Last week we took a look at potential bullish outcome for gold via an apparent developing ‘head-and-shoulders’ formation. This week, I am taking a brief look at silver which is experiencing terrible indigestion against what is now a 29 month downtrend going back to the May, 2011 high near $50. That downtrend line (shown below at the $25.00 level) will need to be decisively penetrated while simultaneously crossing above the 50 week moving average (blue line) and th 200 week moving average (green line). Silver is now trading underneath all of the above. Support is currently at 20.66 followed by the June 27 low at18.31. Downside risk is into the 13.00-15.00 range if these levels are violated. A downtrend is a downtrend until proven otherwise. In the seasonality chart for Silver on Page 2, it appears some further indigestion may be ahead here in October.

Ed Note: Michael Campbell is very impressed by Mark’s work in his VRGold Letter: