Investing in silver has long been a popular choice trusted by many as an alternative to the traditional stacking of gold bullion; the two precious metals share similar characteristics and have an equally long history as vessels of wealth, power, luxury, class and prestige.
Silver prices are extremely volatile, mainly due to the fact that the silver market is not as “deep” as the gold market, although there are also other reasons.
Traders and private investors were well aware of this parameter and saw silver prices getting hit hard in 2013 when the metal lost almost 45% of its value. This crash was in itself a serious factor for many funds to reconsider their asset strategy as far as silver was concerned, and a large number of players actually abandoned the market altogether.
All this would only be a bad memory, if silver prices had followed the same course with gold prices this year. In fact, as many analysts point out, silver has a lot of catching up to do and quite some space to move upwards, perhaps doubling its price quite soon.
Sadly there are others who, based on last year’s performance, support entirely different scenarios, practically opting out silver as an investment, and this created uncertainty which in turn caused silver to lose its momentum.
Silver price congestion
Looking at a 6-month silver price chart, this effect on public mood becomes all too obvious: with the exception of a 3-week period between January and February, silver prices appear to be congested within small areas between strong support and resistance levels. This makes it easy for analysts to determine the exact prices where there is sturdy support or a resistance that is hard to break, but the actual trend is almost impossible to define as the investors appear too preoccupied to notice the metal’s strong fundamentals and rather act on impulse, keeping alive the silver market’s worst enemy which is volatility.
Thus, we can conclude that a strong barrier has formed at $20.5 per ounce; this was a resistance level for quite some time but it broke violently when the price of silver bounced from its $19.14 an ounce rock bottom low to a new double-peak resistance at $22 an ounce.
From then on, technical analysis records a negative trend as the line that connects this to the $22.7 triple-peaked roof of late October-early November last year points downwards. The same line also connects to the $ 23 per oz. six month high, and this practically means that silver prices are not going to be able to reach this ceiling anytime soon, in contrast to gold’s outstanding performance during the same period.
Silver price appealing to long term investors
Given its statistics, silver presents a unique opportunity for a long term investment as it is not getting any cheaper, while it is more likely to catch up with gold sooner or later.
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