Silver... when will it take off?
This is going to be one of my shorter yet more significant public updates. Many of us remember the movie Jerry McGuire a now famous phrase “Show me the money!” As Jim Puplava has mentioned on his radio show several times he takes a good hard look at money flow. In one of the first interviews Jim and I did we addressed this issue. I explained why stocks or commodities move up or down. Right now I am writing this after the close of the market and both gold and silver showed good gains today. Early this week they were weak. In this business it is not so much show me the money as Follow the MONEY!!
Take a look at the chart below and look at the money flow INTO silver!
Notice we have some catching up to do. It appears that this rally could take silver to $4.90 or better.
Sentiment ?
What is the current “feeling” about silver? Known to us as sentiment? This formation is known as a reverse head and shoulders. This is a powerful formation and indicates that we may have bottomed here. This is a weighted average of seven silver mining equities. The chart is courtesy of http://www.sharelynx.com/. Examine the chart below; it looks as if the way up to 500 has very little resistance. One more item of interest is very few seem interested in the precious metals right now!
Let us examine another important factor – VOLUME
Volume is picking up in Silver Futures as well. The open interest in the May contract is over 56,000 contracts. Normally split fairly evenly, half looking for higher prices, half looking for lower. Looking at the longs only, this would be over 140,000,000 million ounces of silver. Since the Comex total is at 108,000, 000 right now, we do have a significant “interest” in this delivery month.
Let us be clear, May normally has very high open interest, what makes this year so promising is big moves often take place when sentiment is low.
David Morgan
May 8, 2003
PS: Social consequences of the coming financial situation... I highly recommend
Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Because individual investment objectives vary, this Summary should not be construed as advice to meet the particular needs of the reader. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice. Including the owners of Stone Investment Group and/or independent consultants or members of their families may have a position in the securities mentioned.