Over the past 30 days silver has traded in a much narrower range than the previous 30 days. From May 16th to June 15th silver has seen a low of $32.89 and a high of $38.79. The range has become narrower as the last 3 days we have seen silver in the $35 range.
It appears that silver is consolidating and is waiting for the next catalyst to move higher. The announcement of QE3 will certainly send silver soaring but there are also has been a more subtle shift that has occurred.
There has been a shift between the dollar/precious metal relationship. The dollar is recently appreciating vs the Euro and the stock market. Historically when the dollar appreciates the precious metals decrease in price. This inverse relationship has recently changed, at least when it is in this direction. A dollar appreciation no longer necessarily means a drop in the silver price.
The Euro has declined vs the dollar due to social unrest. The dollar strengthening has not resulted in a corresponding drop in silver. Rather silver is consolidating at this current level. The relationship of strong dollar/weak precious metal prices has been replaced with the strong dollar, weak stock market. We have yet to retest the weak dollar/higher precious metal price relationship but QE3 will present that opportunity.
So the downside risk at these price levels are very small. Silver is certainly volatile and it's quite possible we can find an even more attractive entry point but all indications are that silver is looking for a catalyst to move higher, probably when the announcement of QE3 is a foregone conclusion.
It appears that silver is consolidating and is waiting for the next catalyst to move higher. The announcement of QE3 will certainly send silver soaring but there are also has been a more subtle shift that has occurred.
There has been a shift between the dollar/precious metal relationship. The dollar is recently appreciating vs the Euro and the stock market. Historically when the dollar appreciates the precious metals decrease in price. This inverse relationship has recently changed, at least when it is in this direction. A dollar appreciation no longer necessarily means a drop in the silver price.
The Euro has declined vs the dollar due to social unrest. The dollar strengthening has not resulted in a corresponding drop in silver. Rather silver is consolidating at this current level. The relationship of strong dollar/weak precious metal prices has been replaced with the strong dollar, weak stock market. We have yet to retest the weak dollar/higher precious metal price relationship but QE3 will present that opportunity.
So the downside risk at these price levels are very small. Silver is certainly volatile and it's quite possible we can find an even more attractive entry point but all indications are that silver is looking for a catalyst to move higher, probably when the announcement of QE3 is a foregone conclusion.
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