Silver has gotten absolutely crushed as gravity has reintroduced itself to the markets.
Silver
Silver has gotten absolutely crushed on Friday as gravity has finally reintroduced itself to the market. At one point it looked like we were threatening the $120 level, but we have now seen silver absolutely collapse, threatening $90. The question at this point in time is whether or not we are going to see this continue.
I will say this: it is very rare to see a candlestick at this moment, not have follow-through. A 20% drop is no joke when it comes to markets in general, and there are few markets that can get hammered and move like silver. Silver is essentially a very difficult place to live, and I think a lot of traders are starting to see that now.
A Massive Running to the Exits
Now that we are well below the $100 level, one would assume that it is likely to be a situation where traders are going to be very cautious about what they do next. Quite frankly, this could lead to a massive rush to the exits. I have been hearing stories as of late where bullion shops just simply will not accept silver at the moment, and of course, everybody wants to sell, not buy.
There have been a few notable news items, such as the Federal Reserve chair choice by Trump firms the US dollar. He does tend to be a little bit more hawkish. Beyond that, there is a little bit of risk-on type of behavior, a little less of a run-to-safety trade, as the US government has come to an agreement in order to keep the government open.
With that being said, I think you have to look at this as a warning sign. Although I do not necessarily think gold and silver are both going to collapse, they certainly did a good job of it on Friday. I think we have further to go because it is very rare when you get a move like this that people don't see bigger problems ahead for the market.
At this point, you're probably looking at some type of attempt to get down to the $80 level, which is right around where the 50-day EMA sits. If we break down below there, it really could open up the floodgates. At this point, I'd say you cannot be a buyer of silver, at least not in this environment. The spread with physical dealers at the moment is about $7 to $8 an ounce, but I've been watching this all day, and the spread is starting to widen again, meaning that silver bullion dealers do not want to buy from the public. Unfortunately, I think a lot of people were left holding the bag again. Furthermore, I suspect a lot of retail accounts are now liquidated.
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