I have to be honest – I was in 60% cash for like 3 weeks on lots of worries about Chinese real estate. Those problems will get here, eventually, and we may face other oddities like the debt ceiling and shut downs, but I saw silver fly down $1 today on no real news. Still have about 15% cash and can get out of something quick, but man prices crashed in those 3 weeks. What this has looked like recently is end of quarter selling of paper silver.

At the same time this was happening yesterday, gold was up. The markets were up. So which is it, silver was acting as a monetary metal and got crushed with gold (gold didn’t move), or is it an industrial metal which moves with order flow and the markets are up today? Which is it? What is undeniable is someone absolutely needed to offload thousands of silver contracts over 2 hours.

In fact, yesterday, about 500m paper ounces were sold. Half a year’s supply in about 2 hours. Anyone at all find this somewhat strange? Does this seem like a solid market?

If I put on my tin foil hat, this to me appears as if big money is trying to teach a lesson to people who wanted to buy silver to make price go up. The problem is, they didn’t SELL REAL metal, they sold paper contracts which are worth toilet paper.

I have been an ardent believer in price manipulation, but days like yesterday make this even more apparent. There’s only one last thing I can think of besides end of quarter. With 2 days out from debt ceiling issues, big banks see a possibility of major markets moving down and sell paper silver until their eyes bleed. When/if the markets as a whole sell off, margin calls are made at which silver goes down – at which the BB can buy it back cheaper and make a nice profit. This might end up looking like a V bottom. Now, with the debt ceiling thing in the rear view mirror, could this price sharply rebound?

I have been tracking a pattern for 15 months, that from the day after metals options expirations, for about 9 days, we see metals recoveries. I have shared these many times. THIS time, the price had been taken super low and it didn’t seem like any real pressure had to be exerted around this options expiration, so I was a little timid – but bought in anyhow.

What you see in that last green circle is a break of the pattern. Let’s look a little closer.

That last red candle was today, on no news. You can clearly see a down channel. My bet this month was on hitting the top side of this channel by October 5th. It’s still possible, however, relatively unlikely. To mitigate my uncertainty with this, I bought options mostly out to 2023 and WPM to hold. I did buy some FSM Jan 2022 calls, but even a move back to $24 silver in a few weeks gets me a nice pay day. My next part of this play may be to play off of a bounce from the bottom of this channel, if it gets there. What you can also see when you zoom out is important support levels just got breached. This is one of two things to come – a further breakdown in price, or a sling shot when shorts begin to cover and price rises into a V. We’ll see how this forms over the next few weeks. Sentiment is in the gutter and it “feels” like there has been utter capitulation with not a ton of sellers out there. What?

What I noticed yesterday morning was silver was down a dollar, and miners had barely moved. Since then, I have seen some movement, but it almost seems like all who have wanted to sell, have sold – and most left may be deeply down and not selling. I have a few juniors I’m way down on, but love them and these are 1-3 year holds anyhow, so not looking to sell.

The question is, what happens from here?

You have a few schools of thought here.

  1. You have a few of the TAs that I spar with that basically said I was an idiot for buying anything silver related. They could be right. I more or less called the one guy a fool who doesn’t have a crystal ball or else he would be a billionaire and not reading my stupid tweets. Not my proudest moment, but the sheer ego of some people with their certainty makes me want to write my congressman to ask him to make throat punching legal. I think anyone who understands TA from even a most elementary understanding gets this is a probability game and NOT a certainty game. The smugness got me to react. I probably shouldn’t have, but it was a level of arrogance that just got me. Disagree with me on fundamentals. What am I missing? don’t tell me your secret magic 8 ball called a weather forecast months out with certainty and you are driving a 1987 Datsun. If you are too young to know what a Datsun is, you get the idea. It was a shitty car that doesn’t exist anymore. There are some out there I trust with their magic 8 balls because they use more than TA and manage billions of dollars of money.
  2. Silver to the moon! Any day now. I’ll believe it when I see it. We are in a very obviously 4 month down channel and it is also clear no bottoming pattern is in. I try to play some short term volatility with the call options to upside volatility. The last 6 months I’ve eaten steak playing these, and I have called these every month. This month might be Ramen. It’s probabilities. I don’t get upset or emotional about it. IF it goes to the moon, I’ll catch a ride up at $26 silver with Michael Oliver (In Oliver I trust).
  3. There’s some near term shit storms coming and it’s not good to be in a lot right now. Whether it’s Evergrande, the rollover we are seeing (evidence below), or the debt ceiling, shut down, or a 10-20% correction, some bad times are coming. Was hoping to be in and out of a play by Oct 5th. You can also see a potential accident in the making with lower lows and lower highs. This could be the beginning of the arm wrestling match Michael Oliver is calling for.

