Silver Crash 2011 Probably Not Over

It looks like most silver bugs got swept away by the bullish hysteria that is associated with parabolic moves, with outlandish forecasts emerging just as silver was peaking at $49, forget $75, $100 was just a matter of weeks away when the resulting reality was that of a 33% price crash to below $34.

My quick take as someone who is watching from the side lines is that the silver price ran way ahead of itself when compared against the Gold price (SeeInflation Mega-Trend Ebookanalysis on the Gold / Silver Ratio), in fact it STILL remains expensive when compared against Gold, so on a fundamental basis I can't see a sustainable run up in the silver price on the horizon. If anything we could see Silver after a short-term bounce to $40 from technically oversold levels trade to below $30 and lower still if the Gold price also significantly weakens.

So Silver bugs, despite the 33% crash, Silver is still not cheap relative to gold, keep your eye on the gold price, and don't get married to your positions as Silver has always been one of the most volatile markets to trade, and given the relatively mild reaction in the Gold price which suggests that is where precious metals investors should be focused.

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