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« A Strategy to Protect Your Portfolio | Main | Eagle Plains Resources Limited Up 12% Yesterday »

Silver Lining to this pullback

Silver Chart 17 jun 09.JPG

Chart courtesy of Stockcharts

Silver has backed off recently and could possibly go a little further down, presenting us with a super buying opportunity. The technical indicators have left the overbought zone and passed through the half way stage heading south. The job now is to wait and try and spot the bottom before making any more purchases in the hope of picking up a bargain or two.

Keep a close on the US Dollar as it is trying to rally and is being supported by various politicians from various nations who are trumpeting its integrity as a store of wealth. A few nice words from the Russian Minister of Finance will not be enough to support the dollars rally for long. However the dollar is prone to react in a positive manner should either Obama, Bernanke or Geithner make reassuring statements about the state of the nation. The fact that the Terminator cant save the state of California would appear to have eluded them completely.

We do have some opportunity cash to invest which has recently had a little boost via the sale of Randgold Resources which was residing in our portfolio of gold producing stocks. We sold our entire holding for an average price of $68.69 generating a return of 82.44% in just under a year which is not too shabby considering that we are in the mother of all depressions. Some of this cash may well go into the silver portfolio as we see the silver producers outperforming its big brother over the next twelve months or so. Many of our peers are sticking to the mantra of juniors, juniors but we think it may be a little early in the cycle for them to take pole position so for now we will be sticking with the quality producers that have good exposure to silver prices.

As we can see from the chart below the USD was oversold as the indicators suggested but is now enjoying a bounce to higher ground. This could continue over the short term however the dollar is destined to trade a lot lower as its dilution has been of mammoth proportions.

US Dollar chart 17 jun 09.bmp

Have a sparkling week.

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Reader Comments (1)

In Larry Edelson's recent publication on Fed's Secret Debt Solution for the Financial Crisis, he thinks the US Fed will lead a global re evaluation of gold to be the foundation for a new global currency. Gold goes to $??,000 per oz. How will silver react to such an event as it is nolonger much of, if any, a holding in global central banks and considered by them as only an industrial commodity along with copper etc.??

June 17, 2009 | Unregistered Commenterrob

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