Find Out Where Silver Prices are Headed in 2013

Which way is silver headed in 2013?  Silver prices since  mid 2011 have been tightly clasped in a broad band between $37 on the upside and $26 on the downside. While the initial oscillations had been large, off late the movement without giving clues to direction is oscillating in a narrow range of $35- $29. While the price movement has been directionless, we thought that before undertaking an analysis of the fundamentals we should undertake a quick  technical analysis of the spot silver prices to spot for clues of the likely future movement.

Silver Technicals not giving clues to market direction

Silver saddled between $29 and $33

The downward sloping trend line from the recent $50 high was challenged at $35. At $35 silver made a 5th lower top and then retraced back below the $30 level. While the markets have reversed form there and moved up marginally, only a closing above $33 will be bullish for the stock. Once $33 is taken out then we would be watching the level of $35, which if Silver can surpass, then we would be in for a very explosive rally. However the move could take time and Jupiter in Taurus sign (sidereal) can be quite painful and the pain could last until May.

What is encouraging about the previous down move is that on a lower time scale silver has done a flat pattern formation (similar to gold) and taken support at the 61.8% retracement of the previous rally from $26 to $35. One eminent Technical Analyst, Alf Fields expects that the recent take down of the precious metals clearly indicates that the correction is almost over and prices should now start storming on their way up. [Link]

Caveat: If silver breaks $29 then the upside is under threat and then $26 would be our next support level. Until then we maintain our bullish bias.

Meanwhile Fundamental factor predict the tug war to continue

The global economic price drivers  are virtually intact -.

• Silver Coin sales and ETF investment remains at an extremely high level
• Central Banks  continue to be buyers of  gold at all price points
• Asians continue to be big buyers of precious metals, gold and silver,.In particular China is rumoured to be a very aggressive buyer of Gold to augment its reserves. Once this is made “official” the prices of gold would only go through the roof and silver is expected to follow it in sentiment
• On the supply side, the underground reserves are good for only about 8 -10 years.
• New resource finds are trailing requirements
• Above ground reserves have virtually dried up. Its only time before the demand supply equation breaks up and the shortages loom to raise the prices of silver.
• The mindless printing of money by global Central Banks to counter the economic turmoil is almost certainly going to cause rapidly rising inflation; which is a big positive for precious metals.
• The recent fiscal cliff resolve is not expected to lead to any budget cuts and the Feds dollar for debt program is expected to lead to enhancing debt by nearly $ 4 tr.

Despite the relative bullish background for the long term price of silver certain events which have taken place in recent time could keep the lid on the price of silver.

• Majorly the recent dismissal by a federal judge of the class-action silver market-rigging lawsuit against J.P. Morgan Chase & Co. should encourage further short selling of silver.

• India, which is a major buyer of gold along with China, is expected to reign in gold imports through increasing duties and imposing restrictions on import quantities. These restrictions are being applied to shore up precious foreign exchange and curb the countries widening fiscal deficit. This could lower demand for gold and ease demand supply pressures and lower gold prices. This in turn would affect the price of silver as both are closely related. 

• Demand for silver from the solar photovoltaic industry was much lower than anticipated in 2012. With increasing prices of silver, the solar cells industry cut back on the usage of solar paste leading to a fall in silver consumption to 40 mn oz from the previous year’s record breaking 60 mn oz. Although the solar cells industry is expected to grow at 10%, it remains to be seen how much the industry scales back on silver consumption. With no substitute for silver, it is not expected to decline much. However growth would be slower than anticipated previously.

Considering all the above we believe that prices would continue to remain directionless and hence Silver technicals should be  the first indication for future price direction. We would be mildly bullish on the event prices break $33 on the upside and go short should $29 be violated on the downside decisively.

So where do you think the price of silver is headed ? Let us know what you think.

Before investing please make your own thorough analysis or speak to a qualified Certified Financial Planner / Advisor. Also read the disclaimer below.

