It has been awhile since I've done one of these. The turmoil in the Precious Metals sector continues, with the sell off pushing the price of Gold towards retesting the recent crash low. At the same time, Silver and Gold Miners made lower lows.
Many regular readers of the blog know that I have been investing in Silver for a long time and in recent quarters, I have been updating my purchases in "real time" via the blog. Moreover, as many already know, Silver remains by and large my biggest holding, with over 90% of my fund's NAV in the precious metal. Everything else I hold is just minuscule trades in comparison, so one would not be wrong in saying that my financial performance is solely and directly linked to this extremely volatile precious metal.
Chart 1: During Asian trade Silver retested $20 support
Source: Barchart (edited by Short Side of Long)
On April 15th, I posted a few charts during the Precious Metals panic (link here). I wrote that traders and investors should:
"...let the selling exhaust itself in the coming days or weeks and buy the final panic low."
Many investors have asked me "what does the panic low look like..." and "...how does one know it has happened?" Well, in short nobody ever knows anything for sure. Personally, I know even less than all the gurus out there who call bottoms and tops everyday of the week on various asset classes. Timing is a difficult thing for us mortals.
Having said that, I felt that we saw a panic low, as Silver retested its long term support resistance line around $20. During the Asian morning trade (yesterday), we saw Silver fall almost 8% from already extreme extreme bearish sentiment readings and technically oversold conditions (I'm not going to bore you with all the indicators again, because you have seen them on this blog and many other sites for weeks now).
However, as the trading day continued into Europe and US timezones, we saw bears lose control to bulls in a possible sign of capitulation and selling exhaustion. Powerful reversals and outside day candles, huge tails and hammers, were witness throughout the whole sector.
I sent out an email to many of the traders I stay in communication with, telling them know I have started buying again... for the first time since July 2012 (link here) and December 2011 (link here). I bought my third major position during this cyclical bear market, which has now lasted for over 2 years when it comes to Silver.
Long term outlook remains the same. I still continue to believe that Silver will eventually recover back to $35 and then towards its major resistance at $50. It might takes months and quarters for this to occur. Furthermore, down the track, I believe that the metal will go on to make all time new highs above $50 per ounce. That is when the real gains will start!