I thought maybe it was time to write a post that could be helpful to the newer audience members here who are building their war chests of silver and gold but wondering why metals are selling off recently. In the current case it is clearly a technical event that lies behind the price drop as silver (in particular) has reached a key resistance level at its long term imputed mean reversion line.

I say “imputed” since that line isn’t actually a mean reversion line until price reaches the 100% level of the pattern. Without getting into the weeds about how Gartleys work I want to simply point out that the technical level of 50% on the red line as shown is an important resistance level from the perspective of the army of computing algo’s that trade silently in the background. They saw it coming from miles away. A selloff was a certainty.

The technical traders saw it coming too. But the metals world is usually so emotional that technical people are mostly ignored as background noise while the fundamentalists take center stage and pump their various agendas about dollars dying and gold going to number one in the charts without end or remorse. I do my best to ignore them since few know what they are talking about and its a rare day that their theories actually line up with what the charts are doing in the real world!

Anyway, thank goodness for charts. A picture speaks a thousand words. Just note how precisely price reversed at the 50% line and notice too that it has not yet exceeded a similar peak seen all the way back in 2012 that resulted in a massive decline when it failed to break higher. Price dropped from about 37 dollars to near 15 that time meaning it was effectively a crash. We will need to see price exceed a weekly high of 37.58, which was the 2012 peak, for there to be hope its going on to higher highs from here. Barring that we will be seeing a deep selloff.

Its technical though. So no need to get emotional and cry about it. Lol