Lower Highs and Lower Lows = Silver Downtrend since April 2011
ext4r, I understand what you are saying, but respectfully disagree with your interpretation. If you do a "5 year" chart and then change the appearance from "Log" to "Linear" you get a "5 year linear chart". You are graphing the line coming down from $50 and plotting that channel (lower highs and lower lows) over about 2 years. But if you draw a line from the low in late 2008, you will see that the current price is still above the 5 year support line. As long as this 5 year support line is not broken, we are still in an uptrend. The uptrend is a lower sloped uptrend than may of the "Silver Nuts" would like to see, but I think the uptrend is still clearly intact. At this point on the 5 year support line, support is not broken until it would drop below the $27-$28 range. I think that the 5 year trend is a more forceful trend than the 2 year down channel you are talking about. The gold/silver uptrend has several years to go yet. Typically, a trend like this lasts 16-20 years. We are in year 12 of the precious metals uptrend, so the middle innings of the game. Since I'm long SLV, SIVR, PALL, SLW, etc. it is a bit scarry when silver takes a big hit. But it really doesn't phase me much, because I'm convinced this still has several years to run. If the price were to drop to the $27 range, I will buy quite a bit more. Someday though, perhaps in 5-10 years, gold and silver will be much higher and we will again reach an inflection point where equities will again become the better relative investment. But for the next few years, just average down, or increase your silver position, until prices are considerably higher. Respectfully, sent.
A big problem with your otherwise sound logic is silver's relationship with other commodities, like oil and copper. Silver tends to peak when oil (and copper) peaks. Based on where oil and copper are right now, it only justifies perhaps $18 - $26 silver.... But if oil prices fall to 65 (which is where supply and demand say prices should be today), then silver is only justified at perhaps $13 - $18. If oil crashes to $30 - $50 as it did 4 years ago, then that would justify silver at $8 - $12.
Oil and copper can't go sustainably higher in our weak economy, so silver can't go sustainably higher. Especially since miners like Hecla, can mine silver for $1.03 per ounce in cash costs.