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A New Bull Market for Silver

By Jeff Clark
Tuesday, January 10, 2012

The silver bear market is over.
Silver bottomed two weeks ago at $25.65 per ounce. It happened during the typically quiet period between Christmas and New Year's. If you blinked, you probably missed it. But it happened. The price of the shiny metal fell to more than 33% below its 200-day moving average (DMA) – thereby tagging the bear market target we set last April.
But over the past two weeks, silver has bounced back 10%. That's a big move – especially for such a short time frame. But it has gone largely unnoticed. No one cares. No one is paying attention. It's as though all the folks who were wildly bullish on silver early in 2011 have gone away.
That, of course, is how bear markets usually end... quietly.
It's not the same with bull markets. Bull markets flame out in a spectacular, parabolic move higher in a rush of popularity... with calls for insanely higher prices. Those were the conditions in the silver market last April.
Back then, we warned that the silver price had run too far, too fast. It was trading 50% above its 200-DMA – a level that had signaled a top for silver in the past. We suggested caution and patience. And we speculated that silver could drop anywhere from 30% to 50% below its 200-DMA before finally hitting a bottom. That's exactly what happened two weeks ago.
Take a look...
Silver Finally Hit a Bottom  
Silver dropped down to long-term support at around $26 per ounce. It's still trading about 30% below its 200-DMA (the blue line). As you can tell from the chart, silver typically doesn't get much more oversold than this. In fact... except for the decline during the mass-liquidation event in late-2008, this is as oversold as silver has been in the past decade.
But no one cares. No one sees an opportunity here. Everyone seems to think silver's best days are behind it.
I can't say for sure that silver won't drift a bit lower from here. But just as I was confident the action last April was a sign of a top for silver and a time to be cautious, I am equally confident the action over the past two weeks is the sign of a bottom.
Now is the time to buy silver. A new bull market is beginning.
Best regards and good trading,
Jeff Clark

Further Reading:

Last April, Jeff said silver – which was flying high from a meteoric rise in just three months – was due for a "nasty correction." He advised readers to hold off buying. Over the following two months, the metal fell 20%. Read his prediction here: The Curse of the Silver Trade.
If Jeff's right and silver resumes an uptrend, shares of one company could be a double in waiting. "I don't expect to make 800% returns," Brett Eversole writes. "But we could easily double our money over the next few years... even if silver goes nowhere. Our gains will increase if silver pushes higher." If you like silver over the long term, this is a stock you need to own…

In The Daily Crux
Market Notes
Apple touches a fresh all-time high.
Gold is still the best-performing asset of 2011... up 18%, despite going sideways for the past six months.
Ag giant Monsanto is sitting just below a fresh two-year high.
Beaten-down biotech bellwether Dendreon rockets 78% in just three days... more than two dozen other biotechs are up 30%-plus since October.
Market Watch
Symbol Price
S&P 500 1280.70 +0.2% +0.7%
Oil (USO) 39.08 -0.4% +3.7%
Gold (GLD) 156.50 -0.5% +17.2%
Silver (SLV) 28.13 +0.8% +0.1%
U.S. Dollar 80.96 -0.4% +0.2%
Euro 1.28 +0.4% -1.2%
Volatility (^VIX) 21.07 +2.1% +22.9%
Gold Stocks (^HUI) 519.76 +0.4% -2.3%
10-Year Yield 1.96 +0.0% -41.1%

World ETFs
Symbol Price
USA (SPY) 128.02 +0.2% +2.8%
Canada (EWC) 26.98 +0.3% -10.7%
S. Africa (EZA) 61.65 +0.6% -11.0%
S. Korea (EWY) 52.07 -0.2% -14.7%
Lat.America (ILF) 43.61 +1.2% -15.2%
Japan (EWJ) 9.10 +0.3% -15.4%
China (FXI) 35.92 +2.1% -16.2%
Taiwan (EWT) 11.90 +0.6% -17.7%
Singapore (EWS) 10.99 -0.9% -17.7%
Israel (ISL) 12.93 +1.7% -20.2%
India (IFN) 19.82 +1.1% -38.3%
Russia (TRF) 14.07 +0.8% -40.4%

Sector ETFs
Symbol Price
Retail (PMR) 22.25 -0.1% +19.0%
Utilities (XLU) 35.07 +0.1% +15.7%
Big Pharma (PPH) 73.19 +0.6% +14.8%
Health Care (IYH) 72.58 +0.2% +11.0%
Consumer Svcs (IYC) 72.46 +0.0% +7.8%
Real Estate (IYR) 56.67 -0.3% +5.7%
Big Tech (QQQQ) 57.62 -0.3% +4.1%
Industrials (IYJ) 65.47 +0.8% +0.6%
Transportation (IYT) 90.90 +0.7% -1.3%
Defense (PPA) 18.48 +0.3% -3.2%
Internet (HHH) 70.21 +0.1% -3.6%
Media (PBS) 13.54 +0.2% -3.8%
Biotech (PBE) 20.65 +0.3% -4.1%
Insurance (PIC) 15.13 +0.0% -5.5%
Construction (PKB) 12.21 +0.1% -6.7%
Water (PHO) 17.26 +0.3% -7.6%
Software (PSJ) 23.17 -0.2% -7.8%
Telecom (IYZ) 20.92 +0.2% -7.9%
Financials (IYF) 50.48 +0.4% -11.9%
Basic Mat (IYM) 66.46 -0.1% -11.9%
Oil Service (OIH) 118.12 +0.7% -13.9%
Semis (PSI) 14.34 +1.5% -14.0%
Nanotech (PXN) 6.18 +0.7% -37.9%
Alt. Energy (PBW) 5.30 +1.5% -49.2%

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