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Silver Slips Big – Here’s the Outlook for the Rest of ’16?

October 9, 2016 7:29 am est

I know from the emails some of you send me, that you are on an emotional roller-coaster, wondering what is next for silver and gold – I don’t blame you – It’s quite confusing. We know its protection against the paper derivatives that are on the verge of exploding, but shouldn’t gold and silver be going up?

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Your answer is yes, it should be going up – But there are 3 things to consider…

1) With Deutsche Bank in trouble, they could seriously cause a Lehman Bros ’08 moment and then the jig is up on Big Banks and Politicians who vowed in ’08, this would or could never happen again. Imagine the bank run and then the run on silver and gold – Nope. Too early still. We still have some tools available to avoid a disaster right now.

 

2) Gold and silver are a crisis hedge, its as simple as that. If you feel we are headed for a crisis, you hedge with physical metal (not futures, ETF’s or garbage like that) Now, consider we are in an election year, one of the most important elections in history. There is no way that “they” are going to let the system fall right before the most important US election in history – so they wash, rinse and repeat.

 

3) Commercials/Institutions, this is the biggest one. I believe that the recent orchestrated take-down was intentional because of the strength we’ve seen all year in the metals. Commercials we record short gold and silver all year and the metals had to be pushed down so they can unwind the shorts and not lose – trust me, they never lose. If you know how to read the silver COT report, read it here Commercials took off about -9,200 contracts, at 5,000 per contract… you do the math.

 

What I think is the most screwed up is how investors allow the just the words of the FED control the market, not the actions. I mean all they have to do is sneeze and it creates volatility… They are more corrupt than any politician or banker and we hang by their every word? Its ridiculous, but we must exercise patients here friends and use this drop as a buying opportunity – again, only if you feel we are heading for a crisis, if not, just sit tight with your life savings in a CD, MM or in the Stock Market.

 

Silver Slips to 90-Day Low: What’s the Outlook for the Rest of ’16? – The decline in gold & silver should be temporary, with the Fed’s rate hike saber-rattling not convincing investors that anything will happen until December, 2016. “Silver prices at the end of the year should be in the $22.00 dollar range,” says Charles Thorngren, chief executive officer at Noble Gold Investments, in Pasadena, Calif.

 

Thorngren says that with the Fed’s constant misdirection on rates, the markets are left without any defining catalyst for strong sustained increases. With that said, the Fed has no choice but to maintain their current vocal policy of increases, while actually doing nothing because of the election.
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Collectibles Skyrocketing As Gold & Silver Smash Continues But Bull Case For Gold Gets Stronger – Watching the decline in gold on the belief odds are growing that the Fed is going to raise interest rates by 25 bps soon puts me back to November and December 2015 when the same behavior took place ahead of the first rate hike in almost 10 years…

After that hike was digested gold then rallied 30%. For some reason one rate hike per year somehow scares gold holders even though this potential rate hike is coming as economic growth is barely above zero.
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Top Gold Forecaster: “As Quickly As Gold Fell” May “Rally Back” on Global Risks – Gold forecasting is a mugs game at the best of times but given the uncertain geo-political situation, the fragile banking system and the very strong fundamentals for gold, it is hard to argue with Barnabas Gan of OCBC  or BMI. Gold should be meaningfully higher in the coming months and into 2017 as investors diversify into gold. Or rather we are likely to see dollars, euros, pounds and other fiat currencies continue to be devalued versus gold.
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In Major Victory For Gold And Silver Traders, Manipulation Lawsuit Against Gold-Fixing Banks Ordered To Proceed – Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why so many were surprised to learn six months ago that not only had this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troubled German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors.
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Silver IS Way Undervalued – Its strong new bull market this year is both far too young and far too small to give up its ghost anytime soon. Silver remains quite low in both absolute terms and relative to gold, its primary driver. Silver still has to power much higher merely to mean revert to normal levels compared to today’s prevailing gold prices, let alone where gold is heading in its own bull market.

Corrections within ongoing silver bulls are normal and healthy, re-balancing sentiment by eradicating greed rampant at the preceding interim highs. They offer bulls’ best opportunities to buy relatively low ahead of future up-legs. 2016’s silver bull is alive and well despite the recent correction-weakened sentiment. Once gold inevitably starts powering higher again, silver will follow and amplify gold’s gains like usual.
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2017: Gold and Silver’s Year of “Public Recognition” – In almost every major bull market, the public begins to arrive at the party after the first few innings have been played. This time around we can make a guesstimate as to what price levels are likely to “trigger” a wave (waves?) of physical metals’ buying by newly-informed, recently-committed members of the public.

Buying low is never easy. When sell-offs snowball to major levels, there’s always a chance they will cascade even lower. So it’s very challenging psychologically to fight the thundering herd and buy when everyone else is selling. It feels terrible buying into capitulation sell-offs, almost nauseating. The only way to build the fortitude necessary to do it is to stay exceptionally informed, which helps frame sell-offs in context.

Even after you’ve done the research and decided to participate, buying into price weakness against the herd and contrary to your emotions is not an easy thing to do. But time and again, some of the world’s most successful investors have done just that. You might want to consider joining their ranks.
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It’s Too Late to Rescue Wall Street – Two data points tell this story:

1.    So far this year, investors have pulled nearly $80 billion out of equity mutual funds and exchange-traded funds (ETFs). Every month but one has been a down month, and so far through mid-September, the equity mutual fund outflows have surpassed $5 billion. That’s an indication that Main Street investors are not involved in the current euphoria on Wall Street.

2.    So far this year, foreigners have pulled $67 billion out of America, according to Treasury Department data on international capital flows. That’s an indication that, on the whole, foreigners have been selling U.S. assets.

So back to our physics test: How is it that Wall Street keeps hitting new highs on an almost daily basis when the air it needs is leaving that balloon?

I have a two-pronged theory, the first part of which I detailed in my dispatch on August 31: Wall Street is higher, in part, because companies are using their cash to buy back their own shares instead of investing in growing their businesses.
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