Loading ...Gary Savage
@garysavage1
People don’t realize we are in a different environment than anything we’ve seen for several decades. We are in the parabolic bubble phase of a very mature bull market. And a bull market that is experiencing shortages.
Yesterday was an attempt by the banks to stop delivery of physical on the COMEX. The are stuck in the short positions with huge numbers of contracts now standing for delivery. The problem is that they just created a $40 spread between the US paper market and Asia. Silver is going to be frantically bought at these artificially low prices and moved to Asia where it will command a much higher price. All they did yesterday was make the problem 10X worse.
This is why I say the recovery will be quick, and once it does unsophisticated Joe six pack traders will start to flood into the market thinking this is a “sure thing”.
It’s that flood of dumb money that drives the second stage of a bubble.
This could have played out naturally as a rolling top and 15-20% pullback over 5-10 weeks, but yesterdays intervention has almost surely sped up the process. We will get the bottom sometime next week, Maybe even as early as Monday or Tuesday.
The chart of the Nasdaq in 99 is another example of this extreme volatility consolidation between the first and second phase of a bubble.