USLV update

One of the things that has always bothered me about my bottoming call for silver has been the lack of a capitulation event.  The market generally wants to see some sort of panic washout event at the end of a long decline before it is sure that all the weak hands have been scared out.  It doesn't always happen but if you get such an event then your odds of having caught the exact bottom go up dramatically.  Of course, I believe that silver is headed to $75 in a matter of years and so it really doesn't matter too much what price you buy at these days (which is why the dollar cost averagers will certainly win in the end).  But I find it financially entertaining (and challenging) to try to pick or predict the exact bottom.  And so, once again into the fray on silver using the USLV chart as a proxy.

It is far from confirmed yet but the strange chart behavior of this final wave down on silver looks very much like that you expect from a triangle.  The rapid moves upward such as found in wave 1 below are not normally part of a motive 1-2-3-4-5 wave.  In fact, the nature of wave 1 looks a-b-c.  So does wave 2.  Wave 3 is a bit harder to discern but I think there is a a-b-c style 5-3-5 in there more than a 1-2-3-5-4 wave made up of 5-3-5-3-5.  The current wave will help solidify this view (or smash it to bits) pretty quickly.  I expect a move back up to the top rail to be the 4th wave.  If it can't break out, I will dump my small USLV holdings for a small loss and then wait for the plunge to the bottom at wave 5 below.  But if that happens I will not just buy back in with the same money.  Nope.  If this chart pattern plays out and we get a high volume capitulation then I will go in with a much higher bet given the much higher confidence in this being the real bottom - 10x of my current modest bet.  Half of it will go in based on the wave count down, the other half if and when it breaks back up into the channel (first confirmation).  If it cannot stay in the channel after that, sell the 2nd tranche but keep the first.  If it falls 1 cent below the first, stop loss out completely for a miniscule loss and reassess.

This is like playing chess against the fed.  They have a king.  I have a king and a rook.  The fed can take my win from me if I make a mistake but there is a clear and undefeatable path to my success if I just follow the algorithm for winning.  A player with a king and rook can always checkmate a single king if they know the rules and don't do anything stupid.

If the chart does not make it to the top rail at 4 (it might be contained within the current sideways triangle) or if it breaks out at 4? above then I will have to reassess.

One thing I am 100% sure of: the false calm that we have right now is taking a good deal of energy to maintain.  The fed cannot really print unlimited fake value as everyone believes it can.  It can print unlimited currency but the more it prints the less it is trusted and valued.  There always comes a point of diminishing returns.  At that point the fed has to decide whether to save itself and to plunge the country into a depression or to continue to burn itself out with stimulus until it loses all credibility.  There is no 3rd choice.  No scam ever ran forever and it's not different this time.