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Denial

By: Erik Swarts | Wednesday, November 21, 2012
Silver ETF Holdings vs Silver Chart
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"The steady rise in ETF holdings is encouraging as it relates to the long-term silver outlook. Despite significant gyrations in prices, holdings haven't fluctuated nearly as much, suggesting that investors that buy these products are holding the metal for the long term and with conviction." -Silver ETF Holdings Reach Record - IndexUniverse November 20, 2012


The passage above, as well as the accompanying chart below - illustrates the underlying risks of what has been a slow bleed lower in the precious metals complex. In essence, dogma has been maintained while prices have trended lower. Conventional contrarian perspective will tell you this typically does not end favorably for investors - regardless of size and sophistication.

Silver ETF Holdings vs Silver Chart
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This is also why I have utilized the 1991 Nikkei comparative (most recently - Here) this year to illustrate the respective waves of denial throughout the year.

91' NIKKEI Chart
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Should the comparative continue to be prescient, silver's most recent rally will fail ~ the 61.8 fibonacci retracement level. This level could also be used as an overall proxy for risk appetites in the currency and equity markets.

Silver Daily Chart
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Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

Copyright © 2011-2014 Erik Swarts