So far this year silver prices appear to be range trading at around the $30.00/oz level. Gold prices have been under considerable selling pressure which in turn has tended to cap any rally that silver could muster. The anecdotal evidence suggests that the demand for physical silver remains strong, however over on the COMEX the paper shorts appear to have the whip hand.
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Taking a quick look at the chart we can see that the earlier violent oscillations appear to be slowing and entering a less erratic phase of movement. We can also see that the price of silver has now fallen below the 200dma which now becomes a resistance level for silver.
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The Bulls and Bears are both putting forward strong cases in terms of why they are correct about the direction of silver. You don’t need to read between the lines here as the each camps predictive analysis moves to more extreme pricing with the bulls expecting a moon shot and the bears focusing on the basement. As we see it it’s going to be a close call either way in the short term.
There are occasional signs of a modest, fragile recovery in some parts of the world which may in turn support silver prices as its use as an industrial metal in solar panels, for instance, continues. Silver as money should also be supported by the amount of money printing that is taking place across the globe. This argument is slightly strained at the moment as quantitative easing in its various forms continues without any signs of abatement at a time when gold is heading south. One would expect the reverse to be happening in the gold space, so just maybe this is an aberration which will be short lived, time will tell.
In terms of actionable data we are still of the opinion that the acquisition of physical silver is the first step, followed by a small selection of good quality silver stocks, something we have avoided for the last two years until just recently. And for those in a more adventurous mood a foray into the options arena can liven up ones portfolio. Whatever your particular preference this is not the time to be aggressive in either direction, as always go gently with the implementation of your investment programme. These are murky waters so allowing some time for a clearer direction to become apparent, could serve you well.
Take care.
By. Bob Kirtley
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