTrade platform only, sometimes for deeper look I go to netdania


all is fine with fxtrade except lack of weekly/monthly/4h charts

so...what happens is that what can't go up, must go down?

Reversed H&S pattern forming on H4. Is it going to make it? Only time will tell...

http://img826.imageshack.us/img826/5198/32488069.jpg

Also a beautiful bullish engulfing bar on H4 today and a weekly hammer just behind. How can it possibly go down?