Trying to tip the direction of the most volatile of metals is a futile task and we would never advise anybody to attempt to trade the silver market. Even JP Morgan is going to get caught out with its massive short position one day, and any idea that these are the true masters of the universe is surely buried by the $2 billion loss admitted last week.
However, if you are considering the establishment of a silver position you still need to decide a precise time to buy, you have no option but to do that. So on those grounds only you do have to think about the immediate price outlook and make your best guess.
Bob Kirtley of silver-prices.net notes: ‘Taking a quick look at the chart we can see that the 50 day moving average didn’t make the cross over of the 200 dma, that we were hoping for and so the pressure remains on silver prices. The drop below $30 that we have alluded to has now happened. We see this as at or close to a possible buying opportunity, however it could go as low as $26, so it could be worth the wait for slightly better prices.
‘Also note that the RSI has dipped below the ‘30′ level which is usually a sign that silver is oversold and that a bounce could be on the cards. This is not always the case and is not totally reliable, but it does suggest that the selling is overdone at this point.’
That is the technical view from the charts. ArabianMoney is very bullish on the long-term fundamentals for silver (click here). But we have always viewed a short-term sell-off along with just about everything else as a high probability. This seems to be where we sit today.
Like Bob Kirtley we also think that the mining sector equities could be a major opportunity in this sell-off and the ArabianMoney newsletter (subscribe here) has some neat ideas on how best to profit from this.
For as the printing of money by global central banks cranks up even further in the aftermath of a major correction then the only two currencies that they will be unable to print will be gold and silver. Quantitative easing is not alchemy!
This CNBC interview with Eric Sprott on silver is well worth listening to: