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Monday, July 13, 2009

Time to keep a close eye on Silver ETFs (SLV)

Some say that the price of silver could be ready for a renaissance. If that’s true, it may be time to keep a close eye on silver exchange traded funds (ETFs).

Are we nearing the end of the great silver depression? Theodore Butler for SilverSeek thinks that the days of the silver price depression are just about gone and that the metal could be headed for its true free market price. That’s a price much higher than what it is now, Butler points out. What’s his argument?

An apparent liquidation cycle taking place on the COMEX for silver and gold futures.Historically, low-risk entry points are presented when liquidation cycles have exhausted themselves

As for now, the drop in metals prices have removed a lot of risk from the market. There is no way to tell how deep silver sell-offs may go, and when, but the prices are giving a signal that times are conducive to buying sometime soon.

Alas, silver is below its trend line. Will this prediction come to fruition? Keep your eye on the 200-day moving average, and be prepared with an entry and an exit strategy before investing in a fund.

Two Silver ETFs:

iShares COMEX Silver Trust (SLV): up 11.6% year-to-date
PowerShares DB Silver (DBS): up 12.1% year-to-date

Disclosure I am long SLV in my commodities folio. (Akademos, Inc.)

1 comment:

  1. Companies involved in silver production are a great way to invest.