While sitting with an old friend sipping coffee this evening, I received a text message from a fellow trader stating that silver was down $1.23 in overnight trading. By the time I finished my coffee and returned home to have a look, silver was down $1.40! This type of selling, particularly when silver is due for a cycle low, has tended to coincide with at least a near-term bottom. It is also curious to note that this panic comes a year, almost to the day, after the panic of August 2007.
Perhaps I am off the mark in presuming that tonight's selling is a capitulation. It certainly feels like the right time for it, but who's to say silver won't fall another $1.40 tomorrow? In any case, I decided to dabble with a small long position. As I've noted here, I expect a sucker's rally to emerge in commodities in the very near future. This type of drop could certainly set up such a rally. If and when a rally does occur, I intend to enter a more significant short position than the current long.