Chris Slife owns Howling Coyote Silver Company. He sent this email this morning, explaining why the prices of silver and gold have been so volatile. If you have questions for Chris, post them as a comment, and I’ll ask him to drop by and answer them personally. By the way, you can track the live ups and downs of your favorite precious metal here.
There is a lot of very bearish sentiment right now out in gold and silver land and that is a very good thing!What has changed?
1) This past Friday and Saturday, www.marketwatch.com ran three major ‘hit’ pieces on silver: the waterfall started on Sunday. Do you think someone was scared?
2) We have killed bin Laden. Do you think we will leave Iraq and Afghanistan?
3) Margin requirements have been raised FIVE times on silver over the past eight days!
4) My prediction was for EXTREME VOLATILITY around $50. This is actually good because, coupled with the margin hikes – see above – a lot of very weak hands are being forced out of the market. Silver is being given over to the strongest of hands, right here, right now.
5) Another prediction I made was a pause around QE2 to give political cover for QE3. Did anyone notice jobless claims today?
6) We are fast approaching debt ceiling limits. State pensions deficits, state budget deficits, et cetera. What is more likely, that foreigners will start buying more of our debt or we will print to cover? If you believe the former, I have a bridge for sale.
Could gold/silver continue to correct? Absolutely, anything is possible; however, I know I am trying to source some physical silver and have had no luck thus far. In addition, I am going to start nibbling on some SLV call options. For those of you who wish to profit from corrections in the metals, once again, I would encourage you to invest in your financial education and learn about call and put options. They are simply a tool in your toolkit, nothing more, nothing less. It has been physiologically bearable to see this price drop because I had put options in place when silver started to correct. I have collected on my insurance policies.
As always, do your due diligence. I am not a paid financial consultant and do not experience either your gains or losses.
BOTTOM LINE TAKEAWAY: What has changed? NOTHING!