What Caused Silver’s Take-Down? (SLV, AGQ, ZSL, GLD, PSLV, SIVR)

Share This Article
March 1, 2012 6:25pm NYSE:AGQ NYSE:GLD

Dominique de Kevelioc de Bailleul:  While traders watched silver take its latest (but not greatest) dive during the ongoing bull market in precious metals, the European Central Bank backdoored near-record ‘liquidity’ to hundreds of European banks.

Trained eyes of the incongruous event of sharply lower silver prices atop the backdrop of a QE announcement by the ECB on Wednesday suggests that the bank cartel was behind the attack, according to bullion market  professionals.  Get my next ALERT 100% FREE

At one point during Wednesday’s trading, gold was down more than $100, while silver  was trading down $3. Both metals have since recovered approximately 30  percent due to bargain hunters stepping in at the sub-$1,700 and sub-$34 levels,  respectively, in the gold and silver markets.

“What happened today; the news of today; the important event of the day; the  substance of today; the reality of today is $712.4 billion of QE from the ECB to ECB member banks.  That’s what happened, today,” 40-year bullion market veteran James Sinclair told King World News (KWN) on Thursday.

“Mainstream media put the emphasis on Bernanke’s statement” that the  struggling US housing market is looking up, suggesting to many traders that the  need for further asset purchases above and beyond the present easing by the Fed  may not be needed instead of the financial media leading with the much bigger  story surrounding the ECB, was Sinclair’s assessment of Wednesday’s events.

The attack on the metals was well-coordinated and timed, according to Sinclair, but the assault on the silver and gold markets was also too obvious, even sophomoric.

“First you intervene via the mouth,” he said.

“Due to the modest improvement in housing, it is possible that our reliance  on Quantitative Easing may not be as necessary,” Bernanke told the House Banking Committee in Washington.

Immediately following Bernanke’s statement, gold dropped $30 and silver shed $1.

“That’s intervention, if I ever saw one,” Sinclair said.

Sinclair added that the sudden drop in the metals then triggered computer  algorithms to sell more ‘paper’ contracts, which then set off a chain reaction that tripped ‘stops’ under $35.

“How many listeners have even see the $712.4 billion in low-interest loans that went from the ECB to the member banks, today,” Sinclair continued.  ‘It’s there, but you’re going to have to look hard to find it.”

No top headlines from the mainstream media following the ECB announcement were found during the day’s trade on Wednesday.

The day after, after searching Google News (using the search term “ECB” within the past 24-hour), the results are not only scant, but the tone of the  headlines of the ECB announcement to inject massive liquidity into the system doesn’t reflect the gravity of the event, Sinclair explained.

As of 11 a.m. EST of Thursday, Google News returns the following headlines:

Reuters: ECB cash helps offset worries over growth

Reuters: GLOBAL MARKETS—ECB cash helps offset worries over growth

Malaysia Star: ECB to pump more funds

Financial Times: Europe’s smaller banks approach ECB

Reuters: Disquiet within ECB laid bare after cash injection

Wall Street Journal: ECB Sending Euro Lower Now

A competent financial journalist from, for example, Reuters, could have led with a more compelling headline:

ECB launches record $712 billion of liquidity to 800 banks


ECB announces record QE to avert euro collapse

“Today was a coverup by the US Federal Reserve and by mainstream media of the fact that what took place in terms of fundamental reality was one of the largest injections of liquidity into the system that has ever occurred,” Sinclair asserted.

Sinclair warns amateur investors of the silver market to expect volatility  and occasional take-downs of the silver price as the white metal achieves new highs throughout the course of the  bull market.  No one, or entity, however powerful, can beat the market’s natural tendency for price discovery for ever, according to economic theory.

Lower prices attract more buying by professional traders, who gladly take more metal off the market at discounted prices.

If manipulated paper prices stray too far from the physical market’s street  price, the banking cartel’s price suppression activities could suddenly backfire and setup a force majeure (a default or, more likely a settlement in dollars), a situation that the JP Morgan-led cartel wishes to avoid, completely.

“I am not a member of the school that believes central banks are trying to keep the price of gold from rising.  Central banks are trying to keep the price from rising violently.  Volatility is the key,” Sinclair explained in  a Feb. 14 interview with KWN.  “Price is secondary to the volatility of the gold market as it challenges currency markets and creates an imperative to  action.

“The attempts and activities of the central banks, in gold, are not by any  matter of means to control price, as they are to control volatility.  (This  is being done so they don’t have to) unmask the mechanism of what is bringing to  you a new monetary system.  The mechanism is called liquidity.  Gold is liquidity.”

Sinclair strongly suggests hold physical gold until the price tops $10,000,  as he has previously predicted (and updates from time to time).

Related ETFs: ProShares Ultra Silver (NYSEArca:AGQ), Sprott Physical Silver Trust ETF (NYSEArca:PSLV), ProShares UltraShort Silver (NYSEArca:ZSL), iShares Silver Trust (NYSEArca:SLV), SPDR Gold Trust (NYSEArca:GLD), ETFS Physical Silver Shares Trust (NYSEArca:SIVR).

By Dominique de Kevelioc de Bailleul From Beacon Equity Research

BeaconEquity.com is committed to producing the highest-quality insight and analysis of small-cap  stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily OTC stocks in the stock  market today, which have traditionally been shunned by Wall Street.  We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular

From Our Partners

Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories