After a massive 5% drop yesterday, silver surged higher again today by 3.5%. The iShares Silver Trust (ETF) (NYSE:SLV) is trading at $32.28, +1.08 (+3.48%). The drop yesterday was a major signal that silver may be near a short term top. Technically speaking, the drop tells traders that the retrace higher can be shorted as long as the 52 week high is not breached. The 52 week high on the SLV was $33.00. Gold is also trading higher today with the SPDR Gold Trust (ETF) (NYSE:GLD) trading at $137.44, +0.96 (+0.70%). Gold had a much smaller decline yesterday and did very little damage to the uptrend on a technical basis.
The key to the silver trade is two faceted. Not only is silver a store of safety against inflation and global unrest but it is also a production metal. If oil remains high, it is possible to see global economies hurt. Should this happen, the production metal side of the trade would suffer, thus bringing silver in slightly.