Silver Market Update

By: Clive Maund | Sun, Jan 8, 2006
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Silver is now largely subject to the same dynamics as gold, and this is reflected in the current remarkable similarity between the silver and gold charts. The powerful uptrends in both metals are being driven by the same overriding forces, which are tending to make the fundamental differences in the supply and demand situation between gold and silver look like irrelevant detail. This being so, what has been written in the latest Gold Market update applies in almost equal measure to silver, and thus I am largely relieved of the task of writing a separate Silver Market update, and you don't have to read the same arguments twice.

Thus, for the outlook for Silver you are referred to the Gold Market update, with the addition of the detail differences set out here.

The striking resemblance between the silver and gold charts is obvious when the two 6-month charts are placed beneath each other, as they are here. On these charts we can see that silver experienced a much more severe reaction than gold on Thursday, but then went on to stage a fine strong recovery on Friday, closing near the high, and above Thursday's close. Thus, like gold, there is a strong probability that silver will break above its December highs next week, despite being considerably overbought as shown by the gap between the price and its 200-day moving average. Remember that in a powerful bull market advance an overbought condition can persist for a long time as the price continues higher.

The chief difference between silver and gold on the 5-year charts is that whereas gold's uptrend has been comparatively steady, the insanely overbought condition that had developed in silver by April 04 led to a long, roughly triangular zone of consolidation before the advance resumed.


Clive Maund

Author: Clive Maund

Clive Maund,

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

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.

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