Last Updated : 02 September 2011
With Gold prices taking a tumble, investor interest is now turned to silver. After a strong consolidation in May-June, Silver prices have formed a trading channel, providing profitable opportunities to open new positions in the metal.
The chart below shows the long term support, the short term support (blue lines) and also the current price channel (red).
THE FUNDAMENTALS
-Silver fundamentals are extremely bullish, particularly since gold prices crashed and investor interest might turn to silver which has been in a consolidating phase.
-The US GDP growth is disappointing and so is growth in Europe. Inflation in both west and East are at high levels which will support silver.
THE STRATEGY
- The Price channel provides an opportunity to accumulate positions on price dips. Buy as price dips into the lower channel line
-The Long-term support is very important and has a good possibility to provide an excellent support for the prices provided favorable fundamental
- The Short-term support provides additional support in case fundamental factors cause prices to plummet below the long term support. The short-term support can also be used as the target once price breaks below the long term support.
THE TARGET
Target can be fixed at the previous all-time high which is close to $50. Investors should keep an eye on the volatility as prices go higher since when Silver prices fall, it tends to crash swiftly.
(The views expressed are a personal opinion of the author. Investment decisions should be taken only on personal considerations. The author can be contacted at deepak@commodityonline.com)
