Silver: One Top Trader’s Viewpoint

Starting afresh this week, following a week of death-spiral plunges and rebound, recovery and retest of the $33 level in the silver price, traders have been seeking guidance from their favorite gurus and chart technicians.

Is this the dip in silver that should be bought aggressively?  Or will silver succumb to the seasonal pattern of weakness into the summer months?  Do silver bulls buy now or wait for an opportunity during the seasonally weak summer months of July and August?

One professional trader known for his level-headed perspective, experience and discernment in several active markets has weighed in recently.

Dan Norcini of Jim Sinclair’s Web site, JSMineset.com, told Eric King of King World News (KWN) the silver price looks has looked attractive to traders at the $33 levels, according to volume statistics in the SLV Exchange Traded Fund (ETF) and the cash market, with the latter rumored to be coming from large Asian buyers.

“Trader Dan,” as he’s called on JSMineset.com, told KWN he’s looking for at least one more successful test of the $33 level accompanied with high volume before he’ll feel comfortable suggesting a bottom for silver is most likely in.

On the initial breathtaking 30%+ drop in the silver price during the first week of May, large volume from ‘strong hands’ came into the market as gold’s kissing cousin fell back to the $33-$34 range last Thursday.

After trading briefly above the $39 handle during Tuesday’s New York session, silver sold off again sharply on Wednesday, and again, on Thursday, dropping to Norcini’s short-term target range low of $33 and $34.  Again, very large volume came in during New York’s trading hours, lifting silver to above $35 in its first successful test of Norcini’s target range.

“Well it looks like Eric, based on what I’m seeing on the chart right now for silver, when it drops down below $34, anytime it gets down below there, it seems to be uncovering some pretty good buying,” Norcini told King.  “It does not stay down there very long.  That’s promising. As long as that continues, silver is in pretty good shape.”

If silver can hold the $33-$34 range, the price may trade within a 10% range for a while before making its next move, according to Norcini, who mentioned he saw a lot of hedge funds, who were playing the narrowing price spread between gold and silver, now unwinding their trades, as well as highly leveraged latecomers who couldn’t make margin increases to satisfy the Chicago Mercantile Exchange’s (CME) five hikes within eight days.

So for now, traders could witness the price of silver bouncing around on high volatility until the market stabilizes and demarcates a floor over time, according to Norcini.

“It [silver] will just range trade, Norcini added.  “That would be a good situation for us, to let it range trade between $33 and $34 on the bottom and run up near $36, $37 on the top, maybe work a little higher, but just work back and forth and consolidate, work the froth out of the market, work the emotion out—what we need to get out of the market and calm it down a little bit.”

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