If you have not formally considered me a Silver bear since late April 2011 (with a couple of small head fakes along the way) and a Gold bear since late 2012, then you live on a different planet.
Perhaps there have been other traders as adamantly bearish on Silver, but if so I am not aware of them. I have been unapologetic in my opinion and openly in the face of Silver bulls.
Then, late last week I Tweeted that “We are in the final portion of this phase of the bear market [in Silver and Gold]. At the time Silver was trading at 18.63. On Friday I Tweeted that if I were a bottom picker I would buy Gold with a tight stop. Gold was at 1213 at the time. It has not traded below 1209 since. Also on Friday I announced I had bought some bullion for my safety deposit box.
I want to spend the rest of this post discussing my present opinion on precious metals and why I have been so harsh on Silver bulls.
My present opinion
I think the vast majority of the bear market in metals is over. I have no desire to be short — at least at present levels and at this time. Should metals put in a good rally, then I would likely be looking for a short trade. But I am in no hurry. The metals have dropped a very long way. Now is not the right time to become a metals’ bear. What kind of a rally might interest me in shorting — a big enough rally to blow all the late shorts out of their losing positions. I have no idea what the price levels would be. I have not turned constructive on metals. In fact, I am 50% sure the low prices are not in place. But, I have no desire to be short.
I bought bullion because I do believe in holding some insurance against fiat currencies. But, I will not campaign for or be married to this idea. I put a small amount of cash into the bullion purchase. If I do not need the Gold as insurance in my lifetime I will pass it along to my grand kids. Perhaps they can make some jewlery out of it.
Bottom line: I have no desire to be short metals. I am not a bear. I am not a bull. I am nothing. I have no interest in the metal markets. I may not trade Gold or Silver again for months. I have no price targets or time targets.
My cruelty to Silver bulls
I have taken a lot of criticism for my treatment of the Silver bugs. But, they deserve every last word of mocking I have placed upon them. Silver bulls are idiots. Why? Because they do not think critically or independently, they travel in over-crowded herds and refuse to acknowledge price as the ultimate arbiter of value. Silver is a commodity. Nothing more, nothing less. Silver has no intrinsic value other than what the market says is is worth. Silver bulls, more than traders of any other commodity, are obsessed with the narative of fiat currency destruction, manipulation by the exchanges, “paper” Silver vs. “physical” Silver, supply shortages, cost of production, etc., etc., etc. Silver bulls — you are fools.
Let me make something very clear to you — and this applies to traders of any and all physical items. Unless you plan to take deliver and actually consume Silver, then you are simply a speculator and gambler on the price of Silver. Nothing more. Nothing less.
And speculators trade price and nothing more. No, in fact, speculators trade price change and nothing more. If you really think you are trading or investing in Silver (or Soybeans, or Gold, or Platinum, or Sugar, or S&Ps, etc.), then you are completely self deceived. No group is more self deceived than Silver bugs.
Speculators trade price change. We profit if we can sell at a higher price than at which we bought. Who cares what name is at the top of a price chart. The only thing that matters is the price scale at the right and left side of a price chart. Until Silver bugs figure this out they deserve their lot in life.
I have not always been a Slver bear. Only since late April 2011. Some of my best traders since 1980 have been on the long side of Silver — and they have been trades based on trading price and price alone, not on trading Silver.
I was a super bull in Silver in late 2005/early 2006 when the weekly chart completed a textbook ascending triangle coincidental with the completion of a massive multi-decade base on the quarterly graph, as shown below.
And, when Silver made new highs on expanded volume in October 2010 there was no way to be other than bullish.
So, I have not really campaigned against Silver — I have campaigned against Silver bugs. I have nothing against Silver. It is the irrationality and arrogance of Silver bulls without confirming price behavior that have driven me crazy.
There is an approach to prediction (of markets, weather, earthquakes, sporting events, etc.) known as Bayesianism. Silver bulls should become familiar with Bayesianism. All traders should learn to think like Bayesians. In a very simplistic approach to the Silver market, a Bayesian would make certain statements, such as:
- The reason to be bullish on a market is that prices are advancing.
- A characteristic of a bull market is advancing prices.
- When prices are not advancing, the bull market is not a logical conclusion.
Of course, Bayesianism is much more complicated than this, but you get the idea.
$PSLV, $SLV, $SIF