Bottom watch on Silver.

For my recent views on silver, please check out my last post.  Pay particular attention to the short term prediction which is charted near the end of the post.  Below is today's silver chart (click on it to get a more detailed image).  I can honestly say that it seems to have followed my EW model prediction fairly well.  The formation came very close to the right side of the channel after forming a triangle.

Given that triangles are always supposed to be the second to last waves, we should have 1 more wave after the 4th wave break down.  You can see that the 4th wave broke down with gusto and then the 1st of 5 of C stopped at the orange support line and then rebounded into 2 of 5 of C.

What followed 2 of 5 of C was another wave down which had a gap in it but it could not break down and stay down below the orange support line and so I think 3 of 5 of C will be an extended wave, itself made up of 5 distinct waves.  I think what we just saw was 1 of 3 and 2 of 3.  If I'm right about this wave count (this view of the wave model), the next wave down will be 3 of 3 of 5.  That means it will be a 3rd of a 3rd and that means cliff diving is to be expected.  If we get this type of gap down behavior it will not be time to panic but time to scrape up your spare cash and start buying. 

I will not buy the SLV fund, I think it is fractionally reserved and therefore fraudulent.  I will only buy real metal.  But I will be buying as everyone else is freaking out.  In any case the 3rd wave should play out strongly and then an a-b-c rebound as shown in blue and then the 5th of 5 of C will be done.  That will be the bottom of this selloff.  I cannot say for sure what price that will happen at but when the waves are all counted out (or if we face the prospect of a failed 5th with an inclining double bottom) then I'm going to buy a bunch of metal. 

If I'm wrong, if this Elliott wave modeling turns out to be a bunch of hoodoo voodoo then I'll buy even more silver if the price goes lower.  Without margin or leverage or any worry whatsoever that silver will ever go bankrupt I will not lose any sleep and in fact would enjoy lower prices.  But before you write the EW modeling off too quickly as hocus pocus, go check out my calls on silver as it hit its big 3rd wave up (I was not optimistic).  More recently, check out my call on Sunpower (SPWR).  My view of the EW model was accurate there.  More recently still, check out my post on Ballard Power.  I actually did buy some of BLDP having modeled the bottom pretty well. 

Again, keep in mind that all stocks are just gambling.  If Wall St got a dirty bomb dropped on it and nobody could work there for 1000 years as a result, stocks would all be worthless overnight because there would be no greater fool to sell them to because there would be no marketplace to sell them in.  Do you think you could sell them to your neighbor even if you had the certificates if you needed food?  Really?  Now consider the fate of silver and gold, metal in hand, under these same conditions.  It's value would not evaporate.  Just the opposite.  Silver and gold would skyrocket.  Now think of any bad condition and consider if it happened: would silver and gold go worthless?  I think not!  Even in civil war it would be the money of the people.  Heck, even if aliens landed and took over the planet people would value silver and gold as money. This is why buying silver and gold for retirement are never bad ideas and can be downright good ideas if you can catch them when the herd has been tricked into being afraid of them (like right now).

Note: this is not investment advice.  Don't be an idiot in thinking you should listen to some guy on a blog.  If you can't see the logic for yourself and make the decision for yourself then I can not save you.  In fact, I will be lucky to even save myself.  So just save yourself...  (kudos if you know the song that came from ;  ).