PHYS and PSLV Update – 15 Mar

Do not throw away your gold and silver because others are in a panic to raise cash! In fact, give them the cash they so desire and buy their real money in exchange for the Bernank’s silly paper. Everything is being sold off to raise liquidity in order to abandon risk trades. Gold and silver is not risky. It is real money and can be sold in order to generate cash needed elsewhere. The dollar is surging, not because its fundamentals are suddenly strong. In fact, the fundamentals have never been worse. Strength in the dollar measures demand and scarcity. Many leveraged positions require dollars to unwind them. When everyone rushes to the exit at the same time, not enough dollars exist to satisfy the demand and price rises. This situation is an artifact of our current debt based fiat monetary system, where at any given point there does not exist enough money to pay off current debt.This situation will be alleviated by the Bernank in short order, have no fear. He will print up some more debt to provide liquidity. When he does, the panic will subside and the dollar will resume its journey straight to the shit can.

PHYS is finding support at a key level that was the break out level for the latest move to all time highs, 12.40. This is also the Fibonacci 38.2% retrace level and strong natural support. Resistance will be the last swing high at 12.80. All of the technical studies have been largely neutralized and the slate is clean for just about anything. A close above 12.40 today would be constructive in that it would not establish a lower low. That will neutralize the current downtrend and suggest sideways consolidation or possibly a reversal.

PSLV has a different loo than PHYS in that the swing low was violated and now a down trend is firmly in place, defined by lower lows and lower highs. This should be expected because PSLV has developed a substantial premium to NAV and some of that is coming back out. But, where this chart is actually better is that price remains well above the breakout level of 14.35, which serves as strong support. This is a reflection of how strong the silver market has been and how it has outperformed gold. Light resistance rests just above the current price at 15.25, with another stronger level at 16.25. I am buying today.

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