Agoracom: Small Cap Investment - Golden Minerals Company - Silver in a dangerous position.....

Welcome To The Golden Minerals HUB On AGORACOM

Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.

Reply New Message

Back To Forum List View

bujjai

Rank: Vice President [?]

Points: 1488 [?]

Votes: 32 Score: 3.0 [?]

Your Vote:

Please Log In to Vote

Did you know? You can earn activity points by filling your profile with information about yourself (what city you live in, your favorite team, blogs etc.)

Silver in a dangerous position.....

posted on Nov 10, 2011 11:07AM

A Deadly Sign for Silver

By Jeff Clark

Thursday, November 10, 2011

Precious metals bulls are getting all worked up over the price action in silver. Why shouldn't they? The price of the metal is up 18% in just the past three weeks. It's showing a 10% gain on the year. And analysts are predicting more gains to come.

All of a sudden, everyone loves silver.

I love silver, too. But I'm not buying it here. Not after what happened last week. Take a look at this chart…

Last week, silver's 50-day moving average (DMA) crossed below its 200-DMA. Technical analysts refer to this action as a "death cross," and it is considered a bearish development. This is textbook technical analysis 101. Everybody who pays attention to charts knows this is a bad sign.

But ever since the death cross occurred, I haven't heard anyone talk about it. Not a single soul.

To be completely honest, I'm not a big fan of following the 50- and 200-DMAs. They're just too popular. Everyone else pays attention to them, so their use as a technical tool is diluted. I prefer to look for signals no one else is following.

But the death cross on silver's chart is a clear bearish sign… And no one noticed it. That makes me want to pay attention.

It has been three years since the last silver death cross. In September 2008, the 50-DMA crossed below the 200-DMA… And the price of silver dropped 30% in the next two months.

If we get the same sort of action this time around, the price of silver could fall as low as $25 per ounce by the end of the year.

Please understand that I'm not predicting that severe of a decline. I just won't be surprised if it happens. But I am suggesting that if you're looking to buy silver, you may get a better opportunity to do so a few weeks from now.