Silver, the worst-performing precious metal this year, may drop as much as 11 percent to $14 an ounce, according to technical analysis by Barclays Capital.
The attached chart shows prices formed a so-called “head and shoulders top” and then failed to hold above a 27-month pivot line, which the bank says is a bearish signal. The second chart shows a drop to about $14 would equate to a 50 percent retracement of the metal’s advance from October 2008 to December last year, according to a series of numbers known as the Fibonacci sequence.
I mention this because it's in the news, but honestly, it's not really news I care about. I've bought silver at prices ranging from $12-18. I plan on continuing to buy for the foreseeable future.
Sure, I'd like to pick up more at $14, but I think the upside so far outweighs the downside that I'm not really worried about a move of a dollar or two either way. Should you hold off a planned purchase to save a couple of dollars an ounce? Sure, as long as you're sure it's coming. Of course if you are, you should probably be buying put options on SLV.
When you think about it that way, it sort of makes you wonder how sure you are, doesn't it?