By Jeff Clark  
Tuesday, January 10, 2012
 
The silver bear market is over

Silver bottomed two weeks ago at $25.65 per ounce. It happened during the
typically quiet period between Christmas and New Year's. If you blinked, you
probably missed it. But it happened. The price of the shiny metal fell to more
than 33% below its 200-day moving average (DMA) – thereby tagging the bear  market target we set last April.

But over the past two weeks, silver has bounced back 10%.
That's a big move – especially for such a short time frame. But it has gone
largely unnoticed. No one cares. No one is paying attention. It's as though all
the folks who were wildly bullish on silver early in 2011 have gone
away.

That, of course, is how bear markets usually end… quietly.

It's not the same with bull markets. Bull markets flame out in a spectacular, parabolic move higher in a rush of popularity… with calls for  insanely higher prices. Those were the conditions in the silver market last April.

Back then, we warned that the silver price had run too far,  too fast. It was trading 50% above its 200-DMA – a level that had signaled a top  for silver in the past. We suggested caution and patience. And we speculated  that silver could drop anywhere from 30% to 50% below its 200-DMA before finally
hitting a bottom. That's exactly what happened two weeks ago.

Silver dropped down to long-term support at around $26 per  ounce. It's still trading about 30% below its 200-DMA (the blue line). As you  can tell from the chart, silver typically doesn't get much more oversold than this.  In fact… except for the decline during the mass-liquidation event in  late-2008, this is as oversold as silver has been in the past decade.

But no one cares. No one sees an opportunity here. Everyone
seems to think silver's best days are behind it.

I can't say for sure that silver won't drift a bit lower from
here. But just as I was confident the action last April was a sign of a top for
silver and a time to be cautious, I am equally confident the action over the
past two weeks is the sign of a bottom.
 
Now is the time to buy silver. A new bull market is  beginning.

Best regards and good trading,

 Jeff Clark

Further Reading:

Last April, Jeff said silver – which was flying high from a meteoric rise in
just three months – was due for a "nasty correction." He advised readers to hold  off buying. Over the following two months, the metal fell 20%. Read his
prediction here: The Curse of the Silver Trade.

If Jeff's right and silver resumes an uptrend, shares of one company could be
a double in waiting. "I don't expect to make 800% returns," Brett Eversole
writes. "But we could easily double our money over the next few years… even if  silver goes nowhere. Our gains will increase if silver pushes higher." If you
like silver over the long term, this is a stock you need to own…







 

 


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