Disclaimer: This blog is the personal blog of Vinit Bolinjkar. The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

	Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Vinit Bolinjkar
Winning Trades

Tel: | Mobile: +91- 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

More interesting reading from Winning Trades

• Technical Outlook of the Indian Pharmaceutical Sector December 2012
• Wockhardt top pick in the Indian pharmaceutical space
• Burning Oil: Geopolitics of the war against Iran
• Gujarat Mineral Development Corporation – mineral resources stock to power your portfolio
• Four Principles of Stock Selection: Video interview of Kukkuji
• DEN networks – a multi bagger stock idea for India
• Silver price in preparation for a big rise

Silver price in preparation for a big rise

Silver may be setting up for a sharp price rise and  though I did not report the recent spike, it is never unexpected. Though silver clearly is a low risk high yielding investment opportunity, before jumping to give a BUY call I would like to see silver close above the $29 level. This breakout has a target  of $31, which is the next immediate resistance level. Once $31 is cleared then all over head resistance would have been taken out and would put Silver  firmly in a bull grip.

The following two charts for the long term and short term clearly enumerate our above stand.

Silver price all set for a big rise

Short term silver is a low risk buying opportunity with a rally target of $31

COMEX inventory reduction favorable for bull case justifying low risk entry

Having examined the charts we now look for supporting evidence to examine the probable causes why silver would rally. Already the physical inventories at the exchanges are declining. Silver inventories during the sharp take down in the price of silver to $26 levels had seen inventories peak. Typically silver prices follow an inverse correlation to these inventories and hence declining inventories is a good sign for an up move.

Geopolitical risks affecting the already acute supply clearly spelling high gains on investments ahead albeit with low risk

Also on the supply side a lot of geo-political events are taking place which could be a set up for the the long term bull market. We already know that silver supplies mainly come from the the Latin American countries-mainly Peru and Mexico. Both these countries have been subject to violence amongst the miners and this could adversely affect supply lines in an already tight silver market.

Further resurgence of nationalization in these countries is also having an untold impact on the investment mood among global silver producers and they are now hesitant to invest in these countries given this uncertainty. Already Pan American Silver has suspended its investments in its flagship project Navidad due to these very fears. Bolivia another major silver mining country is also considering nationalization of one of the reportedly largest undeveloped silver deposits. Cumulatively these countries of Peru, Mexico, Argentina and Bolivia contribute almost 43% of the tiny silver market and can wreak havoc with supply lines.

This combined with the rising global political uncertainty, potential conflagration of the Iran war and the global debt situation creates for a potential gigantic spike in the price of silver. Further with the possibility of gold being included as a Tier 1 asset it is possible that the former glory of silver would also be restored in sentiment to the increased importance to gold.

Considering all the above it is very evident that there exists  extremely low risk and high gain potential for investment in silver and  one may consider buying physical silver with a technical break out above $ 31 and keeping a far stop of $26.

Related reading from Winning Trades

• Why silver is the best investment over the next decade
• Tiny silver to take on mighty gold
• Global OTC Derivates – Weapons of mass destruction (WMD) infographic
• Burning Oil: Geopolitics of the war against Iran

Related reading from around the web

• Silver Linings on the Horizon, says Upcoming Trading Forecast by… (prweb.com)
• Watch For Silver Prices To Breakout Higher (SLV, AGQ, ZSL, PSLV, SAC) (etfdailynews.com)
• Watch Out For A Silver Breakout Higher (safehaven.com)
• CFTC’s Bart Chilton Assures Silver Price Manipulation Probe Not Over (SLV, AGQ, PSLV, ZSL, GLD) (etfdailynews.com)
• Expect Major Silver Price Spike As COMEX Inventories Decline! (socioecohistory.wordpress.com)
• Lord Rothschild bets against the Euro/Silver advances above the resistance $28.50 (sgtreport.com)
• The Dumb Money Hates Silver; Why It’s Time To Go Long The Metal (AGQ, SLV, GLD, ZSL, PSLV) (etfdailynews.com)
• Silver Linings on the Horizon, says Upcoming Trading Forecast by Trading with James (prweb.com)
• Long-Term Technical Outlook for Gold and Silver (safehaven.com)
• Silver, Wine, Art and Gold (SWAG) To Protect From Inflation (zerohedge.com)

