Today I will conclude the task assigned by Kingsley who was interested in the prospects for gold and silver. Last time I conducted a study of the charts for gold and today I will review the charts for silver. This will be my third inspection of the charts for the metal since 2013.
The last time was on March 12, 2014 when silver was trading for $20.88 and it was moving higher and testing the downtrend line. The price had moved up and through the 50 and 200-day moving averages and a golden cross seemed to be on the verge of forming. Unfortunately sellers continued to dominate trading pulling the metal back in line with the downtrend.
Silver is used as a store of value and has industrial applications. With the global concern that China’s economy is slowing down coupled with the anxiety over rising interest rates in the U.S. it should come as no surprise that silver has been selling off. In fact the metal has been in a downtrend that goes back to 2011 when the price came off the high of $48.50.
There are some calling for $100.00 per ounce silver in five years and $1,000.00 per ounce in fifty years. My analysis will not extend into those time periods.
Another probe of the charts will identify the status of the trend in play.
The three- year chart exhibits a relentless downtrend that has disappointed investors. What is also evident is the death cross that formed in September of 2014 and the resistance along the moving averages.
The six-month chart illustrates some base building at $14.50 that started in mid July. Make note of the sell signals generated by the MACD and the RSI mid May as the price pulled back from $17.75.
There is scant evidence pointing to a trend reversal at this time. The best way to manage this asset is to trade it not hold it.
Next time I will audit the charts for Encana Corp. (ECA TSX) for Scott.
Make it a profitable day and happy capitalism!