Gold and Silver Price is set to Rocket up again

As more and more people around the world come to realize that the global monetary system is going to collapse and that all fiat currencies is going to be worthless, demand for gold and silver is only going to continue to grow at an accelerating pace. 

With accelerating demand and a very inelastic supply curve, prices for gold and silver has no where else to go but up, and up, at an accelerating rate.

Current price chart is showing that gold and silver price is set for another price explosion to the upside.

Gold above $1,414 Per Ounce, Brent Crude above $110, West Texas Intermediate touched $100 per barrel today

As the pace of the US Federal Reserve's Money Printing activities accelerates to unprecedented level, the inflationary impact is now being felt everywhere, triggering massive unrest in the middle east, and soon to spread world-wide, Gold, Silver, Oil and all commodities has sky-rocketed in price.

Here is an updated chart of gold price from today.

The bull is definitely winning.

Gold In Breakout Mode

Gold has broken above my key price level of $1,390 per ounce. Price broke above $1,400 per ounce on Monday 21-February 2011.

The stage is now set for gold price to rocket up as the short-sellers get squeezed and stampede out of their position or get liquidated.

Silver Short-Squeeze Intensifies

We saw another over a dollar rally in Silver on Monday even though the US market was closed for the President's Day holiday.

At the current pace, Silver's $50 per ounce price is not far around the corner. As the short-squeeze intensifies, and the short-sellers panic or get liquidated, we may see a $3 to $5 daily price rise very soon, as long as key support of $29 - $30 per ounce is not violated on any pullback.

Looks like the bull is winning this one.

Silver Breaking Out: Short-Squeeze Intensifying

As expected per my previous post, the stage was set for a fast short-covering rally following a price break above my key price level of $29 per ounce in silver (see chart below)

In just 9 trading days upon breaking above the $29 mark, silver price has rocketed almost $4.00 per ounce, a very gigantic-size movement in silver price, and can only be an indication that the short sellers are panicking and desperately need to cover or be liquidated.

In the last two days alone, Silver Price rallied over $1.00 per ounce each day, an indication that the speed or pace or momentum of this breakout is in acceleration mode.

There were very few profit-taking activities as silver close the day near the high, another indication of the intensity of the short-squeeze.

At closed on Friday 18th February 2011, CME announced yet another increase in margin requirement for gold and silver futures contract, another desperate attempt in suppressing the price of gold and silver. Should the impact be only temporary, the stage will be set for a parabolic price rise as "JP Morgan's Silver Price Suppression Scheme" comes unraveled.

Short-Squeeze Imminent in Gold and Silver

Silver has broken above key resistance area at $29 and is now on the verge of rocketing up, squeezing short-sellers.

Gold is now at key resistance zone $1,390, a sustained break could trigger a fast short-covering rally.

China May increase gold Holding to 10,000 Tons

As reported by King World News, Global Economist David Hale made remarks at a conference in Cape Town South Africa that various Chinese officials have proposed making China’s gold holdings 10,000 tons, larger than that of Fort Knox.  

Hale also stated, “The odds very much favor China making, over five years, very large gold purchases, and this in turn makes me bullish on the gold price.”

Hale went on to mention, “China will probably start to buy gold in the near future, but they won’t report it for two or three years.”  Hale noted, “This would be a huge development for the gold market.” 

This is extremely bullish for gold prices.

Silver Futures Contract Specifications

Silver futures trading allows traders to make significant profits from short-term changes in the spot price of silver. Futures traders can profit from an increase in the price of silver with a buy-to-open or bet on a decrease with a sell-to-open order. The cost, or margin deposit, for a trade in either direction is the same.

Standard Silver Contracts

The standard silver futures contract is for 5,000 troy ounces of silver. The contract product symbol is SI. In December 2010, silver was about $29 per ounce, so one futures contract was worth $145,000. Individual traders often prefer the smaller e-mini futures contracts. The e-mini silver -- symbol 6Q -- has a contract size of 1,000 troy ounces.

Margin Requirements

To open a silver futures trade, the trader must put up a margin deposit in the amount dictated by the futures exchange. The margin deposit is just a fraction of the value of the silver contract and allows the trader to control a large amount of silver with a relatively small amount of capital. In December 2010, the initial margin deposit on the standard silver futures contract was $10,463. The e-mini silver contract required a deposit of $2,093.

Ticks and Values

Futures contracts have a minimum price change called a tick. On the standard futures contract, the tick value is 1/10 of a cent per ounce. For the trader, each tick change in the price of silver is worth $5.00. The e-mini silver contract also has a minimum price change of 1/10 of a cent. An e-mini silver tick is worth $1.00. Small changes in the price of silver can add up to significant value change in a silver futures contract. A 20-cent price change in silver is worth $1,000 on the standard silver contract and $200 on a e-mini contract.

Profits and Losses

At the end of each trading day, the profits or losses of a silver futures trader's open positions are determined and compared to the margin maintenance requirement. For the standard contract, the maintenance margin is $7,750 and for the e-mini contract it is $1,550. If any losses push the trader's equity below these levels, a margin call will go to the trader to put more cash into his trading account or the position will be closed by the broker.

Gold and Silver Price is Set to Explode

As the US Federal Reserve Money Printing Business a.k.a. Quantitative Easing continues to accelerate in order to keep pace with the purchases of the ever accelerating budgetary shortfalls / budget deficit, those excess money has to find some place to go.

For now, most of those excess money or liquidity has gone into commodities such as food, metals and crude oil, making those commodities not affordable to the common people, causing starvation and hunger. Inflation has already triggered worldwide uprising in Tunisia, Egypt, Yemen, Jordan, Syria, and soon to spread all over the world. 

In order to hide the true effect on non-stop money printing activities, and flooding the world with excess paper money, the US Federal Reserve has resorted to Gold and Silver Price Suppression activities. But soon the tide will overwhelm and over-run the Federal Reserve attempt to hold Gold and Silver Prices down. When that happens, gold and silver prices, having been held down for so long, will explode to the upside.

When that happens, and the short-sellers in gold and silver contract are forced to cover, as silver price breaks above $30 per ounce, the next up target for silver is $50 per ounce, and when gold price breaks above the $1,430 per ounce, the next upside target for gold is $2,150.

As the short-sellers panic, the speed of price explosion in gold and silver, can be extreme. Some upside targets for silver is $500 per ounce, and gold at $5,000 to $10,000 per ounce.