I will take being lucky over being good any day of the week but I have to say I have been batting a good average on silver this year, based on my chart analyses. As you know, I issued about as strong a warning as I know how to set stops on silver on Thursday April 28th. The rot set in the next day and we have seen silver free-fall ever since. SIVR is now down nearly 29% in a week. Talk about a falling knife! Some newsletter writers make a living for a year out of a call like that.
What finally tipped the scales against silver? I think it was the increased margin requirements set by the exchanges that did the trick although it’s all in the chart too. I saw a similar thing happen to palladium (but not as severe) after margin requirements were raised on that metal a few months ago. Click in the body of the chart below to see it full size.
A good question right about now is where does the buying opportunity begin? Before the fall I figured $35 would look like an attractive number but it doesn’t any more. Given the pace of the decline, the volume, the implied volatility in the options market on silver ETFs…………. and the fact that lately the Fibonaccis have been working for me, I am thinking $26 or $27 is an entirely possible price — we’ll see what tomorrow brings. We may get a dead cat bounce along the way.
If we needed a lesson that stops are your friend and greed is dangerous to your wealth this week is it. I spent a few hours Sunday and Monday nights calculating and setting stops to preserve profit with regard to the volatility in the individual security on every one of my investments. Emotion is out of the game. My oil is gone, BNO a few weeks ago, DBC went today, I still have gold and DBA. As I have realized a profit well above where these instruments lie now, I am happy. You know that I think commodities should play a significant role in a well-balanced portfolio so I will be plotting my entry points this weekend.
I truly hope you all set appropriate stops in your portfolios and are now observing the market action with interest, not fear.