Calling a Top

I have forecast that at some point the physical silver market will dominate the paper silver market. The question I ask now is, "Are we there yet?"

In the past I have stated that,  "The market is trading in a short squeeze fashion, and I think it best not to chase the market here, especially if you use leverage. The shorts must be sweating here and maybe, just maybe, they are going to feel much more pain during the next several trading sessions."

This turned out to somewhat accurate for a brief moment in time as silver did move to the $21 level. (see my comments below)

As stated in an earlier report I went on to say, in my view, silver could keep moving up for several more trading days, but "normally," buying pressure exhausts at some point. Please pay attention to this update, because we always must be aware of the fact that at some point, someone may call the silver bluff. Meaning someone, some entity, some sovereign wealth fund, stands for delivery of physical silver.

If, or more likely, when, this takes place, the whole dynamic of the silver market will change from being a paper-based derivative market (Comex) to one based upon the true physical demand for silver. I have predicted this to take place "at some point," but do not think we are there yet.

I did my Silver Bullion Dealer survey, which I have not done for some time. I personally phone most of the major physical dealers in the U.S. and ask how the orders for silver bars, rounds, and bags are doing. What I found was that most dealers reported sales are somewhat slow currently however, it is almost all buying, very few sellers.

I did state that we will get a correction. In fact, one useful tool we have is the number of inquiries asking if or when a correction will take place. The more inquiries, the closer we get. But as reported in my newsletter, The Morgan Report, at some point the buying pressure exhausts, like a ball thrown straight up into the air eventually stops going up.

Silver entered into another parabolic rise, just like it has in the past. Because silver is becoming much more sought after as an investment, these moves go further before topping out. Where will the new top be made? It is possible it has been set at over $21 level. It turns out I called this one, and per our recommendation we took 25% of our money off the table at that point, waiting for a better buying opportunity.

David Morgan

Mr. Morgan has followed the silver and gold market daily for over thirty years. Much of this Web site,, is devoted to education about the precious metals.

You can get his Ten Rules of Silver Investing — click here