The bloom is off the rose in Silver. It peaked in March 2008 at the end of a five-wave rise which began in August 1999. That peak will not be exceeded within the foreseeable future. Silver is headed for $12.50, in fits and starts - a large down-up-down pattern.

“All the king’s horses and all the king’s men…..” And all of the fundamental reasons why Silver should rise will amount to naught. They simply will not make any difference.

Perhaps one reason for that is that the fundamentals, which seem strong now, will disintegrate. It is a mistake to project present facts linearly into the future. The currently-high prices of commodities represent the last hurrah of the mania which peaked in year 2000 (marking the true end of the long-term bull market) and peaked in a rebound last October. The Dow Industrials Index has declined 70% since then, in terms of gold, which is real money. The Dow’s nominal numbers are fakery.

All eyes concentrated on inflation in food prices and in petroleum prices. This focused interest will end as the bubbles pop, prices decline, and deflation takes hold, just as housing and the automobile industry have already topped – together with gold and silver – and are caught in a deflationary strangle. In such times, the value of Cash increases and the value of everything else decreases, including gold and silver.

Money will be made on short swings in gold and silver. But buy silver to hold, long-term? Not tonight, Josephine.

By William Kurtz
CandleWave