Silver markets fell initially during the day on Wednesday, testing the $19.50 level. Ultimately, we still feel that this is a market that is going to attract buyers, and quite frankly we have been buying physical silver for some time. However, we recognize that the market has been overextended for a while, so at the very least it would make sense to grind sideways as it helps us build up momentum.
Recently, of the consolidation area has been between the $19.50 level on the bottom, and the $20.50 level on the top. With this, this is a market that should find buyers, but at this point in time it appears that this area has been where we are starting to “catch our breath” after the extraordinarily strong move several weeks ago.
Even if we do break below here, we believe that the $18 level below is essentially the “floor” in this marketplace. Any sense of a bounce or support between here and there is reason enough for us to pick it up larger positions. We continue to add to our silver positions, and we believe that longer-term we will break out to the upside. However, we do recognize that the recent volatility and of course all of the issues at all around the world will continue to drive money towards the US dollar, which does put a little bit of a strain on the move higher in silver. At the end of the day though, they both can go higher, and eventually will.
Silver almost always in demand
On top of that, silver is almost always in some type of imbalance, as almost all of it is used immediately after being pulled out of the ground. Because of this, silver is something that we believe is in a longer-term uptrend as far as the generation is concerned, but recognize that there of course will be times when we pullback or even collapse. This is because of all of the various concerns out there, most notably the European Union. We know that the United Kingdom has left the European Union, or at least voted to, but what is less clear is what is going to mean for the European Union. Because of this, money has been flowing from the euro and the pound, and then to the US dollar. But beyond the US dollar, money seems to be flowing into the precious metals markets. This is because people prefer to have “hard currency” in times of uncertainty. I believe this uncertainty is going to last for some time, so at this point in time we have absolutely no interest in selling this market, and are just patiently waiting for bounces, supportive candles, and of course impulsive moves higher.