Silver – Cautious Buying, But Waiting for Confirmation of the Bottom

by JDH on May 19, 2008

So, what’s up with Silver?


The silver chart is similar to the gold chart. After a double top in March, silver has corrected down to about the $16.25 level. The long term trend remains up, but it is unclear whether or not the short term trend is also up. Therefore, I’m not aggressively buying at this time.

PAA.TO – Pan American Silver Corp has been trading in a channel for the last three years:

paa pan american silver corp

There appears to be support at the 200 day moving average, and the RSI looks good, so I’m holding what I now own, and will probably increase my holdings with a stink bid around $28 in the unlikely event we have a major correction over the next two months.

SSO.TO – Silver Standard Resources, Inc. is in a more obvious correction phase, and it’s trading below it’s 50 and 200 day moving averages, so for know it’s a hold until we see which direction it wants to go.

silver standard resources

The smaller silver plays may be approaching good buy points. For example, SVM.TO – Silvercorp Metals Inc. looks good:

Silvercorp Metals Inc

Silvercorp closed Friday within one cent of both it’s 50 and 200 day moving averages, and although there will be significant resistance at the double top level of $10.50, the down trend line from April is now broken, and the RSI is turning up, so I’ll be buying at $8.

FVI.V – Fortuna Silver Mines Inc. is also trending lower, so if you really want to buy, a stink bid at $2 makes sense, although I’ll be waiting to confirm that we have a bottom.

Fortuna Silver Mines

Another interesting silver chart is FR.TO – First Majestic Resource Corp:

First Majestic Resource Corp

First Majestic is making higher lows and lower highs, so something’s got to give. It spiked on Friday above it’s 50 and 200 day moving averages, so I’m putting in a buy order at $4.

Again, my strategy will be to put in stink bids and not chase anything, since I have no idea if we have really reached a near term bottom in silver.

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