Friday, 25 March 2011

Gold prices are soaring but is it too late to buy in?

Gold at US$2,300 an ounce? John Kilduff, CNBC analyst and founding partner at Again Capital, lays out a strategy.

Thursday, 24 March 2011

Silver going for a new high.

Silver is now at US$37.71 an ounce. The bulls win. US$36 is probably resistance turned support for now. 20dMA is currently at US$35.04 an ounce.

In terms of momentum, the MACD has completed a bullish crossover with the signal line and it remains to be seen if it would form a higher high or a lower high. A higher high would be good news for the bulls while a lower high would sound a warning bell especially as price forms a higher high.

UOB is selling silver at S$47.59 an ounce.

Sunday, 20 March 2011

Silver is rebounding off support.

On Friday (18 March), I mentioned that "Technically, silver has tested the 20dMA which is now at US$34.22.  So, for anyone who would like to start a long position in silver and is afraid of missing the boat, initiating a position here could be a good idea. Buying at supports in an uptrend is conventional wisdom."

Looking at the latest technical chart, it seems that silver has rebounded smartly off the 20dMA. It closed at US$35.25 per ounce. The 20dMA is now at US$34.51 per ounce. UOB now sells silver at S$44.75 per ounce.

In terms of momentum, the MACD looks like it is beginning to turn up. It is still too early to tell if it would successfully cut the signal line on the upside in the week ahead although the histograms look like they are forming a higher low.

For sure, I am not a seller now. I am more interested in buying on weakness. A test of support provided by the 50dMA would be a fairly good proposition and that is currently at US$31.17 per ounce. With the current heightened tension around the world, I would wait and see.

Friday, 18 March 2011

Silver: Where are the supports now?

Silver's price has been very resilient in the aftermath of the disaster in Japan. This is reasonable since precious metals are seen as a store of value and during crises, investors would seek to protect their wealth. So, where are the supports now? Is the price rising further or would it correct?

After touching almost a low of US$33.60 two days ago, silver has risen to US$ 35.04 now. You might remember me asking if silver is once again experiencing a shallow correction.

Technically, silver has tested the 20dMA which is now at US$34.22.  So, for anyone who would like to start a long position in silver and is afraid of missing the boat, initiating a position here could be a good idea. Buying at supports in an uptrend is conventional wisdom.

However, the MACD completed a bearish crossover with the signal line a while ago and it suggests that there is a slowing down in momentum. Having said this, the MACD is a lagging indicator and in very rapid movements, it could be a bit late.

For me, I am going to keep an eye on those supports and buy on any further weakness.

Wednesday, 16 March 2011

Silver: Testing 50dMA support soon?

The MACD on silver's technical chart has completed a bearish crossover with the signal line. The 20dMA approximates US$34.21 at the moment. If the bearish momentum carries through, we could see the 50dMA tested and that is currently at US$30.89.

Tuesday, 15 March 2011

Silver testing 20dMA support.

Silver's correction is likely underway as it almost touched US$33.60 per ounce at one point a few hours ago.

The 20dMA is now at US$33.80. A top seems to have been formed for silver in the region of US$36 an ounce and if the 20dMA fails to hold, we could see price falling to test support at the 50dMA which is now at US$30.82.

For anyone waiting to add or to initiate long position in the precious metal, the time to do so could be near.

Saturday, 12 March 2011

Silver: Another shallow correction?

Silver retreated and touched US$34.20 but rebounded to US$35.90. It has yet to test support provided by the 20dMA at US$33.50. Of course, it is possible that it might not test support and head higher. TA, after all, only shows where the supports are. It does not say supports must be tested.

However, I believe that it is a matter of time that supports are tested. I do not like to chase prices higher. Going by the technical chart, there are certain signs that the upward movement is losing momentum. Candlesticks show that highs are all somewhat lower than that of five sessions ago while the lows have been getting lower in the last two sessions. Look at the MACD. It is closing in on the signal line and looks as if it might be forming a bearish crossover. This is the first time it has happened since end of January 2011.

I am looking to the 20d and 50dMAs as fair entry prices.

Thursday, 10 March 2011

Silver: The start of a correction?

Silver is now at US$35.24 /ounce, sharply lower and very different from how it was flirting with the US$36.00 mark in the last couple of days.

I would watch those supports. They are probably fairly good entry points if we believe that silver is going much higher in the course of the year.

Buying at supports in an uptrend is the way to go. Good luck.

Wednesday, 9 March 2011

Reasons to buy silver.

In a blog post of 25 September 2010 in my investment blog, ASSI, I asked: "Do I have a target price for silver? Silver reached its peak in value on 15 January 1980 when 1 oz of gold could purchase only 14.9 oz of silver.  Based on today's price of gold at US$1,299.70 an ounce, it would mean US$87.22 an ounce for silver!  Mind boggling, isn't it? That would be 4 times higher than the current price!  Of course, I am not suggesting that silver would hit that price anytime soon, if it does go that high at all. I am merely putting things in perspective. Remember where the price was in February? Good luck." See blog post here.

For a few days now, silver seems to be flirting with the US$36 mark. At the moment, it is US$36.38 an ounce:

Looking at the technicals, two reversal signals have appeared, a shooting star and a white spinning top. They are just signals and require confirmation. They could be violated and silver could go higher. Having said that, my belief, for what it is worth, is that silver would have to test support as provided by the 20dMA in time. When? That is the million dollar question.

