What a difference a day makes. Actually not really. I still think the prudent thing to do is to wait for some kind of silver price consolidation before thinking about deploying more funds into silver. The market’s reaction to the FED’S meeting and Bernanke’s speech are pretty clear. No need to waste your time watching or reading it. The printing and buying up of bonds will continue. So for now the consequences for the market are still the same:
- Commodities are still the place to be.
- Precious metals still offer the best protection.
- Stocks are perceived to be a viable way to protect from inflation.
- Over time the US$ Dollar goes lower. The longer this continues the higher the risk of losing reserve currency status.
I have updated the Silver price chart on my public list. Another great way to analyze Silver would be to use SLV – Silver ETF as a gauge as it allows for a volume analysis.
Up-to-date Silver price chart on my public list. (Click on the chart to enlarge)
- Silver – Sector Overview Chart Big Cap Stocks
- Silver – Sector Overview Chart Small Cap Stocks
- Silver Price – Long-term Chart
Today’s retest of the recent high is undeniably a sign of great strength. This kind of price action does indeed have the potential to invalidate any kind of Silver blow-off top assumptions. Silver has moved out of the price channel I drew into the chart and broken out to the upside. This could either mean a trend acceleration is at hand or that silver needs to base in order to be able to sustain such a steep angle of ascent.
Silver could either go ‘really’ parabolic here or it could rest in order to set up for something much bigger and much more sustainable down the road. In any case, I wouldn’t even think about fighting such a strong trend. But initiating new positions right here is extremely problematic. We are extended and there is no basing pattern providing pressure for entries that would provide sound risk control. I am simply holding on to my physical silver and gold positions but am only willing to buy more once appropriate pattern pressure develops. A 6 week basing pattern would be the minimum I’d want to see.
Even if Silver overshoots and touches, let’s say the 60US$ mark, I expect a trading range to develop at some point in time. The former 50$ all time high mark is a very significant price point. So I am expecting at least a few retests of that price level. Be it from the upside or the downside.
Risk control is the most important thing in trading. – Paul Tudor Jones
My public list with all my charts can be viewed here: