Metals Doing Far Better Than Underlying Mining Shares

Morgan Report/Silver Investor
"It is obvious that gold and silver are doing far better than the underlying mining shares, and this is of concern to us as well as our readers. In almost all bull markets, the shares lead the bullion and provide confirmation that the trend is intact and remains sound...

We expect to see a quick and solid spike high within the next few weeks. It may come as early as a few trading days from the date of this publication. First, we base this on the fact that the Commitment of Traders report in silver is showing us caution based upon countless previous experiences. Gold is off the charts, meaning that the amount of open interest continues to build. We will state it could be different this time because someone may continue to buy, but our experience watching the floor traders makes us very cautious on a short-term basis. What we are experiencing is the floor traders yielding to the ā€œlongsā€ for a brief timeframe, letting the metals settle higher over a few trading sessions (could be days or weeks).

Once the ā€œtopā€ is in, the longs have pretty much exhausted their arsenal (they are out of buying power) and need to sell to lock in profits. Once the selling starts, the orders get tough to match, because the commercials (banks) will short (sell) as the trading funds are also selling to lock in their gains. This is how the sell-offs start and usually the move down is hard and fast. Once again this is what we expect to take place, but we do give an outside chance that it might be different this time, although we doubt it." (3/08)

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