Silver: Accumulate or wait and see?

At this moment, silver is trading at US$ 30.93 an ounce.

The 200dMA as a support has been compromised. The short term uptrend of the metal has been jeopardised.

Looking at the daily chart would sent jitters down the spine. Momentum has plunged into negative territory and one could only wonder if price is going to find a base soon.

Looking at the weekly chart, it is clear that the longer term trend is still up. It is also interesting to see that while negative divergences were quite clear in the daily chart, they are nowhere to be seen in the weekly chart. There is, therefore, no signal that silver's uptrend will have a major shift over a longer timeframe.

For anyone who believes that investing in silver is a hedge against the inherent flaws of fiat currencies and that much higher inflation is going to take place, any weakness in an uptrend is a buying opportunity.

Having said this, the flight to the perceived safety of cash especially the US$ amidst expectations of another recession and accompanying deflationary pressures will continue to see prices of commodities going down in the meantime. With people expecting prices to come down for all assets in a truly deflationary environment, gold and silver have not been spared.

It would certainly take some guts to continue buying more silver on further weakness in the near future. If the 200dMA is not recaptured as support, I will look to the 100wMA at US$26.21 as the next support and this is some way to fall.

Instead of buying at every drop in price, a wait and see approach might be prudent even for the very bullish.