Is Silver’s Run Up Over?

by Jack Lee

Last week we saw the price of silver climb 1.5% based on little more than a mildly favorable FOMC report that suggested cash rates shall remain unnaturally low for longer than we expected. This has kept the price of silver supported, but for how long and that’s the rub. Investors worry that silver set for a tumble and sometimes investor sentiment is enough to tank a stock or in this case an ETF like SLV.

If the Feds leave the cash rate low it could add to silver’s climb, but don’t get your hopes up too much. This is the week that Janet Yellen, Chair of the FOMC will testify before the Senate Banking Committee and the House Financial Services about the Semi-annual Monetary Policy Report. Yellen has hinted recently that she thinks the economy is plugging along ok and inflation isn’t a great concern at this time. This could push silver under $19 an ounce and so goes SLV too.

The fact that silver is off to a terrible start this week and erased all the gains of last 3 weeks and a lot more, does not bode well for a bullish silver spot price. Yesterday’s gloomy headlines read,” The price of gold experienced today the sharpest price decline of 2014. Although it was usual to see these corrections last year, they have been scarce in 2014. Gold futures in USD closed 2.18% lower on the day while silver futures in USD declined 2.24%.” Bottom line; This probably isn’t the time you want to be in silver.

Disclosure: Author has just gone short on silver ETF (SLV)

UPDATE: Events as of 7/16/2014 in Iraq, Israel and the Ukraine have spooked the precious metals market, scared money runs to precious metals…shorting is not advised.

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8 Responses to Is Silver’s Run Up Over?

  1. bob says:

    When do you think the price go back up?

    How far out are you short?

  2. Post Scripts says:

    Bob, precious metals can turn on a dime, but I try to get a week or more direction out of it before reevaluating my position. I’m not trading options, just shorting stock, so there’s no time limit. I pull the trigger when I see the signals and sentiment trending one way or the other.

    Re signals I like to use the MACD, RSI, VIX, Bollinger bands and DMI and couple that to the headlines, I get pretty good odds that way.

    Yellen’s comments were not dramatic enough to move the market much, which is probably what she wanted.

    Silver will really trend up when countries like China and India start buying again, but until then look for channeling between 18.50 and 22.50. You can make a lot of money playing the channel if you’re nimble.

  3. Harold says:

    And ….Jack be nimble! 🙂

  4. bob says:

    And Jack be quick, Harold….

    I dunno though…I see silver up today. Timing markets is very difficult. Very few people can do it consistently enough to make money. Considering trading costs you have to consistently outperform the market market just to break even.

    I worked with a professional trader a number years back trading commodity options and futures (including gold and silver) and lost money.

    I always ask myself if trading markets is a practical way to make money why are there so many newsletters and people offering other advice on the subject? If these experts can make enough profit trading why do they even need to sell their advice? If they can profit trading they should be able to make a living trading their own accounts and not have to sell advice.

    Mark Hulbert tracks newsletters and his research indicates very few people can outperform the markets and the odds of doing so over longer periods are very low. That’s why people like Jack Bogle recommend being well diversified and using asset allocation instead of trying to trade in and out of markets.

  5. bob says:

    Dang, and now silver is really up along with gold after that Malaysian airliner got shot down.

    Just goes to show you can really get yer you know whats singed when trying to jump over those candlestick chart patterns…

  6. bob says:

    Just goes to show you can really get yer you know whats singed when trying to jump over those candlestick chart patterns…

    All the while taking it in the shorts. 🙁

  7. bob says:

    But for all I know Jack may be nimble and Jack may be quick and Jack may even be able to jump over the candle stick…candle stick chart that is. 🙂

  8. Post Scripts says:

    I cashed out as soon as the news broke. You have to be nimble alright, the world is subject chaos. I am staying away from precious metals until they calm down. Right now nobody knows what could happen! Its nuts.

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