Silver Seeks Support

You’ll remember in my September 9 blog-post, I told you that silver could pull back to test support around 10.7, and below that there was support at 9.9. Well, that forecast seems to be panning out. Look at the chart …Silver IS pulling back to test weekly support. It will probably test it today. If it breaks below that support, that will be psychologically damaging. The test of 9.9 becomes likely. There is more important support below at 9.4, but let’s stick with 9.9 right now.

Silver may bounce today. If so, that's GREAT! If that happens, I'll likely have recommendations for Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers next week.

But what if it doesn't? A smart trader plans for that, too. Then we have to look for a test of 10.7 ... and beyond that, 9.9 is a 61.8% Fibonacci retracement of silver’s rally since September 2, 2005. If silver breaks support at 9.9, there are many in the markets who will declare silver’s bull run dead.

But even if silver dips beyond 9.9, I don't think the bull market is over. I'll tell you why...

Corrections are part and parcel of any bull market. So it’s not suprising to see silver pull back like this, not at all. I’d be happier if it didn’t. But I know this happens in every bull market, and those who keep their heads make the biggest profits.

If silver doesn't bounce at its 50% fib retracement ... doesn't bounce at 10.7 ... do we sell if and when silver breaks the weekly uptrend … or if and when it breaks its 61.8% retracement? Do we sell out of positions, take our licks and regroup? Or, do we hold for all the fundamental reasons that are driving silver higher?

I’m leaning toward holding and adding when we see a bottom put in. You know that’s coming. Investor demand for silver is enough to send it back to $15. The global economy is ramping up, and silver is an industrial metal as well as a precious metal. And while there are new silver mines coming online (Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers own some of the best of them), global supply is not enough to keep up with demand in the longer term.

Stay firm, stay focused, and we’ll pick up some potentially incredible bargains when things bottom.

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