Silver : 800 POUND GORILLA IN THE ROOM

After having rose almost from $38 to $50 an ounce in my previous backwardation article(Previous blog entry: http://gamatraders.blogspot.com/2011/04/silver-futures-now-contango.html ) I still see a threat for future price explosion in prices due persistent backwardation.Events like this definitely have adverse effects on prices, And eventually cause flash smash in prices.

If silver breaks 1980 nominal high with out inflation adjusted then its free bird from there no one knows whats the next price levels.Technically speaking it will take general retracements based on supply demand but I would say SKY IS LIMIT.

Future Chain for Silver:
year 2011 is in con tango with the spot but where as from 2012 to 2015 is in backwardation.





CME group rose 9% margin hike to suppress the price and again on thursday they did 10% hike, But do they want to raise margin in just one metal leaving the rest of the metals market.I think this will a be history going back raising margin in success in week period time frame.At the same we had 20% comex physical delivery to eligible so the margin hike had some concidence with physical delivery.Silver room clearly tellingus that it is running out oxygen and manipulated at max. Anyway time will tell.

I Have Seen This Silver Movie Before

Options expiration in general markets will tend to have price fluctuation so we had inside out day in silver market which killed the bull run.Bears camp had huge success and that will be short lived.

Silver is in collision course with US dollar which will be a early event as proximal trigger for the onset of hyperinflation in the near-term.Its the good hedge of inflationary markets, And is responding to it.$50-$52 is considerable psychological resistance band on silver markets going back to hunts brother who tried to corner the market.

whose going to sell at this level ?

1.JPM and HSBC have already crushed big time with 40% silver markets future/naked short positions.

2.Margin raised twice or thrice as shorts (commercial traders) are already crushed so got to cover their ass ....as I have see this silver manipulation movie many a time.

3.Hedge funds( aka FED pumped money) looks like shorting mining sector to dislocate metal markets so as to propup fiat paper markets

Okay now lets see open interest on silver markets as its growing and will keep going as month of may and June are traditional metal delivery so guyz buckle for some serious volatility in coming months.

Open Interest with red shaded area with today and y'day.




Okay now lets look at the futures chart as bull were little over enthu in thier run up with a big gap formation which is support but at this juncture as channel resistance came into pic.So we have to respect bear here and little consolidation with little backing and filling.

Futures Chart



Is silver/gold comex nearing default? don't expect any parabolic moves until we see break down in US dollar index to new lows.

Houston Houston are we ready to lift off as count down has already began........so buckle up for bumpy ride before we head to a clearer skies.We are definitely entering into new phase of bull market in precious metals.So guyz stay tune and will keep updating.

One more thing as Many of you have asked me question regarding silver like :

why gold/silver now ? Is Silver a WEALTH ?
Targets for long/short term?
How long we have to hold this?

will try to answer in next blog post.Happy Trading

Cotton Sending Mixed Signals

Cotton considered to a be a cash crop in commodity space.This is sending a mixed signals if you look at the futures vs equity.Stay away until decision is made.

Futures:

1.c&h consolidation in 3 months frame break rally took almost to target of 220
2.Break trend with gap down looks like panic sell off
3.50% correction is already priced in or will it take us to next level shaded in white for potential buy signal.




Equities:

1.Cotton ETF which took same path as future market is going hand in hand until now.
2.Here the trend is intact, And right at the buy point with volume confirmation shaded in white

Will the future market derail this ETF as broke the trend and looking for considerable support ? This is a wait and watch game.My personal feeling is a panic sell off for deep correction in a shorter time space but eventually hold this trend.

S & P 500 Big Picture

As promised I'm posting S&P 500 historical chart this time which shows the way back from 1930's.Now lets take a look at events happened in due course of time circle in red

1.First circle was in early 90's during dot com when it broke away from the channel that was the growth engine in broader economy which went parabolic and got peaked 1999-2000 bust.

2.Technicially speaking after having took of the channel it has to test the channel which it did that when fed fueled the house market in 2002 and which got peaked in 2007 bust.

