“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people. Source – The Declaration of Independence

Monday, August 20, 2012

Stealth Mode Rally in Silver Maybe not so Stealthy Anymore

I remarked last week that silver had been slyly working its way higher in very quiet fashion but was knocking on the door of overhead resistance. Today it broke that resistance and so far is doing it in convincing fashion.

Based purely on technical factors, it should try to make a run at $29 where heavier supply awaits. That stands between it and a handle of "30" which will most certainly catch the attention of the momentum crowd.

Take a look at the shorter term moving averages (not labelled). These are the 10 day and 20 day respectively. Notice that late last week BOTH MOVING AVERAGES crossed above the longer term 50 day moving average. This has not been the case since the middle of March of this year! Also notice that both of those are now trending in an upward direction as they pick up the upward shift in momentum.



You will also see the heavier blue line which is the 100 day moving average. That comes in near 28.83, a bit below horizontal resistance near the 29 level. Expect a battle beginning at that level and extending up to $29. This is one of the reasons I expect to see a fairly large amount of supply hit the market near this point. If the silver bulls can eat through and absorb that selling, it will mark a decided shift in sentiment towards the metal.

Downside support lies first near $28 and is staggered at 50 cents intervals below there down to $27.

I should note that this is occuring against a backdrop of a higher CCI (Continuous Commodity Index) which is beginning to move closer to the top of its recent trading range. Note also that this top of the recent trading range happens to correspond EXACTLY with a criticial Fibonacci Retracement level, namely the 61.8% near 566.

If the CCI can clear 570 with gusto, Silver will see an increase in buying.

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3 comments:

  1. It will be interesting to see what happens in the next few days. Given how silver just took off today at exactly 11:10am EDT, I wonder whether $29 will be an issue. It just seems like someone wanted it with little regard for price.

    Otherwise, they could have bought slowly while keeping it in the narrow range it's been sitting in for the past few months.

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  2. Dan

    do you have any thoughts on the ETF SLV - The golden truth site seems to think owning SLV will have dire consequences.
    Perhaps I should sell my position and just buy the physical but wondered if you might address this in this comment section or in a blog. If not, no worries but just wondered. We are all lucky to have this site.
    You are a voice of reason and one of the few folks in this area that are pragmatic.

    ReplyDelete

  3. Paper is for trading. Physical is for owning. That's all you need to know. SLV will go to $0 someday while the price of silver skyrockets.

    ReplyDelete

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