Will Silver Crash Again Before 2012?

After nearly doubling from the summer of 2010 to April of 2011, the precious metal has had a nasty 25% correction/crash. Now that the price of silver is settling into the $35 to $40 price range, should you jump back in? Or is another crash just around the corner?

Not Another Crash But Perhaps Another Correction

Corrections are usually considered to be a price drop of around 10% which is nothing unique for silver. The precious metal has dropped 10% in one day alone. However, another 25% may not be possible since the problems with the dollar are still on the horizon. The United States is facing a debt ceiling crisis and the fundamentals in silver are still intact.

U.S. Debt Problems will keep a "Floor" on silver

One of the best floors in the price of silver is the United State's Government's inability to manage its debt. And chances are, the problem will not be resolved quickly and quietly. In fact, we may see a government shut-down in the fall that may cause the price of silver to rise several percentage points in one day. Also look at any government collapse or problems in Europe to also support the price of silver as the currency markets go into chaos mode.

September May Be the Last Correction Point for Silver

If you are looking for another "problem area" in Silver, look at the month of September. September is usually the weakest month of the year for stocks. And since the stock market has doubled since the 2009 low, September may become a bad time for just about all markets except for the dollar and gold. Bear in mind, silver has a foot in both the precious metals and industrial sector and a drop in the stock market can make silver vulnerable.

Summary

Silver will have a floor due to the United States government debt ceiling crisis and the continuing problems in Europe. However, September may cause another correction in silver. Look for the precious metal to remain in the $30 to $45 trading range from now to the end of 2011.