3.So this time after testing the upper channel it got into the channel with 50% which was healthy then we had fed intervene into the markets in late 2008, And pumped the market with his printing press and now test the upper channel which is resistance was support before.Now we have to wait and see how it reacts for that we have to options:

a.If fed raising the rate will effect the markets and we will see downside in market and correct to 500-600 level to lower end of channel which is show on chart with grey line.

b.If fed still eases with lower rates then it will crawl along with the upper channel and stay with the channel as dollar devalues.

Good luck folks and enjoy trading.

Gold/Silver Turning or Tipping Point

It's time for physical metal now and the biggest physical market squeeze is on which is huge so buckle for big ride so better stay with it as inflation is going out of fed radar.Take a look at this article which tells us the race for the gold standard is on

Texas University Endowment Storing About $1 Billion in Gold Bars

Belarus central bank halts sales of gold for roubles

Gold has succesfully tested the Inverted H&S pattern support which is bullish and uptrend in tact after strong breaking $1440, And heading for $1580-$1600 on futures market making new highs drawn in red line on log chart.Spot price on gold is $1486.



Silver on the other hand is flying high so don't look for dips. So all you have to do is to chase until $50 which is all time high and $52.40 on futures market.Spot price on silver is $43.02

Currency Updates

Currency markets have been in volatile recently after 2008 crisis when everybody flocked into the US dollar which was in downtrend from late 90's had a huge upside correction which is good for the dollar Index before going down the toilets.When fed announced the QE then dollar is literally a sink hole.

We had multi-year correction on currency markets, And which is healthy for indicies and now ready to rally as dollar in big time devaluation going on by end of 2012 summer.So better flock into the currencies which have strong fundamentals, And these are currency which can easily double based on technically stand point.

Australian Dollar Index:

1.No easing on their economies for recovery
2.Strong mining industries(which has got huge precious reserves)
3.Strong agriculture based economy
4.Strong backing on reserve ratio based on interest rates






Swiss Franc Index:


1.Currency is backed by the Gold
2.No easing




New Zealand Dollar Index:

1.No easing on their economies for recovery
2.Strong mining industries(which has got huge precious reserves)
3.Strong agriculture based economy
4.Strong backing on reserve ratio based on interest rates





Canadian Dollar Index:

1.Strong exports on Energy sector espl oil, natural gas, coal etc.
2.No easing on their economies for recovery
3.Strong mining industries(which has got huge precious reserves)
4.Strong natural resource to sustain low density population

Jesse Going MainStream

This is must watch video, And it has got 5 parts video all you have to do is play first and the rest will follow the topics below:

1. Assassination of JFK.
2. 911 Inside job.
3. Going after war for American welfare.
4. Conspiracies Theories.

sit back and enjoy the interview........

Silver Futures Now In Contango

Silver Futures two days before was in Backwardation but now in Contango. Persistance backwardation will definitely have spike in spot price will takes into $40's, And will eventually contango.Take a look at the red oval for detail view of the future chain when the silver for spot is $38.20

Click here for Silver Futures

Please Raise One More Time

Secretary Geithner Sends Debt Limit Letter to Congress

April 4, 2011

The Honorable Harry Reid
Democratic Leader
United States Senate
Washington, DC 20510

Dear Mr. Leader:

I am writing to update you on the Treasury Department’s projections regarding when the statutory debt limit will be reached and to inform you about the limits of the available measures at our disposal to delay that date temporarily.

In our previous communications to Congress, we provided regular estimates of the likely time period in which the debt limit could be reached. We can now make that projection with more precision. The Treasury Department now projects that the debt limit will be reached no later than May 16, 2011. This is a projection based on the expected level of tax receipts, the timing of our commitments and obligations over the next several weeks, and our judgment concerning the level of cash balances we need to operate. Although these projections could change, we do not believe they are likely to change in a way that would give Congress more time in which to act. Treasury will provide an update of this projection in early May.Click here for more

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