Silver, Gold Set to Bottom Out

The precious metals markets have been in decline for some time now following last year’s record highs of $49.82 in silver and $1922 in gold. After finding solid support just after Christmas and some fresh rallying off late-2011 lows, prices seem to have been repeatedly beaten down by surprise moves initiated by large market participants. Despite all the efforts of what appear to be manipulation attempts by ‘cartel’ traders, both silver and gold have been holding their respective levels which, unless proved otherwise, appear to be a hard floor for the markets.

We would also like to remind readers of our December 27 article about $26.16 in silver being the 50% level of the white metal’s overall upward move since its 2004 lows.

Much depends on whether or not these ‘hard floor’ levels continue to hold and become a turning point for the markets to continue upwards.

The tricky thing is that the stupid money usually is losing patience with the market just before it turns around and powers upward again.

It should be noted that financial history provides at least one interesting precedent for similar market action: precious metals prices seemed to be stagnant in 1920-1 just before hyper-inflation set in in Germany and had prices literally going through the roof.