Thursday, February 12, 2009

Silver- The Choice Metal



One of the strongest ETFs out there right now has been SLV (silver). This ETF has been moving higher since last November but has really accelerated to the upside over the past 4 weeks. Gold has also rallied nicely but silver has outperformed gold and is the choice metal in my opinion.

Part of the reason for silver's strength over gold is due to the long-term chart below. What we have here is a ratio chart of Silver vs. Gold over the past decade. As you can see, this ratio has held major support and is now moving higher. What this chart is telling us is that silver is undervalued compared to gold and that silver should now continue to gain over gold in the month's to come.

If we look at the chart above you will see that silver is now testing a resistance area which means this is NOT a good place to get long especially since silver is overbought. What I'm looking to do is buy a pullback to the 50 day moving average followed by some kind of buy trigger such a stochastic buy signal or a bullish candlestick formation etc.

Whether the metals continue to rally remains to be seen but if they do maintain their uptrends I think silver will be the metal to buy.

3 comments:

Anonymous said...

Hi Kevin,
thanks for all your posts.They present individual,insightful analysis.

Captain Dave said...

Please do keep us posted when you see a good entry point for silver.

Thanks Kevin.
-Dave

Anonymous said...

what do you perceive could be the reason for silver's performance?And thanks for the posts

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