1. Do we have a notable expansion in the monthly ranges occurring relative to previous months?
Yes. The average monthly range from Jan. 2007- Aug. 2010 was 2.16. From Sept. 2010-April 2011, it has nearly doubled to 4.02.
2. Has the price action started to reflect a buying panic that disregards price?
Yes. Almost every monthly bar has closed at or near its highs. Bidders are climbing over each other in an effort to buy. This is irrespective of the velocity of the move in the previous days, weeks or months.
3. Has the price of silver experienced a rapid appreciation in a relatively short amount of time?
Yes. Since Sept. of 2010 it is up 111%.
4. Has volume expanded dramatically as participation has exploded?
Yes. Average volume has increased 150% over the past 8 months.
According to silver aficionados, we may be entering a new era where the devaluation of paper assets is leading to a nearly endless thirst of real monetary assets, such as silver.
The financial markets are essentially a game of odds, where experienced investors will attempt to position themselves at the point where the potential or odds for profit are the greatest. While the possibility that we are facing a statistical outlier must always be taken into consideration, reasonable odds are that we are not.
Given the fact that silver is behaving much like asset bubbles of the past -- along with the fact that it has become the talk of the investment media, bloggers and newsletters. It is safe to assume that the odds strongly favor a punishing attack on those who are long silver at present.
When we look back on the chart of the SLV some years from now, we may indeed be using it as reference for whatever bubble will exist at that time. We will then wonder how the market fooled everyone into believing that the bubble in silver was any different than the myriad of bubbles we have failed to learn from in the past.