Silver Still On Track

Print This Post | Topic: Silver — November 19th, 2009

As the chart above shows silver prices have made steady progress since July 2009. The RSI is still below the ‘70′ level so has some room to accommodate further gains in silver prices. A golden crossover on the MACD is a positive sign for silver. The gap between silver prices and the 200dma is cause for concern so we need to keep an eye on it, as it equates to around a 27% increase over the moving average.

Should this gap increase to around the 50% level then we will need to proceed with great caution as a pull back could be on the cards. However we will cross that bridge if and when we come to it.

For now we can see that big brother Gold is still holding up well and managing to eek out gains on a daily basis which in turn is positive for silver prices. Sooner or later gold will decouple from the dollar and go its own way regardless of how the dollar performs, but for now the inverse relationship appears to be in place, even though it is not as strong as it has been in the past. Now there some commentators who are calling for a rally in the dollar which they expect to put a cap on gold and silver prices. We don’t go along with that view, firstly we see the dollar resuming its trek south and expect it to test the ‘72′ level in the near term. At the moment the dollar is finding some support at the ‘75′ level and that in itself has pundits calling for a reversal in the dollars fortunes. Time will tell. Precious metals are gaining in popularity on a daily basis and will continue to do so even if the dollar stages a mini rally of which there have been many on its way to an all time bottom.

The silver stocks are a different story as most of them are displaying signs of being well and truly overbought suggesting that a correction is now on the cards. This may well happen however we intend to hold onto our core positions unless an unbelievable spike occurs sending all the indicators off the charts, in which case we will be tempted into banking some profits.