So much for a potential bottom having been formed in the mining shares based on the performance yesterday where the sharp spike lower was followed by a strong rebound and high range close. That low near 542 gave way early in the session and the index never managed to seriously threaten it since.
We are back to watching for a sign of a bottom. A substantial amount of buying came in near the session low at 526 but as to whether or not we get a pop higher tomorrow across the shares is unclear.
I find it difficult to believe that even with the margin hikes silver has that much more to fall but a lot depends on the willingness and financial means of the large specs left in the market to maintain their existing long positions. A drop of this magnitude cannot last much longer and I would be surprised to see silver fall below $32. If it did, it would meet with enormous demand on the physical side of things.
Even at that I will want to see the HUI stop going down and find a stable bottom before I am confident that the rout in silver is over. Reports indicate that demand for the physical product is very robust on this huge price drop. if that is the case, then it will not be long before the Asians swoop in and clean up the remains of the exchange-killed silver longs.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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