The recent pummelling of silver prices appears to be running out of fuel, with poor mans gold finding some support around the $9.00 level.

In addition to this, note that the RSI for silver has recovered from being deeply oversold, and is now trending upwards, perhaps a sign of some strength building in the much beaten silver market.

Similar comments can be made regarding the MACD indicator, which is steadily moving north.

The most key part of the technical picture for silver at the moment however, is the descending triangle formation, which has formed over the last four months. If silver can break up through to say $11, and break the triangle formation to the upside, this would be a very positive sign from the technical standpoint.

Fundamentals for silver have deteriorated with the slowdown in economic activity lessening the demand for silver as an industrial metal. However, despite this lack of demand, physical silver bullion is very difficult to get hold of these days, and certainly not for $10/ounce. In addition to this, since the mining of other metals that produce silver as a by product is decreasing, so the supply of silver to the market shrinks.

In conclusion the fundamentals of silver may not be in as poor condition as first thought, and the investment community may begin to realise this soon. Watch for a break of the triangle to confirm a new rally in silver prices.

Until then, if you have a comment, please fire it in!

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