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« Hecla Mining Company in the Overbought Zone | Main | If You Thought the Housing Meltdown Was Bad… »
Thursday
Nov192009

Silver Still On Track

Silver Chart 20 November 09.JPG


As the chart above shows silver prices have made steady progress since July 2009. The RSI is still below the '70' level so has some room to accommodate further gains in silver prices. A golden crossover on the MACD is a positive sign for silver. The gap between silver prices and the 200dma is cause for concern so we need to keep an eye on it, as it equates to around a 27% increase over the moving average.

Should this gap increase to around the 50% level then we will need to proceed with great caution as a pull back could be on the cards. However we will cross that bridge if and when we come to it.

For now we can see that big brother Gold is still holding up well and managing to eek out gains on a daily basis which in turn is positive for silver prices. Sooner or later gold will decouple from the dollar and go its own way regardless of how the dollar performs, but for now the inverse relationship appears to be in place, even though it is not as strong as it has been in the past. Now there some commentators who are calling for a rally in the dollar which they expect to put a cap on gold and silver prices. We don't go along with that view, firstly we see the dollar resuming its trek south and expect it to test the '72' level in the near term. At the moment the dollar is finding some support at the '75' level and that in itself has pundits calling for a reversal in the dollars fortunes. Time will tell. Precious metals are gaining in popularity on a daily basis and will continue to do so even if the dollar stages a mini rally of which there have been many on its way to an all time bottom.

The silver stocks are a different story as most of them are displaying signs of being well and truly overbought suggesting that a correction is now on the cards. This may well happen however we intend to hold onto our core positions unless an unbelievable spike occurs sending all the indicators off the charts, in which case we will be tempted into banking some profits.

If we do change our strategy we will post immediately and report our intentions and any trades that we make.

Finally please add your comments to the article as we do not have the time to draft answers to all the individual emails that we get but we will try and respond to your queries via the site.

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Reader Comments (1)

Hi Shawn, the options are expireing today so don't sweat it. We'll see green at the end of day.I see gold to keep running to $1380 before the next downturn...all the way back to this area....so let's make some frekin money.

The stockmarket in general looks shaky..keeping an eye on it.

my portfolio looks like Sprotts..jag,hl,xra,slw tgb...he coppied me... I love it

November 20, 2009 | Unregistered CommenterC

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