To The Moon

Even the rebalancing by Bloomberg commodity index comes to nothing in the face of the uncertainty created by Trump… sigh…😮‍💨 I would never have imagined I would appreciate the chaos for my portfolio...

Now that the rebalancing was done and dusted, it’s now purely about demand and supply. So who is telling the truth about the perceived or real demand? How much is speculative hot money and how much is attributed to the squeeze?

Will silver price correct or will it continue to ramp up? The uptrend is very much intact from the chart perspective, so I would expect the price of both silver and gold continues to increase. Platinum and palladium are like two accompanying mates that follow the trend in both silver and gold.

If it is normal time, I would have expected silver price to consolidate prior to its next leg up, but this is not normal time. The continued Trump generated drama might have just tilted the balance for the precious metals trade.

It is understandable that some traders are concerned about silver’s crowded trade. However, irony as it may sound, the cure for higher price is higher price. Yup, a higher price does attract concern about inflated prices and might attract profit taking from weak hands and speculators. However if traders realise that higher prices are here to stay, although corrections might still occur in future, the bottom will likely be at a higher level. This would force those on the sidelines to take up their positions. Those industrial application users who have been putting off buying silver pending a correction would also have no choice but to come back into the market. The higher price would also make those high net worth investors who had dismissed this silver price run to reassess their investment portfolio.

With silver prices consolidating and moving further upward, it is only a matter of time that all these higher prices would be considered the new norm. I read about analysts comparing this silver price run to bitcoin style of volatility. Some mentioned about the MEME run when silver price hits $50 some years back. These analysts are not convinced that silver squeeze is real. Yes, the hot money from speculators do play a part in this run. Unlike the previous run, this new economy involves more silver in the industrial applications. Like I mentioned earlier, whether the silver deficit is real would be the key for this run to continue. We would likely know in a month or two when March delivery comes about. That is the bulk of the future due anyway. With recent backdation of silver contracts (rolling silver futures forward for earlier delivery), the demand seems to be real.

One more thing, from the chart perspective (see secondary chart above), RSI is not overbought at current level and trending nicely up too). It is a weekend chart, so it has not taken into account of Trump's weekend bullying tactics for forcing Greenland 🇬🇱 sale.

Lastly, yes, bitcoin is a digital algorithm and cannot be increased at will. That was the original idea after all. We have seen so many side-coins being created for bitcoin. Whenever bitcoin prices go up, those side-coins benefit as well, if not more. Furthermore, the algorithm might fail with the arrival of quantum computing. Only time will tell. Why did I mention bitcoin comparison? Silver, yes, we can continue to dig for more silver or gold. However, especially silver, most mines in the world are not silver mines. Silver is mostly a side minerals rather than the main ore. This means that we can add silver even if we want to. Furthermore, it would take easily 10 good years from exploration to mining. It is a laughable take from certain analysts to mention that higher prices would generate more silver, so deficit would become excess. Nah, all these are behind-the-computer analysts who do not understand the real mining industry. No matter how advanced AI or how fast computer computation has become, we simply cannot add silver magically overnight. Yes, no matter how much money we throw in! The exploration might become more efficient with improved technology, the digging still take the same amount of time. If the grade of silver is low, the cost just ballooned. The effort is probably not worth that.

Silver price heights are here to stay. How high and for how long, I have no idea. $100 is the near term target, but I expect that to be taken out. It would be a good starting (resistance) point to hold, won't you think so? [Tongue]  [Chuckle]  [Evil]  

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