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In this article,
we would like to point your attention to the big picture regarding the silver
market - since both metals usually move together the below analysis should
prove useful to gold investors as well. (Click to
enlarge)
On the
very-long-term chart this week, emphasis is given to the TRIX indicator,
which has declined somewhat in the past weeks. This is a bullish signal for
the long-term as important developments usually occur after the TRIX reaches
zero. There is a possibility that this level may be reached in the relative
near-term, possible once we've seen the end of the summer decline.
A sharp decline
in silver’s price could cause a substantial decline in the TRIX, which
would be a healthy and normal development for the market. The coming decline
might appear scary at the first sight, but if it does materialize - please
keep in mind that it's something that will allow the market to move even
higher in the long run.
Previous
"second" rallies for the white metal have often been followed by
declines after silver failed to move above previous highs. After that we've
used to see corrections that took silver much lower - correcting 50% of the
preceding rally. Silver may or may not get this low in its next decline.
The current
retracement level is based on the 2008 low and the 2010 high. Since the 2008
decline was generally an unordinary development, the $14 target (as visible
on the chart above at the 50% retracement) might be too low, and perhaps the
$16 level would hold.
Summing up: Technically,
lower silver prices will be healthy not only for silver but also for gold and
mining stocks as well. We have seen massive rallies quickly follow severe
declines in silver’s price. This may, in turn, eventually lead to
higher silver prices, possibly the next rally would take silver to $25 - $35
area.
Disclosure: No
positions
All essays,
research and information found above represent analyses and opinions of Mr.
Radomski and Sunshine Profits' associates only. As such, it may prove wrong
and be a subject to change without notice. Opinions and analyses were based
on data available to authors of respective essays at the time of writing.
Although the information provided above is based on careful research and sources
that are believed to be accurate, Mr. Radomski and his associates do not
guarantee the accuracy or thoroughness of the data or information reported.
The opinions published above belong to Mr. Radomski or respective associates
and are neither an offer nor a recommendation to purchase or sell securities.
Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not
recommend services, products, business or investment in any company mentioned
in any of his essays or reports. Materials published above have been prepared
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regarding any information provided in these essays or reports. Investing,
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Przemyslaw Radomski
Editor,
www.sunshineprofits.com
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