Monday, May 9, 2011

A Great Nation Will Fall

This morning marks a turning point (a great nation will fall, said the Oracle at Delphi to Croesus).

Who knows where silver will lead. In the near term, it may well lead up, such that ZSL leads down. What do we do? We could sell, thereby conserving capital already invested, or we could hold our ground, assuming that the price of silver will eventually continue a downward run. I advocate that latter - this is chance to test our stamina and to focus on one outcome.

I've been reading furiously both sides of the argument this past weekend, and this Seeking Alpha article by writer Glen Bradford seems well reasoned:

"When it comes to silver, it looks like we are in a short period of time where the dominant fear is of the shorts failing to lock in sizable gains. When that fear subsides, and if you let fear be your guide, the dynamics all point to lower prices. We've only erased two months of gains.

Normally, erasing two months of gains could be considered a healthy pullback. I urge you to compare the recent price action with the healthy pullback around January of this year. It's not even comparable unless you honestly believe silver's latest trajectory is going to a fair value, which would put silver annualizing 25%+ returns going forward."

Whether you bail on your bearish silver direction in favor of bullish or not, one thing is clear: your decision will fell a great nation, i.e., your own.  Which to choose? I'm afraid not even the Delphic oracle can help us on this one.


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