Where next for silver?Silver Eagle Sales vs Silver Price: 2003 - 2010 ...excerpts
Bullion Baron
January 21, 2011
The first few years of the bull market show sharp increases in sales every December (this pattern also flows through earlier years all the way from the 1980s), I suspect this is either buyers increasing orders for last supply of each year or putting in orders for the following years coin, perhaps those more familiar with the release dates of the earlier ASEs could comment below. Regardless, when sales started to increase from 2008 onwards this seasonal buying hasn't been so prevalent (infact December 2010 saw the lowest monthly number sold since September of 2009).
One of the most interesting things I found was that the spikes in earlier years of the bull were to around the 2 million ounce mark and that figure is now almost acting as support as the sales spike downwards from even higher numbers (what were high points for early years are now lows for today)…
The second chart shows the annual tallies of ASE sales (for the past 10 years). It's pretty incredible how they have simply taken off since the onset of the GFC. The sales in January 2008 are where things really heated up. The previous two January's (in December 2006 & 2007) had recorded only sales of around 1 million per month, January of 2008 saw over 2 million sold…
With January 2011 ASE (American Silver Eagles) sales already at over 4.5m ounces it's looking likely that this year will continue the trend to an even higher number of ounces sold over the year.
Silver has broken down through support at $28, but with manic buying like we are seeing presently I'm just not sure that I see the price heading much lower from here.
I do believe we are heading into the third phase of the bull market…
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I did talk about downside targets for Silver a couple of months ago after the initial peak ($29.33) and pull back, however I will need to revise these figures given the price peaked higher after this. I will try and find some time this weekend to do update these targets.
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Personally I wouldn't try and time pullback buying, we are already closing in on a 15% correction in price from the peak. This is a significant correction already, although I wouldn't discount the possibility of seeing low 20s again (if only briefly).