The $26 level has acted as silver’s support for over two years now. And after a 10% slide over the past three weeks, including Friday’s 6% drop, we’re once again challenging this all-important line in the sand.
Will $26 hold this time? Maybe not… yet I remain a long-term silver bull and see lower prices as a buying opportunity.It’s been a painstaking ride for silver investors.
Let’s take a look at sentiment, which has turned extremely negative.
Silver sentiment is turning more negative by the day –
- Gold is now trading under a psychologically important level ($1,500), likely triggering a flood of sell stop orders and shaking out weak longs.
- Oh, and Goldman Sachs is now predicting a bear market in metals, including gold and silver.
- Meanwhile, Citibank came out today claiming the end of the commodity bull market has come.
- And adding insult to injury, the equity bull market rages on, with overall bullish complacency aiding the recent rout in metals.
- All we need now is a Newsweek or Time magazine cover proclaiming the death of commodities and we’ll be able to call the bottom.
If you haven’t guessed it – I fully subscribe to the theory of being a contrarian at sentiment extremes. As weak hands let go of their longs I will take silver off their hands and be a buyer.
Whether we’ve fully put in a bottom is not the point. We could easily fall through $26 before hitting rock. But I’m more concerned where prices will be in the coming months, not days. I expect prices closer to $32-34/ounce by Q3 and aim to use this two-year long setback as a buying opportunity within what I see as a longer-term bull market.
I recommend wading into bullish trade slowly…..