Update, May 4: "Spot silver is down 21% in four days...The futures contract had its biggest three-day decline in 28 years, since March 1983." -- EWI's
May 4 Short Term Update (online now).
On April 29, people all across the globe tuned into the 24-hour media coverage surrounding one main celebration -- and no, I'm not talking about the Royal Wedding at Buckingham Palace.
The other widely watched event did not take place on Westminster Abbey, but rather on Wall Street. There, silver was crowned "king" of the precious metals after soaring to its highest level in more than three decades. In the last year alone, silver prices have surged 148%, officially dethroning the prior metal monarch, gold. (Gold has rallied 29% over the same period.)
Throw in a very "safe-haven"-supportive Federal Open Market Committee decision on April 27 to keep interest rates at a record low of 0% -- AND the mainstream silver fanfare the last week of April was in full bullish swing. Here, the following news items from the days capture the gaga surrounding "poor man's gold":
- "Silver Soars on Fed Commentary. Prices made a run for the $50 mark as the wild bull market in precious metals rolls on." (Associated Press)
- "We'll run through $50 per ounce for silver any day now." (CNN Money)
- "Investors Stampede Into Modern-day Silver Rush." (LA Times)
Yet on May 2, silver prices plunged 13% in just 11 minutes, the biggest intraday drop since 2008.
According to several mainstream sources, silver's intraday slide was a temporary "flash crash" caused by CME Group Inc.'s decision to increase its cash deposit requirements for trades made with borrowed money.
But that logic doesn't make sense, considering that CME Group announced its plan to increase margin requirements on April 26. And, silver's "flash crash" didn't occur until SIX days later.
As for seeing silver's downside potential before its May 2 intraday slide,
EWI's Metals Specialty Service editor Mike Drakulich earns major props. In his April 27, 28 and 29 intraday silver updates in the
Service, Mike went on high alert to silver's bearish potential with these timely insights:
- "Bernanke's news conference is over and silver has now rallied to the area of key [Fibonacci] 62% and previous fourth-wave resistance."
- "A HUGE KEY for me is that internal 'momentum' is now at or above [a familiar] extreme. This tells me the odds have increased significantly that a... peak is likely drawing near or is in place."
- "I am starting to get a bit of a bearish 'gut feel' here. The huge volatility we have seen the past few days is another sign of an impending top."
Right now, Metals Specialty Service presents a riveting chart of the silver/gold ratio since 1980 AND a powerful chart of silver prices versus the Relative Strength Index over the last two months. "Keep in mind this is a very dangerous and volatile environment," writes Mike.
The need for objective insight into the metal's near-, and long-term trend has never been more important. What will silver's next major move mean for you?