Bears versus Bulls

A bearish view on silver …

UBS Investment Bank said it has lowered its one-month and three-month forecast for silver and does not expect the metal to move higher with gold nor does it believe it will outperform to the degree it has previously.

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A bullish development for ALL metals …

SHANGHAI (XFN-ASIA) - China's planned foreign exchange reserve investment agency should issue special treasury bonds to raise money from domestic investors and use the proceeds to buy foreign exchange reserves from the central bank to invest abroad, state media reported, citing a central bank official … China should also increase gold reserves and strategic resources like oil and metals, the International Finance News cited Xiang as saying.

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XX Sean’s note – We’ve all been wondering what China will do with its $1.2 trillion in foreign reserves. This proposal is to borrow the money and invest it abroad. The investments would be all types .. everything from banks to mines.

I told you previously about how China plans to buy $12.5 billion worth of goods from the US in May – something that should light a fire under US durable goods orders for May. An increase in the wave of Chinese investment overseas would be another bullish development.

Maybe UBS is right and the price of silver will go down. Certainly that would explain why it gets sold every time it starts to break out – the big boys have turned more bearish on it. But I’m happy to see a little more bearishness. The market climbs a wall of worry, and if we’re all already bullish, everyone has bought and there’s no one left to buy.

And I’m still bullish on silver.

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