Guest Post by GM Jenkins
I once consulted an encyclopedia of philosophy to try to make heads or tails of Martin Heidegger's ideas. His entry went something to the effect of: "Heidegger's philosophy is formidably difficult, unless it doesn't make any sense, in which case it's laughably easy." And so it goes with silver: "Trading the silver market is formidably difficult, unless there's manipulation, in which case it's laughably easy."
A case in point. Kid Dynamite, who, Cincinnatus-like, gave up a lucrative position on Wall Street to become a citizen farmer in the woods of New Hampshire, making maple syrup, tending to his garden, and shooting silverbugs for sport, recently asked "why is it that we pay so much attention to silver?":
Compared to some other high-flyers, silver is a total dog, underperforming the really bubble-icious Party-Like-It’s-1999 momo champions like $LULU, $OPEN, $SINA and $TZOO ...KD interpreted this as meaning "the world is not coming to an end":
What’s my point? ... Silver is part of the momentum rally ... Enjoy the ride – profit – but don’t go off the deep end and delude yourself into thinking that it means we’ll all be lugging around carts full of canned food, sawed off shotguns under our soiled trenchcoats, as we wander from one post-apocalyptic wasteland to another looking for fuel, shelter, and a better life now that we’ve defeated the Imperialist pigs and their Fiat experiment.Of course, one could arrive at a different interpretation. If the momentum traders (in conjunction with the Fed's liquidity pump) can promiscuously inflate even garbage stocks like LULU and OPEN to the point that that they perform just as well (or even better) than the fundamentally valuable asset class of precious metals, does that not suggest price suppression of the latter? Perhaps we have yet to see, or are just beginning to see, the full force of the silver fundamentals come into play, sending their fiat prices to the moon.
Is there a way to tell if vectors unique to the silver market (tight supply, massive short squeeze, the incipient death of the Cartel) have also begun to come into play? Perhaps we can try to cancel out factors common to two assets by looking at ratios, e.g. the $SILVER:NFLX or $SILVER:LULU or $SILVER:OPEN ratios? I am no chartist, so I won't draw any trend lines or make any comments but to say that FWIW (very little) these charts look pretty bullish to me. I'd like to hear what others think.
*The astute reader will note that, of the stocks adduced by KD, I didn't post here the $SILVER:SINA or $SILVER:TZOO charts, which (even to my untutored eye) looked demonstrably less bullish. However, SINA, as KD points out, has some connection to China, and so I'll file that under the dollar bearish trade. And judging from the cheap ticket to Vegas I bought a few days ago, TZOO is a damn good company.