Silver Update

Here's a new one. I know that I often discuss gold, and give gold updates, yada yada yada. You would think that I would put more commentary in regarding silver being that I have more physical holdings of silver than gold and the same story for stocks.

When I discuss one, I am usually discussing the other, but there are some differences. First off, silver and gold generally trend together, but not exactly. Silver also has many more industrial/medical uses than gold. It tends to follow the price of copper slightly, which is one of the reasons I love silver. Basically, silver is kind of straddling the fence. It is not looked at as pure money like gold, but it is not a base metal either. It's somewhere in the middle.

Let's give this a technical look. Well as of recently, the graph of silver looks a little more disheartening than gold's graph.

There's a couple items of importance to note here. First off, silver recovered the ground regarding the post-May correction much faster than gold and has already tested that high a couple of times now. You can see the obvious resistance level at $14.50-14.75.

I would like to discuss the RSI of this silver chart. It is not trading at the top of its range yet, which signals that there still might be some room to go. Unlike gold, once silver gets to the top level of its trading range, it doesn't tend to stay there too long. The RSI will be a good indicator of a pull back to the up-sloping trend line where it has found infallible support.

After testing that level a couple times we are again approaching it. Like gold, we are coming to a critical junction here. As you know, I like the two scenario outlook.

Scenario 1: Mr. Pessimistic says that a third failure at breaking the $14.50-14.75 trend line will signal a strong correction. First finding support at it trend line at $13.50, and if that support is busted, which it hasn't been since the major up leg started in September 05, it will then find support at $12.50. If that support is broken, which even Mr. Pessimistic doubts, we will find support at $10.50.

Scenario 2: Mr. Optimistic sees silver continuing its uptrend being that it isn't extremely overbought yet. He told me that we will break through resistance at $14.50 head to $15. There we will see brief resistance, and he makes a very important note. He told me that last year at this time, we saw silver jump 50% before correcting. That would put us at approximately $21-22.

Again I feel it's important to note that this is all trivial in the long run. I like to dabble in the technical analysis because I think it is interesting as well as challenging. Otherwise, I'm long my positions.