SILVER: TIME FOR ENTRY---NOW
THE TIME FOR ENTRY: NOW
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by: Eric Parnell September 13, 2011
The performance of silver has been generally unexciting since my previous post on the white metal from August 22. But despite these recently uneven results, now may be a good time to establish positions if you’re looking to get long.
Before going further, I wanted to reiterate that I have been bullish on gold (GLD) and silver (SLV) for the last several years, supported by the thesis of hard asset protection against aggressive monetary stimulus, pricing instability and currency debasement. All of these factors remain as supportive as ever for the white metal. While I exited my silver positions just before the peak in early April 2011, I have since reinitiated this allocation since it established a bottom in early July.
Since my last post on the topic on August 22, silver has been chopping back and forth in a modestly upward sloping trend. In that post, I identified several support levels and potential entry points on the iShares Silver Trust (SLV) including the 50-day moving average, the $37 price level and the 200-day moving average. Despite chopping in recent weeks, silver has managed to comfortably hold above all of these support levels. That is until today.
In my previous post, I identified the 50-day moving average as the idea entry point for silver. Not only was it a recently tested support level, but it also had the $37 per share and 200-day moving average support levels below it in the event of a technical break.
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Silver hit this particularly attractive entry point yesterday. During today’s trade, silver touched its 50-day moving average for the first time in over a month, only to bounce modestly higher. Thus, if you are interested in buying silver or adding to existing positions in silver, it may be worthwhile to execute on this decision sooner rather than later.
Of course, it should be noted that silver is notoriously volatile. As a result, allocations for silver are not for the faint of heart. Moreover, support levels should be watched closely on any positions. If we see a break to the downside in silver, it may warrant exiting positions quickly depending on the underlying market conditions at that time.
Disclosure: I am long SLV, GLD.
This post is for information purposes only. There are risks involved with investing including loss of principal. Gerring Wealth Management (GWM) makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made by GWM. There is no guarantee that the goals of the strategies discussed by GWM will be met.