iShares Silver Trust (SLV): The Next Buy Signal of 2011

I have no interest in speculating on the future price of silver ($SLV).  Let me be clear: I have traded the price dislocations and volatility in the Paper Asset Silver Complex group of ETFs, but only as a liquidity provider, never with a clear directional bias.  I currently have a position in the miners versus gold ($GDX$GLD spread), and I have no plans to put any silver trades on for the next month.

The next buy signal in silver will occur once everyone has stopped talking about it.  I warned traders to take $SLV off their screens last week for good reason.  Following such an explosive release of speculative energy traders always exhaust themselves physically and financially in the subsequent weeks.  Trust me, there are going to be many seductive moves in silver — the kind of moves that you will really kick yourself over in hindsight.  The vast majority of people shouldn’t be trading this noise.  Right now people are still getting liquidated from their positions and there is very little predictability.  Let the emotion drain out of the silver market before you get back in.

How will you know when it’s safe to take another look?  The general population will stop searching for riches in three letter ticker symbols.  Below is a chart of people searching $SLV over the last year.  Wait for this to bottom out, or at least get back to the mean before you put silver back on your radar.

** Note: If you are currently stocking a bunker with MREs and hard currency, this post doesn’t apply to you.  Carry on.

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