I came across an article in Seeking Alpha which, towards the end, lists five reasons for buying silver:

1.  The Asian nations continue to be very heavy buyers of silver, and any pull back in metals prices will only bolster their commitment to the metals. 

2.  The demand for silver will continue to accelerate to the point that demand will eventually overwhelm supply.

3.  Recent corrections in the prices of precious metals have been both brief and surprisingly shallow.

4.  Silver will once again on a percentage basis outperform gold as the precious metal bull begins to accelerate toward a new leg of advance to the upside.

5.  The price of silver has a lot of catching up to gold to bring it back to the previous historical highs and I think this precious bull market has more depth than the one we witnessed in 1981.

Read full article here.

Tuesday, 8 March 2011

Silver: Divestment for an 86% gain.

A few days from now would make my initial investment in silver 1 year old. Today, I sold some silver in my UOB Silver Savings Account at S$45.17/ounce:

This is a gain of  86.19% in almost a year in Singapore Dollars (S$) terms. Although in US$ terms, the appreciation is more than 100% (i.e. from US$17/ounce to US$36/ounce), the weakening US$ means a smaller percentage gain in S$ terms.

Last night, I observed that silver broke resistance at US$36/ounce and was wondering if it would trend higher or if it would weaken to retest US$36/ounce as support. Unfortunately, it did not trend higher and, in fact, broke US$36/ounce on the downside. One could also say that it is still testing support since it is hovering just a few cents below US$36/ounce.

Looking at the technical chart, we see the formation of a shooting star, a candlestick with a long upper wick, in the last session. It suggests that bulls pushed the price of silver much higher as observed in my last blog post but the bears pushed it down again while Singapore was sleeping. Selling pressure was very strong. In an uptrend, such a pattern could be the precursor of a correction or even a reversal in trend.

Notice that the uptrend in silver has, in the past, tested support provided by the 20dMA before support broke in early January 2011. A retest of support at 20dMA is definitely probable and this is currently at US$32.34/ounce.

If a pullback to the 20dMA were to happen, it would represent approximately a 10% correction from its recent high. For anyone waiting to buy into silver, the 20dMA could be a fair entry point. Good luck.

Related posts:
Silver broke resistance at US$36/ounce.
How is my investment in silver doing?

Monday, 7 March 2011

Silver broke resistance at US$36/ounce.

I woke up this morning to an exciting development: silver broke resistance at US$36 /ounce! Looking at the 24 hour live chart for the metal, we see how it was resisted at US$36 for more than two hours before it broke out and moved higher. Zoom in on the red line and you would see it too.

Now, silver is trading at US$36.64 /ounce. The green line, which shows the latest price, is creeping higher.

I plan on selling some silver tomorrow. Will the price go higher or would it test US$36 as the new immediate support? Your guess is as good as mine. Let's hope for the best.

UOB buys from us at S$46.18 an ounce. Rates as at 07 March 2011 06:42:39 PM.

Sunday, 6 March 2011

Silver: Technical Analysis.

Silver's price has exploded upwards and James Turk is probably right in saying that "the silver shorts are losing control". With more believing in the long term uptrend of silver and shortists forced to cover their positions, silver could go much higher. Silver at US$50 an ounce in 2011 is the stuff of idle chatter now.

Looking at the chart above, it is easy to see lower highs on the MACD as silver broke US$30.00 an ounce towards the end of 2010. The negative divergence suggested that a correction was coming and it did happen. So, it was fortunate that I sold some silver when I did in December 2010.  See: How is my investment in silver doing?

Silver then went into a downtrend that did not last very long. It was in the region of about US$27.00 an ounce, approximating the 100dMA, that it bottomed in late January. I was waiting for it to go lower towards the 200dMA before accumulating but it never did happen. This was unfortunate for me. See: Silver broke short term resistance.

What this means is that many who were waiting for the same correction towards the 200dMA would not wait during the next correction. The 100dMA is now psychologically a strong support. Buy on every pullback is the mantra for silver investors now and chances of the 100dMA support holding up are higher now.

For anyone thinking of getting some exposure to silver now, buying on any pullback remains the prudent thing to do but waiting for a deep correction before buying in could be a mistake if my recent experience was anything to go by. The current supports for silver are at US$32.00 (20dMA), US$30.10 (50dMA) and US$28.33 (100dMA). Good luck!

Friday, 4 March 2011

Silver spiked above US$35 an ounce!

I was just routinely checking the price of silver and look at the green line! That's the latest price.  See how it suddenly spiked above US$35 an ounce?

It might be time for me to sell some silver on Monday if this keeps up.

Added at 9.18AM on Saturday (5 March):

UOB buys from us: S$44.63/oz (5 March 2011).

Related post:
Consider selling some silver.

Thursday, 3 March 2011

Consider selling some silver.

Silver's price has been on a tear. At this moment, it is pretty near US$35.00 an ounce. Exact price is US$34.83. If the momentum keeps up, we could even see it testing US$36.00 an ounce. So, do we sit back and congratulate ourselves? We can certainly do that but I would also take the opportunity to sell some of my silver.

I still believe in the longer term strength of silver and would accumulate on weakness. Looking at the 1 year chart, the 14dMA is at US$32.00 or so and would provide immediate support in case of a pull back. US$30.00 thereabouts seems like it could be a strong support. These might be good price levels for accumulation.