If you make silver jewelry then you probably keep a close eye on the silver market. I know I do and when it recently topped $19.60 per oz I had to have a shot of whiskey for breakfast. (Yes, it helped.) Thankfully, today it’s back down to a slightly less painful $17.95. I’m running low on supplies so I hoped on roegrande.com (where I buy all my sterling at least until I get a tax ID #) and was told that 22 ga silver sheet and silver calbe chain is on back order! Rio out of silver … WTF?
So what does that really mean? Is everyone rushing to buy supplies while the price is down? Was Rio Grande holding off on replenishing it’s stock until the price dropped? What exactly is going on here?
Time for a little market research!
Sadly, no one knows tomorrows price but here’s what I found … I’m no expert in this area so if you have other references or info please share them.
While most people believe that the price of silver will continue clime some think that there will be price breaks in the near future.
According to Bill Downey of SilverSeek.com, the $16 area has typically marked a major turning point for silver. During the last 4 years silver has only been above the 16 dollar area twice – Once in 2008 for 6 months, and now this year. The high of 2006 was at $16, the high of 2007 at $16 , the crash break price of 2008 was $16 where silver dropped from, the June price peak of 2009 was $16 and finally, the possible projected lows 2010 is the $16 area. There is no other price in the last four years that has served as a better turning point. He also notes that when money flow indicators dropped below zero a major break took place at the $16 dollar area and directly after silver fell below it’s moving averages. We are now on the verge of a very similar situation. Read Bill’s article, Silver’s Most Important Price Point, and learn in much greater detail how he sees silver’s 3 most important indicators – peak price, liquidity and moving averages – all lining up for a major inflection point in the next couple of months. I highly recommend checking it out … it takes a minute to decipher but he’s got a great chart with arrows and such. :)
Jeff Clark also thinks the price drop in silver could be on it’s way and discusses why in his article How Low Will Silver Go?
The following chart from Jeff’s article examines all the major corrections in the price of silver in the current bull market (2001 to present).
Based on this data, he make the following projections. The recent high in silver was $19.64. Therefore…
• A correction matching the smallest decline of 10.3% would equal a silver price of $17.61. Silver closed at $17.64 on May 21, a correction of 10.1%.
• The average correction in the chart is 19.7%. You’ll notice this is almost exactly what we experienced earlier this year. An average correction from the May 20 high would give us a silver price of $15.77.
• The two nasty corrections of 33.7% and 34.9%, when averaged together, would give us a price of $12.90.
• The 53.9% cliff drop would take us as low as $9.05. (SWEET!!!)
So what am I gonna do?
In general, silver’s at a low during June and July. I’ll buy a little now, just enough to fill my jewelry orders and hope for it to drop to $16-17 to stock up. Then I’ll keep my fingers crossed – all of them – for it to really bottom out and stock up BIG. Of course, my elation at a possible price drop is assuming that it will bounce back fast enough that the consumer pricing wont really be effected and that our customers wont expect lower priced jewelry.
P.S. This is my very first financial article so I’m going to need another shot of whiskey now. Please don’t judge but please do leave your comments.