- Silver has plunged during the trading session here on Monday, dropping over 4%.
- At one point in time, it even got close to losing 5%. Ultimately, Silver is a market that has been overdone.
- And I think you've got a situation where we have seen a lot of volume, but really, at this point, the volume suggests maybe, quite possibly, we have a little bit of distribution. We'll have to wait and see whether or not silver can hang on.
It is fighting to hang on to those last vestiges of support near the $46.50 level. But this is a market that has been overdone for a while. And a sharp pullback would make a certain amount of sense. Keep in mind that everybody knows that the central banks around the world are going to continue cutting rates, and most importantly, the Federal Reserve.
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But all things being equal, I think you've got a situation where the silver is going to struggle to gain despite all of that. Typically speaking, interest rate cuts are very good for silver, but we've already seen that move. The question now is who's going to be left to start buying. If we can break back above the $50 level, that would be very important. But truthfully, this is a market that has gotten too far ahead of itself, and now a sharp correction is probably in order.
A breakdown below the 50-day EMA, currently just above the $45 level, could send silver melting down towards the $40 level, where it might try to find the 200-day EMA. If we can break back above the $50 level, then okay, maybe silver hangs out for a while. The best-case scenario in silver here is that it finds a sideways move and works off some of that excess froth that we had seen over the last couple of months. When you start to see random people in the street talking about silver, that's a bad sign. I started to see that two weeks ago.
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