Jump to content
House Price Crash Forum

Silver's Fall Is Liable To Turn Vicious Next Week

Recommended Posts

The GOLD PRICE followed through today on yesterday's fall through $1,350, losing another 5.50 to stop at $1,341, not far from our first target at $1,330. On the weekly chart gold fell below its 20 WMA (1,353.14), offering another weight to gravity.

The SILVER PRICE dropped another 4.3c today after tumbling 133.3c yesterday. Comex closed at 2741.6c.

Silver has fallen through its 20 DMA (2929c) and 50 DMA (2854c) and below here the next backstop appears at 2645c -- coincidentally my highest price target for this correction. Silver's fall is liable to turn vicious next week, so brace yourself.

Reflect a moment upon the GOLD/SILVER RATIO. From my viewpoint, that ratio is technically controlling the market right now. It troughed on 3 January 2011 at 45.749. That also coincided with the high closes for silver and gold.

Looking at past ratio lows, the ratio will spend about 3 months rising to a reaction peak. Unfortunately, that doesn't always coincide with the silver and gold price lows, but 'twill fall in the neighborhood. As silver showed greater volatility upwards in the rally's last phase, so also it will show greater volatility downwards in the reaction. Silver could fall to 2640c to 2115c. Gold, on the other hand, probably won't fall lower than $1,280.

What would gainsay these forecasts? The GOLD PRICE above $1,425 hand in hand with the SILVER PRICE above 3109c or the ratio below 45.749.

While causes remain, effects continue. Rising silver and gold are the effect of inflating the money supply in every fiat currency. Has the cause been removed? No. Well, then neither will the effect disappear. Ignore all the dire and supercilious warnings of the "end of the gold bubble" and "death of silver." This is a primary uptrend, a raging bull market that has 3 to 10 more years to run and prices you and I cannot now even envision.

Silver and gold dropped stoutly, the dollar joined, while stocks diverged from metals and rose. Meanwhile, platinum and palladium said, "No, we ain't a-goin'" and rose instead. Ratio rose since metals fell.

Although the US DOLLAR INDEX rose yesterday after touching 78.50 support, it slammed down today 69.3 basis points to 78.13, smashing all hope that 78.50 might hold it.

Where do we stand now?

The short term chart shows the 20 DMA (79.68) just crossed below the 50 DMA (79.81) which confirms the dollar is headed lower. Significantly lower. Most likely target is 76.70, maybe the last low at 75.63. Only thing putting the brakes on against that conclusion is the euro chart, where the euro gapped up today after a long nine-day series of upmoves. Might be an exhaustion gap.

Weekly dollar chart looks even worse. 20 WMA (79.07) has fallen below the 200 WMA (79.58). Hard to imagine what might stop this plunge short of 75.63. Clearly, my expectation that the dollar would rise in the first half of this year was wrong.

STOCKS rose again today to a new high for the move. Dow reached 11,871.84, up 49.04. S&P wasn't quite as enthusiastic, rising 3.09 to 1,283.35.

Stocks are progressing from overbought to over-overbought to preposterously overbought. Relative Strength Indicator stands at 74.15, when 70 is extremely overbought. MACD is also overbought, but today's rise came on higher volume. Deadly rising wedge has formed to points surely to a sharp breakdown.

Stocks remain the moldy deviled eggs in the investment picnic basket.

Y'all enjoy your weekend.

Silver and Gold Prices

Max Keiser & Mike Maloney In Paris (not new but worth a watch) - Part1 Part2 Part3.

Edited by Constable
Link to post
Share on other sites

Silver and Gold Prices

Max Keiser & Mike Maloney In Paris (not new but worth a watch) - Part1 Part2 Part3.

afaics, silver has two key supports from 26 through to 27usd. until these are breeched i do not think the negativity is justified.


in fact, if it gets close enough, i will take a paper long position because the stops will be tight enough for a low risk entry point. DYOR yada yada

edit - just re-looked at the chart and put my money where my mouth is - now watch it sink!!!

Edited by p.p.
Link to post
Share on other sites
  • 3 weeks later...

Back to early 20s USD would suit me fine, & alleviate some of the pain from not shifting the balance in my gold/silver set up.

I can't complain about the last five years but having the same weight of each was not wise (done in haste & always considered temporary); though it did save on silver storage costs :)

I've just been trying to get my head around this angle http://www.321gold.com/editorials/saville/saville021511.html

It's not sitting right with me at the moment but my aging brain can't quite figure why :(

This is from the end of the article & the voice in my head keeps repeating a rarely heard phrase:- 'Yeah but it's different this time' :)

We have always said that silver stood a good chance of out-performing gold over the course of the long-term precious metals bull market, simply because silver is a vastly smaller market than gold and therefore has the potential to make disproportionately large gains in response to increasing investment demand. However, we have also said that we favoured gold over silver due to gold's lesser downside risk. It's the risk relative to the potential reward -- not just the potential reward -- that determines the merits of a speculation. The risk is that a future banking crisis and/or major deflation scare will have the same effect on the silver/gold ratio as the last three such episodes (the early-1990s, the early-2000s, and 2007-2008), when silver cheapened relative to gold to the point where it took 80-100 ounces of silver to purchase an ounce of gold.

If you believe that there is almost no chance of a banking crisis or major deflation scare happening over the next few years then you should definitely favour silver over gold

Link to post
Share on other sites

I'm also at 45 oz (10 1oz cons + kilo bar) - hesitation in not buying more coins has "cost me" over £2 per coin in the last two weeks :angry:

Do I top up on another 10 or 25 coins now & bite the bullet or wait for a dip or risk paying even more in a few weeks ???

March is supposed to be a biggie apparently (I'm happy with my current hoard) when Comex has to supply orders or pay a premium in cash to make these people go away.

Link to post
Share on other sites

I'm also at 45 oz (10 1oz cons + kilo bar) - hesitation in not buying more coins has "cost me" over £2 per coin in the last two weeks :angry:

Do I top up on another 10 or 25 coins now & bite the bullet or wait for a dip or risk paying even more in a few weeks ???


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.