More interesting reading from Winning Trades

• Wockhardt top pick in the Indian pharmaceutical space
• Burning Oil: Geopolitics of the war against Iran
• Gujarat Mineral Development Corporation – mineral resources stock to power your portfolio
• Major correction in gold seen if price breaches $ 1500

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

	Vinit Bolinjkar Head of Research, Ventura Securities Ltd

Tel: | Mobile: 0 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

(function() {
var po = document.createElement(‘script’); po.type = ‘text/javascript’; po.async = true;
po.src = ‘https://apis.google.com/js/plusone.js’;
var s = document.getElementsByTagName(‘script’)[0]; s.parentNode.insertBefore(po, s);
})();

(function() {
var po = document.createElement(‘script’); po.type = ‘text/javascript’; po.async = true;
po.src = ‘https://apis.google.com/js/plusone.js’;
var s = document.getElementsByTagName(‘script’)[0]; s.parentNode.insertBefore(po, s);
})();

Return of QE provides low risk buying opportunities in Gold and Silver

Big 4 Central Banks lining up for QE at their policy meetings

With the Central Banks already having added $6 tr in money printing, they are set to print for even more more years given the lackadaisical state of Euroland and US purchasing power which is threatening to blow off. Everyone is looking back to the U.S. Federal Reserve, European Central Bank , Bank of England and Bank of Japan to stabilize the situation once more. And more quantitative easing is definitely up for grabs as it gets back on the agenda for all their upcoming policy meetings. This provides us with low risk entry into the precious metals markets.

If QE is delayed any further then the world will be stuck with a wave of banking holidays starting with the top 9 Banks in the United States through the plunging OTC derivatives contracts

This clearly means that money printing is very positive for both gold and silver.

Get gold and protect yourself

If you want to leverage off gold try silver

For the benefit of our readers I am going to start a new series of articles “Gold is Money”. I recommend to subscribe to the blog posts by clicking on the RSS feed at the top of the page on the left pane OR by subscribing to our follow blog by email again in the left pane. This we suggest as some of the articles could be 3000 words and you would enjoy reading them at leisure.

Also with the view that more readers benefit from this new series why not promote it on your social media networks and to other social bookmarking sites like stumbleupon, reddit, delicious, digg, diigo, newsvine, technorati etc which are given below. All you have to do is press the buttons and voila they go to all the sites and search engines. Thanks in advance for your support.

Finally we have added a FB fanpage https://www.facebook.com/WinningTrades/app_208412272531040 and we could surely do with a like.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

Vinit Bolinjkar Head of Research, Ventura Securities Ltd Tel: | Mobile: 0 9730836363 http://winningtrades1.com http://in.linkedin.com/in/vinitbolinjkar

Tiny silver to take on mighty gold?

Silver at $37 taking on mighty gold at $1788 sounds a little preposterous. But eventually in our own life time or perhaps as early as in this decade itself silver will be rubbing shoulders with gold in price levels. I would expect this to happen even much sooner than that as the shortages of silver begin to bite.

The following presentation Why silver is the best investment over the next decade is a treatise on the history of silver, its demand supply and pricing and where it is expected to go.

The following picture shows the movement of silver which I expect to happen over the medium term and long term.

Silver price target of $140 -400 on basis of Elliot wave perspective

One would wonder – “if all this is known to the market then why would the price is not up in the clouds already?” Th easnwer lies in the suppression of the silver prices by mighty western bankers whose very bane is going to be silver itself. The following chart shows what the long term price implications of silver are.

Silver log chart shows dizzy silver prices in the long term

QE to infinity could well mean silver would rally to infinity
We all know that the OTC derivative contracts are all bleeding the western banks and that the Fed will do whatever it takes to ensure that these banks stay afloat. Even if it means indulge in the printing press till we all run out of forests to print paper. The more we print; a la Zimbabwe is the outcome. Rising silver prices is the only protection against the certainty of hyperinflation.

Download link Why Silver is the best investment over the next decade

Vinit Bolinjkar Head of Research, Ventura Securities Ltd Tel: | Mobile: 0 9730836363 http://winingtrades1.wordpress.com