I have been watching Silver for ques on the gold rally. In short, silver is the higher beta version of the gold contract and thus carries a higher relative volatility and more risk of capital loss due to its precipitous falls it has from time to time. Lately the falls have been far and few between and the bulls have been very happy. As the chart here shows, they bulls have much to clamor about as this contract is clearly in breakout mode - one that argues for a 50% rise based on the previous range, to the 30 level in the months/years ahead. Is this possible? Well, I think two factors need to work in Silvers favor; first, gold must continue to move upward and with new highs today, that helps things. Second, industrial metals demand needs to start rising and that means copper needs to stop having issues with this $350 area. If such continues, Silver is likely to run into profit taking and the rally will be stopped in its tracks.
Going forward, I am watching the current levels closely because silver has a working or did have a working double top around 2100. As this is written, silver is below the level again as the sellers are taking profits up here and perhaps there is some disbelief that silver can move this high as gold seems to have slowed its gains over the past few weeks. This disbelief should lead to higher silver prices. On the other side of the Leger, if silver fails around this level and drops down, I will be watching 1930 closely - a break of level we have a false breakout. False breakouts do not end well and a 50% retracement of the move could come into play. Also a failure of silver wil most likely weigh on gold as well and hasten coppers move down.
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