Chart courtesy of Stockcharts

As we can see from the above chart silver has retraced most of its steps recently and now looks set to re-test the April lows as the indicators drop into oversold territory. It will be interesting to see if silver can hold just above these lows as this will tell us that a bottom has been made and we can look forward to better things this year. The next two months could be as dull as dish water as silver consolidates and settles into a sideways pattern and you well may become fed up and indeed dump some of your silver producers. Try very hard not to let this happen as we think you will be offering someone else a real bargain. Towards the end of the year the silver landscape will look a whole lot different with silver trading at much higher levels than they are now. We know just how volatile this tiny sector can be and we should be used to it by now. Any future lows should be looked upon as buying opportunities to bag a few more of your favourite stocks.

Just to recap on the 8th June 2009 when we took out some insurance against a fall via the sale of Randgold Resources Limited and the purchase of Put Contracts on the same stock we also suggested that a similar situation existed in this silver space so it could be worthy of your consideration to take a closer look as silver had turned and so had a number of silver producing stocks as depicted on the chart below.

Our stance regarding silver stocks was to stay put and sit through this down turn having raised some cash from the sale of Randgold which will be re-deployed sometime over the next month or so if we have identified this next bottom.

Have a sparkling day.

Any thoughts – then fire them in.

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