We informed our readers of The Silver Prices Newsletter that a technical breakout in silver prices was due within weeks and just three days after we published that article, silver prices made a big breakout (although not in the direction we hoped), plunging down over a dollar or 8.44%.

If we look at the recent history of silver prices we can recognise that when silver drops, it drops like a stone, falling hard and fast in just a few trading sessions. Silver certainly fell hard and fast yesterday, losing over eight per cent in just a few hours as it fell to nearly $11.00. Silver remains relatively flat in trading in Hong Kong and Sydney overnight and we are watching silver trading in London at fairly stable levels. However the real action doesn’t really begin until New York opens so we will keep an eye on how silver prices behave in trading there and where silver closes at the end of the week.

If there is more downside in silver prices, we will see it surface in the next few trading sessions. By the end of next week, probably before then, we should have seen the bottom of this drop and that will be the time to buy. We will probably give a short term BUY signal on silver over the coming days as after such a sharp drop, silver tends to make a decent comeback.

Technically, the Full STO for silver is looking slightly bullish, but not as bullish as the RSI. At the moment the RSI is more bullish for silver than it has been for over a year. The last time it was this bullish was in June 2006 when silver fell to $9.48, after the massive correction from $14.74. However before we signal a BUY and put our hard earned cash on the line, we would like to see some sort of consolidation or signs that the drop is finding a bottom. Usually after such a drop we see a few days of sideways and/or positive trade in silver prices before the move upwards begins.

Stay tuned to The Silver Prices Newsletter, these are exciting times. It looks as if within the next week we may see a bottom in silver and silver stocks. We wrote about silver stocks yesterday and said we were going to wait before buying as we wanted to see a bottom form. This proved to be a good call as silver stocks fell some 10% yesterday. The only support we can see for silver at the moment is below $11.00 so we could see some more downside in coming trading as silver stock still have not found a bottom. Hold on for a rocky ride.