Originally published November 6th, 2011
Silver did what was expected of it last week, by reacting back to support in the $33.50 area, although it very briefly touched $32 intraday on Tuesday, and then, also as expected it bounced back. On the 4-month chart the action last week looks like a normal reaction, that may be a bull Flag, within a young uptrend that was signalled by the clear break above important resistance in the $33 area, which marked the top of the now completed intermediate base pattern.
Silver looks good here, and like it is preparing to break clear above the 50-day moving average, which is falling just above the price and currently acting as a constraining influence. The next upleg is expected to see it run at the more serious zone of resistance in the $37.80 - $39.50 area, which will be a bigger obstacle, as at this level it will run into supply from earlier buyers who were fleeced during the recent plunge and remain unnerved and ready to sell when they see prices improve.
The COT chart for silver remains strongly bullish with low Commercial short and Large Spec long positions and we saw some improvement in these figures last week.
Long-term the outlook for silver remains bright for reasons which are discussed in the Gold Market update, which boil down to governments and politicians, faced with insurmountable debt problems, continuing to employ QE for the foreseeable future in an effort to kick the can down the road for as long as they can, regardless of the inflationary - or hyperinflationary - implications.
© 2004 - 2011 Clive Maund. Legal & Disclaimer
for billing & subscription questions: email@example.com
for all other inquiries: firstname.lastname@example.org
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities.
Mr Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.
Although a qualified and experienced stockmarket analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.