Monday, September 8, 2014

IS SILVER IN DANGER OF IMMINENT COLLAPSE?: here's what you need to know

SLV weekly candles:

Below $17.50, this chart turns into a screaming massive short. One of those shorts that really brings out the bloodlust among the commodity traders, I'd think.

I wouldn't own a silver miner right now. This is a point in the silver price chart where I'd put a no-questions-asked sell stop on everything; I'd be worried about waking up tomorrow to a 10% drop in the silver price and a crazed stampede for the exits in the miners. If that support line breaks, I'm worried it'll break with conviction, similar to the April 2013 PM collapse.

I don't see a reason why gold would collapse at the same time, but the problem is that moves in the junior gold miners do still correlate strongly with moves in the price of silver. So maybe the juniors turn into a screaming massive short as well? We'll have to see.

Frankly, SLV below $18 would make me start to think that the entire commodity supercycle is at an end. With silver dropping, you have to ask yourself whether energy and base metals soon follow.

And what will that do for the US economy? Something good, you think?

Maybe nothing happens. Maybe the drop right now is coming from early shorting in anticipation of a support break. Maybe you even get a break and a fakeout with a strong recovery. But I'm not interested in playing those types of moves.

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