I’ve been watching the Sprott Physical Silver Trust daily chart for over a year now. It gave a very strong signal for a top with a daily reading of a 26% premium last April when silver topped. Cash silver was only $46 an ounce but investors buying into the “Silver is going to the moon, tomorrow,” story paid an incredible $57.73 an ounce. Needless to say they are sadder and poorer today. I may have mentioned how foolish it is to buy at tops.
Anything that gives you a clear picture of investor psychology can be used as a strong signal of when to buy or when to sell. With all the noise in the market of JP Morgan and manipulation and silver is going to the moon, we still suffer from a dearth of valid indicators. You may well believe silver is the most manipulated commodity in the history of the known and unknown universe but that doesn’t tell you when to buy or sell. Actually a belief in manipulation doesn’t give you any information. If you are so naïve that you think there is such a thing as a non-manipulated market you probably won’t be in touch with your money for long.