gene arensberg on the selloff in precious metals:

What? Did anyone expect the Big Sellers to just give up? It is precisely this kind of volatility that sends hot money to the sidelines and separates the “Players” from the “Pretenders.” Again, we have no choice but to allow for higher than normal volatility if we intend to ride the precious metals bull.

Silver cleared the $30 level before the selloff got underway. Big round numbers (like $30 for silver, or $100 for oil, or $1,500 for gold) are often sell triggers for the simple reason that people tend to use them for targets and then the least sign of weakness sets off a surge of hot money profit taking. For that reason alone Tuesday’s selloff is suspect unless it really follows through to the downside, taking out more than just one or two obvious stop levels.

If silver can do that, then our focus shall be on where it will find overwhelming support, but as of this Wednesday morning, at 06:40 CT with silver still in the $28 - $29 arena and gold not far below $1,400 we are of the opinion that we are in the midst of no more than a profit taking pullback. While it is easy to be doubtful that this Turnaround Tuesday pullback has seen its lows (very doubtful actually), it is even easier to believe that the bull market for gold and silver has yet to see its highs. We intend to trade accordingly.

http://www.gotgoldreport.com/2010/12/slv-record-metal-holdings.html