Hi Yo,

So I'm going to see if I can sneak a post in here in the 25 minutes between what I'm doing now and what I have to do next.

Since I announced my brief hiatus here silver has dropped some 30 percent, and I am watching it continue to drop in after-hours trading. It's a pretty awesome thing already, far steeper than I ever really thought. There will, inevitably, be a dead-cat bounce here shortly.

I know people who think the downside will be 90 percent, basically wiping out the run-up. I think those people are crazy. I'd be happy with 67 percent and settle for 50.

The reason silver is dropping faster than I expected is the same reason housing dropped so fast or the investment banks died in days: excess leverage. Until a few days ago I didn't really realize what kind of leverage there was in the metal market, but for $45 silver the margin requirement was 6.7% (for $33 silver it's nontrivially higher, since the requirement is a fixed amount per 5,000 ounces).

A 6.7% margin requirement means that if you buy silver at maximum leverage at $45 and it drops 6.7%, you're done. Finished. Finito. No more position. Wipeout. Silver has dropped more than that each of the last 4 trading days. People are losing their shirts out there. Leverage makes millionaires into billionaires on the upside, and billionaires into millionaires (or worse) on the down.

I've done a lot of gloating over on in a forum where bulls did a lot of gloating at me as silver went up, but I don't really mean it. I like making my money, but I don't like to see anybody suffer, not even buffoons who light cigars with hundred-dollar bills. Especially not when George Soros got out at the top. More on that guy later, actually.