Commodities Analysis: Silver Remains a Safe Haven Despite Recent Weakness
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Traditionally, metals such as gold and silver have been regarded as safe havens in times of financial turmoil.
In the current unstable economic climate, where even the prices of these two metals sometimes fluctuate wildly, some investors might ask the question whether this is still the case.
To give a sensible answer we have to take a longer-term view. The weekly chart below depicts the price of the silver spread betting market since March 2007.
We can see that on 19th October 2008 the price reached a low of just above $8.60. As a result, the current price of just below $32.00 represents a growth rate of nearly 400% in three years.
This growth is way above that achieved by any stock market index and is a clear indication that silver is still an excellent store of value, despite the fact that it is currently trading well below its recent maximum price.
The daily chart below offers a shorter term view of the silver market. This shows us that, after the disastrous drop on 22nd and 23rd September, when the price went from $39.80 to $30.80 in two days, silver has been moving mainly sideways.
The current price of $31.93 is slightly above the recent minimum. Commodities analysis suggests that silver is presently emerging from the Ichimoku cloud in a downward direction, however given the recent price behaviour this is not enough to warrant a short trade.
The blue Kijun Sen line is still in the cloud and a cautious trader would wait for a close below $29.93, which we briefly saw on 20th October 2011, before risking a short trade.
Any close above the Ichimoku cloud might be an indication that the long-term bull trend is resuming.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 30 November 2011).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade. Neither InterTrader nor CleanFinancial.com accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
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'Commodities Analysis: Silver Remains a Safe Haven Despite Recent Weakness' edited by DB, updated 01-Dec-11
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