Silver has broken below a massive price level at $50. This is an area that has been important several times over the course of several decades. The silver market continues to struggle with these higher real rates.
Silver
The silver market has plunged on Friday, breaking well below the $50 level, which is a major ugly sign for silver bulls. Real yields in America continue to offer real returns, and therefore paper is much cheaper to hold than physical silver.
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This has had a major influence on the futures market, and silver blowing through the $50 level is a very bad look. $50 is particularly important, as it was the swing high in the 1970s from the Hunt brothers trying to take over the physical supply of silver, and again about a dozen years back or so when financial conditions got really ugly. But the fact that it's not holding up is a very ugly sign indeed.
We did break through it earlier this year, so one would think that there's a lot of market memory there. But the fact that it's not holding up is a very ugly sign indeed.
At this point, I'm not a big fan of chasing the market to the downside. After all, it's dropped almost 6% as I record this. But short-term rallies, I think, are opportunities to short if we see some type of exhaustion.
Ultimately, the $55 level would have to be overcome for me to start to think about being a buyer. But I suspect silver is likely to continue to be a scenario where there is so much in the way of downward pressure that I think my move personally is going to be to fade those rallies, but eventually start buying more physical silver. But that might be much lower than where we are now.
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