Monday, April 25, 2011

No more silver obsession from us

Silver 8% pull-back from last night’s highs for us constitutes the short-term top we were looking for and enough of a pull-back for us to stop our obsession.  If we can now enter a consolidation phase under 50 and let the SMAs catch up we would walk down to the bull camp.    Big IF of course, especially since USD still has not been able to find a bid in this reversal.
As an aside, it’s somewhat funny that silver would run up last night 7%, possibly at least on rumors that China would start shifting away from USD and into hard assets.  As we wrote last night, if this were true, why would China want to pre-announce this?  So everyone front runs them?  And they already have trillion dollars worth of US debt, not exactly in their best interest to make toilet paper out of the USD.   Could rumors from abroad about dumping USD scare the Fed away from QE3?      Interesting times indeed.
Here are all the relevant charts:

Silver reversed under the big symbolic 50, and now back at very steep trend-line.  We expect this to break and for silver to go into a consolidation phase.  We’re not interested in shorting it anymore.
We pointed out the silver miner/silver commodity divergence a while back — note how miners have not been able to find traction. We’re still interested in buying the trend-line test.