With Obama's new stimulus package nearly signed into law, it's no wonder that analysts are worried that we'll experience hyperinflation on the back of massive government deficits. However, when I start hearing the same story about how Gold/Silver are so cheap, or "I'll sell at $3000/oz", etc., I think the precious metals bear market isn't over yet. From my analysis, I believe Silver is near a top and should begin to fall to new lows in the coming months.
You can clearly see a 5-wave decline from the March 2008 peak. 5-wave moves are rarely terminal (i.e. the end of the trend). There should be another 5-wave leg down before the overall downtrend finishes. I think SLV will find strong resistance in the $13-14 range because there is the 50% fib, the Wave4 top, and the channel top. Then, it should start downtrending to below $8. Maybe 2-3 years from now, we'll get hyperinflation; but on the short to medium term, I believe all the inflation-bugs need to get shaken out.
2/07/2009
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