Silver - The Bloodbath Is Over

The silver price continued its freefall on Friday, getting right down to $33.25 on Friday night.

And to think that it was $49.80 two weeks ago today. That's a fall of 33%! That is still only two months of gains however.

There was more to this fall than panic selling and profit taking though.

This fall was predominantly due to Chicago and New York commodity exchanges raising margins. This effectively means traders suddenly faced much higher trading costs - the price of trading silver futuresjumped 84% in a fortnight. It's as though your broker suddenly doubled your brokerage - you'd think twice about each trade. This was intentional and was designed to chuck the silver market in a bath of ice water for a bit, to protect it from overheating and exploding!

It seems to have worked - I'd say that a 33% fall in the silver price is enough!

Yet silver has started recovering already. It is already up 9% from its Friday-night low, and has gone through $36 today.

Silver - support at the 90-day moving average and bouncing already

Source: Stockcharts

So what happens next?

The fundamentals of the silver market will push the price up.

Any more interventions or other forms of market meddling will only have a kind of short-term effect. Fundamentals will win over.

Investor demand for silver has grown from a stream into a river. You can try and build a dam in front of this, but the river will go right over it. It's happening already.