SILVER
May silver posted an inside day with a slightly higher close on Friday as it consolidated some of Thursday's decline. The mid- range close sets the stage for a steady opening on Monday. Stochastics and the RSI are turning bearish hinting that a pause or setback is possible near-term. Closes below the 20-day moving average crossing at 18.657 are needed to confirm that a short- term top has been posted. If May extends this winter's rally, monthly resistance crossing at 21.340 is the next upside target. First resistance is Thursday's high crossing at 21.325 then monthly resistance crossing at 21.340. First support is the 10-day moving average crossing at 19.728 then the 20-day moving average crossing at 18.657.
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On Thursday, silver soared to 21.24 (before closing at 20.13), its highest level since October of 1980. It is up 39% this year. This was a reaction today’s drop in the U.S dollar to a new record low, 72.97 against the Eurodollar. Gold closed lower at 979.50 after seeing highs at 994.30.
The economic times we are facing, specifically the weakness in the U.S. dollar, has brought investors to utilize the metals market as a hedge against inflation. The U.S. dollar is clearly under pressure from a technical and fundamental perspective. Many believe the U.S. dollar will continue to tank as precious metals retain their value. Silver is and looks to remain the best value in the commodities world. In the 1970’s, silver was at an all time high of 50 dollars an ounce. On an inflation-adjusted basis, that translates into $137.14. Similarly, gold, in 1980 was priced at $890 dollars per ounce, translating into $2542.85 today.
Investor and industrial demand for silver is easily outweighing a recent drop in consumer buying of the precious metal. In keeping with industry statistics, 45% of the demand for silver comes from the electronics industry. Thirty percent of demand is from the jewelry industry, twenty percent from silver’s use in photography, and just five percent from investment demand. The use of silver within photography is dropping with regard to the rising preference to digital cameras but the rising investment demand has made up for that decrease. The demand pattern is in a long-term growth mode. Silver is an industrial commodity. It is strategic and vital to growth. Demand could even be said to be slightly parabolic since population growth is parabolic and continuing silver demand has increased at a greater rate than population.
Consider the following points about Silver today:
· Silver has every monetary attribute of gold and is far more affordable to the general public
The economic times we are facing, specifically the weakness in the U.S. dollar, has brought investors to utilize the metals market as a hedge against inflation. The U.S. dollar is clearly under pressure from a technical and fundamental perspective. Many believe the U.S. dollar will continue to tank as precious metals retain their value. Silver is and looks to remain the best value in the commodities world. In the 1970’s, silver was at an all time high of 50 dollars an ounce. On an inflation-adjusted basis, that translates into $137.14. Similarly, gold, in 1980 was priced at $890 dollars per ounce, translating into $2542.85 today.
Investor and industrial demand for silver is easily outweighing a recent drop in consumer buying of the precious metal. In keeping with industry statistics, 45% of the demand for silver comes from the electronics industry. Thirty percent of demand is from the jewelry industry, twenty percent from silver’s use in photography, and just five percent from investment demand. The use of silver within photography is dropping with regard to the rising preference to digital cameras but the rising investment demand has made up for that decrease. The demand pattern is in a long-term growth mode. Silver is an industrial commodity. It is strategic and vital to growth. Demand could even be said to be slightly parabolic since population growth is parabolic and continuing silver demand has increased at a greater rate than population.
Consider the following points about Silver today:
· Silver has every monetary attribute of gold and is far more affordable to the general public
· Monetary worry was primarily U.S.-based in 1980; today it is a worldwide concern
· The U.S. was in far stronger financial condition in 1980 than today
· The Silver ETF did not exist in 1980
· Silver is a much smaller market than gold, and therefore any new buying (or selling) has much more effect on the price
· In 1980, silver hit $50 per ounce when there were at least two billion ounces of silver in bullion form; today there is less than one-fourth that amount.
Silver Trust (SLV) Profile as of 3/6/2008:
Total Net Assets - $3,586,299,883
Ounces of Silver in Trust - 172,431,756.300
Shares Outstanding - 17,400,000
Tonnes of Silverin Trust - 5,363.23
Note: No change in Total Tonnes from Thursday’s data.
· The U.S. was in far stronger financial condition in 1980 than today
· The Silver ETF did not exist in 1980
· Silver is a much smaller market than gold, and therefore any new buying (or selling) has much more effect on the price
· In 1980, silver hit $50 per ounce when there were at least two billion ounces of silver in bullion form; today there is less than one-fourth that amount.
Silver Trust (SLV) Profile as of 3/6/2008:
Total Net Assets - $3,586,299,883
Ounces of Silver in Trust - 172,431,756.300
Shares Outstanding - 17,400,000
Tonnes of Silverin Trust - 5,363.23
Note: No change in Total Tonnes from Thursday’s data.
posted by Larry Nusbaum at
5:31 AM
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