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Silver Prices Poised To Leap At Least 50 Cents

Silver prices have been suffering recently as a result of the broad seasonal sell off in the financial markets as well as the sharp sell off affecting all precious metals.

Silver Prices Poised To Leap

However, are silver prices and silver stocks about to bounce back?

Not so long ago, silver prices broke their technical support area when they dipped under $13, the 200 day moving average. To many, this is seen as a negative sign, suggesting a sell trade should be implemented, however now silver prices have found a base about $12.50, fifty cents under the 200dma, we see silver in a bullish situation, technically speaking in the short term.

We are of course still very bullish long term on silver prices and we maintain our long standing target of $20 per ounce by the end of year as we believe this silver bull market is built on strong fundamentals such as a declining US Dollar and rising industrial demand for silver, which may cause it to out perform gold. So we are still holders of silver stocks for the long term and expect significant returns on out investment.

This prediction however is short term and presents more of a trading opportunity rather than an investment opportunity, although if you have not purchased silver stocks so far, now may be a good time to purchase some as a long term investment for the future.

However for those of you who enjoy the occasional spot of near term financial trading, we see silver rising 50 cents in the next few weeks, back up to its 200 day moving average, a four per cent move in silver bullion prices.

If one looks back over the last year or so, silver prices have fallen below the 200 day technical support four times, the fifth being right now. In each of the past drops, silver prices have wasted no time in rebounding sharply back above the commodity's support in a matter of days. Therefore if one allows a few weeks, one should see silver prices back above $13 up 50 cents from Friday's close.

The technical indicators are bullish as well with the Relative Strength Index at 34.78 in the lower bound, signalling a BUY. The stochastics are also bullish with the fast stochastics as 19.49 and full stochastics at 16.05 again suggesting a BUY.

This 50 cent move should help some silver stocks recover slightly, and may allow some of our trading readers to make a tidy profit in the coming weeks.

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Reader Comments (1)

I have a web site where I research stocks under five dollars. I have many years of experience with these type of stocks. I would like to comment about silver. silver is still 20 dollars below its all time high in 1980 while gold is 400 dollars above its all time high of 1000 dollars in 1980. I think silver looks like a much better buy here than gold.

January 25, 2011 | Unregistered Commenterjames moylan

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