How Much Is Silver Worth

May 10th 2012 we wrote that the weekly chart for silver showed “that support has been tested successfully three times at the $27.5 level over the last year and a half ever since the big break from $18 occurred in August 2010. It is therefore very foreseeable that silver may yet drop further from its current price of just over $29 to the mid $27 range again”.

Luckily for us, that is pretty much exactly what silver did. After hitting an intra-day low Wednesday 16th May of just above $26 and a half dollars, silver bounced back during the tail-end of the week to close at over $28.5.

Just like gold, this week’s candlestick for silver is looking like a bull hammer. A bull hammer occurs after an index has been declining, possibly suggesting the market is attempting to determine a bottom. Silver has been declining for the last 12 weeks since finding resistance at its 50 Day Moving Average on the weekly chart as shown below.

Lets see how the next few weeks pan out.

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It has been a tough week on the bullion markets. There is no doubt about that. Gold tumbled and closed at lower than $1600, a strong psychological barrier, and silver also broke down below the $30 level.

It has been a tough week in Europe as well. France got a new socialist President that has got Berlin unnerved as to whether he (Hollande) is as ready as Sarkozy was to absorb the pain of bailing out troubled EU economies such as Greece and Spain.

Greece of course is taking centre stage regarding the pain of austerity measures and Pasok leader Evangelos Venizelos will make a third effort to form a coalition government this week amid political turmoil following Sunday’s elections. All of this has resulted in it being a tough week for the Euro as well which plummeted against the dollar in recent days.

Euro Takes a Hit Following EU Elections

Back to silver though. Chart below shows that it has been on a slippery slide for the last couple of months since rallying to about $36 in early Spring. When will this slide end?

Well, again, the chart shows that support has been tested successfully three times at the $27.5 level over the last year and a half ever since the big break from $18 occurred in August 2010. It is therefore very foreseeable that silver may yet drop further from its current price of just over $29 to the mid $27 range again.

Long Term Silver Support at $27.5 ?

Yes it is a nervous time for those of us who are long on silver and believe that silver has yet to rally in the same way that its elder brother gold has over the past decade.

Bear in mind however, that that all markets need to take a breather after rocketing rallies and summer especially May can be a slow period.

As the traders of yore alway say, ‘Sell in May and go away‘.

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How Much is Silver Worth