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?