Short Update On Gold And Silver

Looks like we were right to close out or silver shorts last Thursday for a modest profit when we got chart confirmation from the charts posted a couple weeks earlier.

Here are a couple of my tweets relating to the issue:

Covered my $SLVshort today. Will re-evaluate after NFP report. Initiated NFLX short using May puts.

— The Fundamental View (@TheFundView) April 4, 2013

I wouldn't want to be short $SLV over the weekend. We could see gap up Mon and the move UP to 28.50 could be faster than this past decline

— The Fundamental View (@TheFundView) April 5, 2013

Here’s the important consideration.  We all knew that there was a massive short position on silver and that by normal contrarian indicators, this was setting us up for a bounce.  It appears as though silver has closed the big downside gap and might want to close the smaller gap that takes it back to $28.25.  That level is a significant overhead Fibonacci resistance level from the decline.  If that gets taken out with strength then we may see even higher prices.

It looks like our call for a sharp short covering rally was correct and we exited the position on a timely basis.  I an now in the process of evaluating one very ugly looking silver chart to set up the next potential trade, long OR short.

Look for that more detailed chart analysis later in the day.

As with all other updates I will attempt to give you all the upside and downside targets to watch for.  We’ve seen many failed rallies in silver.  Whether or not this fails is yet to be seen.  I would have preferred for the old lows to be taken out to make the picture clearer but that is not to say that silver isn’t still working off oversold conditions in an attempt to test those lows.