Silver

I'd been lightening up considerably on the commodity side this year, particularly so in mid July. Although I'm a long term bull on commodities, I'm still a short to intermediate term bear. I have expected a plateau type correction with a lot of volatility for at least a year from March 2008. But we could be getting to the floor or base of that consolidation range rather soon in some commodities.

 

The silver chart shows the great bull market range from $1.29 per ounce in 1967 to the $40.5o per ounce high (nearby futures) in 1980, and it shows the divisions of that range in classic Gann or Fibonacci measurement. Just as crude oil's 2008 high was almost exactly four times the 1991 high, the 2008 high for silver was almost exactly at one-half the 1980 high. As W. D. Gann wrote and spoke extensivley, nowhere better than in his 1942 book, "How to Make Profits in Commodities", these mathematical occurences are not mere coincidences and in fact are quite common. (The 1951 edition of Gann's book is still in print.)

 

Note that as of today (the chart is through yesterday) silver is less than a dollar from its 1987 high which is also the Fibonacci  0.786 level of the entire 1967 to 1980 level. This could be a good place to cover shorts and/or take first long positions for long term investors or short term traders. This is not a recommendation, which I'm not qualified to make, just my thinking and planning for myself. I don't expect new silver highs this year.

 

Although gold broke its 80 week moving average this week, a bearish sign, silver could still make an earlier bottom as it did in the 1990's.