Copper is a metal that many believe that show what the overall market and the economy does, this metal is a industrial metal, much like what many feel that Silver is. Copper has since had a big drop because a fear of a looming recession. In my Opinion Silver is much more rare than all metals but unfortunately we have been witnessing much manipulation in Silver markets by big banks like JP Morgan Chase and HSBC.
Copper prices have traded in a volatile fashion lately. Copper dropped from $4.50 per pound in August to under $3 per pound in early October.
Fears of global recession and the continuing debt crisis in the U.S. and Europe were to blame for the drop. Adding fuel to the fire was a slowdown in China which is the world’s largest importer of copper.
Copper prices rebounded in October and it traded up to $3.70 per pound. But the bell weather commodity has been going down hard for the past few weeks and is currently trading at the $3.48 level. Because Copper and Silver are considered more of a "Industrial Metal" ,this does not bode well for silver.
We are witnessing the move that Copper has done and the big drop shows that Silver could have a similar move. We believe that this will be a great opportunity to add SLV Put Options as a hedge on this downward move and quite possibly look to enter physical metal when the price drops, sometimes very hard to catch the bottom but long term we for see Silver at $100 an oz but for now we may profit off this drop that we see in the chart and previous trading:
Silver prices tanked from over $49 in April to just over $32 an ounce in May. This drop of 35% in a one month period hurt the silver market and scared away investors from silver.
A quick sharp drop in the price of a commodity tends to do a lot of damage to the technical picture for that commodity. Currently silver prices are starting to look weak again at $34-$35 an ounce. With lower copper prices, I believe that silver prices will follow and another leg down is coming soon.
The daily silver chart on Nov 10 2011, provides a number of clues to the future price action. Silver has been unable to rise above $36, the short-term resistance level. Silver’s daily historical volatility has been falling. That means there has been less speculative action or less investment demand in the market. On thursday we saw it try to break $32 but could not and now is trading $30 range if we see a close below $30 we could see $26-$28 if Silver does not hold possibly $24
The stochastics, which show silver’s price momentum, appear to be turning bearish at the 71 level. Also, the relative strength index is in overbought territory.
Finally, volume has been decreasing and open interest (the total number of long and short positions in the market) is stable again indicating a lack of investment demand in the near term.
When technicals and fundamentals line up like this, it’s a powerful indicator that a certain commodity will fall. In this case, silver is preparing to go lower - the silver market is about to drop and we look to benefit. The silver market has been trying to rally for weeks now and it can’t get above $36 an ounce. If it can’t climb higher, then silver buyers will get frustrated and liquidate positions. When that happens, we could see silver fall to $27 or lower again, maybe even into the low $20s.
So as a trade, silver looks like a great short position right now. But once it corrects, I’ll be looking to buy again on the dips.
Bottom line: the coming correction in silver prices will give you the opportunity to make money on a short position and load up on the white metal at much lower prices.
Jim Rogers, "Gold is Overdue for a Correction"
http://www.youtube.com/watch?With that said we will watch the markets closely as we believe that Euro crisis will adversely affect metals markets. We are watching JPM (JP Morgan Chase) for a bounce here as this stock is near 52 week low and is a usual indicator of what the markets do. We do not like bank stocks our recent Put Option recommendations on BAC (Bank of America) JEF (Jeffries)
We believe that the next bank stock to drop big are those that are fully invested in European Sovereign debt those that we feel are big holders are (DB) Deutsche Bank and (BCS) Barclays there are many rumors of a bank in a possible Lehman Bros type collapse we will keep eyes on banks like (MS) Morgan Stanley and (JEF) Jeffries
Our penny stock OTC mentions we believe still far upside and we believe Gold and Silver Long term will be a great way to hedge money and only type of investment that will prove a great opportunity for patience. Here are some videos I would like members to watch on why I feel at some point Gold and Silver will trade 100-1000% at some point between 2013 and 2015 and why I do not want to be fully in the U.S dollar:
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