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« Endeavour Silver Production to Double and Triple! | Main | Pan American Silver Corporation: Up 11.65% »
Tuesday
Jul082008

Silver and its 200-day moving average!

Silver Chart 08 July 2008

The last four months has seen silver consolidate in the $16.50 to $18.50 range as the sometimes referred to summer doldrums arrived. Far from being dull we can see that this performance by silver has been superb. Why? Well if we look at the same trading period for 2007 we can see that silver was again range trading and consolidating at the $13.00 level. So to have established a new trading range, which is $4.00 higher or approximately 30% higher than a year ago, ranks as a sparkling performance in our humble opinion.


Without becoming too technical we would draw your attention to silvers 200dma, which has moved up to support silver at these levels as shown by the blue line on the chart above. Although this is only one indicator we see it as one of the more important indicators when looking for clues as to the direction of silvers next move. The chart also shows that silver has taken a peek at the $18.50 level and backed off slightly. Also note on the chart that the RSI and the Stockastics are now heading south which suggest that silver is taking a breather. If this downward move continues then silver could return to $16.50 and take tea with its 200dma. Why are we so excited about this possibility?

To answer that question we need to take a look at silvers progress over the last three years as depicted on the chart below:

Silver three year chart 08 July 2008

This chart clearly demonstrates that silver has rallied and then returned to the 200dma before taking off again. The 200dma has lent support to silver as it has consolidated at higher levels and only on one occasion has silver fallen significantly through its 200dma and that was short lived as we can see.

In conclusion the scene is almost set for another dramatic breakout for silver from its current trading range. Once through $18.50 we anticipate a strong rally to challenge the old highs of $21.00 and then onto $25.00 or thereabouts before taking another breather.

It is hard to pin point just when this will all begin but it is imminent and we expect silver to start this next leg up within the next two months. So, if you have some favourite silver stocks in mind then commence the implementation of your acquisition programme when these dips occur as they wont last too long. We see this period as a window of opportunity to get into position by deploying our cash accordingly.

Have a sparkling day.

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Reader Comments (2)

Sirs,

You suggest buying silver stocks in the run up to a potential uplift in silver prices over the next couple of months. Is this preferred to buying silver ETFs and why?
If so, which stocks do you suggest?

Many thanks,

Julian

July 8, 2008 | Unregistered CommenterJulian Davis Smith

Julian,

As an EFT is a fund it is taxed differently from an investment made via a silver stock. We are not tax experts but we know that it varies from country to country so please check with your financial adviser.

If you check our portfolio you will see what we are buying and why, we also publish every trade we make right here on this site.

Hope this helps.

July 9, 2008 | Unregistered CommenterSilver Prices

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