Silver: The Sleeper Commodity
I’m going to put what’s left of my neck on the line and state that silver has finally formed a solid base and is poised to resume its massive bull market. The correction from the 2011 high was pretty ugly and expensive; this is to be expected in a long term bull market. Observe in the chart below that during the choppy conditions of the last four-five months, silver has described an “upside down head & shoulders” formation. This is bullish.
Industrial activity is starting to pick-up worldwide (at least it has hit a floor); the greenback is looking top heavy and silver has a lot of catching up to do with gold.
Remember that silver is perishable and that there is less silver in the world today than there was in the late 1970s when it was trading at an inflation adjusted $150 an ounce! At this moment, silver is trading at $17.30 an ounce. As it is a 5000 ounce contract, every dollar move in silver futures is worth $5000.
I suggest one always maintain downside risk control (i.e. put options)… And that what you do risk is something which won’t keep you up at night!
Energies & Metals Markets
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