- The silver liquidity trap exposed a critical gap between screen prices and actual sell prices during the recent bubble, with the supply chain unable to absorb seller supply.
- The analyst who called the initial precious-metals breakout and top now attempts to identify the bottom for silver and Gold markets.
- Technical analysis suggests silver could bottom in the $40-$50 range before entering a prolonged sideways period lasting years.
- Dollar-cost averaging at the bottom is recommended for stacking again ahead of the next vertical silver boom.
The analyst who correctly called the precious-metals breakout and subsequent top now attempts to identify the bottom, as silver and gold investors search for signs of recovery after months of disillusionment and falling prices. Silver’s liquidity trap exposed a critical flaw in the recent bubble, as jubilant investors discovered the price on the screen was not the price at the store when selling.
The system was overloaded by the boom and bubble, and it choked. The silver supply chain was not interested in buying silver that might collapse tomorrow, so it either pulled down the shutters on sellers or offered a price far below what the markets suggested.
Consequently, a liquidity trap snapped shut, and the author cautions against buying anything a financial system aggressively wants to sell you. Liquidity is a hidden variable absent from valuation equations, yet it determines whether you get rich or hurt. Technical analysis of the silver chart, according to data from ADVFN, shows the decline is nearing its end, with support levels around $50 and perhaps $40.
Meanwhile, the gold and silver charts together indicate the end is near when viewed as gold priced in silver. The analyst predicts that once prices fall into that box, it will be time to consider stacking again. However, the market will not whip around and go straight up after bottoming.
It will go sideways, boring everyone for years, before going vertical again for the next boom. “It is not a question of ‘if’; it is a question of ‘when.'” Dollar-cost averaging is the best weapon for this approach, and the analyst will wield it once silver and gold settle into a boring transit across time.
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