Early on Monday morning (Arizona time), silver began to rise. From its close on Friday of $15.46, itran up to $15.82. Then it began to slide, eventually dropping to $15.17 by midmorning on Wednesday. Then…

*BAM*

The Fed said not a lot. It will go on manipulating the rate of interest rate to the same level as it had been previously. This was not what the market was expecting, as many believed the Fed was on thewar rate-hiking path. Lower interest means more quantity of money dollars which means more rising prices which means gold and especially silver should go up.

And go up, silver did. At least, if you measure it using muggle money. Silver ran up 44 cents on the Fed announcement. Then consolidated before running up over $16. It finally exhausted itself $16.15.

It ended the week at $15.78, about 30 cents higher than it began. As the muggles would reckon it, gold went up $5.

As always, we’re interested not so much in the price chart as the fundamentals of supply and demand. We like to know if a move was just leveraged speculators buying or selling futures, or if it was buyers or sellers of actual metal. The latter can tell us if a move will likely be durable or not.

This is a segue into an interesting question asked by a reader last week. He noted that the speculators are trying to predict the next price move. What if they’re right? Then a speculative move may lead a fundamental move.

That is true enough—if they’re right. The catch is knowing if they’re right, on a case by case basis. We have lost count of the number of times silver speculators have gotten excited and falsely predicted a breakout. There have been many corrections as the price of silver has dropped over the three years that we have been publishing our analysis, and the period before that when we had a private email letter. And when each of those corrections has exhausted itself, the downward price trend continued.