Sunday, May 1, 2011


Interesting.  If you haven't noticed, the way I usually put posts together is that I have about 100 ideas floating around in my head and I'll see a news story or blog or other item that will make me think that I'd like to write on that.  Obviously I do a ton of writing at insane hours like 1:00 or 2:00 AM, but you can only get so much done.  What I end up doing often is simply writing a few ideas down and then saving a draft of the post to eventually come back to.  Most of the time, that works just great.  In this case, it didn't as the subject asset is flying again.  And if you were wondering, I still have 11 more posts in "draft status" after getting this one done, so there's lots in the hopper, I just need more time!

Think back almost 1 week ago last Monday when silver hit the $49.50 mark and early in the trading day we were all giddy that this level had been hit.  Almost immediately, I became nervous and started checking all of the silver and gold sites to see what price I could sell my silver at.  Yes, I want to hold some for Mad Max, Thunderdome type calamities, but I'm a trader by nature and if nothing else I need to know what the levels are in the market.

I even went so far as to devise a strategy for selling 1/2 a position so I would not regret any movements that reversed this huge move (recall that silver has been up almost 30% in one month)!

Later that day of course, silver got a good clobbering and that spurred the following article on CNBC's website, which I actually agree with 100%.

Buyers Beware: Silver Crashed 11% in 24 Hours -

Well, that was a one day deal pretty much, and as usual we saw a tremendous rebound in silver allowing for the shiny metal to regain almost all of those losses during the remainder of the week.

I think it was on Wednesday when I received this email from Apmex, a gold and silver seller.  (NO, I DON'T RECOMMEND THEM - AND I DON'T DISLIKE THEM.  They are expensive, so I have never bought from them.)  When I got this email, I absolutely pronounced to myself that this marked the top of silver's run.  A blanket email stating that they would pay anyone $3.00 over spot for any of their silver eagles.  This was $.50 better than the place I usually use, and they are very good, so the APMEX number sort of was over the top, especially for them.  If you have been around enough, when you see weird actions it usually signals important inflection points, and I figured this was one of them.

I had a conversation also last week about SLV the silver ETF and I declared that I had no way of knowing where it would go or what kind of technical pricing targets to suggest (other than ones waaaay to the downside).  I noticed this post later that day and figured it was just one that reinforced that view.

I'm not so sure about that.  Here is a screen shot from that shows precious metal pricing.  As of 10:45 PM CST tonight we see that silver is getting crushed overnight.  Earlier it was down around 9.5%.  I am seeing stories related to China's slowdown causing a drop in commodity prices to fall.

The slowdown will be blamed on tightening measures taken by China to attempt to cool their overheating economy.

The other big news is that Amerika is stating they have killed Osama bin Laden.  Perhaps he died last week as the stories have said, but effectively he died several years ago as Al Qaeda has been rendered impotent for some time.  His organization attacked Americans and Muslims alike and were becoming to be seen throughout the world as the vile serpents that they were.  Amerika used Bin Laden to promote attacks on Iraq and Afghanistan and we gave him more power and influence for a time than he deserved.  Hopefully the death of this evil man will bring closure for the families of 9/11 victims.

Perhaps the joy of the decapitation of one of the heads of the beast, Al Qaeda, has caused all of the inflation and economic turmoil in the world to disappear therefore sending silver plunging.  I'm not buying it.  I do think that silver is going to correct, but I don't think it's run is over.  I'll do a review of the charts in another post this week, but at a quick glance we could easily see $37.00 in this draw down.  It might be worth it to take a 1/3 position there if it nears that target.  It could go lower to $32 to add the rest of the position.  Longer term, this is still a good trade (if you buy at my targets, not if you buy tomorrow!)  as China, India, Brazil and all others seek to escape runaway inflation and buy precious metals.

Be Careful!


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