ROSS NORMAN - SILVER Falls Through Support - A Bounce to $100 Expected

As silver and gold fell in tandem, it was silver that outperformed to the downside—just as it had to the upside. The reason? Speculation. Silver’s higher beta reflects a greater element of speculative play embedded in its price. Silver shed 41% from its highs, while gold lost roughly half that at 21%.

In a sense, this confirms that the primary buyers of gold have been central banks—arguably less price-sensitive and with stickier buying behaviour.

Last night, we posed the question: would silver—then sitting at the $85 trendline—hold, or would gold, still above its own trendline, fall further and drag silver down with it? We favoured the latter, and so it proved. See HERE.Silver fell to a low of $72 and now seems to be finding a floor at last.

If technical analysis holds, silver could make its way back toward $100 over the short term on a 50% bounce from its highs—though timing is, as always, impossible to predict. Hopefully silver will not race higher and speculators and leveraged players have learned a key lesson here: gravity exists. Otherwise it will show we have learned nothing. 

What else have we learned ... well silver followed gold on this move ... gold is still the daddy.