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« Endeavour Silver Corporation: More High Grade Discoveries! | Main | Precious Metals in Europe »
Monday
Dec012008

Silver, Gold and the HUI Index: Bottomed?

Silver gold HUI chart 01december 08

There is always a danger of getting it wrong especially when trying to extrapolate data spread over a short time period, however, as investors and traders we must keep up a process of constantly evaluating where we are and we are going.

As we can see from the above chart the performance of silver, gold and the HUI Index appear to have formed a base but this observation is founded on performances based on the last few weeks only. Also note that Silver and the HUI Index appear to have formed a double bottom, which gives us some comfort that we have seen the bottom and better things are ahead, but we do suffer from mega doses of optimism, hence our move on Friday to purchase Call Options on Yamana Gold.

If we are correct in our observations then now is the time to be deploying our ‘opportunity cash’ into the precious metals sector. So, we are now actively seeking the right vehicle in an attempt to secure the best bang for our buck. Back to the chart where we can also see that for most of this year silver has outperformed gold and only during the last four months has silver fell away rather dramatically. If the gap between silver and gold is to close then a silver producer could possibly give us better returns then a gold producer, so we will start our search in the silver sector.

Of course there are many more variables to go into the mix which will require a tremendous amount of thought, including the US Dollar, the price of oil, Obamanomics, on-going bailouts, geo-political events, etc, before determining just which way to jump.

And there is that old intangible, ‘gut feel’ which plays a bigger part when the investment environment is so cloudy!

Got a comment – fire it in!

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Reader Comments (2)

What does everyone think about the possibility(finally) that someone actually demands December delivery of their silver from COMEX? Then we find out the Emporer has no clothes.

December 1, 2008 | Unregistered Commenterobiwan

Good call!
Gold and silver are dropping like a rock.

December 1, 2008 | Unregistered CommenterNorman

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