Hi ho silver!

05/05/2011 by Philinje.

Silver does that sometimes. Just when it’s supposed to hit that new target higher, it crashes. This one may not be due to the big boys. Here is a great explanation of what happened this week:

http://moneymorning.com/2011/05/05/the-silver-bull-despite-this-weeks-sell-off-we-see-higher-prices-ahead/

Yes, the relentless rise in margin requirements has had an effect. The selling has continued much longer than would have been the case otherwise. Silver has hit its 50 DMA at roughly$38.

The references at the end are interesting. Here is the Arends story, which includes a very nice chart:

http://hotair.com/greenroom/archives/2011/05/04/is-there-really-a-gold-bubble-maybe-not/

Now to really tie up all these threads, here is our man Toby Connor:

http://goldscents.blogspot.com/2011/05/greatest-profit-potential-of-last.html

Please note he takes a dollar collapse as a virtual certainty, meaning a fall below the current support at the all-time low. And by the look of his charts, he thinks that could start tomorrow with the NFP report.

Commodities are deflating right now, and silver could drop further, but keep in mind that if the dollar really does collapse here, it could be explosive for gold and silver.

On the other hand, we could get a mild pop post NFP, then a dollar reversal,  and then a major correction lasting a couple months. So either a top is confirmed soon, or the bottom is happening now and a big move up follows.  Pretty divergent possibilities, so stay alert.

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