Silver Correction?

Silver has now seen two failed tests of the previous intraday high of 1980. While these tests failed tests are bearish and have an effect on the mentality of technical traders the overall outlook is still very positive. The "consumer price" inflation adjusted high (a commonly used and cited target) is roughly $135/oz by my calculations using the Bureau of Labor Statistics CPI data. Though the CPI was modified throughout the time period and major changes were made to the CPI by 1983 and in again by 1998, it was assumed to be constant for the purposes of estimation. However based on the correlating increase in monetary base, silver's "monetary" inflation adjusted high is over $400/oz.



With the 50day MA (charted on the daily above) at $38.00 and the recent support before the noticeable last leg up and the 61.8 fibonacci retracement both at $40.00, I don't see any near term correction going below $38 and honestly feel the correction should not dip below those levels and we will likely remain relatively rangebound before breaking the $50 mark, pending further developments. The long term bullish trend was broken in silver in mid February along with a market in long term backwardation only to develop into a super bullish parabola, reflecting the supply not being able to maintain a physical market flush with investment demand.



The long term trend has essentially been fast forwarded four and a half years to it's level today. Meaning if there is no significant correction to $35-$36/oz, we likely are in the midst of another more parabolic trend which would carry silver to that $135-$400 range in under three years.