Source: Max Default, June 17, 2011

Experienced precious metal traders are very nervous about the near term price for gold and silver.

Precious metal stocks proved a leading indicator prior to the massive liquidations in 2008.

Ominously, leading stocks such as Newmont mining and Silver Wheaton have failed to make new highs since February and have broken down significantly in the last few weeks. In particular the aggressive break below the 200dma for Silver Wheaton is very concerning.

The following charts show the breakdown of SLW and the aggregated performance of precious metal funds and stocks.

We are advising extreme caution for clients right now, especially those thinking of buying silver.