Is Silver The Next Gold?
With gold hitting a historic high this past Tuesday only to have it taken out yesterday, I thought it might be timely to take a look at another precious metal on the move: silver.
Specifically, do the charts and the basic fundamentals support the sense that silver is set to continue its recent run as well? And perhaps more tantalizing, is there any evidence that points to the idea that silver can take out its more than thirty-year-old record high of roughly $50 per ounce?
Based on a scrubbing of the charts and the fundamentals, I am more inclined than not to believe that silver's future may look like gold.
The two-year chart of silver is very strong with an even uptrend and several successful tests of support.
The three-year chart of silver shows that the precious metal has recovered from the routing it received mainly in the second quarter of 2008.
While silver's long-term chart (not shown) is one of the more bizarre that I've seen with the precious metal's record high made back in 1980 hanging over it since that time ($50 per ounce to a low of around $4 per ounce), I don't think it means silver will be unable to rise above that shadow and perhaps the case can be made that the peak puts a precedent in the chart for silver to shoot for and overtake.
Overall, the charts of silver look good and support a continued rise, but what about taking out that record price? In my view, the charts fail to provide that answer and so we must turn to the fundamentals.
In reading up on silver, it seems as though there are at least six good reasons to think it is set to continue to rise.
Summed up, silver does truly seem like the "dual-purpose" precious metal. Put more eloquently by Jeffrey Christian of CPM Group, "Silver is really attractive because you have strong investment demand and strong fabrication demand. You buy gold when you think the world is going to hell in a hand basket. You buy copper when the economy is booming. In between those two, if you're a bit confused, you buy silver."
Sounds like the perfect precious metal for the present moment.
Will Silver Break Its $50 Peak?
I certainly don't know the answer to that question and I don't think the charts combined with the fundamentals provide it clearly either.Abigail F. Doolittle
Peak Theories Research LLC
Abigail F. Doolittle is the founder of Peak Theories Research LLC, which is an on-line research firm dedicated to providing investors with a macro long-term view on the financial markets and the economy. The firm's research begins with the analysis of charts and then ties in various economic fundamentals to better understand the trends pointed to in the charts. She has more than 12 years of experience in the financial services industry.
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