A Flashback to August 4th for Silver

• Posted by Robert Sinn
• on February 29th, 2012

A flashback to August 4th that will make silver bulls cringe:

Click to enlarge (notes on chart)

It is also probably not a coincidence that speculative long interest in silver futures has reached the highest levels since September, this has often coincided with short term corrections in the market:

 

Gold ($GC_F $GLD) has also been sold aggressively with the April futures contract having traded over an $84 range this morning from 1792.30 all the way down to 1708.40 – gold can be very volatile but one doesn’t see this size range and “off a cliff” type of action very often:

The catalyst appears to be remarks by $Fed Chairman Bernanke which seem to indicate a lower likelihood that the Fed will embark upon QE3. Combine this with a slightly overheated precious metals market which has been on a blistering rally since last week and you have the perfect environment for short term leveraged players to be flushed out. Such shakeouts are necessary every so often in order to flush out the “hot money”, moreover, sharp corrections like the one this morning are healthy for the long term uptrend as they help to keep the wall of worry fully intact.

 

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