Silver at US$43.05 an ounce!

There is a lot of fear. There is fear in the USA that their money could become worthless, well, almost. There is fear in the EU that more countries could go asking for bailouts and people even wonder if the EU could come apart. There is fear even in China and India which has seen them increasingly buying more gold and silver. The Chinese government is encouraging even its citizens to buy more silver. So, it is no wonder that silver's price has been going up and up.

Silver is currently at US$43.05 an ounce. The bullishness in the silver market has found new momentum and we see the MACD going past the last high and it is set to form a new high. What does this mean? The negative divergence has been negated! That is extremely bullish as it means that despite higher prices, buying momentum has strengthened!

If we look at the technical chart, we would see that the spinning tops or potential reversal signals failed to be confirmed, time and again. The bulls are powering ahead. So, what does this mean for us who are waiting to buy in or to buy more? Rush in and get some silver now? We can certainly do that. However, I am somewhat apprehensive as the RSI has been in overbought territory since the start of this month. Of course, in extremely bullish circumstances, it could stay overbought for a long time.

However, I have learnt not to chase as price goes higher and will continue to wait for a pull back to supports. Apart from the moving averages at 20d, 50d and 100d, a nearer term support has formed at about US$40.00 /ounce. This is quite obvious if we look at the candlesticks. So, a small long position at US$40.00 for people who have yet to gain exposure to the precious metal? With the MACD on its way to a new high, yes, this could be a good move and it would also be buying at a price that is about 7% lower than the current price.

There is also some concern that the S$ has been strengthening against the US$ and that we might not see much in terms of gains in S$ terms. Well, it would depend on how much silver is going up in US$ terms compared to how much the S$ is going up against the US$. If silver's price is going up simply because the US$ is depreciating, then, its price is out of whack. It should be lower and not where it is now!

My research has shown that silver could go beyond US$80.00 an ounce in time. When exactly would that happen? I do not know. In S$ terms, the gain could be less but with a potential doubling of silver's price in US$ terms, the US$ would have to halve in value for us not to see any gains in S$ terms. If that were to happen, the world economy would have to be a basket case, well, to my mind anyway.