“There are some that since 2001 have doubted the bull market in precious metals. In these past six weeks, however, everyone from former silver bulls to those who sell freeze dried chicken sh*t for a living are out shrieking the bears on the shriek factor. Do a google search and you will find hundreds upon hundreds of references to Hunt brother days. Bubble. Hunt Brothers. Suckers. Bubble. 1980. Bubble. Lose money. Bubble.
What the heck is going on???? Is the sky falling? Should we retreat?
Well, note that during every long, steady march up of a bull market, there are violent corrections down. And during every single one of these violent corrections, most of the media and many of the analysts will begin shrieking with fear or gloating with vengeance that the bull market is over. Read this editorial by Peter Schiff dated 2006 when silver corrected by 35% in 6 weeks. As you see, people were obviously shrieking that silver was in a bubble and now it was plummeting, popping and tumbling from I think it was $12 down to $9. No doubt Schiff will have received loads of hate mail from people who had ‘lost’ money by selling their silver after buying ‘at the bubble high’ on his recommendation. But without losers, there can be no winners in markets. It is because there are so many losers during a bull market that some can win. Their shrieks shake out even more losers, so the winners can win even more. Their loss is your gain….”
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I guess you would call me a long term silver bull as I rode it from 12 and change up to 47 and change, sold everything and sit in wait for my next great setup.
But for now, what I see is a busted parabola with tons of overhead supply in that there are many who are holding the bag and praying for a rally to unload into. Sure, SIlver may get some bursts of 10-15% in here, but my tactic at this point is to sell into overbought conditions until that doesn’t work anymore. The market will tell me when the trend goes back to bullish, until then, I think its important to realize that silver got extremely frothy, and a shift in its personality has occurred. Broken parabolas like the one in silver lead to months long rebuilding phases in order to form a solid base from which a new rally may ensue. I think silver will see 400.00 before the end of the PM bull, but for now, my money is out as it will likely be spinning its wheels for a couple years.
Gold on the other hand will have a much easier time building a base, and will get my attention in the next few months.
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I’ve found that being early to the party usually results in a higher percentage of losing trades. Having the patience to wait for a low risk high reward setup allows for higher percentage wins, and larger gains on those wins.
The cleanest setup I see at this time is to buy DUG with a swing high reversal in XLE, then add to it with a break below 72.28 on XLE. The stop would be above the pivot high. Low risk to portfolio.
I haven’t yet looked, but I imagine similar setups will occur on XLF/SKF, and SPY/SDS.
In the meantime, I feel like a bear in hibernation. Which is fine given that I made a shitload of money over the past twon years riding the pm bull. I do miss my AGQ, SLW, SIL, GDXJ, DGP and others, but I know we will be reacquainted before too long.
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