Sell-off in silver highly unlikely, but not to be ruled out


  Silver ranged sideways most of the time last week, managing to post a gain of around 15 cents.

The weekly chart for spot silver shows a long – legged doji, possibly forming an evening star candle pattern, which if confirmed next week will point towards another correction.

However,  some of the effect from the euro sovereign debt woes spilled over into silver,  to post some late gains on Friday,  as investors sought safer investments.

The gold:silver ratio dipped below the crucial 40.0 level this week. However, gold‘s recovery on Friday helped bring the ratio back above.

Silver‘s parabolic rise is reminiscent of those that happened in past years. The most striking comparison would be to compare it to the rise during 2008, where the price rose to levels around $21.50 with a massive correction not long after. A period of ranging followed, of which we’d be around halfway through, before another massive sell – off occurred, to strip the white metal of around 50% of its value. Were the correlations to ring true, we‘d see the sell – off occur in around two months and expect the price to fall to somewhere between the 55 and 100 – week moving averages, a move which currently seems highly unlikely, but cannot be ruled out.


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