Why I started buying physical silver metal today.

In the past couple weeks I have been on increasingly rising silver bottom watch.  The sentiment on the metals and the miners is in the dirt because of the big pullback they have been experiencing since early 2011.  At the same time, the fed has been buying stocks and bonds trying to get everyone into that Ponzi again.  So it would seem that Bernanke is winning blah blah blah.  Balderdash.  Bernanke has already lost but he's so stubborn that he is willing to risk the security and the sanity of the entire country trying to prop up the status quo.  Everyone thinks he's a hero when in fact he was never anything more than a confidence operator, a high priced carney in the global debt Ponzi.  Words do not convey the contempt that I have for him.  He has caused global suffering with his money games and we still haven't seen the bad stuff yet.

Well, today I started buying again.  It might go lower but I decided to pick up the first 1/3rd of my intended tranche.  So, why now?  Why not wait a bit longer?  Well, I was going to do that originally even though I know that I sometimes have trouble reading the 5th of the 5th of the 5th very well.  But then it struck me - I could possibly find some independent verification in ZSL which is the 2x leveraged short fund.  These leveraged shorts move the chart faster and can thus pull out details in the movements and make them a bit easier to read.  Of course, in the case of ZSL, all the charts are inverted.  So if SLV must be near a bottom, ZSL should be near a top.

In any case, here is the ZSL chart.  What I saw when I looked at it made me wonder greatly if the 5th of C hadn't already been put in.  First off, wave 1 is a pretty easy read.  There are 5 clear wave thrusts with 3 going up and 2 being pull backs.  Wave 2 was pretty clearly a sideways correction.  Per the EW model, I should then get a violently upward 3rd wave followed by a big, vee style pullback (since 2 was sideways, 4 should be a vee per the EW rule of alternation.).  In addition, a line between 1 and 3 should be roughly parallel to a line between 2 and 4.  In fact, the chart seems to have done exactly that.  So now the big question is, is the next peak the 5th and final wave of the series or is it just wave 1 of 5 with waves 2 of 5, 3 of 5, 4 of 5 and 5 of 5 to complete before big red 5 is complete.

I was originally thinking that it could be just 1 of 5.  In fact, it still might be just that.  But it suspiciously hit the top line (the one that goes through 1 and 3).  That's what a 5th wave is supposed to do.  Now the chart is struggling to hold lower support.  If it breaks down it will probably be with gusto because it will be a 3rd wave in the downward direction for ZSL (as silver breaks out to the upside).  In addition, I noticed that the vertical distance from 4 to "5???" really isn't much different than the vertical distance from the start of red 1 to the peak of red 1.  Sure, the recent wave made its move much faster than the red 1 wave played out but the amplitudes are similar, just as one would expect between a 1st and 5th wave.  

Finally, I remembered that the SLV chart was sitting on a support line going all the way back to 2008 (see chart below).  I think it would be quite difficult to break that long standing support line.  I could always be wrong about this but I currently believe it would take a 3rd of a 3rd wave to have enough power to break down through it in a meaningful way.  I'm not convinced that a 3rd of a 5th wave could do it.
Given all of this I think there is a technical case to be made for the immediate bottoming (if not just recently bottomed already) for the SLV chart.  That means the odds are enough in favor of going long right now that I bought 1/3 of my intended allocation for this cycle.  If it goes lower then I will be very happy and buy a lot more.  But if it begins to break out I will also buy more. 

Bernanke will be checkmated soon by the monster market that he helped create.  It will demand increasing amounts of stimulus or it will have a tantrum and this is happening when Bernanke is trying to talk up the unworkable idea of "tapering" off the stimulus.  Pulling off the stimulus will invite deflation.  At the first sign of it, the fund managers will pull their money from the scam and run with it.  The result will be lower stock prices, commodity prices, etc.  But I think this time that gold and silver will go up, not down with because what is anyone to do with the cash they raise by selling stocks?  If it goes into commodities it will cause an Arab spring in Main St. USA.  Government will intervene and anyone foolish enough to have money in it will get robbed by price controls.  Metals are the only safe hiding place.

If anyone has questions on how to buy metals, send leave a comment on the blog or send me email if you are family or friends.  I just checked the prices at Monex vs Apmex and Monex edged out Apmex and Apmex refused to make up the difference so Monex it was.  The price for silver US Eagles (decided to try them instead of the Philharmonics that I usually get) was $25.46 per coin delivered to my doorstep.