As the arguments set out in the Gold Market update are equally applicable to silver, they will not be repeated here, and in this Silver Market update we will only discuss the differences worthy of note.
Whereas gold broke down from its uptrend in force since mid-2005 only this month, Silver broke down from its similar uptrend late in April and early in May. This doesn’t actually make much practical difference, for as we can see when the 2-year silver chart and 2-year gold chart are put side by side, where one goes they both go.
A significant difference between silver and gold is that because silver has underperformed relative to gold so far this year, if both metals drop then silver is likely to break below its January low at about same time that gold breaks below its March low. Thus, while the stop loss level for buyers of gold at this time would be set below the early March low, in the case of silver it would be below the January low.
The silver chart looks “uglier” than the gold chart right now, and with the price rounding over beneath a “Distribution Dome”, a series of lower highs and a trendline break, the downside risk is as obvious as the Marquis de Sade’s nose. However, as with gold it is holding up thus far at a point very close to its long-term moving averages, and there are signs of accumulation in various larger stocks. So it could nevertheless break out upside.
Clearly, this is a situation that is likely to break one way or the other soon. A key difference between silver and gold is that when silver drops the declines can be savage - much more severe than gold and you have to be fast to escape serious damage. For this reason it is considered prudent for silver bulls to wait until it breaks above the “Distribution Dome” shown on the chart before going long. This dome is now falling quite steeply above the price.
The content on this site is protected by U.S. and international
copyright laws and is the property of SilverSeek.com and/or the
providers of the content under license. By "content" we
mean any information, mode of expression, or other materials and
services found on SilverSeek.com. This includes editorials, news,
our writings, graphics, and any and all other features found on
the site. Please contact us for any further information.
Disclaimer
The views contained here may not represent the views of SilverSeek.com,
its affiliates or advertisers. SilverSeek.com makes no representation,
warranty or guarantee as to the accuracy or completeness of the
information (including news, editorials, prices, statistics, analyses
and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or
materials contained on or within this website, without the express
written consent of SilverSeek.com, is strictly prohibited. In no event shall SilverSeek.com or its affiliates be liable to any person
for any decision made or action taken in reliance upon the information
provided herein.
