Martin Armstrong Asks: Will Silver Crash in 2011?

Silver has come crashing down right in line with the usual 11 year high. This has come also on a Pi cycle from the October 2008 low (31.4 months). Yet despite the blood and the carnage that is typical in this market [which is] prone to high volatility, whether this proves to be a long-term high of a major shake-out will be revealed in the weeks ahead. Words: 702

So says Martin A. Armstrong (http://armstrongeconomics.files.wordpress.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted and edited […] below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.) Armstrong goes on to say:

We have two primary possibilities for a low shaping up on the horizon. We could create that spike low and bottom precisely on June 13th/14th in a few weeks, and this would tend to suggest we may be more likely than not to see the 1980 high of $54 exceeded by 2013. The other possibility remains the fact that the low could extend for 2.15 years into the next turning point on the Economic Confidence Model.  

The weekly timing turning points of the last week of April/first week of May have [already] come into play. The next key weeks will remain the last weeks of May going into the week of June 13th.There is always a danger at the 11 year mark for a crash. It is just a matter of time. Typically, at the top, euphoria is prevalent and we just find the inexperienced screaming there will be no end in sight. Those who have been down this road before know when this kind of talk becomes the hallmark of doom. Even gold bounced off the top of the PRIMARY CHANNEL. Yes it might be that Bin Laden’s capture has marked the end of an era. More likely it has marked the shift in mood as the dollar has risen as well.

So we have a split target with the week of April 25th producing the highest weekly closing and the week of May 2nd the intraday high. If we drift lower into the final weeks of May, then we can see a rally for the week of June 13th. That would not be good as it could set the stage for a decline especially if we close year-end below $28. The force of this decline is encouraging, however, because the faster it comes down, the shorter the duration (remember 1987, 1929-320 and could lead to a marginal bounce into the last weeks of May, and from there silver will turn down into the June 13th target.

The sharp spike rally was in line with a Phase Transition in Silver – NOT gold. This has been distinguished by a virtual doubling in price since January. Any time a market doubles like this in the last few months going into a high is the kiss of death.

Silver…has not broken out above its 1980 high as did gold and this is largely due to the fact that silver remains the most manipulated precious metal of the entire group. It is routinely played with by the NY crowd… Yes, you can make a lot of money on these moves but never forget that the game is rigged and the regulators always turn a blind eye…

[In conclusion,] the $23.50-$26.50 range is the critical area for long-term support and a MONTHLY closing BELOW this range would signal that we have a serious near-term change in trend. On the yearly level, the main support lies at $28. This will be the critical area to watch for year-end. A closing BELOW this level will signal a decline into 2012. 

 The future may be bullish long term, but the short term can kill you. 

  *http://www.martinarmstrong.org/files/The%20Silver%20Crash%20of%202011%2005-06-2011.pdf

Editor’s Note:

• The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
• Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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