Goldman Sachs seems to be in agreement issuing a 12-month silver price target of $28.20 U.S. with silver slipping as low as $24.70
Beware! It is treacherous market right now, so you probably
shouldn’t be buying more material than you expect to need in the next
month or so.
I spent a few hours on the weekend trying to learn about the silver
market. What I learned is that most commodities sites are a sales
pitch, but there are a few charts and statistics that give a pretty
clear indication that silver is an investment fad right now. There is
a fairly large surplus of silver versus industrial and jewelry
demand. The demand that is driving the price is investment demand.
Higher prices also drive mining and recovery of scrap, increasing
supply. The volume of silver traded has abruptly increased a thousand
percent or more since early this year. I think a $25 to $30 price
after things settle down is very likely. Maybe even lower as users
find alternatives materials and ways to conserve and suppliers get
stuck with big inventories.
Silver isn’t gold. It is like gold in some ways, but there is a lot
more money invested in gold. As a store of value gold is a much
stronger part of world financial culture. The silver market is
smaller. Nobody has enough money to corner the gold market on their
own, but cornering the silver market, or at least manipulating it,is
within reach of some big hedge funds and billionaires.
Meanwhile, those of us who use silver for our work need to cope with
the price. I think buying silver for a long term investment right now
is a bad idea. Better to keep an eye on the 200 day and 60 day moving
averages and try to time your purchases to avoid the days when the
price spikes too far above those figures. Market number crunchers
throw out their theories about “support” levels and “resistance”
levels. Of course they are not always right, but now they are saying
the support level for silver is around $33 to $34, which means if the
price falls to that level there will be buyers getting in who will
then drive the price back up. If you see the price drop to the
support level, that is a good time to buy if you need the material.
If you wait hoping that it will go even lower you might get lucky,
but most likely in this kind of volatile market it will turn back up
after hitting the support, just as it will turn down after reaching
resistance levels. But the price is moving up and down pretty
suddenly, so you have to be ready to move quickly to take advantage
of a price dip.
kitco.com is a pretty good source for reliable market
Some of those other silver and gold sites have all the window
dressings of technical but it is all designed to
convince you to buy now as an investment.
Stephen Walker
Andover, NY