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<p>[QUOTE=&quot;InfleXion, post: 1747622, member: 29012&quot;]A timeframe of one month is going to be difficult for even the most knowledgable insiders to nail down. Precious metals are a longterm investment. If you&#039;re trying to get in and out for a quick buck silver is a very volatile market and could payoff big or burn you big.</p><p><br /></p><p>I don&#039;t claim to have any idea what will happen, but I voted that it will drop to further lows for the following reasons.</p><p><br /></p><p>Gold and silver are both below cost of production. The market is showing us that cost of production does not matter. CEOs of miners do not seem to mind operating at a loss for whatever reason. So there&#039;s no reason to think that will provide support since it hasn&#039;t so far.</p><p><br /></p><p>Gold backwardation is also <i>increasing</i>. That means that in spite of all the arbitrage and profit taking going on by selling physical at a premium to the futures prices, demand is still outpacing the supply that arbtirage is bringing to market. Therefore the market is also telling us that arbitrage will not provide support.</p><p><br /></p><p>We know that the market is determined by paper contracts which have only a small fraction of the metal they represent, and therefore the price can do anything. I am reluctant at this point to even say that technical support matters. When someone can sell 5 million ounces of gold or all the silver mined in a year in a single session that will break technical support with ease. The stops have been flushed out already.</p><p><br /></p><p>It has been reported that the COMEX gold inventories are draining at the fastest pace on record, and that JPM has offloaded it&#039;s massive short position inherited from Bear Stearns at sub $20 prices and is now in the process of going long on SLV. That short position is still out there somewhere diluted among the big banks, but for all we know it could be tied to some derivatives in retirement funds since they can invest those however they want.</p><p><br /></p><p>As such there is evidence that the very forces who have been suppressing the price of silver are now preparing to profit from their rise. However it stands to reason that they will not be done positioning until all the physical metal has been acquired, and right now the COMEX still has some metal. As long as they have metal for the big players to gobble up at super low prices I don&#039;t see why they don&#039;t keep knocking it down and buying it cheaper and cheaper to maximize profits. There is nothing to stop them until the exchanges run out of metal. Once that happens then the physical price will diverge from paper and the exchanges will either go away or become obsolete for buying physical, or the exchanges will be forced to replenish inventories at the physical price which will become the new market price determinator instead of paper proxies. I do feel that will inevitably occur and lead to exceptionally higher prices, but I do not see that happening in the next month. So we could be in for more downside until the wealth transfer is complete. Although it is a fine line and it might just stay where it is until then as well. Or it might go up <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie2" alt=";)" unselectable="on" unselectable="on" />[/QUOTE]</p><p><br /></p>

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