Death cross in the silver chart looks ominous for immediate silver price
Posted on 18 February 2013
Those readers trading silver for short-term gain ought to be thinking of selling soon. Not that this is the ArabianMoney approach to precious metals which we prefer to hold as a long-term hedge against the many other problems of the investment universe, and frankly because amateur traders generally lose more money over time than they make.
The 50-day moving average for the price of silver is approaching a ‘death cross’ with the 200-day moving average, normally a very bearish price development while COT futures in the commercial market are also flashing a danger signal. Consider this chart from silver-prices.net:
A major move down in the silver price is also wholly compatible with a big fall in the S&P 500 that technical analysts also now see coming (click here). Back in 2008-9 silver was one of the biggest losers, plunging an eye-watering two-thirds in value though rebounding in equally spectacular fashion to twice the price seen before the crash.
No other commodity or asset class showed such an extreme volatility in the dark days of the global financial crash. Would it be different next time?
It is possible which is why we are not rushing to sell silver. For if money also came out of bonds in the next financial crash then precious metals could be a very different story this time around, with a more modest sell-off to around $27 an ounce. Or more likely the price reversal back up would prove impossible to catch unless you were already locked into this market.
Volatile monster or friend?
Too hairy for you? Nobody ever said the superior absolute price gains of silver came free of charge. If you’ve been in this for a decade you know that. But you are ten times richer than when you started. No other asset class has delivered that performance over the past decade.
Stand firm and you will triumph again but bolt at the first sign of blood and you will be annihilated. The professional traders will take your silver off your hands at low prices and wait for the recovery.
However, while we can flag up the price warning this is a lousy way to try to time the market. ArabianMoney thinks the only way to deal with an extremely volatile asset like silver is to ignore the volatility and live with it, until prices go to absurd heights and then you must sell.
http://www.arabianmoney.net/gold-silver … ver-price/
Statistics: Posted by yoda — Mon Feb 18, 2013 12:32 am
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