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« Silver-prices step on the gas | Main | Silver Prices: Dare to Dream »
Saturday
Sep112010

Silver Prices Rally Takes a Pause

Silver Chart 12 September 2010.JPG

Silver prices are now at the starting line of an explosive rally which could see $25.00/oz plus before the year is out. The de-leveraging sell off which hit the markets last year have effectively delayed the rise of the precious metals by about a year in our humble opinion. However, both silver and gold prices are both gaining momentum and are now well positioned to show their true strength during this forth coming rally.

Taking a quick look at the chart we can see that July was fairly flat for silver prices, however, buyers have been active recently and pushed silver along with a strong rally to the $20.00/oz level. We are now looking for silver to push through its resistance level of $21.50 or thereabouts and go on to dazzle investors. Against this move are the technical indicators which are overbought and languishing in the overbought range. This is a worry for us, however, they could stay that way for some time in a consolatory sideways pattern and unwind a little.

A new all time by gold prices will also help to drag silver higher whether we are ready or not for this next leg of the rally.




As you are aware our largest holding in this sector is Silver Wheaton which we use both as an investment vehicle and an options trading vehicle from time to time, so we will take a quick at its chart. As we can see two days of profit taking reduced the stock price, however, Friday saw the buyers return for a nice 2.75% gain. Hopefully we can move higher next week on the back of stronger silver prices. The indicators are close to the top of their ranges, which is not where we like to see them when buying stock. Its a difficult call when the fundamentals are in favour of higher prices and the technical indicators suggest otherwise. There is never really a perfect set up for making a purchase or a sale for that matter, so our hope is that the indicators can go sideways from here. If silver prices do 'pop' to the upside then the charts will look very interesting indeed and could tempt us into looking at a 'short' play in the form of a few PUTs. Again not a perfect set up as we are in a bull market and would prefer to go with the trend instead of against it.

SLW Chart 12 Sep 2010.JPG


Another point to consider is that the September Series of Options expires on the 18th September, 2010, so it could get rough towards the end of the week as the books are squared. Options trading is volatile and risky so go gently with them and expect to be bounced around a little. Our last trade which ended with a profit of 79.46% was under water a few times before we finally closed the trade.











Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

On Friday, 27th August 2010, we closed another successful trade banking a profit of 79.46% on Call Options on Silver Wheaton.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09. On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days, with more positions opened yesterday. Drop by and take a look.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.



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Reader Comments (2)

Gentlemen,
Nice call on your recent gains. I also enjoyed the last ride and profitied handsomly BUT nothing has grossly changed over the last few years and the chart indicators show that you are right in taking your profits as have I.
Markets seem to enjoy reverting back to the support lines so that people cna get in at prices they screwed up at and have missed. Also to a spot where they think they are getting a deal. So now that all the cheerleading is over that silver is now going to the moon right here and right now, it is time for those people to come to the realization that a pile of people (mostly our theiving bankers) are going to bag their profits and we will return back at least to the 50 day moving average. 19.87 is a price to buy for dummies that think they missed the boat. It's high, is a lower high than the last three days and portends profit takers in action as the dummies buy in at the top. Myself, I'm going to give it another 5 days before I even think of buying back in, and hopefully I get the opportunity before I have to go salmon fishing, which always seems to be a conflicting date with my trading. My buy prices are already set in my account to take advantage of certain indicators on several mining stocks. If they are hit I will be happy with my buy back prices. Then I look forward to our president and the Fed to mess things up even more and drive more people into the precious metals market and make this a very Merry Christmas And a Happy New Year! At which point 19.87 should be the floor and not the ceiling. Happy trading ! Mike

September 12, 2010 | Unregistered Commentermike

Mike,

Thanks for taking the time to add your thoughts, they are very much appreciated by the team here. Its certainly an exciting time to be involved with the silver market and the possibilities are numerous. We wish you well with your strategy which is similar to ours although we are expecting silver to keep going, but thats just us.

Good luck with the fishing, let us know if you catch a whopper! Days away from the screen can be very relaxing and help to clear the mind, a good thing all round.

cheers,

Bob K

September 13, 2010 | Unregistered CommenterSilver Prices

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