We signalled a BUY on silver prices in anticipation of a short term upwards move of $1.00 to around $12.80 (spot). Previously we gave a BUY on silver for a short term upwards move of 50 cents and this trade worked out well, so hopefully we can replicate that success in this silver trade.

The December 2007 Silver futures contracts are currently trading at about $11.95, so we are down slightly on our trade at the moment, but not significantly so. As the chart above shows, silver prices are recovering after the drop down from near $13.00.

We have taken a spread bet on silver and signalled a BUY as we thought silver prices were set to rise near $13.00 (spot price) again in the coming weeks.

Of course we still maintain our long term bullish stance on silver prices and our target of $20.00 per ounce. However, along the way to $20, we occasionally see trading opportunities and if such opportunities present themselves we see no reason to cash in and try and make a few extra bucks.

We are satisfied with the progress silver prices have made since our BUY signal. Although silver prices usually fall hard and fast, the recoveries tend to be more steady. It is normal to experience some consolidation after a drop, before silver prices begin to move higher again. We are seeing this consolidation period at the moment, but it should not last for that long, especially with the summer doldrums coming to an end.

As readers of The Silver Prices Newsletter will remember, we see a rally in both gold and silver starting at the end of the summer. As the summer is nearly over we are not shying from our prediction and as the summer comes to an end, we will see the early stages of the next major rally beginning. In our opinion the best way to profit from this coming rally is by investing in quality silver stocks as documented in our free newsletter and in our silver portfolio.