this article by roland watson is short-term bearish on silver, but i disagree with him. when asked about silver some time ago, i said i thought it would run to $18, and then consolidate or even sell off. amazingly (given my horrible record of short term forecasting) that is exactly what happened. now that silver has approached $18, the prevailing view is that the metals will decline. however, when too many people are looking for a correction, you often don't get one. i see that david morgan is short-term bearish, jay taylor is advising his clients to raise cash, and even uber-bull bill murphy of gata is day trading. so when all of these bulls are selling, i am holding.

Silver is pushing $18, gold has made new all time nominal highs and it all appears to be looking good for The Great Leap Forward. Buyers are piling in fearful of having to buy at higher prices and gold and silver look moon bound. Meanwhile I am now all cash in my trading account and have sold silver bullion as well (for my trading account of course). Yet I believe silver will make new highs and approach the highs not seen since January 1980. Am I insane? No, just bearish medium term and bullish long term. The graph below explains my shorter term fears.

The basic question is how long do silver price runs last? Do they go on forever? Obviously not. The chart shows that since March 2003 where we place the start of this 10+ year bull market, there have been six good price runs in silver. They lasted for a range of 7 to 12 months before either spectacularly crashing or entering a grinding period of consolidation. The average period was 8.8 months and this price run since late October 2008 has lasted 11 months.

Call it a hunch but going by the historical price hints, this price run is very long in the tooth and either due to A) crash spectacularly or B) enter a grinding period of consolidation. By some strange coincidence, what could happen next is the subject of our latest newsletter.

Don’t be soothed by people talking about “healthy corrections”. Silver is a volatile commodity that unlike gold blows hot and cold – very hot and cold. I don’t think there will be anything healthy about the next few months (unless you think electric shock therapy is a healthy medical procedure).

http://news.silverseek.com/SilverSeek/1255908807.php