And then there's this. Here's the link to ZH where you can read the full FT story with registration:
Hmmm......sounds a lot like or Buyer(s) of Size, doesn't it???
Anyway, as a precaution, I am now long 1 July $50 silver call which cost me a cool $7500. However, the recent spike, the upcoming option expiration and this latest news all but guarantees a steep but brief selloff is just over the horizon. I'd put the chances at 90%. On the 10% chance there is no pullback....which is why I bought the call...silver is going to accelerate UPward rather quickly here. This will be a very interesting day.
Two main thing I want to discuss in this note. First and foremost, the POSX. It's sure living up to its name, isn't it? WOW! Look at this six-hour chart:
As the POSX approaches 72, the almost has to be a Calvin coming. The dollar will rally and bonds will sell off but then what? The dollar will roll back over and down it will go.
Lastly, I've been getting a lot of inquiries about the horrific underperformance of some/most of the mining shares. Keep in mind, there are three main issues affecting share performance currently:
1) ETFs. ETNs and closed-end funds siphon investment dollars that would traditionally have been flowing into the miners.
2) The "ratio trade" employed by hedge funds whereby they sell the shares of the hedged miners and use the proceeds to purchase paper metal contracts on the Comex. Eloquently described here by Trader Dan:
3) Equity analyst limitations. This is important. Eric Sprott touches upon this is his latest (which is copied below) but let me expand upon this. At a sell-side firm (retail, private client or investment management firm), analysts all have individual areas of expertise. In making their forecasts for equities that they cover, they get feedback from other analysts that specialize in other areas. For example, the analyst that covers a multi-national company like GE may know everything about that company's growth prospects but his opinion will be enhanced or tempered by the opinion of his company's "global economist". Global macroeconomic forecasting is not the expertise of the GE analyst so he will defer to the global economist when implementing growth forecasts into his earnings projections.
The same thing happens with mining stock analysts. The analyst may love SLW and all that they do. But if his firm has a "commodity specialist" who forecasts year-end commodity prices and this fool has a 2011 price target for silver of $30, then the analyst has to use the $30 price as his number for projecting earnings per share numbers. So silver can go to $45 and you and I know that SLW will make a boatload of extra money this year but until the "firm" changes its price targets, the EPS forecasts will stay the same and money will not flow into the stock. Does that make sense? I have a feeling that this concept is much more easily explained verbally than in text. Anyway, I hope that helps.
And here is the latest Sprott letter, in its entirety. Really, really great stuff. I love how he inadvertently blasts all the trolls as folks who don't understand the fundamentals.
Have a great day. Stay nimble and be mindful that The Cartel would do just about anything right now to convince May contract holders to roll into July. TF