Category: Precious Metals
The Market With the REAL Action This Week
And Why It's No Surprise That It Went Unnoticed
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| By Robert Folsom |
Published: Thu, 20 Mar 2008 16:45:00 ET |
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Stocks closed higher on Thursday (March 20).
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Everybody knows about the ups & downs in the stock indexes this week, which moved in a whiplash trading range of more than five percent.
Big trading range duly noted, the fact is that the stock market whiplash looks mild compared to the G-force acceleration this week in the silver market.
Last Friday (March 14) saw a session high near $21; by the end of today's trading silver prices were below $17 ($16.85 close). That's a decline of some 21% in five sessions.
Still, it's not really surprising that a move of this size in silver would go mostly unremarked upon, especially considering that it was 180-degrees opposite of what was "supposed" to happen. Surely you've heard all the "bullish reasons" why: Precious metals are hot, the U.S. dollar isn't worth spit, investors are spooked and want hard assets, blah, blah, blah. The air has been thick with platitudes because the psychology has been so strong -- an important sentiment indicator last week registered an all-time bullish extreme toward silver (98%). The bad news about Bear Stearns last weekend only made silver's bullish prospects brighter.
Right?
No. Not right. Once the strongest case imaginable has been made for where a market "should" go, that's the time to think like a contrarian. This is precisely what Bob Prechter was doing in the latest Elliott Wave Theorist, published March 14. That issue is all about precious metals, including silver. One of his silver charts says "Final peak due soon," yet Bob's purpose is also to put silver in its context as a leading economic indicator. That's not the sort of insight you'll get from establishment economists, but the facts and evidence speak for themselves -- Bob Prechter simply spells it out.
Specifically, he devotes an entire page of the issue to three tables that show the "Behavior of Three Key Markets During Ressions." There's a lot to learn from financial history, especially when it's well-organized. As I said, the facts speak for themselves -- Bob's analysis allows no less.
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