Urgent Silver Market Technical Update…
by Justin Bennett, Editor
Have you noticed the trading action in silver lately?
The white metal is kicking off 2012 with a bang. In fact, it’s up 24%
since the start of the year. That’s a sweet short-term rally no matter
how you slice it.
What’s going on? Why are investors suddenly so interested in silver
again?
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After all, the precious/industrial metal suffered a brutal
sell-off in the second half of 2011. What’s more, a good share of Wall
Street analysts recently turned bearish on both silver and gold.
They suggest both these metals have nowhere to go but down.
Yeah, right…
These guys are either intentionally misleading retail investors or
they’re flat out stupid. The fundamentals for silver have never been
stronger. Asian and Indian investment demand is through the roof, while
global industrial demand remains in a steady long-term uptrend.
Now, I can hear you asking, “If that’s the case, why did silver prices
collapse last year?”
It’s a great question…
So why did silver prices collapse last spring?
The CME raised margin rates through the roof in late April 2011. They
wanted to clamp down on excessive silver speculation. Of course, that
was after the metal had surged to just over $49… up 177% from its
mid-2010 price of $18 an ounce.
Long time readers know, I wrote an
article in
mid-2010 about an impending silver price breakout… before the metal made
that historic move.
But the aggressive action of the CME caused a stampede of selling in May
2011. Silver traders big and small ran for the exits. They knew the
CME’s sudden action would set off a cascading short-term wipeout in the
silver market.
But that was then, and this is now…
After dropping 46% from those April 2011 highs, silver is starting 2012
on the right foot.
Take a look…

As you can see, silver popped off the green support trendline in the
last few trading days of December. The bullish momentum is carrying
through into 2012 as silver’s currently pushing above $33.
And this is just the beginning…
The recent rally is the start of something much bigger for silver in
2012.
Why am I so bullish?
One thing’s for certain, the long-term technical picture is still very
bullish for silver. And not only that, but Ben Bernanke pretty much just
sealed the deal for higher prices this year. He recently announced the
Fed’s keeping interest rates at record lows through 2014.
That’s a change from last year when he said rates would stay at or near
0%
through 2013.
What’s it mean?
Bernanke’s creating the breeding ground for inflation.
In fact, some traders are calling the Fed’s recent move a sneaky version
of QE3. The reaction of the US Dollar index to the news pretty much
tells the story… it got creamed. And as you may know, a falling dollar’s
very bullish for commodities- including silver.
How high could silver go?
I’m looking for prices to rise to the $37 area (red resistance line)
over the next few weeks. At that point, we may see a bit of technical
profit taking. But in coming months, silver’s likely going to break well
above that down-trending red resistance line.
In fact, I wouldn’t be surprised to see silver retest the $50 area
sometime this year.
How can you take advantage of the coming rally in silver prices?
There are a number of great ETFs that track the price of silver. The
iShares Silver Trust (SLV),
Sprott Physical Silver Trust
(PSLV), and
ETFS Silver Trust (SIVR) are all viable options for investors.
Until next time,
Justin Bennett
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