Like gold, silver gapped out of its downtrend last week, but volume was lacking on this move, which, given the now bullish outlook for the dollar, may turn out to be a “pop” that will be followed by renewed decline. This breakout was predicted in the last update, when it was pointed out that silver’s COTs were still far from outright bullish. You are referred to the parallel Gold Market update to read the reasons why the dollar may be shaping up for a sizable rally back to the 97 area on the index, before turning and heading south again. Needless to say, this can be expected to knock gold and silver back down again.On its latest 6-month chart we can see how silver gapped higher last week, after breaking out of its recent downtrend a few days before. As mentioned above, due to the immediate outlook for the dollar being positive, with a sizable “swansong” rally in prospect, this breakout by silver may well turn out to be a “pop” to be followed by renewed decline. How far might it drop? – a logical target, given that gold would probably drop to the $1200 – $1215 area, would be somewhere in the vicinity of its July lows, i.e. somewhere in the $15 area.

….continue for 2 more charts and commentary HERE