4. Oliver’s arm wrestling – I alluded to this above. Basically, he thinks there will be a fight over the direction of the stock market down over a year, where dips are bought, but you get lower highs and lower lows on the way down. As this happens, gold and silver catch a bid on the way up.

5. The global Bust – Hunter is still calling for much higher targets and then the bust. I was in his camp for about a year, when he was calling a lot of this at end of 2nd qtr. As we get closer to these dates, he pushes it out a quarter or two and raises the numbers. In fairness – he has stated a number of times the numbers he has been calling may be low. He then revises them up. I believe we are at that time now, and we are falling short of those targets. He’s the guy with 50 years experience. I’m the rube who can see with my eyes shit falling apart all around us. I also feel with the trillions sloshing around, and the plunge protection team in place – that market draw downs might have more cushion in them, with more buy the dips after. I’m not saying Hunter is wrong – I’m saying that I think the clock is running out on the market top and his earlier predictions are closer that his recent mark ups the last few months.

So where are we going?

Anyone who tells you they know what is going to happen is full of shit. I don’t mean to pick on Vermeulen in any way, shape, or form – but one of the people I follow on Twitter wrote, “I’m done” and had a lot of pictures of Chris’ predictions which are used for show click bait. Silver to $38 by last December was one I had counted on. However, he then came out and said the first half of 2021 will be rough and nailed that. Chris seems like a nice guy – but also this shows the weakness of TA charts in a vacuum. It’s probability, so he’s nailed some, he’s missed some. I love the TA – but I personally use it in support of a macro thesis to make attempts to navigate when to enter or exit long and short term positions. While I’m not driving a Datsun, I also do well in my “real” career and can afford to make much more risky decisions than a 63 year old accountant who should be buying bonds and dividend stocks. This is a HOBBY for me and am into a lot more volatility than many of you would be comfortable with because I can replace my principal rather easily. I LOVE the community out there, but they will eat you alive if you profess to be an expert and make one bad call after another.

Much of what TA misses is that our markets today seem to be REALLY artificially propped up and more focus is going into parsing the verbiage of the Fed speakers rather than fundamentals of any securities. By any measure, all equities are massively over valued and PMs and their mining stocks are massively undervalued. A TA chart cannot predict what the Fed is going to say, but you also now can watch on the calendar WHEN they say things – and this word diarrhea is what they moves markets for a period – until a jobs report comes out. Or the next CPI print. TA cannot predict this. At all.

What I can tell you from my perspective, is that I have a physical metal position that I don’t really plan on selling. I bought 500 ounces at around $16-17 silver 2 years ago when I was begging my friends to get in on, and sold that for $30 to then pay for repairs on my rental unit. So yeah, almost a double. That’s nice. The rest of my physical metals are secure with things like Kinesis and I won’t be touching them. Meaning, I don’t really care if silver gets to $18. In fact, I’d probably buy more there. Where I DO care if silver gets to $18 is with call options on miners.

In these choppy waters, I did get some advice to look at 2023 call options, and that I did. I also bought WPM. This stuff hit $21.40 today. Crazy!! In your honest opinion, what kind of downside is even possible yet? 10%?

So part of this then is we worry about Evergrande. Stock market accidents. Nail biting shit. At the same time, I’m pretty excited because this is really starting to feel close to a bottom. Can it go more? Sure. But what a bottom is to me, is when there are no more sellers.

And that’s what this looked a hell of a lot like yesterday morning when silver was down $1 and I was down like $200 in my account with all of the options I have. Over the course of the day they slid a little, but $1 in silver down for me previously could have been a $10,000 down day in my account. This ended up down like $2,000. So to me, it FEELS as if miners might be priced at $18 silver right now.

Theory….not a lot of sellers. Lots of capitulation has happened.

Short covering to start soon when a bottom is sensed and more people start to dip their toes in the water with starter positions. Just this level of buying from a large amount could force short covering on things. Watch for a market blip for a final push down, and then those covering shorts are coming to the party to buy. Brady is talking about another final plunge, but sir – I have to ask – in the miners – where the hell are the sellers to plunge further? The metals may, on paper, drop much more. But miners don’t seem to have a lot of sellers left.

Lack of sellers is telling me we are close to bottom. I’m an amateur. Check what the pros are saying. But what I saw with my eyes was that miners sold off a lot the last few weeks prior to this plunge and it may have already been baked in the cake.