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Silver: The Wild Child


The market was just mildly positive through midday, while in the "potential information department," Texas Instruments, as well as IBM, were deemed successful at beat-the-number, but neither of them actually had a lot to show for "winning." That might be because the numbers were lowered and they're not all that impressive in an absolute sense. But that would mean that the action in the market has something to do with underlying fundamentals and I think that's obviously a pretty dubious proposition.

When Sanity Is the Exception In the afternoon, the market pushed higher and closed on its best levels, led by the Dow/S&P, which gained about 0.5%.

Away from stocks, green paper was a little weaker and fixed income was a little stronger. Meanwhile, the real action was in the precious metals, as they erupted early last night, with silver gaining more than 5%, compared to a 1.5% gain for gold. From there we saw a couple of dips, followed by rallies, and the net of it all was silver closed about 6% higher while gold closed 1.5% higher. The miners were higher, but lagged in lumpy fashion.

In the last couple of days, folks have seen what I mean when I say silver is a "personality" and can be incredibly volatile. It's been quite docile for the last five years or so, but when it wants to go, it really goes.

Exacta What We Were Thinking On the subject of silver, a friend pointed out to me that there was a point about silver in the End Game interview with James Aitken (formerly known as the Lord of the Dark Matter) that he thought might be significant.

In the podcast we were discussing what sort of signs we might look for to indicate that people's thinking about inflation had changed. James made a couple of points, one being we needed to look to markets that weren't "administered" by the Fed. For instance, if silver broke out for no reason, or a basket of junior mining stocks did the same, that might mean something about people's expectations. Of course, both of those have occurred recently. Whether that's a precursor to a large shift in inflation psychology, I can't say, but I can certainly believe that it could be.

Positions in stocks mentioned: none.