Silver might have the strength to break through to new highs


Market sentiment towards silver had a touch of the bi-polar disorder last week as risk appetite swung from each extreme, sending silver and other metals into a deep correction followed by a bounce.

The weekly chart still posts a decline of around 6%, but despite this analysts remain bullish as general global economic woes weighs on sentiment. The increased volatility of silver led the Comex to increase margin requirements in a move similar to what is occurring in gold futures, this should calm the price swings down enough that we may see another move towards $50, according to analysts.

After a phenomenal surge higher that culminated in a euphoric peak at the end of April 2011, silver corrected sharply in May and ground its way through June. However, the white metal managed to establish a bottom over the summer and has begun to ascend once again. It might have the strength to break through to new highs this time around.

On the fundamental side, Canadian miner Silvercorp Metals Inc said its majority unit has agreed to spend $4.3 million for a 90% stake in two Chinese mining companies, both based in China‘s Henan Province.

In the long term, the bullish trend for silver remains in force as of Friday’s close, but it is getting close to reversing. That would come eventually on a move to the $37 level. However, a more important support would be at the $33 level.


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