SILVER UPDATE

This post is from Chaz...a commodities trader that writes a monthly newsletter on the precious metals market. He has given me permission to post it on my blog. As a disclaimer...I (and Option Magic/Market Trend Signal) are not responsible for the content or recommendations in this newsletter. Also...a lot of this information relates to trading the actual commodities. There may be some terms or strategies that you don't recognize. This update is meant to be an information guide for those of you that are trading gold and silver...or just the gold and silver ETF's like the GLD or the SLV. This commentary is opinion and analysis. You must still use good money management and trade management principles. You must also read the charts. No one...I'll repeat...no one knows the exact future of any event on Wall Street. You must still do your due diligence.

Hello again traders. This is the first time I have ever made commentary so close to prior commentary. So many questions in my email. Where to begin?......Throughout today, I saw many news blurbs and heard many comments on the Internet and CNBS...oops, I meant CNBC..... that said traders were dumping gold and silver in favor of cash. One talking head said the COMEX pits were filled with panicked sellers. Another said the Hedge Funds were abandoning the metals. NONE of this is true. We are watching a computer rigged High Frequency take down program designed to trigger a black box cascade of the Hedge Funds computerized pre-programmed asset and capital protection liquidation program. I guess I should explain this....Hedge Funds have computer trading programs that are designed to automatically buy or sell when certain price levels are hit. These predetermined price levels are known as "Black Boxes". The banksters, who sell massive quantities of contracts and options have created computer programs that trade with each other at high frequency on even a fraction of a penny's movement in price. These programs can trade thousands of trades per second. I cannot prove it but I do believe these programs can recognise the buy and sell orders from other computers which tell it which computers it is authorized to trade with and which ones it's not. I believe these programs are allowed to make a paltry token amount of trades with "unauthorized" computers so that a few small orders are filled so as to make it appear that the trading is fair. To prove my point, consider this..... Why are these computers able to make thousands of trades at the theoretic value of an option yet when you or I place a trade order, we have to make offers well above theoretic value if we want to get filled? You see the point now?.....These programs are designed to trade at such high speeds as to negate and ignore real trades placed by traders. As the price drops lower and lower, a black box trigger is hit causing many positions to be liquidated. The computers recognise this and begin to trade faster until the next black box it hit. This is repeated again and again causing a cascade of black box sell offs until the predetermined desired price level is reached at which point trading slows down and is stabilized and "contained". Interestingly enough, this phenomenon only seems to occur a few days to a week before option expiration. The Hedge Funds did not willingly sell their positions. They were tricked out of them. ........... I've said several times now that this retracement will be VERY short lived. Here is the proof. It was announced today that MARGINS on metals are being RAISED again ! ! ! I've lost count of how many times margins have been raised in the last 12 months buy I think its about 8 times now. Anyway , gold margin was $9450 per contract and is now $11,475 and silver was $21,600 and is now raised to $24,975. Now let me ask you a question. If we lose 20% of the value of a commodity in two days, why is a rise in margin levels necessary? And why did this raise come out of the blue without any prior hints or suggestion that it even might be raised? Not interesting enough for you? How about this? A number of central banks were happily buying large quantities of gold in the 1750 to 1850 range in the last few months. Gold is now on sale below 1675. If you were running a central bank and wanted out of dollars ,would you stop buying and wait for the price to get above 1750 before you start buying again? I'm just asking. .....One other little thing, I've been watching and trading gold and silver for 32 years now and I can tell you that this take down is the most brazen and criminal act I have ever seen in commodity trading. It is also the most aggressive and vicious I've ever seen. There is NOTHING to compare it to. ....Back to the margins. Because margins are being raised, it is likely that many traders will be forced to liquidate positions to raise capital to cover the new margin levels on Monday. Just before expiration. What convenient timing for the banksters. We may well see silver drop even more. Perhaps to $27. The story will likely be told Sunday night about 7pm in the Hong Kong market. .....I am very happy to say that I was filled on ALL of my outstanding orders this morning and I am prepared to buy more on Sunday night in the international market. Make no mistake here, this market will not stay suppressed. It will snap back very quickly and probably exceed its recent highs by a wide margin in as little as 30 days. This kind of market can make you rich very quickly or drive you into poverty just as fast if you don't know what you are doing. For the umpteenth time, PLEASE do NOT trade more than you are willing to lose. This is a rigged market. We have become very adept at guessing what is most likely to happen but the last few days have reminded us that we can not PREDICT exactly what a market will do. It seems my recent statement about volitile price swings coming sooner than anyone was prepared for was dead on. I think it's only going to get worse from here on out. But after the 27th it will be in both directions. This is an excellant market to play both sides but this should only be attemped by seasoned traders with deep pockets. If you are new to trading, don't even think about it. IF you can get filled, the Dec 30 and 35 calls are outstanding buys as are the March 40's. It's late, thats it, I'm tired, I'm done. Good luck and happy trades.....Chaz....Sept 24, 2011