Tuesday, October 5, 2010

Silver at another 30 year high, next peak at ?

2+ year chart of the World Silver Index
The World Silver Index chart above has a fibonacci retracement drawn from the low in 2008 of $8.46 to the December high in 2009 of $19.50. This places the fibonacci level of 161.8 at $26.25 which is where the next high may be.

~2  month daily chart of the World Silver Index
It's easy to see that Silver has been in a bullish run since late July, early August. The stochastics are embedded and the trend suggests higher prices going forward. It may be safe to assume that most of the readers of this blog understand that no investment will continue to rise without a pull back or consolidation. Look for one sometime in October, then a continuation to the suggested fibonacci 161.8 level of $26.25.

The higher Silver (and Gold) prices are related to a combination of factors.
  • Seasonals
  • Indian marriages and the holiday of Diwali
  • U.S. Debt and the continuation of the debasing of the dollar currency
  • Financial uncertanty
  • Industrial demand (The economy actually looks better than expected)
  • Short squeeze
  • Investor demand. (There is much more coverage of Gold and Silver in the headlines). Larger investors that did not have exposure to the metals markets over the last 10 years want to increase their exposure to Gold/Silver positions to ~10%. (Suggested by some financial advisors now as high net worth individuals have questioned them as to why they have not seen the returns that Gold and Silver has provided over the past 10 years).

No comments:

Post a Comment